Al owes Tracy $500, due June 1. Al, Tracy, and Ted mutually agree that Ted will pay
Tracy instead of paying Al the money Ted owes Al, and Al will be discharged from his
debt to Tracy. Such an agreement is an example of:
a. an accord.
b. a novation.
c. a satisfaction.
d. a rescission.
Monica’s husband is an accountant who keeps the books for her business. When the
business goes bankrupt, will Monica’s husband’s claim for services be allowed by the
bankruptcy courts?
a. No, since he is an insider.
b. No, because it would be difficult to prove that services were actually rendered.
c. Yes, but only up to the reasonable value.
d. Yes, as long as he is not an officer of the corporation.
Which of the following is true?
a. A security agreement may create or provide for a security interest in property that the
debtor presently does not own or have rights to.
b. Obligations covered by a security agreement may not include future advances.
c. Federal regulation allows a credit seller or lender to obtain a nonpossessory security
interest in a consumer’s household goods, such as furniture, appliances, and clothing,
whether as a purchase money security interest or otherwise.
d. Encryption of a record cannot serve as a debtor’s authentication of a security
agreement.
Remedies for breach of contract include all but which of the following?
a. Compensatory damages.
b. Punitive damages.
c. Restitution.
d. Equitable remedies.
Which of the following would NOT be considered to be an example of open-ended
credit?
a. A gasoline credit card account.
b. A VISA account.
c. A real estate mortgage account.
d. A department store credit card account.
Confirmation of a plan for reorganization under Chapter 13 may be given only if:
a. the plan complies with applicable law and is given in good faith.
b. the plan provides for payments longer than three years.
c. the debtor remains in possession of the estate.
d. all of the creditors agree to accept it.
When Mark bought new office furniture on credit, Bartin’s Office Supply Co. filed a
financing statement. What would be required on the financing statement?
a. The trade name of Mark’s business.
b. Mark’s signature.
c. Mark’s name and an indication of what collateral is covered by the agreement.
d. All of the above.
When state efforts proved inadequate to alleviate the problem, Congress enacted the
__________ Amendments of 1970, greatly expanding the federal role in antipollution
efforts.
a. Clean Air Act
b. National Ambient Air Quality Standards
c. State Implementation Plan
d. None of the above.
A corporation is considered a citizen:
a. of the state in which it has its principal office, for the purpose of determining
diversity of citizenship.
b. of the state of its incorporation, for the purpose of determining diversity of
citizenship.
c. under the Fourteenth Amendment privileges and immunities clause.
d. Both (a) and (b).
Which of the following is correct with regard to duress?
a. It always renders a contract void.
b. Duress by improper threats is the most common form of duress.
c. The wrongful act must be either a crime or a tort in order to be considered wrongful.
d. All of the above.
Which of the following is a true statement concerning a life estate?
a. A life estate is an ownership right only for the life of the grantor.
b. A life estate is an ownership right in property for the life of any individual designated
by the grantor.
c. A life estate requires special wording, prescribed by statute, to create it.
d. None of the above.
A(n) __________ is a substituted contract that involves an agreement among three
parties to substitute a new promisee in place of an existing promisee, or to replace an
existing promisor with a new one.
a. accord
b. satisfaction
c. novation
d. mutual rescission
Miller does the payroll for XYZ Company. In between the last names of Adams and
Bates, he inserts the name Appleton and makes out a weekly paycheck in that name. He
keeps the check for himself, signing “Appleton” and cashing it at a local bank. Auditors
discovered the fake payee many months later. May XYZ require the bank to recredit?
a. No, because of the holder rule.
b. No, because Miller is an XYZ employee, and the fictitious payee rule applies.
c. Yes, because the indorsement is forged.
d. Yes, because the check was, in effect, stolen.
The international treaty to which the United States is a party and which protects
copyrighted works is known as the:
a. Berne Convention.
b. Convention on International Copyright Protection (CICP).
c. Geneva Convention.
d. Treaty of Vienna.
The majority of states have adopted the 2001 revision of the Revised Uniform Limited
Partnership Act (ReRULPA), which reflects that LLPs and LLCs can meet many of the
needs formerly met by limited partnerships.
If all milk producers in the area agree to set a minimum price for raw milk, this would
be an example of:
a. horizontal allocation.
b. vertical market restraint.
c. horizontal price fixing.
d. a tying arrangement.
Which of the following is correct about employment relationships?
a. State statutes protect workers from discriminatory discharge for filing workers’
compensation claims.
b. Under the common law, a person cannot be fired for “any reason at all.”
c. Courts have not created exceptions to the employment-at-will doctrine by imposing
tort obligations on employers.
d. The U.S. Supreme Court recently reaffirmed the basic “at will” rule.
Marilyn brought her $300 silk dress to University Dry Cleaners to be cleaned. On the
back of the ticket she received in exchange for the dress was written, “Liability limited
to ten times the cost of cleaning.” Marilyn’s dress was lost and University now claims it
owes her only $96.50, ten times the cost of cleaning. Is that true?
a. No, because Marilyn is not a bailor.
b. No, because they are common carriers.
c. No, because the limitation was not communicated to her.
d. No, because the limitation is unconscionable.
The validity of zoning is based on the police power reserved to the states.
Checks, when accepted, are said to be certified.
A receiver is a disinterested person appointed at the discretion of the court to manage,
liquidate, and conserve assets of a debtor.
An ethical relativist looks to a central authority, such as the Bible, to guide her in ethical
decision making.
Under the shelter rule, a person who is not a holder in due course can obtain the rights
of a holder in due course.