Legal Environment of Business 1-28 Final
Who bears the risk of loss of damage to unidentified goods?
Seller
What rights does a finder have to abandoned property?
A finder has title to and absolute right to possession of abandoned property.
A voucher's check is a check drawn by one bank on another bank.
False
The term delegation describes a transfer of rights.
False
Courts will always permit spoken words to add to or modify the terms of a written contract that appears to be complete.
False
Coupon bonds carry detachable individual coupons to be presented for payment when due.
True
The UCC defines _____ as "the first delivery of an instrument by the maker or drawer for the purpose of giving rights on the instrument to any person."
issue
Which of the following is true of a binding contract?
It is created when an offeree accepts an offer that has been properly communicated.
Which of the following is true of a jury trial procedure?
The jury is selected before an opening statement is made by the attorney.
When one party wrongly threatens to injure another person financially in order to get agreement to a contract, economic duress occurs.
True
A copyright must be registered in order for the owner to sue for its infringement.
True
Parole evidence refers to:
spoken words
Documents that show ownership are called documents of _____.
title
In which of the following cases will a court refuse to enforce the provision of liquidated damages on a party?
When the amount of liquidated damages fixed by the contract is unreasonable
A _____ is a promise by a bank to repay a sum of money received by it
certificate of deposit
Mark, a civil engineer, entered into a contract with David. As per the contract, Mark agreed to design and build a house for David for a specified fee. Mark provided David with an estimation of the total cost and the contract was mutually agreed upon. However, during construction, when Mark increased the price due to a miscalculation on his part, David refused to pay the amount. This scenario is an example of a _____ mistake.
unilateral
A temporary order that is issued by a court with equity powers forbidding activities that would be detrimental to others is known as:
a restraining order.
The legal system of the United States is based primarily on the French legal system.
False
The statement of the seller in which the article sold is warranted or guaranteed is known as an implied warranty.
False
The theory of respondeat superior states that an employer is liable for personal injury committed outside the course of employment.
False
When an agency agreement does not state the amount of compensation, any compensation will be set on a contingent basis.
False
An acknowledgment by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money is known as a certificate of deposit.
True
Under the Statute of Frauds, a written note or memorandum may suffice if it is signed by the party against whom the claim for breach of contract is made.
True
When an alteration is fraudulently made, the party whose obligation is affected by the alteration is discharged.
True
Widespread use of instruments of credit appeared as international trade began to flourish in the wake of the Crusades.
True
The laws regarding hotelkeepers do not apply to boardinghouse keepers.
True
A gambling contract is a transaction wherein the parties stand to win or lose based on pure chance.
True
Kenneth, aged sixteen, sells his car to Robin, aged 49. Later, Robin sells the car to Sarah, an innocent third party, before Kenneth can disaffirm the contract. In this case, which of the following will hold true?
Sarah can obtain good title to the property.
An offer that does not specify a particular manner of acceptance may be accepted in any manner reasonable under the circumstances.
True
Payments made to governmental officials to obtain new business are treated as bribes by the Foreign Corrupt Practices Act.
True
What is the Statute of Frauds?
It is a law requiring certain contracts to be put in writing.
Which of the following statements best defines a power of attorney?
It is a written instrument indicating the appointment of an agent for the performance of certain tasks.
Which of the following statements best describes the term "assignment"?
It is the conveyance of rights in a contract to a person who is not a party.
If the choice of whether an instrument is payable in either cash or goods is left up to the holder, the instrument is not negotiable.
False
the theft of trade secrets is a federal crime
True
The "mailbox rule" does not apply in situations where the offeror does not receive the acceptance.
False
The law requires that only persons with sufficient intelligence to carry out a principal's orders may be appointed to act as an agent.
False
A holder for value and in good faith with no knowledge of dishonor, defenses, or claims, or that paper is overdue is known as a _____.
holder in due course
A(n) _____ is a signature on the back of an instrument along with any directions or limitations regarding use of or liability for the instrument.
indorsement
Brokers are known as commission merchants.
False
The trailing edge is the right side of a check when looking at it from the front.
False
The termination of a corporation's operation except for activities needed for liquidation is known as _____.
dissolution
Which of the following is a scenario where a universal defense can be applied?
A delivers a check to B, who is a minor, and B loses it.
One may have rights and obligations imposed by law even when no real contract exists.
True
When an agency is terminated by operation of law, notice need not be given to third parties who have dealt with the agent.
True
A secured bond or note issued by a government is called a debenture.
