1) the reduced sales of martha stewart branded goods at k-mart after she was accused of
insider trading is an example of the strength of the profit maximization theory.
2) in order to be valid, a holographic will must be typed.
3) a seller of goods can never pass “better title” to those goods than the title that she
has.
4) michael and william contracted for michael to mow williams lawn once a week for
20 weeks, at a price of $20 per week. later, without terminating the first contract, the
parties modify the contract as follows: michael will mow williams lawn in exactly the
same way for exactly the same time period, in exchange for williams promise to pay
michael $22 per week. there is no consideration for williams promise.
5) the sources of assignment law today are the common law of contracts and provisions
of the ucc.
6) a legal theory that imposes liability even if the defendant acts with all reasonable
care and caution is called:
a.assumption of risk.
b.strict liability.
c.superseding event.
d.contributory negligence.
7) which of the following is both a transfer warranty and a presentment warranty?
assume that the instrument in question is a draft.
a. the draft that has not been altered.
b.the draft that is negotiable.
c.the draft that is not subject to any defense or claim for recoupment.
d.the drawer that is not insolvent.
8) according to contract law, a(n) _____ is a belief about a fact that is not in accordance
with the truth.
a.assertion
b.concealment
c.mistake
d.material
9) which of the following is sufficient for a gift of real property to be valid?
a.properly executed deed
b.possession of the property
c.actual possession of the property
d.an oral declaration
10) ted nix purchased two acres of land from sally pine. nix paid 15 percent at the
closing and gave his note for the balance secured by a 30-year mortgage. five years
later, nix found it increasingly difficult to make payments on the note and finally
defaulted. pine threatened to accelerate the loan and foreclose if nix continued in
default. pine told nix either to get the money or obtain an acceptable third party to
assume the obligation. nix offered the land to quick co. for $4,000 less than the equity
nix had in the property. this was acceptable to pine and at the closing, quick paid the
arrearage, executed a new mortgage and note, and had title transferred to its name. pine
surrendered nixs note and mortgage to him. the transaction in question is a(n):
a.third-party beneficiary contract.
b.novation.
c.purchase of land subject to a mortgage.
d.assignment and delegation.
11) a buyer makes payment for goods accepted using a check. if the bank refuses to pay
the check, the buyer:
a.has still satisfied the duty to pay for the goods.
b.must give the goods back to the seller.
c.has the right to retain the goods.
d.can be excused from the obligation.
12) debbie gives barry a cartier watch as a gift for their engagement. a week later,
debbie suddenly leaves the country, leaving barry a note that she cannot marry him.
assume that debbie had no good reason to break off the engagement. under the
traditional rule:
a.debbie will be able to recover the watch because she does not intend barry to keep the
gift.
b.debbie will be able to recover the watch because the gift was made on the implied
condition of marriage.
c.debbie cannot recover the watch, because she is in a foreign country.
d.debbie cannot recover the watch because it is a valid gift delivered to barry.
13) under the product liability theory of strict liability as expressed in the restatement
(second) of torts, what is an essential fact that must be present if strict liability may be
used in a lawsuit as the basis for recovery?
a.the product must be unreasonably dangerous.
b.the product must be un-merchantable.
c.the product must be unfit for the purpose intended by the buyer.
d.the product must be unfit for any purpose.
14) which of the following is a transfer of the right to possess and use goods belonging
to another?
a.bailment
b.lease
c.deed
d.easement
15) which of the following is true of a subagents duties to a principal?
a.a subagent does not owe the agent any of the duties that agents owe their principals.
b.a subagent who knows of the original principals existence also owes that principal all
the duties agents owe their principals except for duties arising solely from the original
principals contract with the agent.
c.the agent who appoints the subagent is not liable to the original principal when he/she
is harmed by the subagents conduct.
d.a subagent owes the original principal for duties arising solely from the original
principals contract with the agent.
16) able was employed as a security guard for seep corporation. ables job was to guard
a fenced-in area and to use force to keep intruders from climbing the fence to enter the
plant. his working hours were from 8:00 a.m. to 5:00 p.m. at about 11:00 p.m. one
evening, able drove past his place of employment. he saw a teenager named johnny
climbing the outside of the fence that he guarded during the day. angered by this
violation of seeps property rights and by the fact that johnny had called him a potbellied
moron only three days earlier, able stopped his car, ran up to the fence, pulled johnny
off of it, and beat him up. johnny sues seep corporation for ables assault and battery
(both intentional torts). which of the following is most likely to be the courts verdict?
a.seeps is directly liable because able was an employee of the corporation at the time of
the incident.
b.seeps is not liable because able didnt act within the scope of his employment.
c.seeps is liable under the doctrine of respondeat superior, since able was an employee.
d.seeps is not liable for the intentional torts committed by its employees.
17) rick tells dan that sue will inherit a mansion if she pays him back an old debt. since
sue is unable to pay the debt, dan offers to pay it provided that he gets the mansion from
rick. the agreement between dan and rick need not be in writing under the:
a.collateral contract rule.
b.parol evidence rule.
c.leading object rule.
d.part performance rule.
18) under section 11 of the securities act of 1933, in order to establish the liability of an
auditor who prepared a defective registration statement, a plaintiff must prove that:
a.he/she purchased securities issued pursuant to the defective registration statement.
b.the auditor was negligent in preparing the registration statement.
c.the auditor acted with scienter in preparing the registration statement.
d.he/she had privity of contract with the auditor.
19) generally, a buyer in the ordinary course of business can take a property free from
any security interest. which of the following buyer is an exception?
a.a person who is a consumer of durable goods.
b.a person buying inventories from a wholesaler.
c.a person buying farm products from a farmer.
d.a person who is a consumer of perishable goods.
20) which of the following is true if an instrument is undated?
a.its date is the date it is signed by the maker or the drawer.
b.its date is the date it is issued by the maker or the drawer.
c.its date is the date it is received by the payee.
d.the instrument is nonnegotiable if it is undated.
21) the rights to notice of the charges brought against you and to some kind of fair trial
or hearing to prove those charges are central requirements of:
a.substantive due process.
b.equal protection.
c.procedural due process.
d.economic due process.
22) the doctrine of res ipsa loquitur can be translated as:
a.you may have the body.
b.to show, prove, or ascertain.
c.by what warrant.
d.the thing speaks for itself.