Article 2A, in a provision analogous to Article 2’s warranty of title provision, protects
the lessee’s right to possession and use of the goods from claims of other parties arising
from an act or omission of the lessor.
a. True
b. False
If destruction or casualty to goods, total or partial, occurs after risk of loss has passed to
the buyer, who is responsible for losses?
a. The seller
b. The buyer, who must pay the entire contract price of the goods
c. The buyer if the loss is partial; both parties share the loss if it is total
d. The carrier delivering the goods
Mary Lou takes her paycheck to Al’s Place on Friday night and gives it to the bartender
as payment for her running bar bill. If the company she works for goes bankrupt the
following Monday, Mary Lou is liable for breach of warranty of no insolvency.
a. True
b. False
State X passes legislation that requires that unless a mother of children under the age of
7 is found to be unfit, custody in divorce proceedings should be awarded to the mother
and not the father. If this statute is challenged, the court will:
a. not defer to the legislature and will independently determine whether such a
classification of persons is constitutionally permissible.
b. determine that fundamental rights and a suspect classification are involved in this
legislation.
c. only require that the legislation conceivably bear some rational relationship to a
legitimate governmental interest.
d. review the legislation to see if it bears a substantial relationship to an important
governmental objective.
Which of the following would notbe subject to the writing requirements of Article 2 of
the UCC?
a. An unborn puppy whose mother is an AKC champion
b. Trees that will be cut from a ten-acre tree farm
c. Food served in the banquet room of a Florida resort
d. Medical care received in a hospital
Leslie purchased 100 flower pots from a local merchant. Warranties which are not
included in her sales contract, but exist by “operation of the law,” are the:
a. express warranties.
b. exclusive warranties.
c. quasi warranties.
d. implied warranties.
Generally, State A may exercise “long arm” jurisdiction over a defendant located in
State B if the defendant:
a. once resided in State A.
b. uses a product produced in State A.
c. made a contract in State A.
d. has relatives in State A.
A breach of contract always discharges the injured party from performance under the
contract.
a. True
b. False
For purposes of the statute of limitations contained in Article 2, a cause of action
generally accrues when a breach occurs, without regard to whether the injured party
knows of the breach at that time.
a. True
b. False
Robert paid William $1,000 for a rare first edition of an Edgar Allen Poe novel. The
sales contract states that the book is to be delivered within ten days. William, however,
refused to deliver the book as promised. In order to sue for the UCC remedy of specific
performance, Robert must prove that money damages will not be adequate
compensation for his loss.
a. True
b. False
Glenn indorsed his paycheck by signing just his name and cashed it at the grocery store.
The check was stolen from the store, indorsed in a false name and transferred to a
convenience store. The convenience store could not be a holder in due course since the
check had been stolen and indorsed with a false name.
a. True
b. False
Which of the following is an informal contract?
a. A letter of credit.
b. A written contract for the sale of a 5-acre tract of land.
c. A check.
d. A recognizance.
A seller has the rightto transfer title:
a. in any case in which the seller has possession of the goods.
b. in all cases in which the seller has the powerto transfer title.
c. even if the seller does not have either possession of ortitle to the goods, if he has
authority to sell the goods for the rightful owner.
d. only if the seller is the rightful owner of the goods.
The ethical decision-making approach that views ethical decisions from the actor’s
perspective and then judges whether the decisions were ethical is:
a. ethical fundamentalism.
b. absolutism.
c. situational ethics.
d. act utilitarianism.
The courts readily enforce a covenant not to compete during the period of employment.
a. True
b. False
Every indorsement is either blank or special.
a. True
b. False
Absent an agreement otherwise, upon dissolution, a partner is entitled to which of the
following after payment of partnership creditors?
a. A share of profits in proportion to capital contribution
b. A share of profits based on the degree of participation in management
c. Under the UPA, repayment of his capital contribution during the winding up of the
firm
d. The UPA requires that the partners have an agreement or else they must seek a court
order distributing the remaining assets
If a written limited warranty is given for a consumer product, it may state that there is
no warranty of merchantability as long as this disclaimer is conspicuous.
a. True
b. False
ZYX Corporation purchases 1,000 shares of its own stock from Jones, a shareholder, at
a price of $50 a share.
These shares will be known as:
a. treasury shares.
b. preemptive shares.
c. preferred stock.
d. no par stock.
The Code section which sets forth the requirements that must be met for an instrument
to be negotiable is:
a. 2-209.
b. 3-104.
c. 4-405.
d. 3-250.
An auctioneer is free to withdraw the goods from sale if the sale is advertised or
announced in explicit terms to be without reserve.
a. True
b. False
“Restricted securities” are those that are sold pursuant to an exemption from
registration.
a. True
b. False
Ralph is the payee of a negotiable promissory note on which Brian is the maker. Ralph
indorses the note in blank and delivers it to Clark, who then transfers it to David
without indorsement. David presents it to Brian for payment when it becomes due, but
Brian claims he signed the note based upon fraud in the inducement and refuses to pay.
a. Who is primarily liable on the instrument? Who is secondarily liable on the
instrument?
b. Who has warranty liability? Why? Explain.
c. From whom can David try to collect?
The Sarbanes-Oxley Act:
a. establishes new criminal offenses as well as substantially increasing penalties for
existing crimes.
b. imposes fines and/or imprisonment of up to 20 years for knowingly altering,
destroying, or falsifying any document with the intent of impeding a federal
investigation.
c. adds new financial disclosure requirements for corporations.
d. The Sarbanes-Oxley Act does all of these.
Komco Computer Company has developed a new and innovative magazine and
television ad campaign that it would like to protect from use by its competitors. Komco
may copyright its magazine and television ads.
a. True
b. False
A statute may preclude judicial review of an agency action.
a. True
b. False
Once a corporation becomes publicly held, it cannot return to being private.
a. True
b. False
Caroline signs a contract to work as a sales rep for Incellmed Corporation for a period
of two years. This contract is governed by:
a. Article 2 of the UCC.
b. state common law.
c. federal statute.
d. the law of quasi contract.
All of the following except which one is a duty of an agent?
a. Account for money received on behalf of the principal
b. Inform the principal of any information relevant to the agency
c. Refrain from competing with the principal
d. Refrain from using any information gained while an agent
Recording of a deed is necessary to pass title from the grantor to the grantee.
a. True
b. False