When does the UCC allow buyers and lessees to seek the remedy of specific
performance?
A. Only when goods are unique
B. Only when a remedy at law is inadequate
C. Only when goods are worth more than $500
D. When goods are unique, when a remedy at law is inadequate, or when goods are
worth more than $500
E. When goods are unique or when a remedy at law is inadequate, but not because the
goods are worth more than $500
_____________________ oversees the purchase and sale of securities.
A. The Securities Act of 1933
B. The Securities Exchange Act of 1934
C. The Depression Act of 1932
D. The Oversight Act of 1935
E. The Stock and Bond Act of 1930
Which of the following occurs when a legal contract combines two or more
corporations such that only one of the corporations continues to exist?
A. A merger
B. A consolidation
C. A combination
D. An alteration
E. A reorganization
How many days, if any, does Congress have in which to review proposed agency rules?
A. 0
B. 20
C. 30
D. 60
E. 90
Nasty Break-Up. Harold wants to purchase a lot next door to Sarah’s home that is
owned by Sarah. Harold knows Sarah will not sell the lot to him because they dated in
the past and had a nasty break-up. Harold agrees with Alice that Alice will purchase the
lot from Sarah for him. Alice and Sarah reach an agreement and enter into a contract
whereby Sarah is to sell the lot to Alice for a price within the scope of Alice’s authority.
Alice tells Sarah nothing about her plan to later transfer the lot to Harold. Before title to
the lot is transferred to Alice, Harold tells Alice that he no longer wants the lot. Alice
tells Sarah about Harold. Sarah tells Alice that as far as she is concerned, Alice has
bought the lot. Sarah says that she plans to move anyway and really does not care
whether Alice or Harold ends up with the lot. She just wants her money. Which of the
following is true regarding whether Alice is personally bound on the contract with
Sarah?
A. Alice is not personally bound because she was acting on behalf of Harold.
B. Alice is personally bound unless she can establish that Sarah would not have sold her
the lot if she had known that Harold was involved.
C. Alice is personally bound unless she can establish that Harold has the funds with
which to pay Sarah.
D. Alice is not personally bound unless Harold has legally filed for bankruptcy.
E. Alice is personally bound.
Which of the following is a federal independent agency?
A. The Consumer Product Safety Commission
B. The Veterans Administration
C. The Occupational Safety and Health Administration
D. The Consumer Product Safety Commission, the Veterans Administration, and the
Occupational Safety and Health Administration
E. The Consumer Product Safety Commission and Veterans Administration, but not the
Occupational Safety and Health Administration
Styling Shenanigans. Candy, who operated a hair and nail salon called “Up Sweep,” had
a crush on Bruce, a stylist there. He paid her no attention. Finally, Candy told him that
to get her approval of his new blow dryer request, he needs to take her on a date and
give her a kiss. Bruce reluctantly did so. When they returned to work, Candy proceeded
to make suggestive comments to Bruce in front of other employees and to request that
he rub her shoulders. When she passed Bruce’s station, she would caress him while he
worked. Candy also decided that Robert was cute, and she showered him with the same
type of attention. Robert enjoyed the attention, but Bruce was offended and filed a
claim against Candy for sexual harassment. Bruce asked Robert to join in on the claim.
Robert said that it personally never bothered him; but that if Bruce can collect, then he
wants in on the action. Bruce told Robert that he is going to see a psychologist to
substantiate his claim and that Robert should consider doing likewise. Robert tells him
that he has no interest in seeing a psychologist but that his case is as strong as Bruce’s.
Robert says that while he found Candy entertaining, in all fairness, he should be able to
recover if Bruce does so. Which of the following is true regarding Robert’s claim of
sexual harassment?
A. He will be able to prevail only if he visits a psychologist.
B. He will not be able to prevail because Candy did not require that he take any action
toward her in order to receive a work-related benefit or avoid a work-related detriment.
C. A recovery by Bruce does not establish that Robert should recover because Robert
would need to show that he subjectively found Candy’s conduct unwelcome.
D. Candy’s actions would be reviewed only on an objective basis, and what Robert
subjectively thought is irrelevant.
E. Robert will be able to recover only if he can establish that he did not benefit by
favors at work based upon Candy’s actions.
With a simple delivery contract involving goods sold by a merchant that are to be
delivered, when does risk of loss transfer to the buyer?
A. When money is transferred
B. When the items are tendered
C. When goods are delivered to the buyer
D. One day after goods are identified to the contract
E. When goods are identified to the contract
Lake House. Harry has two houses, a house on the lake and a house in town. Rebecca
wants to buy the house on the lake. Harry and Rebecca orally agree that Rebecca will
buy the house on the lake for $300,000. Harry hurriedly writes out a contract providing
that he would sell “his house” to Rebecca for $300,000. Harry signs the top of the
document. Rebecca does not sign at all. No merger clause is included in the contract.
