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When does title to property pass?
A. When the parties intend.
B. When a contract is made.
C. When physical possession is obtained.
D. Twenty-four hours after possession is obtained.
E. Three days after a contract is signed.
"Missed Payments." Robin, who loved water sports and relaxing in hot tubs, purchased
a hot tub on an installment plan and was to pay the seller monthly. Her last payment
was made on January 2, 2008. After several attempts at collection, the seller brought a
lawsuit against her for sums remaining on the account on January 3, 2013. Robin
defended on the basis that the statute of limitations had run. The seller claimed,
however, that adequate time remained because the UCC applies a flexible statute of
limitations; and, at any rate, sellers have at least five years in which to sue. Robin also
arranged to purchase a personal watercraft. By contract with the seller, Robin was to
pay an initial deposit within 10 days of the sale at which point she could take
possession of the watercraft making monthly payments thereafter. Recognizing that a
personal watercraft would not allow her to invite all her friends on lake trips, a couple
of days after purchasing the personal watercraft, Robin purchased a pontoon boat.
Because the seller of the pontoon boat demanded cash, Robin paid the total sales price
prior to delivery. Unfortunately, when the pontoon boat was delivered, Robin found that
it had a less powerful motor than the seller represented. Robin notified the seller of the
problem, but the seller claimed to have no obligation to remedy the problem. Although
recognizing that she paid too much for it, Robin decided that since lake season was
underway, she would keep the pontoon boat. Because Robin paid full price for the
pontoon boat, she was unable to pay within 10 days the deposit on the personal
watercraft. The seller refused to deliver the watercraft, and sold it to another customer.
Robin informed the seller that the refusal to deliver the watercraft was wrongful and
that she was going to exercise her right to cover.
Which of the following is true regarding Robin's options in regard to the pontoon boat?
A. She has no options in regard to recovery from the seller because she retained the
pontoon boat knowing that the seller refused to grant relief.
B. She has only 90 days in which to return the pontoon boat and seek either specific
performance or monetary damages to give her the benefit of the bargain.
C. She has only one year in which to return the pontoon boat and seek specific
performance, but she cannot sue for damages.
D. She has only one year in which to return the pontoon boat and seek monetary
damages to give her the benefit of the bargain, but she may not seek specific
performance.
E. She may keep the pontoon boat and seek monetary damages to give her the benefit of
the bargain.
"Wild Things." Image Company, a company specializing in photography of exotic and
wild animals, took out a life insurance policy through ABC Insurance on its president
Bruno and also on a company-owned jeep that he drove. Bruno got a better offer from
Wild Things Company, another company specializing in the photography of exotic
animals, and went to work for them. He parted on good terms with Image Company and
taking the jeep with him under the mistaken idea that the jeep was part of his severance
benefits. Neither of the insurance policies was cancelled by Image. Unfortunately, while
photographing a lion for Wild Things Company, Bruno was attacked and eaten. His jeep
was then stolen by an unknown bystander who apparently saw the attack and took the
opportunity to take the jeep. Image Company had been in the process of contacting
Bruno in an attempt to obtain possession of the jeep but had not reacquired it at the time
of his death. Image Company had renewed the policy on the jeep reaffirming to the
insurer that its purpose was for use by Image employees because Image planned to have
possession of the vehicle shortly. Image Company filed a claim to collect on the life
insurance policy and also on the vehicle policy. ABC Insurance denied both claims.
Which of the following is true regarding whether ABC Insurance will be required to
provide coverage on the jeep?
A. ABC will likely not be required to provide coverage on the jeep because Image made
material misrepresentations in the renewal of the policy that would have prevented its
renewal.
B. ABC will likely be required to provide coverage on the jeep because any
misrepresentations made were innocently made in the belief that the jeep would be
returned soon.
C. ABC will not have to provide coverage because Image did not have an insurable
interest in the jeep.
D. ABC will have to provide coverage unless Bruno had already obtained his own
insurance on the vehicle because one vehicle may only be insured under one policy.
E. ABC will not likely be required to provide coverage because Bruno's new employer
was liable under workers' compensation.
Which of the following refers to the right of a principal to sue an agent to recover any
amount assessed against the principal for a breach of contract caused by the agent's
negligence?
