exam 3
A "draft drawn on a bank and payable on demand" is a: a. check b. note c. certificate of deposit d. deposit slip e. promissory note
A
A good is tangible if it: a. can be seen and touched b. can be seen, but not necessarily touched c. can be found in more than one state d. is a service that anyone can perform without special training e. is inexpensive
A
A transfer of contract rights to another party is: a. assignment b. reenlistment c. delegation d. termination e. reassignment
A
Article 2 of the UCC covers the sale of: a. goods b. services c. investment securities d. goods and business services e. all of the other choices
A
In DeRosier v. Utility Systems of America, Inc. where DeRosier sued Utility Systems of America, Inc. for dumping too much fill dirt on his property, the appeals court held that: a. the trial court was right to award DeRosier general damages so he could have the excess dirt removed, but wrong to award additional consequential damages since there was no claim for delay damages in the pleadings or discovery b. the trial court was wrong to award DeRosier general damages so he could have the excess dirt removed, but right to award additional consequential damages since there was a claim for delay damages in the pleadings or discovery c. the trial court was wrong to award any damages to DeRosier d. the trial court was correct is all its awards to DeRosier e. DeRosier's permit for dirt dumping was invalid
A
In Deschamps v. Treasure State Trailer Court, Ltd. where Deschamps was sued after he bought a mobile home trailer park and then stopped making payments on it because he claimed the seller told him the water system was in good condition when in fact it required $400,000 of repairs, the supreme court of Montana held that: a. Deschamps had to make the full payment because his claims of reliance on verbal information were barred under the parol evidence rule b. Deschamps did not have to make the full payment because his claims of reliance on verbal information were barred under the parol evidence rule c. Deschamps should not have to make the full payment because there was a lack of agreement in the contract d. Deschamps should not have to make the full payment because there was a lack of consideration in the contract e. the original contract was void
A
In Fordyce Bank and Trust v. Bean Timberland, the bank lent Bean money to buy timber from landowners. Bean gave the bank security interests in the timber, which he sold to lumber companies that milled the logs into lumber. When Bean defaulted on the loan, the bank tried to collect from the lumber companies because it had a secured interest in the timber. The courts held that the bank: a. gets nothing from the timber companies, they were not responsible for the security interests and breached no duty to the bank b. collect the unpaid balance of the loan from the timber companies, depending on how much secured timber they bought from Bean c. collect the unpaid balance of the loan from the timber companies, which are each jointly and severally responsible under UCC 4-320, which sets strict standards for security interests d. collect the unpaid balance of the loan from the timber companies only if it can show that the companies had been notified by the bank each time they accepted timber from Bean e. none of the other choices
A
In Hinson v. N&W Construction, where Hinson submitted the low bid to N&W for plumbing work to be part of a larger construction project by N&W, but then refused to do the work when construction was started by N&W, the court held that: a. Hinson was liable for the value of the contract because N&W relied on his verbal quote of $92,000 b. Hinson was not liable for the value of the contract because N&W should not have relied on his verbal quote c. a verbal quote cannot be a promise d. Hinson was not liable because there was not a contract due to lack of proper acceptance by N&W e. none of the other choices
A
_____ requires that directors of a corporation place the interests of the corporation before their own interests. a. fiduciary duty of loyalty b. duty of care c. fiscal duty of loyalty d. real duty of loyalty e. preferential duty
A
. A commercial instrument where one party has a legal obligation to pay another party a certain sum of money and involves a maker and a payee only is called: a. a check b. a note c. a debit d. a draft e. a certificate of deposit
B
. A contract made by a person with partial capacity is: a. not enforceable b. enforceable unless the person with partial capacity exercises the right to disaffirm the contract c. enforceable in some states, but not others d. enforceable only if the other party has complete capacity to contract with persons of partial capacity e. not enforceable unless it deals with property worth less than $100 and there is a written agreement
B
. A counteroffer ____ the original offer. a. completes b. terminates c. enhanced d. improves e. increases
B
A California winery shipped its Rotgut Red wine to the House of Wines. The wine was improperly bottled, causing the wine to blow its corks and spew wine all over Wines' carpeting. In Wines' suit against the winery, the damages to the carpet will be considered: a. incidental damages b. consequential damages c. exemplary (punitive) damages d. part of any of the other choices e. none of the other choices