False
Which of the following best describes a durable power of attorney?
It is a written appointment of agency designed to be effective even though the principal is incapacitated.
Which of the following statements best describes a difference between rules and laws?
Laws are rules that are enacted by the government.
Maya, an elderly lady, wanted to sell her house. She offered the house to Lily, a friend. However, before the house deeds were transferred, Maya passed away. Which of the following scenarios is legally acceptable in such a case?
Lily must consider the offer automatically revoked and void.
A _______ is a court decision that determines the decision in a subsequent, similar case.
Precedent
_____ is the demand for acceptance or payment made on the maker, acceptor, drawee, or other payor of commercial paper.
Presentment
Which of the following is an example of a bailment for the sole benefit of the bailor?
Sally leaving her car in a neighbor's garage while Sally's carport is getting a new roof.
Sam and Martha sign a contract in which Sam agrees to pay a certain price and buy Martha's house. Later, Sam's brother states that Sam often has intervals of delusions and hence the contract is invalid because it has been made by an incompetent person. Sam has not been declared by the court as insane. In such a scenario, according to law, which of the following will entitle Martha to the price agreed upon in the contract?
Sam was in a sane frame of mind and understood the contract when he signed it.
A novation does not need to be in writing and can be implied from the parties' actions.
True
A principal may ratify an unauthorized contract and thus be bound on it.
True
A union contract binds the employer to recognize certain hours of work.
True
An offer expresses the willingness of the offeror to enter into a contractual agreement.
True
Which of the following best describes the term "recognizance"?
It refers to the obligations that people enter into before a court to do an act required by law.
______ is information that the law presumes everyone knows by virtue of the fact that it is filed or recorded on the public record.
Constructive notice
An agent who signs an instrument indicating a representative capacity cannot have personal liability on the instrument.
False
An agreement between two parties to perform an illegal act is a quasi-contract.
False
An assignee can receive greater rights or interest than the assignor held in a contract.
False
An offer made in jest that does not appear to be seriously intended to an offeree is considered a valid offer.
False
As a general rule, one's rights under a contract cannot be transferred freely.
False
At common law, individuals other than the parties to a contract can sue upon or seek to enforce the contract.
False
Common law rules governing the relationship of employer and employee have been greatly modified by statute.
True
Contracts obstructing the administration of justice are unenforceable.
True
Each state is part of the federal court system and has a state court system.
True
Electronic fund transfers that begin at retailers when consumers want to pay for goods or services with debit cards are called point-of-sale systems.
True
Failure to disclose information when there is duty to do so is known as passive fraud.
True
Generally, it is the activity itself, not its effect, which is the most important element in deciding whether the Sherman Act has been violated.
False
In an FOB contract, the seller bears the risk of loss until the goods are delivered to the FOB point designated.
True
When charitable enterprises are financed by voluntary subscriptions of many people, the promise of each person is generally not held to be enforceable.
False
An express warranty applies even if defects are actually known to the buyer, or defects are so apparent that no special skill or ability is required to detect them.
False
The maker executes a note by signing on the back of the instrument.
False
When a negotiable instrument is lost, this automatically discharges the obligation of the holder.
False
Which of the following best describes a debenture?
It is an unsecured bond or note issued by a business firm.
Which of the following is true of The Water Pollution and Control Act?
It sets limits on discharges, including pollutants into sewer systems.
The Racketeer Influenced and Corrupt Organizations Act provides for the recovery of three times the damages suffered by an injured party as a result of its violation.
True
The Statute of Frauds recognizes electronic signatures as legally enforceable.
True
The U.S. Supreme Court is the highest tribunal in the land, and its decisions are binding on all other courts.
True
The language used in a promissory note must show that a promise is intended.
True
The legal term for one party benefiting unfairly at the expense of another is unjust enrichment.
True
The location where a case is to be tried is known as a venue.
True
The offering of money, entertainment, or anything of value as a corrupt payment constitutes a bribe.
True
In which of the following situations is a state most likely to enforce a usury law?
X charges a very high rate of interest on money borrowed by Y.
A case of someone finding and taking possession of lost property is an example of:
a bailment for the sole benefit of the bailor.
Default refers to:
a breach of any contractual obligation
Which of the following is true of primary liability?
a drawee is liable only by writing "accepted" and signing the draft.
To recover fora tort based on negligence, the plaintiff must show:
a duty of the plaintiff to the tortfeasor.