A. Reformation
B. Indemnification
C. Reimbursement
D. Contribution
E. Recoupment
"Hair Stylist Woes." Maryann, a college student, went to see her hair stylist, Candy.
Maryann who had black, curly hair, requested straight, blond hair. Candy told her that
she could make that change, but that there would be significant upkeep involved. Candy
made the change, but Maryann did not do the upkeep required. She also falsely claimed
that Candy did not do what Maryann asked her to do, that Candy lied to her, and that
Candy was professionally incompetent. Maryann made the statements to friends of hers.
She also wrote an editorial in her college newspaper to the effect that Candy's shop
should be avoided at all costs because Candy was incompetent. In fact, Candy was a
good hair stylist and enjoyed a good reputation up until the time that Maryann started
her criticism. Candy threatened to sue Maryann for defamation, but Maryann told
Candy that Candy could not prevail because Candy could not prove loss of income.
Candy had to admit that while her reputation had been damaged somewhat and she felt
embarrassed and humiliated, the damage was primarily among the college population.
Her income kept increasing from other segments of the community, and she had
suffered no net loss. All her appointment times were booked and she could do no more
business.
As far as the editorial is concerned, which of the following is true in regards to
Maryann's statement that Candy cannot recover because she cannot show loss of
income?
A. Maryann is correct.
B. Maryann is correct only if she can establish that she did not intend to cause
economic loss to Candy.
C. Maryann is incorrect because her actions would be considered liable per se.
D. Maryann is incorrect because general damages would be presumed.
E. Maryann is incorrect because Candy has proven special damages.
"Disappointing Boat Purchase." Sally went to purchase a new boat. She wanted a boat
that she could use in both a nearby lake and also a boat that she could take to the coast
for use in ocean waters. Sally saw a boat that she liked and told the sales representative
at the dealership that she wanted a boat for both lake usage and ocean usage. She told
the sales representative that she particularly liked a boat that they were looking at in the
showroom. The representative told her that the dealership had the best boats in the state,
that the engine was great in the boat she liked, and that she would have no problem with
steering or with the carburetor. He said nothing at all regarding whether or not the boat
was appropriate for ocean waters. Sally purchased the boat. She immediately began to
have significant problems with it. The engine did not perform adequately, and there
were problems with the steering and carburetor among other things. Additionally, after
Sally attempted to take the boat out into ocean waters and had significant difficulty, she
discovered that it was not an ocean-going vessel. It was only appropriate for lake usage.
Without considering any statements made by either the salesperson or Sally regarding
uses for the boat, what type of warranty did the seller make by merely selling the boat?
A. The sale itself constituted an implied warranty of merchantability but not an express
warranty or a warranty of fitness for a particular purpose.
B. The sale itself constituted a warranty of fitness for a particular purpose but not an
express warranty or an implied warranty of merchantability.
C. The sale itself constituted an express warranty but not an implied warranty of
merchantability or a warranty of fitness for a particular purpose.
D. The sale itself constituted both an express warranty and a warranty of fitness for a
particular purpose but not an implied warranty of merchantability.
E. The sale itself constituted both an express warranty and an implied warranty of
merchantability but not an express warranty.
Chicago School theorists argue that the central, and perhaps only, purpose of antitrust
law is to encourage economic ____.
A. Control
B. Regulation
C. Efficiency
D. Competition
E. Success
In order to be upheld in court, an agency's fact finding must be supported by which of
the following?
A. Substantial evidence
B. A rational basis
C. Any evidence
D. Material evidence
E. Non-hearsay evidence
Compliance with federal laws may lead to the defense that use of state tort law is
______________ by a federal statute designed to ensure the safety of a particular class
of products.
A. Preempted
B. Complimented
C. Refuted
D. Extinguished
E. Upheld
Which of the following is a mark used in conjunction with a service?
A. Product trademark
B. Collective mark
C. Certification mark
D. Service mark
E. Physical activity mark
Which of the following is needed for diversity-of-citizenship?
A. Only that the plaintiff not reside in the same state as the defendant.
B. Only that the plaintiff reside in the same state as the defendant.
C. Only that the controversy concern an amount in excess of $75,000.
D. Only that the controversy concern an amount in excess of $100,000.
E. That the plaintiff and the defendant reside in different states and that the controversy
concerns an amount in excess of $75,000.