Harry backs out of the contract, and Rebecca sues him. He tells the judge that the
statute of frauds is not satisfied because he did not sign the document at the end and
also because Rebecca did not sign at all. He also tells the judge that, at any rate, the
agreement referred to the house in town, not the house on the lake; and that under the
parol evidence rule, he had the right to identify the correct house. Which of the
following is true regarding Harry’s assertion that under the parol evidence rule he alone
had the right to identify the house referenced in the contract?
A. Harry is correct.
B. Harry is incorrect because under the parol evidence rule, Rebecca, as the buyer,
would be allowed to identify the subject matter in the event of a discrepancy.
C. Harry is incorrect because under the parol evidence rule, the judge would likely
allow oral evidence regarding the house at issue in order to clarify an ambiguity.
D. Harry is incorrect because the parol evidence rule would not apply in situations
involving an ambiguity.
E. Harry is incorrect because the parol evidence rule would not apply in the absence of
a merger clause.
With a simple delivery contract in which the seller is not a merchant, which party
sustains a loss if, through no fault of either party, the goods are destroyed through fire
prior to delivery?
A. The seller if tender of delivery has occurred
B. The buyer if tender of delivery has occurred
C. Both the buyer and seller with the loss being proportioned 50% to the buyer and 50%
to the seller
D. Both the buyer and seller with the loss being proportioned 75% to the buyer and
25% to the seller
E. Both the buyer and seller with the loss being proportioned 25% to the buyer and 75%
to the seller
Which of the following is false regarding rights of an assignee and assignor?
A. Assignees essentially fill in for the assignor as the legal recipient of contractual
duties.
B. Assignees acquire the same rights as the assignor had.
C. Assignees are offered additional protection than assignors.
D. The obligor may raise any of the same defenses for nonperformance to the assignee
that he would have been able to raise against the assignor.
E. When an assignor transfers rights to an assignee, the assignor legally gives up all
rights she previously had to collect on the contract.
A patent protects a product, process, invention, machine, or a(n) ______.
A. trademark
B. copyright
C. plant produced by asexual reproduction
D. book that has not yet been submitted for copyright protection
E. idea
How did the appeals court rule in Steven A. B. Hannington v Trustees of the University
of Pennsylvania and Dr. Mark Bernstein, where the plaintiff, a student suing for alleged
wrongful expulsion, attempted to avoid a settlement agreement entered into by an
attorney acting on his behalf?
A. That the settlement agreement would be set aside because the attorney had exceeded
his authority.
B. That the settlement agreement would be set aside both because the attorney had
exceeded his authority and because the doctrine of apparent authority was inapplicable.
C. That the settlement agreement would be enforced based on the doctrine of apparent
authority, but only in part because the college was comparatively at fault in placing
unjustified reliance on the attorney’s authority.
D. That the settlement agreement would be enforced based on the doctrine of apparent
authority regardless of whether the attorney exceeded the scope of his actual authority.
E. That a jury should determine the enforceability of the settlement agreement based
upon its reasonableness.
The violation of a duty of care is called _______.
A. breach of responsibility
B. breach of statute
C. breach of duty
D. objectionable breaching
E. negligent breaching
Which is not a major obstacle to genuine assent?
A. Mistake
B. Misrepresentation
C. Undue influence
D. Ratification
E. Duress
A majority of citizens in a democracy can agree to permit certain authorities to make
and enforce rules describing what behavior is permitted and encouraged in their
community. These rules are what we refer to as the __________.
A. electoral college
B. community standard
C. democratic validation
D. stare decisis
E. law
Which of the following was the result on appeal in J-Mart Jewelry Outlets Inc., v.
Standard Design, the case in the text in which a creditor of a defunct corporation sued
the major shareholder seeking to pierce the corporate veil and hold the shareholder
personally responsible for corporate debts after the shareholder paid off his personal
credit cards using corporate funds and paid the corporation $1 for a new Cadillac?
A. That insufficient evidence existed that the shareholder controlled the corporation and
that the corporate veil could not be pierced.
B. That the corporate veil could not be pierced because the shareholder was not also an
inside director.
C. That the corporate veil could not be pierced because the shareholder was not either
an insider or outside director.
D. That the corporate veil could be pierced and that evidence supported abuse of the
corporate form.
E. That the corporate veil could be pierced regardless of whether evidence of abuse of
the corporate form existed because of the unfairness involved.
Murder is which classification of crimes:
A. Strict liability.
B. Misdemeanor.
C. Felony.
D. Petty offense.
E. Ordinance.
Used Car Commission. William promised to sell Helen’s car for her, but he wanted a
commission of 10%. Helen signed an instrument promising to pay William a 10%
commission if he sold her car. William assigned the agreement to Phil. Helen’s car was
sold and the buyer paid Helen. A dispute ensued between Helen and William regarding
whether William found the buyer or the buyer found Helen. When Phil asked Helen for
payment on the instrument, Helen refused. William, Helen, and Phil settled their dispute
without going to court, and Helen wrote Phil a check for $3,000. Phil endorsed the
check on the back planning to take it to the bank the next day. Unfortunately, Phil lost
the check that was found by Barry and cashed by the local bank. Barry then left town.
Which of the following is true regarding the instrument signed by Helen promising to
pay William a 10% commission if he sold her car?