B
If an instrument is found to be negotiable under the UCC, it may be freely traded without concern for any existing contract responsibilities if the instrument is in the possession of a holder in due course. To be a holder in due course, one must: a. accept the transfer of the instrument with the same contract responsibilities as the person assigning the instrument b. give value for the instrument, accept it without knowledge of any defects (for example, that it is overdue), and take the instrument in good faith c. present himself as having knowledge or skill specialized to the transaction and regularly deal in that kind of transaction d. demonstrate that the instrument falls within the scope of Article 3 of the UCC, that the transaction is not for the sale of a tangible product, and that any defects in the title to the goods involved in the transaction is not known to the party e. none of the other choices, there are no special requirements
B
In Certified Fire Protection v. Precision Construction, Precision accepted a winning bid from Certified for it to install a fire suppression sprinkler system. Later the two parties got into a fight over some details in the contract, which was never signed. The courts held that the contract was: a. a binding contract had been formed, even though only one of the parties had signed the agreement b. a binding contract was never formed because the parties did not agree on some major terms needed for an agreement c. there was no binding contract because Certified failed to accept in the manner prescribed in the contract that was offered d. there was no binding contract because Precision failed to make the initial payment needed to bind Certified e. there was no binding contract because the document "shocked the conscience of the court"
B
In Lee v. R&K Marine, where a boat that Lee bought became unusable after only three years when it fell apart, and the seller had expressly disclaimed all warranties, the court held: a. Lee was out of luck as warranties do not apply to personal watercraft b. Lee was out of luck because the seller properly disclaimed warranties c. the seller could not disclaim warranties for reasonable repairs d. the seller could not disclaim warranties that evade industry standards of quality e. none of the other choices
B
In Orkal Industries v. Array Connector, where Orkal bought parts from Array by sending an order form, but Array confirmed with its own form that contained different terms. Orkal did not object to different terms until litigation arose later at which point the added terms mattered. The courts held that under UCC: a. the buyer, Orkal, controlled the terms, so the original order form controls b. the buyer, Orkal, controlled the terms, so the original order form controls; Array could have forced a change by requiring Orkal to recognize its different terms, but it failed to do so c. the seller, Array, controlled because Orkal did not object to the change in terms when the contract was formed d. the seller, Array, controlled because under UCC 2-207, a sellers terms always control e. none of the other choices are correct
B
In the divorce agreement between Ted and Alice, Alice agreed to assume the debt on Ted's credit card. The credit card company agrees to this arrangement. This is an example of: a. accord and satisfaction b. novation c. rescission d. revocation
B
The _____ means that there are also responsibilities imposed on parties who commit to binding relationships in contracts. a. freedom of speech b. freedom of contract c. freedom of sales d. freedom of economics e. freedom of torts
B
The idea that breach of contract generally only allows recovery for profits and costs incurred due to the breach is called: a. the compensatory rule b. the economic loss rule c. the remedy doctrine d. contract damages doctrine e. none of the other choices
B
A 16-year-old goes to a used car dealership and pays $2,000 cash to buy a car off the lot. a. assuming no fraud by the dealer, and that the car is really worth about $2,000, the contract is valid b. the dealer realizes that the car is worth more than $2,000, so he can void the contract and insist on the car back c. the 16-year-old can bring the car back the next day and demand his money back (less damages) because the contract is voidable d. the parents of the 16-year-old cannot try to get the money back for the car because parents are responsible for providing their children with necessities e. none of the other choices
C
A _____ is issued by the clerk of the court and directs the sheriff to seize and sell any of the debtor's nonexempt real or personal property within the court's jurisdiction. a. writ of judgment b. writ of attachment c. writ of execution d. writ of sale e. writ of lien
C