"Convertibles." Barry, a new car dealer, advertised that a new brand of convertible
called Wind would be available at his dealership for the price of $10,000 each. He had
only three Wind vehicles, however; and when those were sold, he tried to convince
shoppers to purchase a much more expensive new convertible at a price of $25,000.
Kathy, a customer who decided to purchase one of the more expensive vehicles needed
financing in order to do so. She had $10,000 to pay on the car and sought a loan from
ABC Bank for the remainder. She wanted the loan for a specific amount of time. ABC
Bank offered her the loan and she agreed. The only information she received from ABC
Bank was confirmation that she borrowed $15,000 at an 8% interest rate. After
receiving several complaints, the Federal Trade Commission disapproved of Barry's
action in regard to the Wind vehicles. After appropriate proceedings, the Commission
proceeded to issue a cease-and-desist order involving Barry's misleading advertisement
in regard to Wind vehicles and also in regard to any other vehicles he offered for sale.
Which of the following terms references the cease-and-desist order entered by the
Federal Trade Commission involving not only Barry's sales of Wind, but also his sales
of all other vehicles?
A. A multiple cease-and-desist order
B. A multiple-product order
C. A combined order
D. A superlative order
E. An exceptional order
"Overextended Debtor." For his home, Dennis purchased a big screen television from
ABC Electronics and financed the purchase through ABC Electronics. Later, because
Dennis had bought a boat, a new car, an expensive engagement ring for his girlfriend,
and some other items, he was unable to continue making payments on the television.
The manager from ABC Electronics called 60 days after the sale and asked Dennis to
return the television. Dennis refused on the basis that ABC Electronics never perfected
its interest in the television. He also explained that he had later granted a secured
interest in the television along with his other goods to XYZ Credit in return for a loan.
No financing statement was filed on behalf of ABC Electronics although XYZ Credit,
with no knowledge of any interest of ABC Electronics, did file a financing statement.
Which of the following is true regarding priority in rights to the computer?
A. The bank had priority because the computer was considered after-acquired property
properly covered by the initial security interest.
B. XYZ Electronics had priority because XYZ Electronics had a purchase-money
security interest in the computer.
C. XYZ Electronics had priority only if XYZ Electronics perfected its security interest
within 10 days of the purchase.
D. XYZ Electronics had priority only if XYZ Electronics perfected its security interest
within 20 days of the purchase.
E. The bank had a security interest in the computer because it perfected its security
interest before XYZ Electronics did so.
Which of the following are damages identified before the breach occurs?
A. Nominal damages
B. Compensatory damages
C. Reliance damages
D. Liquidated damages
E. Consequential damages
A[n] ______ allows a person to transfer property to another person with the property to
be used for the benefit of a third person.
A. Probate
B. Trust
C. Command
D. Executor
E. Allocation
"Fighter." Willy, a ninety-year-old wild bronco rider in the rodeo, had a will leaving all
his possessions to a girlfriend, Linda, age twenty-two. During a rodeo, Willy was placed
on a particularly wild bronco named "Fighter." During the ride, Grumpy the clown
yelled out to Willy that Linda had suggested that particular horse. Willy was very
grumpy about that because he was having trouble controlling Fighter. Nevertheless,
Willy prevailed and collected the prize. Willy was so excited that he felt himself having
a heart attack. Just before he died, he yelled out, "Linda, you had me put on that crazy
horse, and I'm revoking my will. I'm dying, and I'm leaving everything to my other
girlfriend, Candy." A number of witnesses heard his statement; and Grumpy, who had
always liked Candy more than Linda, promptly wrote down Willy's statement. Linda
knew nothing about Candy and was very upset. She told Candy that Candy could have
nothing because Willy's written will was still in effect. She also told Candy that Willy
was suffering from a mental illness and did not know what he was doing when he stated
that Candy should take everything. Willy's daughter, Monique, age 65, also entered the
discussion stating that Linda had unfairly coerced Willy into writing a will leaving her
everything.
Assuming he was of sound mind, which of the following is true regarding the effect of
Willy's statement that Candy should take everything?
A. Because a will must be in writing, his statement has no effect.
B. Because a will is not usually required to be in writing, his statement was effective to
revoke any prior will.