A private carrier's contract for transporting goods is an example of:
a mutual-benefit bailment
A toy merchant's display of a doll house in a store window for $100 constitutes:
an invitation to the public to make an offer for the doll house.
In a written contract, Sheldon agreed to tutor the children of Mrs. Smith for a certain period of time. However, Sheldon, prior to starting classes, announced that he would not be able to tutor the children due to other commitments of his. In this case, there has been a(n):
anticipatory breach
A person licensed to represent others in court is called a(n):
attorney
An offer to pay money in satisfaction of a debt or claim when one has the ability to pay is a ____.
tender of payment
The term disaffirmation refers to:
the election to avoid a contract or set it aside.
If a minor contracts for necessaries, the minor's liability is quasi-contractual in nature. This means that:
the minor is not required to pay the contract price but will be required to pay a reasonable amount to avoid unjust enrichment.
A common carrier may refuse service that is unprofitable.
False
The legal rate of interest is a rate:
that is applied when no rate is specified.
When a contract contains the words "time is of the essence," which of the following is true?
Performance on the exact date is deemed vital.
Which of the following is true of a shipment contract?
The title and risk of loss pass to the buyer when the goods are delivered to the carrier.
What is the difference between an agreement and a contract?
An agreement results whenever two people's minds meet on a subject, but a contract only exists when the parties intend to be legally obligated by the terms of the agreement.
As a general rule, a promise must be supported by consideration. Which of the following is an exception to the rule?
An obligation of record such as a judgement.
Which of the following best describes the difference between civil law and criminal law?
Civil law deals with the enforcement or protection of private rights, whereas criminal law deals with offenses against society.
Which of the following is an example of a dishonor?
Dan issues a check to Ben but it is returned by the bank due to insufficient funds.
Which of the following is true of a contract between two minors?
Each minor has the right to avoid the contract.
On investigation, it was found that Ken, the bookkeeper at CL Corp., had stolen money from the company's account and recorded financial transactions inaccurately to cover up for his activities. For which of the following business crimes can Ken be prosecuted?
Embezzlement
A bill of lading may not place additional limitations on a carrier's liability.
False
In general, the defenses available in a dispute over a contract can be raised against holders in due course.
False
In order to attain the specially favored status of being a holder in due course, the holder need not give value for the paper.
False
In the case of a time draft, the holder can require payment of the paper before it matures.
False
Indorsers and drawers are the parties whose liability on negotiable instruments is ordinarily primary.
False
Performing or promising to perform what one is already obligated to do is a valid consideration.
False
The Statute of Frauds requires a written memorandum to contain all information on one piece of paper.
False
The Statute of Frauds' requirement of writing applies if the main purpose of the promise is to gain some advantage for the promisor.
False
The Uniform Commercial Code does not require an allonge to be attached to an instrument.
False
The drawee's signature alone on the draft is not sufficient to constitute a valid acceptance.
False
The mere act of creation of a piece of intellectual property lends the creator with an absolute and unending title to the property.
False
Kenneth was sentenced to six years in prison for forgery. In this case Kenneth has committed a(n) _____.
Felony
Which of the following is true of government regulation of business?
Government regulations are used to eliminate abuse in business.
Which of the following statements is true of statutes of limitations?
In the case of running accounts, such as purchases from department stores, the statute starts from the date of the last purchase.
Which of the following best defines the tort of interference with a contract?
It occurs when a business relationship has been formed, and in some way a third party intentionally causes one party to end the relationship.
Which of the following statements is true of fraud in the execution?
It occurs when a party does not intend to sign a contract, as the nature of the writing is not understood.
Which of the following is true of the doctrine of promissory estoppel?
It requires the promisor to reasonably expect the promise to induce action by the promisee.
Which of the following is true regarding parties who make mutual mistakes of law?
It will generally not invalidate a contract.
The act of transferring ownership of commercial paper to another party, is called _____.
Negotiation
Which of the following is an unconditional promise to pay? I will pay you :
On Tuesday.
Which of the following warranties does an assignor make when he assigns rights under a contract to an assignee for value?
That there are no defense available to the debtor that have not been disclosed to the assignee
A contract not to compete is valid in which of the following instances?
The buyer of a business prohibiting the seller from engaging in the same business in a certain town.
Which of the following is true of the transportation of goods through a common carrier?
The carrier is not liable for damage due to the inherent nature of the goods, such as decay of vegetables.
An enforceable contract is made by an adult with a minor. Which of the following is most likely to hold true in this case?
The contract is enforceable against the adult but not against the minor.
