In an involuntary bankruptcy filing, the petition itself becomes the order for relief and is
effective the moment it is filed with the court.
An express warranty must be in the written form.
Grandmother Smith is concerned about having an incapacitating illness that will
prevent her from managing her finances. Grandmother Smith should execute a(n):
A. power of attorney.
B. advance directive.
C. agency proxy.
D. durable power of attorney.
A union must register its bylaw with the:
A. NLRB.
B. Department of Commerce.
C. federal district court.
D. secretary of labor.
Which of the following is true of consequential damages?
A. They result from a breach due to special circumstances that exist with a particular
contract.
B. They are the sum of money equal to the real financial loss suffered by the injured
party.
C. They cover any expenses paid out by the innocent party to prevent further loss.
D. They are awarded as a measure of punishment for the defendant’s wrongful acts.
One corporation makes a tender offer to the shareholders of another corporation in
a(n):
A. merger.
B. consolidation.
C. stock acquisition.
D. asset acquisition.
A(n) _____ type of contract may be canceled by one of the parties.
A. unenforceable
B. void
C. voidable
D. valid
Under the Individual Debt AdjustmentChapter 13, Bankruptcy Code a debtor must
begin payments within a period of:
A. three days.
B. thirteen days.
C. thirty days.
D. thirty-three days.
An equitable remedy may be all of the following except:
A. specific performance.
B. damages.
C. an injunction.
D. a restraining order.
Pepe dies without a will leaving a brother, a cousin, and an uncle as his only surviving
relatives. Who is the “next of kin”?
A. The uncle
B. The cousin
C. The brother
D. This must be determined by the state law where Pepe died.
Brandon, a recent law school graduate, says he will provide affordable legal services to
anyone who needs help. Although his bar exam results are not out yet, Brandon is
certain that he has passed. Legally, are his clients required to pay for his legal services
before he has received his license?
A. Yes, a court will require that his clients pay in full for any legal services they receive
from him.
B. Yes, but if Brandon fails the exam, he must return all consideration to the
appropriate clients.
C. No, since it is against the law for anyone without the required state license to offer
legal advice.
D. No, because Brandon has acted incompetently.
Jim borrowed Sally’s car to get to class when his car did not start. After attending the
class he uses the car to visit his grandmother. While on his way he enters an intersection
when the light is just turning from yellow to red and meets with an accident. What is the
Jim’s legal position?
A. Reasonable care.
B. Liable for gross negligence.
C. Liable for slight negligence.
D. Jim has no liability.
Under RUPA, a _____ takes place whenever a partner is no longer associated with the
running of the firm.
A. dissolution
B. dissociation
C. rescission
D. devolution
Large Union negotiates a wage increase for members of a bargaining unit. This wage
increase is:
A. only for union members.
B. only for workers whose names are listed in the contract.
C. for all workers who join the union.
D. for all workers in the bargaining unit.
________________ is the first of the four elements of a valid contract.
A. Consideration
B. Capacity
C. Mutual assent
D. Legality
Which of the following can take advantage of Chapter 13 provisions?
A. Self-employed people
B. Corporations
C. Partnerships
D. Educational institutions
If the mortgagor has defaulted or has failed to perform some other agreement in the
mortgage, the mortgagee has the right to apply to a court to have the property sold. This
right is called ____.
A. acceleration
B. foreclosure
C. perfection
D. attachment
The just war theory’s criterion of _____ states that war can be initiated only by
legitimately recognized nation-states.
A. proportionality
B. just cause
C. right intention
D. competent authority
Mill enterprises needs to raise a large amount of money. Therefore it sells its fractional
interest in orange groves, located in Florida, to Sunshine Co. in New York. Sunshine Co
would be ensured a return in investment from the land purchased. Mill enterprises has
sold:
A. real estate.
B. debt instruments.
C. goods.
D. securities.
Which of the following is true of real defense?
A. Real defenses can be used against holders, but not holders in due course.
B. Anyone who has a real defense is required to pay an instrument.
C. Real defenses can be used against everyone, including holders in due course.
D. Real defenses include breach of contract, failure or lack of consideration, fraud in
the inducement, and payment.
Which of the following legal detriments is known as forbearance?
A. Doing something that one has a legal right to do.
B. Doing something that one has a legal right not to do.
C. Giving up something that one has a legal right to keep.
D. Refraining from doing something one has a legal right to do.
Henry borrows money from Commerce Bank to purchase a house. However, he moves
to another city to attend graduate school and so sells the house to Maria. Henry wants to
be released from his payment obligations to Commerce Bank. Which of the following
would release Henry from his liability to Commerce Bank?