A buyer and a seller would like to enter into a contract for the sale of goods. In his offer the buyer does not specify a price. The seller agrees with the arrangement. a. under Article 2 there is a contract if the parties have done business before b. under the common law of contracts, but not the UCC, there is a contract because the parties intended to enter into a binding agreement even in the absence of the price term c. there is a contract under Article 2 because it allows the parties to enter into a contract even though the price is to be determined later d. there is no contract under Article 2 because "some of the offer's major terms were omitted or were simply left open for determination later" e. there can be no contract under Article 2 or the common law when price is missing
C
A is a form of check in which the bank is both the drawer and the drawee. a. real check b. bank check c. cashier's check d. credit check e. cashier's note
C
A shareholder's relation to creditors of the corporation is generally that the shareholder: a. is a secured creditor b. is an unsecured creditor c. has no relation to creditors d. is a third-party beneficiary to creditors e. none of the other choices
C
A(n) is a note promising to repay borrowed money, probably with interest. a. negotiable instrument b. negotiable note c. promissory note d. lending note e. borrowing note
C
Andrea offered to buy apricots from Aramos. The offer was for 10 tons at $1.20 per pound to be transported to Andrea's warehouse in Aramos trucks. Aramos accepted the offer, but said that the goods would be transported in Andrea's trucks. A dispute later arose and Aramos refused to sell the apricots, asserting that no contract existed. If Aramos sues, it: a. wins because agricultural products are outside the scope of the UCC b. wins because his acceptance changed terms from the original offer by Andrea c. loses if it can be shown that the parties intended to form a contract even though the acceptance contained different terms from those of the offer d. loses if it can be shown that Aramos did not offer new consideration for the transportation modifications to the contract e. none of the other choices
C
In Certified Fire Protection v. Precision Construction, Precision accepted a winning bid from Certified for it to install a fire suppression sprinkler system. Later the two parties got into a fight over some details in the contract, which was never signed. The courts held that the contract was: a. properly accepted, so there was a binding contract b. accepted with minor modifications that were not critical to the intent of the contract, so it was binding c. never formed as there were disagreements over major provisions d. never formed because Certified was not licensed by the state to do such work e. none of the other choices
C
In Griffith v. Clear Lakes Trout, Griffith grew trout for Clear Lakes; the parties got into a dispute over what were "market size" trout, as Clear Lakes wanted larger fish. The court held that: a. since the contract between the parties was vague about trout size, there was no enforceable contract b. Clear Lakes was correct about trade usage regarding "market size" so Griffith had an obligation to grow larger fish and be in compliance with the contract c. Clear Lakes was incorrect about trade usage regarding "market size" so Griffith had no an obligation to grow larger fish to be in compliance with the contract d. Clear Lakes had underpaid for the trout given current market prices, so owed Griffith damages equal to the market price versus the price paid e. none of the other choices
C
In Hinson v. N&W Construction, where Hinson submitted the low bid to N&W for plumbing work to be part of a larger construction project by N&W, but then refused to do the work when construction was started by N&W, the court held that Hinson: a. could not be relied upon by N&W because he was not licensed for such work b. was not liable because there was no consideration paid by N&W to create a contract c. was liable for damages based on a theory of promissory estoppel, not breach of contract d. was not liable because there was not a contract due to lack of proper acceptance by N&W e. none of the other choices
C
In general, limited partners lose their limited liability status by: a. being a limited partner in another partnership b. denying association with the partnership c. participating in managerial decisions in the partnership d. being a partner in another partnership or by participating in managerial decisions in the partnership e. being a partner in another partnership or by participating in managerial decisions in the partnership or by denying association with the partnership
C
The of partnership affairs involves completing any unfinished business and then collecting and distributing the partnership's assets. a. winding down b. resetting c. winding up d. terminating e. dissolution
C
The rules that regulate and govern the internal operations of a corporation are known as: a. the certificate of incorporation b. the bond c. the bylaws d. statutes of business e. the corporate constitution
C
A smooth talking door-to-door salesman talks you into buying $200 worth of magazine subscriptions. After he leaves you want out of the deal. The contract you signed: a. is voidable because you did not give genuine consent b. is voidable because you were under duress c. will be voidable only if you can show the subscriptions are worth far less than you paid d. may be rescinded within 3 days under the FTC Cooling-Off Rule e. is enforceable, you cannot walk away from this
