Disclaimers in contracts are usually effective to shield a manufacturer or seller against
liability for negligence to consumers.
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The agent does not have to inform the principal of knowledge the agent gains in the
course of her responsibilities.
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Commercial speech, such as advertising, enjoys no First Amendment protection.
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Under the MBCA, shareholders may remove directors without cause.
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If Jamal is carefully driving his car within the speed limit and an inebriated Eddie darts
out in front of his car and is hit, Jamal is liable for Eddie’s injuries.
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Most courts refer to a statute’s legislative history when the language is unclear.
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Article 9 of the UCC does not define what constitutes default.
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The doctrine that says a court, in making a decision, must follow precedents of prior
cases is called the ex post facto rule.
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Article 2 of the UCC does not apply to the sale of real estate.
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A person who claims to have been victimized by a misrepresentation may cancel the
contract only if he/she can show some detriment as a result of the misrepresentation.
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Trademark dilution laws protect “distinctive” or “famous” marks from unauthorized
uses even when confusion is not likely to occur.
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Preferential liens are treated in a manner similar to preferential payments.
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The CPSC and the ____ may sue for injunctive relief or the seizure of products to
enforce various provisions of the Consumer Product Safety Act (CPSA).
A. U.S President
B. U.S Chief Justice
C. U.S Attorney General
D. U.S Secretary of State
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If the parties agree on the amount of damages that will be paid to the injured party, this
amount is known as ____.
A. liquidated damages
B. registration expenses
C. consequential damages
D. remedy
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An instrument which reads, “For deposit only” is an example of a:
A. qualified indorsement.
B. special indorsement.
C. restrictive indorsement.
D. blank indorsement.
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A large and well-known corporation wants to acquire a plot of ground for a new plant.
To avoid the extra cost, purchases the land through several agents, each purporting to be
buying personally. In such cases, the corporation is a(n) ______.
A. undisclosed principal
B. disclosed principal
C. partially disclosed principal
D. subagent
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All business corporations derive their existence from:
A. the Commerce Clause of the U.S. Constitution.
B. the common law.
C. the state in which they are incorporated.
D. the federal government.
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Ultrahazardous activities:
A. are defined by federal statutes.
B. are subject to strict liability.
C. only create liability where the defendant fails to act as a reasonable person.
D. only create liability when the defendant fails to exercise utmost care.
Answer:
Under the Securities Act of 1933, liability is imposed for improper offers and sales
when:
A. a person simultaneously buys and sells the same stock in order to stimulate
substantial trading activity.
B. a person offers or sells unregistered and nonexempt securities in violation of the Act.
C. the investor finds that the registration statement for the security contained an
unTRUE statement.
D. the issuer inadvertently omits a few material facts in the registration statement.
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Alice drew a check on her account at the Third National Bank payable to the order of
Aaron. When Aaron presented the check for payment, Third National refused to honor
the check. Under these circumstances:
A. the bank may be liable to Alice for wrongfully refusing payment if Alice has
sufficient funds in her checking account to cover it.
B. the bank may be liable to Aaron for wrongfully refusing payment if Alice has
sufficient funds in her checking account to cover it.
C. the bank has breached its transferor’s warranties.
D. the bank will be liable to both Aaron and Alice.
Answer:
Which of the following is TRUE of the obligations of a maker?
A. The maker of a promissory note is secondarily liable for payment of it.
B. He makes a conditional promise to pay a fixed amount of money.
C. The obligation of the maker is to pay the negotiable instrument according to its terms
at the time he issues it.
D. The obligation of the maker is owed to an indorser, who is a person entitled to
enforce the instrument.
Answer:
The Congress amended the ADA with the passage of the Americans with Disability
Amendments Act (ADAA) to overturn decisions of the Supreme Court that severely
limited the coverage of the ADA.
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In a typical predatory-pricing scheme, the predator:
A. reflects changing conditions in the marketplace affecting the marketability of
competitor’s goods.
B. reduces the sale price of its product to below cost, hoping to drive competitors out of
business.
C. grants a discriminatory price to a customer who has been offered a lawful, lower
price by competitors.
D. furnishes customers with certain services that were not provided by the competitors.
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In order to become a holder in due course, a person who takes a negotiable instrument
must be a holder, and take the instrument:
A. without notice that the instrument contains an authorized signature.
B. with notice that it is overdue or has been dishonoured.
C. with notice of any claim of a property or possessory interest in it.
D. without notice that any party has any defense against it or claim in recoupment to it.
Answer:
A reorganization plan is essentially:
A. a supervised attempt by the state to solve a debtor’s financial problems.
B. a contract between a debtor and its creditors.
C. a contract filed voluntarily by the creditors.
D. a contract between a debtor, its creditors and trustees.
Answer:
The prohibition against excessive bail and fines can be found in the:
A. Eighth Amendment.
B. Fourth Amendment.
C. Fifth Amendment.
D. Sixth Amendment.
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Zeta contracts to perform a violin solo for Pat. Zeta assigns the contract to Roy. Is this a
valid delegation of duty?