A. A delegation of the payment obligation by Henry to Maria is will release Henry
from liability.
B. The sale of the house by Henry to Maria involuntarily releases his payment
obligation.
C. A delegation of the payment obligation to Maria along with a written notice to
Commerce Bank can release Henry from the liability.
D. A novation in which Commerce Bank agrees to substitute Maria for Henry will
release Henry.
The absolute time limit for notifying a bank of a forged or altered check is _____ from
the time the depositor receives the bank statement.
A. fourteen days
B. thirty days
C. one year
D. three years
A check that a drawee bank guarantees will be paid to the holder is a:
A. bank draft.
B. traveler’s check.
C. certified check.
D. treasurer’s check.
A woman who can neither speak nor read English purchases a stereo system from a
local electronics store. Although the stereo is advertised for $450, the store owners
charge the woman $10,000. A court would most likely consider this transaction:
A. the result of accord and satisfaction.
B. an unconscionable contract.
C. a bargained-for exchange.
D. an enforceable contract.
Lizzie works as an entertainment journalist. Her editor tells her that she has to produce
a story defaming a television celebrity if she wants to retain her job. Once Lizzie has
produced the article and publishes it in the newspaper she works for, her editor fires her.
Lizzie wants to bring a lawsuit against the editor for firing her. Which of the following
is true of this case?
A. Lizzie has committed a crime and hence cannot file a lawsuit.
B. Lizzie can bring forth a lawsuit as her contract with the editor contained all five
elements.
C. Lizzie’s contract has been executed, hence the court is likely to award her damages
for breach of contract.
D. Lizzie has committed a tort and her contract with the editor will not be upheld in the
court.
_____ demonstrates that the cause (the unreasonable conduct) led to the effect (the
injury to the plaintiff).
A. Proximate cause
B. Actual cause
C. Legal cause
D. Foreseeable cause
In tenancy by the entirety:
A. a husband and wife share entire control over the estate and share the right to all
rents and profits.
B. only a husband may have entire control over the estate and have the exclusive right
to possession and the right to all rents and profits.
C. a husband and wife are regarded, in law, as separate individuals.
D. an execution by a judgment resulting from an action against a husband or wife alone
may be placed against the entire property.
Winston was going to be out of town on September 1, when his rent would be due. On
August 20 he gave his landlord Becky a check dated September 1, with instructions not
to deposit or cash the check until September 1. As the instructions to Becky were clear
he did not notify the bank of the postdated check. On August 21 Becky deposited the
check in her account at her bank and the check was dishonored on August 23. Which of
the following is true of this scenario?
A. Winston has recourse against Becky as she did not follow his instructions.
B. Winston has recourse against Becky and the bank since it failed to refuse the item
when deposited.
C. Winston has recourse against the bank as it failed to notify Winston of the check
acceptance and failed to refuse the item when deposited.
D. Winston did not notify the bank not to pay it before the date on the check, hence has
no recourse.
Writing the words, “pay to the order of” or “pay to”, followed by name of the indorsee
and the signature of the indorser on an instrument, makes it a ____.
A. special indorsement
B. restrictive indorsement
C. qualified indorsement
D. conditional indorsement
Cato rented a chain saw from Rental Warehouse to cut firewood for his home fireplace.
When it was time for lunch Cato left the chain saw in the woods while he went home to
eat. When he returned the saw had been stolen. What is the Cato’s legal position?
A. Cato owes the duty to use reasonable care.
B. Cato is liable for gross negligence.
C. Cato is liable for slight negligence.
D. Cato has no liability.
The Congress passed which of the following acts which requires lenders to disclose the
finance charge and the annual percentage rate?
A. The Fair Credit Reporting Act
B. The Equal Credit Opportunity Act
C. The Truth-in-Lending Act
D. The Fair Debt Collection Practices Act
_____ permits a driver to buy optional coverage such as personal injury insurance that
would allow him or her to receive payment without bothering to determine fault.
A. Comprehensive coverage
B. Add-on coverage
C. Threshold coverage
D. Collision coverage
Jodie deposits in her checking account a $527 check made payable to her from the
Internal Revenue Service. When will the $527 be made available to her?
A. Within seven business days of the date of her deposit.
B. Within three business days of the date of her deposit.
C. Within ten business days of the date of her deposit.
D. The next business day following the date of her deposit.