C. His statement was ineffective to revoke his prior will only because he was angry
when he made it.
D. His statement was ineffective to revoke his prior will only because he believed he
was dying at the time he made it.
E. His statement would likely be upheld as an oral will because he made the statement
during his last illness in front of witnesses who later wrote down his wishes.
Paul and Mary have an agreement that Mary will buy Paul's house. Later Mary orally
assigns the right to buy the house to Ally, one of Paul's former girlfriends. When Ally
shows up with the money, Paul says "No way! You ditched me to date Rick. I'm not
ever letting you get anything from me!" Which of the following is true in regard to the
dispute between Paul and Ally?
A. Ally can enforce the assignment only if the agreement that Paul and Mary had was in
writing.
B. Ally can enforce the assignment.
C. Ally cannot enforce the assignment because it was not in writing.
D. Ally cannot enforce the assignment because Paul did not specifically grant Mary the
power to assign the contract.
E. Ally cannot enforce the assignment because assignments to purchase property cannot
ever be assigned for public policy reasons.
Which of the following is true regarding a secured party's interest in proceeds?
A. A secured party automatically has an interest in proceeds.
B. A secured party has an interest in proceeds only if the proceeds are taken into the
possession of the secured party.
C. A secured party has an interest in proceeds only if a financing statement is filed on
the proceeds.
D. A secured party has an interest in proceeds only if the secured party has a signed
statement from the debtor granting an interest in proceeds.
E. The secured party may not acquire a security interest in proceeds.
Which of the following is considered a debtor eligible for Chapter 7 relief in
bankruptcy?
A. Banks
B. Railroads
C. Health maintenance organizations
D. Partnerships
E. Insurance companies
"Miracle Face." Tara developed a great new type of face cream guaranteed to provide
total sun protection, remove wrinkles, and result in anyone looking at least ten years
younger. Her product, Miracle Face, became extremely popular in the U.S., where she
has several shops, and also in other countries to which it was shipped. Tara has a
number of individuals in other countries seeking to team with her in selling Miracle
Face. Sam, a citizen of Mexico, asks that she grant him permission to use her name and
any associated trademarks, and allow him to sell Miracle Face in Mexico. Tara has an
offer, however, from another Mexican citizen, Maria. Maria proposes that she and Tara
associate together, open a business to sell Miracle Face, and share profits and
management responsibilities. Tara has also thought about opening her own business in
Mexico in conformity with Mexican laws. She would then, hire employees in Mexico to
sell the product. Another matter Tara has considered is simply arranging for her
products to be shipped to Mexico for sale, and she is interested in the effect of any trade
agreements in effect between the U.S. and Mexico.
If Tara simply opens her own business in Mexico in conformity with Mexican laws and
hires employees in Mexico to sell the product, she would have opened a[n] ______.
A. Franchise
B. Distributorship
C. Joint venture
D. Licensing subsidiary
E. Affiliate
Which of the following occurs when parties agree that they simply wish to discharge
each other from their mutual obligations and therefore rescind or cancel the contract?
A. Accord and satisfaction
B. Novation
C. Substituted contract
D. Mutual rescission
E. Alteration
Under the Sarbanes-Oxley Act, which of the following is true regarding the destruction
of documents in a federal bankruptcy investigation?
A. The destruction of documents in a federal bankruptcy investigation is a misdemeanor
with possible sentences of up to 364 days in jail.
B. The destruction of documents in a federal bankruptcy investigation is a felony with
possible sentences of up to 364 days in jail.
C. The destruction of documents in a federal bankruptcy investigation is a felony with
possible sentences of up to 5 years in jail.
D. The destruction of documents in a federal bankruptcy investigation is a felony with
possible sentences of up to 20 years in jail.
E. The destruction of documents in a federal bankruptcy investigation is a felony with
possible sentences of life imprisonment.
"Hair Stylist Woes." Maryann, a college student, went to see her hair stylist, Candy.
Maryann who had black, curly hair, requested straight, blond hair. Candy told her that
she could make that change, but that there would be significant upkeep involved. Candy
made the change, but Maryann did not do the upkeep required. She also falsely claimed
that Candy did not do what Maryann asked her to do, that Candy lied to her, and that
Candy was professionally incompetent. Maryann made the statements to friends of hers.