D
An effective offer includes which of the following: a. a clear intent by the offeror to become contractually bound b. clear and certain basic terms and conditions of the offer c. proper communication of the offer d. all of the other specific choices are correct e. none of the other specific choices are correct
D
Fernando owes Lucia $8,000. They both realize he is unlikely to be able to repay that much, so Lucia says: "Pay me $5,000 and we'll call it good." Fernando pays the $5,000. This settlement is called: a. preexisting duty b. liquidated debt c. unliquidated debt d. accord and satisfaction e. detrimental reliance
D
In Crest Ridge Construction v. Newcourt, where an order for construction materials that Crest Ridge needed was rejected for failure to meet credit terms, and Crest Ridge had to find a higher-cost replacement and sued Newcourt for damages, the appeals court held that: a. Crest Ridge had no basis for suit since the credit terms of the contract were clear and it failed to follow the instructions b. Crest Ridge had no basis for suit since the credit terms of the contract were clear and it did not have sufficient credit history to qualify c. Newcourt was liable as it imposed higher credit conditions on Crest Ridge than it stated were necessary in the contract d. Newcourt was liable as its actions gave Crest Ridge reason to believe the sale had been approved e. none of the other choices
D
In Eagles Landing Development, LLC v. Eagles Landing Apartments, LP, where the LLC built apartments for the LP, but the LLC was not paid for all its work, the LLC sued some limited partners in the LP for payment. The appeals court held that: a. the limited partners had agreed to be personally liable on the debts of the LP, so were responsible b. limited partners share equally in the debts of a limited partnership unless the agreement among the partners states something to the contrary c. the LLC had agreed not to sue any limited partners individual, so could not later go back on that agreement d. limited partners are not liable for the debts of the LP e. none of the other choices
D
In Hinson v. N&W Construction, where Hinson submitted the low bid to N&W for plumbing work to be part of a larger construction project by N&W, but then refused to do the work when construction was started by N&W, the court held that Hinson's bid: a. could not be relied upon by N&W because he was not licensed for such work b. was unrealistically low, which N&W recognized, so it could not rely on the bid c. was valid, so there was a breach of contract; Hinson was liable for the full value of the contract d. created liability based on promissory estoppel, so he was liable for the extra costs incurred by N&W e. created liability based on promissory estoppel, so he was liable for the full value of the contract
D
In a famous old case Sherwood v. Walker, Sherwood sold Walker a cow for $80 that both believed could not produce calves. When it was later discovered the cow could calve, which made her much more valuable, Sherwood sued to get the cow back. You would expect the Supreme Court of Michigan ruled for: a. Walker; it was a valid contract; he keeps the cow b. Sherwood; he did not get the cow back, but got the price for the more valuable animal c. Sherwood; the contract violated the statute of frauds and so the contract was canceled d. Sherwood; there was a mutual mistake as to an important fact, so the contract was void e. Walker and imposed punitive damages on Sherwood for bringing a nuisance suit
D
A contract can be discharged by: a. performance b. agreement of the parties c. legal impossibility d. none of the other choices e. any of the other specific choices
E
A contract made by a person with partial capacity is: a. not enforceable b. enforceable unless the person with partial capacity exercises the right to disaffirm the contract c. enforceable in some states, but not others d. enforceable only if the other party has complete capacity to contract e. none of the other choices are correct
E
If a North Carolina firm contracts to buy toys from China, and the contract does not specify which law applies, in case of dispute, which law will apply: a. the law of the buyer (North Carolina) b. the law of the buyer's nation (federal law) c. the law of the seller nation d. the UCC e. the CISG
E
In Eagles Landing Development, LLC vs. Eagles Landing Apartments, LP, where the LLC built apartments for the LP, but the LLC was not paid for all its work, the OOC sued some limited partners in the LP for payment. The appeals court held that: a. the limited partners had agreed to be personally liable on the debts of the LP, so were responsible b. the limited partners share equally in the debts of a limited partnership unless the agreement among the partners states something to the contrary c. the LLC had agreed not to sue any limited partners individual, so could not later go back on that agreement d. the LLC must first proceed against the bank that granted a mortgage to the LP as it was the primary creditor of the project e. none of the other choices
E