A. There is no valid delegation of Zeta’s duty to play because all delegations must be
expressly stated in the assignment contract.
B. There is no valid delegation of Zeta’s duty to play because the contract is one in
which Zeta’s personal skill as a musician is an essential part of the agreement.
C. There is a valid delegation of Zeta’s duty as Zeta has entered into a novation with
Roy.
D. There is a valid delegation of Zeta’s duty because Zeta does not want to play for Pat.
Answer:
Titus, a CPA, certified a client’s financial statements because he believed they were
correct, on the basis of his use of standard accounting and auditing practices. Later,
while doing further work for the same client, Titus discovered information leading him
to the conclusion that the financial statements he had certified were false and
misleading. Which of the following statements is correct?
A. Titus has a duty of loyalty only to the third parties who must have reasonably relied
on the accuracy of those financial statements.
B. Titus can have no liability to anyone if he chooses not to reveal the unreliability of
the financial statements, because when he certified them, he had good reason to believe
they were accurate.
C. Titus has a duty to disclose the unreliability of the financial statements to anyone he
knows is relying on the financial statements.
D. Titus has a duty to inform his client of what he has discovered, but he has no duty to
inform any third parties.
Answer:
Tie-in contracts:
A. violate Section 3 of the Clayton Act regardless of the seller having monopoly power
in the tie-in product.
B. do not violate Section 1 of the Sherman Act under any circumstance.
C. violate Section 3 of the Clayton Act if the seller has foreclosed competitors from a
substantial volume of commerce in the tied product.
D. violate Section 1 of the Sherman Act and Section 7 of the Clayton Act.
Answer:
This is a partial defense against a holder in due course (or a person having the rights of
a holder in due course), and a complete defense against a non-holder in due course.
A. Illegality that makes a contract voidable.
B. Fraud in the inducement.
C. Alteration of the completed instrument.
D. Lack or failure of consideration.
Answer:
An award for loss in value of a promised performance is:
A. nominal.
B. punitive.
C. liquidated.
D. compensatory.
Answer:
While on his deathbed, Larry’s grandfather revoked all his prior wills and wrote out a
new will in his own handwriting, leaving everything to the local animal shelter in trust
for his dog, Fido. Grandfather signed the will and mailed it to the animal shelter before
he died. Larry wants to challenge the new will. Which of the following statements is
TRUE?
A. Grandfather did not have the legal right to revoke his prior will without notice to
Larry and the other beneficiaries.
B. If his grandfather lacked the mental capacity to understand his actions, the new will
is invalid.
C. The holographic will would not be valid in any state because it was executed without
the presence of witnesses.
D. The will would be treated as valid only if signed by two or more interested
witnesses.
Answer:
Identify the TRUE statement about cancellation of an insurance policy.
A. Insurance contracts cannot be cancelled by the insured by surrendering the policy to
the insurer.
B. Insurance contracts contain a reinstatement clause that allows an insured to reinstate
a cancelled policy.
C. Insureds who terminate are entitled to a return of the premium on a short-rate basis.
D. Insurers that cancel need not return the unearned portion of any premiums paid by
the insured.
Answer:
A perfected security interest in fixtures has priority over the conflicting interest of an
encumbrancer or owner of the real property:
A. only if the debtor is in possession of the real property.
B. if the security interest is a purchase money security interest.
C. even if the interest of the encumbrancer arose after the goods became fixtures.
D. if the fixtures’ security interest is perfected by a “fixtures filing” anytime after the
goods became fixtures.
Answer:
Which of the following statements is TRUE of the doctrine of employment-at-will?
A. It requires certain reports to the secretary of labor which should disclose a great deal
about the financial situation of the union.
B. It has been reinforced in the past 50 years by statues such as Title VII, the NLRA,
and the ADEA.
C. It is based on the laissez-faire values of the 19th century, for it leaves both the
employer and employee with maximum freedom.
D. It gives workers the right to organize and bargain collectively.
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Explain durable power of attorney for health care.
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Explain the limitations on a minor’s right to disaffirm a contract.
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What is the difference between a promissory note and a check? Why is the distinction
important?
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What is an offer? What are the three conditions necessary for the creation of an offer?
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‘˜The function of a judge in the United States differs from that in Europe. Explain.
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