She also wrote an editorial in her college newspaper to the effect that Candy's shop
should be avoided at all costs because Candy was incompetent. In fact, Candy was a
good hair stylist and enjoyed a good reputation up until the time that Maryann started
her criticism. Candy threatened to sue Maryann for defamation, but Maryann told
Candy that Candy could not prevail because Candy could not prove loss of income.
Candy had to admit that while her reputation had been damaged somewhat and she felt
embarrassed and humiliated, the damage was primarily among the college population.
Her income kept increasing from other segments of the community, and she had
suffered no net loss. All her appointment times were booked and she could do no more
business.
Statements made by Maryann to her friends that were defamatory of Candy are what
type of defamation?
A. Libel but not slander.
B. Slander but not libel.
C. Both libel and slander.
D. No tort was committed because the statements were made only to friends of
Maryann, not to business acquaintances of Candy.
E. No tort was committed because the falsehood involved matters of appearance not
business-related matters.
"Prudence's Imprudence." Unfortunately, Prudence failed to act prudently. She had a
bad day after failing a business law test and breaking up with her boyfriend. While
drinking a mocha and talking on the cell phone with her best friend, she slammed into
the back of George's car. Shortly thereafter she received notice of a lawsuit setting forth
George's claims for personal injury and property damage. Prudence was very busy
studying for her next business law test and hanging out with her boyfriend with whom
she had reconciled. Also, she just did not feel like dealing with a pesky lawsuit. Several
months later, Alice, a new agent with the insurer called Prudence and told Prudence that
she had just heard something about a lawsuit from the plaintiff's lawyer. Alice told
Prudence that although investigation would be difficult after so many months, she
would like to talk with Prudence because the trial was scheduled for the next week.
Prudence told Alice that she had no time to meet at the moment and that just before
court, she would meet with the lawyer the company appointed to represent her. Alice
told Prudence that the insurance company was going to deny coverage. Alice also told
Prudence that vehicle insurance did not typically provide for legal representation and
that, in any event, no lawyer would be provided. Finally, Alice told Prudence that her
insurance was cancelled immediately because she was a real jerk and failed to help, that
insurance would not pay for accidents that were the fault of Prudence anyway, and that
the insurer wanted nothing more to do with her.
Which of the following is true regarding Alice's complaint that Prudence failed to help?
A. Prudence had a duty to cooperate with the insurer.
B. Prudence's only duty was to show up for court; otherwise she had no duty to assist
the insurer.
C. Prudence's only duty was to show up for a court and for any depositions for which
she received a subpoena; otherwise, she had no duty to cooperate with the insurer.
D. Prudence had a duty to assist the insurer and to provide a share of funds to help the
insurer in defending her claim.
E. Prudence had a duty to cooperate with the insurer only because it appears that the
accident was her fault.
The statement, "Pay to Constance only," with the endorser's signature is an example of
which of the following types of endorsements?
A. Conditional endorsement.
B. Trust endorsement.
C. Endorsement to prohibit further endorsement.
D. Bearer endorsement.
E. Conditional bearer endorsement.
Which of the following is true regarding the termination of an offer based on a
rejection?
A. Regardless of how long an offeror states that an offer will be held open, once the
offeree rejects it, the offer is terminated.
B. Even on rejection, an offer is not terminated until the expiration of the time period
for which it was originally to remain open.
C. An offer must remain open for at least two days before it is terminated following a
rejection by an offeree.
D. An offer must remain open for at least three days before it is terminated following a
rejection by an offeree.
E. An offer must remain open for at least one day before it is terminated following a
rejection by an offeree.
Which of the following suggests that people who are insulated from risk sometimes
behave differently?
A. Moral hazard
B. Negligence
C. Strict liability
D. Coverage insulation
E. Coverage protection
Which of the following is false regarding the implied authority of partners?
A. Partners generally have less authority than typical agents.
B. The implied authority of partners is usually determined by the nature of the business.
C. Implied authority permits partners to enter into agreements necessary to carry on
partnership business.
D. A partner has the authority to purchase goods necessary to perpetuate the business.
E. A partner does not have implied authority to sell partnership property without the
consent of all other partners.
