Assume an offeree mails a rejection to the offeror on November This rejection arrives at
the offeror’s place of business on November In the meantime, on November 4, the
offeree sends the offeror an acceptance that arrives November Which of the following
statements correctly describes the situation?
a. There was no contract because when an acceptance follows a prior rejection, the first
communication to be received by the offeror is the effective one.
b. There was a contract since the acceptance was mailed prior to the time the rejection
was received.
c. There was no contract because the rejection was mailed first.
d. There was no contract because the acceptance was mailed more than three days
subsequent to the rejection.
A number of states have included social guests in the invitee category, although they
have traditionally been labeled as licensees.
a. True
b. False
Which of the following is true of the “order to pay” requirement of a negotiable
instrument?
a. It is an instruction to pay and must be more than an authorization or request.
b. It must identify with reasonable certainty the person to be paid.
c. The addition of words of courtesy, such as “please pay,” will not destroy the
negotiability.
d. All of these.
A description of the finance charges that said “1.8% per month compounded daily”
would comply with the rules of the Truth-in-Lending Act.
a. True
b. False
“Doing business” within a particular state will subject a foreign corporation to the
litigation, regulation, and taxation of that state.
a. True
b. False
Fixit Co., a four-person business, employs Wesley as a full-time mechanic. One day
while welding a frame modification on a sports car, Wesley paid no attention to a
clearly visible oil leak dripping from the engine compartment of the car. The welding
torch ignited the oil causing a fire in which Wesley was badly burned. Which of the
following BEST describes the rights of the parties?
a. Fixit is liable to Wesley under a workers’ compensation statute despite the fact
Wesley may have been contributorily negligent when he ignored the oil leak.
b. Wesley cannot recover workers’ compensation since federal law requires that an
employer have at least 15 employees before he must provide workers’ compensation
benefits.
c. Fixit is not liable to pay Wesley workers’ compensation since Wesley fell below a
recognized standard of care by auto mechanics.
d. Wesley cannot recover workers’ compensation benefits, but can sue Fixit for failing
to provide a safe working environment.
A party to a contract that is unenforceable because of the statute of frauds may be able
to recover in restitution the benefits conferred on the other party in reliance on the
unenforceable contract.
a. True
b. False
Clara types a letter to David setting forth the terms of their contract that falls within the
statute of frauds. At the end of the letter, she types her name but does not sign her
signature to it. If David wants to use the letter to satisfy the writing requirement, he
may do so.
a. True
b. False
Lucille bought a new lawn mower on sale at a local discount store. The mower did not
come with an instruction book, nor did it have warning labels placed near dangerous
parts of the mower. If Lucille injures herself while using this mower, she can claim that
she purchased a defective product.
a. True
b. False
Although he knows the ring is really valuable, Alex tells Mona her ring contains
artificial gems, but he would be
willing to buy it for $50. Mona agrees. Alex quickly takes the ring to Hanna’s Antique
Jewelry Shop and sells it for
$1,000. A month later, Mona sees her ring on sale for $2,000 at the shop. Is Mona
entitled to get the ring back?
a. Yes, she is the true owner of the ring since she was defrauded.
b. Yes, since Alex had void title to the ring.
c. No, since Alex had voidable title to the ring and Hanna was a good faith purchaser.
d. No, since Mona was an entruster.
An involuntary petition for bankruptcy can be filed with respect to a:
a. nonprofit charitable organization.
b. partnership that invests in real estate.
c. life insurance company.
d. wheat farmer.
A promise to pay $1,000 a year to a local police officer to not have your store
vandalized is legally unenforceable under the rule that makes performance of a
pre-existing legal obligation legally insufficient consideration.
a. True
b. False
After the formation of a limited partnership, the admission of additional general
partners can only be accomplished with the written consent of all partners.
a. True
b. False
The common law “mirror image” rule applies to an offer and the acceptance of that
offer in a contract for the sale of goods.
a. True
b. False
Which of the following is not a reason for the use of negotiable instruments?
a. Reduction of the chance of forgery or material alteration
b. Convenience
c. Elimination of the risk of loss or theft of cash
d. Reduction of cost to the federal government of maintaining an adequate supply of
currency
If a promisor intends her promise as a joke, whether or not the promisee as a reasonable
person should understand it to be such, the promise is not an offer.
a. True
b. False
Conduct on the part of the plaintiff which falls below the standard to which he should
conform for his own protection and which cooperates with the negligence of the
defendant in bringing about the plaintiff’s harm is:
a. comparative negligence.
b. contributory negligence.
c. resipsaloquitur.
d. voluntary assumption of the risk.
Registration of a foreign limited partnership is required in order to:
a. go into business in another country.
b. defend the partnership in court.
c. collect contributions from foreign investors.
d. None of these.
A testator with capacity and intent can create an irrevocable will.
a. True
b. False
Wanda has a new idea for a novel, which she won’t have time to write until next year.
She may protect it by means of:
a. patent.
b. copyright.
c. registration of the idea.
d. nothing. An idea that has not yet been developed into a tangible form cannot be
protected.
Defenses to an action in strict liability include:
a. contributory negligence only.
b. contributory negligence and comparative negligence.
c. comparative negligence only.
d. express assumption of risk under the Third Restatement and, in some states,
comparative negligence.
The 1936 Act prohibiting price discrimination in interstate commerce involving
commodities of like grade and quality is the:
a. Sherman Act.
b. Clayton Act.
c. Robinson-Patman Act.
d. Federal Trade Commission Act.
Social Security now has four major benefit programs: OASI, DI, Medicare, and SSI.
a. True
b. False
Which of the following is not a characteristics of a corporation?
a. It has perpetual existence.
b. It is a legal entity of its own.
c. It is able to be sued and to sue.
d. It is usually managed by its shareholders.
If the original agreement was oral, a subsequent oral modification, which brings the
resulting contract within the statute of frauds, is binding on and enforceable by the
parties.
a. True
b. False
A partner cannot assign his interest in the partnership without dissolving the
partnership.
a. True
b. False
David is a director on a board of a corporation that is covered by the federal securities
laws. He buys 1,000 shares of stock in the corporation based upon information he has
received as a director. The purchase is:
a. valid provided no fraudulent statements were made to the person from whom he
purchased the shares.
b. invalid.
c. voidable regardless of whether a public announcement was made.
d. valid provided the purchase occurred after a public announcement of the information.
The Federal Trade Commission Act allows the FTC to:
a. determine what constitutes deceptive advertising practices.
b. prohibit all advertising in certain professions.
c. require advertisers to contribute to a fund to reimburse injured consumers.
d. require the independent testing of consumer goods.
A partner has____authority to hire and fire employees whose services are necessary to
carry on the business of the partnership.
a. actual implied
b. apparent
c. no
d. ostensible
If Bill tells Sara that he will give her two days to decide if she wants to buy his car, he
cannot sell it to anyone else during that time.
a. True
b. False