A. The instrument is negotiable.
B. The instrument is not negotiable only because it is based on a condition.
C. The instrument is not negotiable only because Helen is not a merchant.
D. The instrument is not negotiable only because it is not for a sum certain.
E. The instrument is not negotiable because it is based on a condition and also because
it is not for a sum certain.
The federal regulation of used-car sales requires that __________.
A. odometer fraud is prohibited.
B. there are requirements regarding notification that a car is being sold “as is.”
C. the dealer may attach a label providing that the dealer needs no further inspection if
the car has already gone through a thorough inspection.
D. odometer fraud is prohibited; there are requirements regarding notification that a car
is being sold “as is;” and the dealer may attach a label providing that the dealer needs
no further inspection if the car has already gone through a thorough inspection.
E. odometer fraud is prohibited and there are requirements regarding notification that a
car is being sold “as is,” but the dealer is not allowed to indicate that no further
inspection is needed.
In South Dakota v. Dole, a federal law, which grants federal funding for state highways
only to those states in which the legal drinking age is 21, was upheld by the Supreme
Court under what legislative power?
A. The commerce clause
B. The power to collect taxes under Article 1
C. The privileges and immunity clause
D. The full faith and credit clause
E. Police power
A ______ is created when two parties enter into a contract with the intended purpose of
benefiting a third party.
A. third-party beneficiary
B. second-party beneficiary
C. first-party beneficiary
D. void
E. voidable
Which of the following are examples of securities?
A. Debentures and stocks
B. Warrants, bonds, and stocks
C. Stocks and bonds
D. Debentures, warrants, and stocks
E. Debentures, stocks, bonds, and warrants
___________________ is a person who controls, is controlled by, or is in common
control with the issuer.
A. An affiliate
B. An associate
C. A partner
D. A holder
E. A tipper
Which of the following is a person who orders the drawee to pay?
A. Maker
B. Acceptor
C. Drawer
D. Endorser
E. Promisor
Which of the following governs consumer fund transactions?
A. The Electronic Fund Transfer Act of 1978.
B. The Automated Transfer Act of 1990.
C. The Electronic Banking Act of 2000.
D. The Automated Fund Transfer Regulation of 2002.
E. The Uniform Money Services Business Act of 1990.
A(n) ______ beneficiary is a third party to a contract whom the contracting parties
intended to benefit directly from their contract.
A. intended
B. incidental
C. preferred
D. collateral
E. ancillary
If a credit card company sends a person an unsolicited card in the mail and the card is
stolen, for how much can the person be held liable to the credit card company?
A. $500
B. $300
C. $250
D. $200
E. 0
Which is false about a corporation?
A. Corporations cannot exist separately from their shareholders
B. Corporations are legal entities
C. Corporations have rights under the Fifth Amendment to the U.S. Constitution
D. Corporations can sue or be sued by others
E. Corporations are subject to state incorporation statutes
Bank accounts, stocks, and insurance policies are examples of which of the following
types of property?
A. Tangible
B. Intangible
C. Substantive
D. Productive
E. All of these
Beauty Shop Woes. When Janice went to work as a hair stylist in Rick’s beauty shop,
she entered into an agreement with Rick, whereby, if she left she would not work for
another beauty shop within 50 miles for 2 years. Rick trained Janice in a number of new
techniques. After nine months, Janice was offered a great job down the street at a new
beauty shop, quit Rick, and had a number of customers follow her down the street to
her new job. Rick claimed that she had signed a contract and had no right to go to work
at the new shop. Janice disagreed and told Rick that no judge in the country would
enforce such an agreement. Janice told Rick that she was more worried about a
customer, Treena, who was threatening to sue her because her hair turned green after
Janice worked on it. Janice agreed that Treena’s hair was damaged. Janice pointed out,
however, that she told Treena that odd results could result from a dye attempt, and she
required that Treena sign a contract releasing Janice from all liabilities before she did
anything with Treena’s hair. Treena, however, sued anyway. Which of the following is
true regarding the enforceability of the clause providing that Treena not hold Janice
liable for any bad results?
A. Such clauses are enforced so long as no duress was applied.
B. Such clauses are never enforced.
C. Such clauses are always enforced so long as the complaining party had the capacity
to contract.
D. Such clauses are enforced unless a person sustains a physical injury, and hair
damage would not qualify as a physical injury.
E. Such clauses might be enforced if the contract involves private businesses providing
nonessential services.
Which of the following is true regarding the relationship, if any, between negotiability
and an unconditional promise or order to pay?
A. There is no such requirement in order to find negotiability because a conditional
order to pay is sufficient.
B. A promise or order to pay must be specific and not be implied in order for
negotiability to be found.
C. Simply acknowledging a debt satisfies the negotiability requirement of an
unconditional promise to pay.
D. A common IOU is sufficient to satisfy the negotiability requirement of an
unconditional promise to pay.
E. Simply acknowledging a debt satisfies the negotiability requirement of an
unconditional promise to pay, and also a common IOU is sufficient to satisfy the
negotiability requirement of an unconditional promise to pay.