Bob is a trained exterminator who received yearly instruction regarding precautions that
should be taken in relation to use of pesticides. After being told that he suffered
allergies and other ailments based on exposure to the pesticides, Bob sued the
manufacturers of the pesticides at issue based on a failure to warn theory. The
defendants' best argument based on Bob's prior training is the ______ defense.
A. Trained technician
B. Sophisticated-user
C. Knowledgeable user
D. Unharmed user
E. Workers' compensation
Which of the following was the result on appeal in John Coomer v. Kansas City Royals
Baseball Team, the case in the text in which the plaintiff sued after being hit in the eye
by a hotdog thrown into the stands by a team mascot during the "Hotdog Launch," a
customary activity during games?
A. The court affirmed a jury verdict in favor of the defense on the basis that the plaintiff
assumed the risk of injury by hotdog because the tossing of the hotdogs was a
customary event of which the plaintiff was or should have been aware before attending
the game.
B. The court dismissed the case on the basis that injuries at baseball games are an
inherent part of the sport whether by baseball or by hotdog.
C. The court dismissed the case on the basis that through a click agreement the plaintiff
expressly agreed not to sue for any injuries when ordering the tickets through the
Internet.
D. The court affirmed a jury verdict finding for the defense on the basis that the plaintiff
did not immediately report injuries to stadium officials.
E. The court found that the jury was improperly instructed on the assumption of the risk
defense and that the plaintiff did not assume the risk of injury by hotdog by attending
the game.
The Fair Labor Standards Act mandates that employees, who are not exempt, who work
more than ______ hours in a week be paid no less than one and one half times their
regular wage for all the hours beyond ______ that they work during a given week.
A. 30; 35
B. 35; 40
C. 40; 40
D. 45; 45
E. 50; 50
"Dress Shop Problems." Susie, who has a ladies' dress shop, reached an oral agreement
with Kim, a wholesaler, to purchase 100 dresses for $80 each, with the dresses to be
delivered within 30 days. Kim later orally agreed to a modification whereby she would
add ten belts to go along with certain dresses at no extra charge. Kim did so because she
wanted to maintain Susie's good will. Susie sent Kim a memo confirming their oral
agreement, including the modification, but heard nothing. When the dresses did not
arrive within 30 days, Susie checked with Kim. Kim told her that their agreement was
no good because Kim never signed anything and that the UCC does not apply in the
retail arena.
Which of the following is true regarding the modification to the agreement involving
the belts added to the order at no extra charge?
A. The modification is not enforceable because the initial contract involving the sale of
the dresses is not enforceable.
B. The modification is not enforceable because no additional consideration was given.
C. The modification is not enforceable unless it can be shown that the dresses were
designed to have a belt.
D. The modification is enforceable because although the UCC requires consideration
for modifications, the desire to maintain good will satisfies the requirement of
consideration.
E. The modification is enforceable because the UCC requires only that modifications be
made in good faith.
Which analysis, if any, is applied to territorial and customer restrictions imposed by a
manufacturer on a retailer?
A. Both territorial and customer restrictions are generally analyzed under the
rule-of-reason test.
B. Both territorial and customer restrictions are generally analyzed on a per se basis.
C. Territorial restrictions are analyzed under the rule-of-reason test, while customer
restrictions are analyzed on a per se basis.
D. Customer restrictions are analyzed under the rule-of-reason test, while territorial
restrictions are analyzed on a per se basis.
E. Neither territorial nor customer restrictions are analyzed on any basis because both
have been ruled legal in all cases.
Which of the following was the result in Country Club Dist. Homes Assn. v. Country
Club Christian Church, the case in the text in which the defending church wanted to use
three lots in a subdivision for a parking lot, and the subdivision homeowners'
association sued to enforce a restrictive covenant providing that lots in the subdivision
would only be sued for private residences?
A. The court ruled that the church was not subject to the restrictions because it was a
nonprofit entity.
B. The court ruled that the church was not subject to the restrictions because it was a
religious entity.
C. The court ruled that the church was not subject to the restrictions because the church
itself was not a private residence but was allowed to remain, and it was clearly entitled
to sufficient parking.
D. The court ruled that the church was barred by the restrictive covenant from using the
lots as a parking lot.
E. The court ruled that the church was allowed to proceed because using the lots for
parking was the highest and best use for the property.