Which of the following is true of a check made out to the order of a person?
The drawee can only deposit the check into his own account.
Which of the following is a duty of an employer towards an employee?
The employer must provide a reasonably safe place to work.
Which of the following is true of a sale by entrustee?
The goods entrusted are subject to the claims of the entrustee's creditors.
Which of the following constitutes an exception to the Statute of Frauds requirement that a contract be in writing?
The promise to pay one's own debt, rather than a promise to pay the debt or another
Which of the following is true of Sunday contracts?
Their laws are a result of statutes.
Which of the following is true of administrative agencies?
They can become specialists in a particular area of regulation.
Which of the following is true of automated teller machines?
They enable customers to pay bills.
Which of the following is most likely to happen when one party intentionally and without consent mixes another's property with his own, resulting in confusion?
Title to the total mass passes to the innocent party, unless the mixing party can clearly prove how much of his property was confused with that of the innocent party.
When parties to a contract mutually agree to cancel an old contract and replace it with a new one, which of the following is true?
To be enforceable, there must be added features in the new contract benefiting both parties.
A bailment can be created by the unspoken conduct of the parties.
True
A buyer has a property interest in goods when the seller indicates that certain goods are the ones to be delivered to the buyer under the contract.
True
A cancellation made by mistake is not effective.
True
A carrier of goods is not liable for unusual natural occurrences such as floods.
True
A check that is presented more than six months after its date is commonly called a stale check.
True
In the event of goods damaged through no fault of either the buyer or the seller, the party with control over the goods bears the risk of loss.
True
Many federal laws regulating business do so based on the Commerce Clause of the U.S. Constitution.
True
Regulatory agencies can use their licensing power to:
allow a business to enter the field being regulated.
A written order by one person directing another to pay a sum of money to a third person is known as a(n)_____.
bill of exchange
The failure of a party to perform the obligations assumed under a contract is known as a(n):
breach of contract
An offeree's response that rejects an offer by varying its terms is known as a(n) _____.
counteroffer
Blake agreed to renovate Jane's house, and they drafted a written contract. However, Blake was unable to complete the renovation due to an accident. Blake's friend, Tom, agreed to complete the job, and Jane agreed to release Blake from the contract. The terms of the old contract remained the same. This process of substitution of a contract is known as a(n) _____.
novation
Ryan, a college student, intends to sell his car. He contacts his friend Luiz and inquires whether he is interested in buying the car. Luiz finds the quoted price reasonable and buys the car from Ryan. In this scenario, Ryan is the _____.
offeror
A contract must be for a lawful purpose, which must be achieved in a lawful manner, otherwise the contract is:
void
Contracts made by people who have become so intoxicated that they cannot understand the meaning of their acts are:
voidable
A seller's warranty that the goods shall be delivered free from any security interest or any other lien of which the buyer at the time of making the sales contract had no knowledge is known as a _______.
warranty against encumbrances
Mark owes $2000 each to his business partners, Ryan, Bryan, and Clark. Since Mark is facing financial difficulties, his business partners agree to accept a total amount of $4800 from Mark as a cancellation of the unpaid balance due to them. This type of an agreement is known as a _____.
composition of creditors
A joint contract is one in which:
each obligor is bound for the performance of the entire obligation.
When a contract can be terminated at any time by both an employer and an employee, the situation is known as _____.
employment at will
Judy promises to pay Ashley $50 to babysit her children. After Ashley babysits the children, Judy pays Ashley the $50; thus each party has completed performance of each part of the contract. This is an example of a(n):
executed contract
Activities that are illegal regardless of their effect are known as _____.
per se violations
Which of the following is not a true contract and has been imposed by law in order to prevent one party benefiting unfairly at another's expense?
quasicontract
Fraud in the execution occurs when a defrauded party intends to sign a contract as a result of false statements made by the promisor.
False
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) seeks to:
ensure the cleanup of waste from previous business activities.
Where should a check be indorsed?
on the back along the trailing edge
A lease of real property for less than one year must be in writing in order to be binding.
False
If the owner entrusts goods to a merchant who deals in goods of that kind, the merchant does not have the power to transfer the entruster's title to anyone who buys in the ordinary course of business.
False
Implied warranty arises as to fitness of used property for ordinary use from a sale made by a casual seller.
False
In a sale or return contract, the cost and risk of return is borne by the seller.
False
In all jurisdictions, the terms of compensation determine the contract period.
False
Negotiable instruments have replaced the instruments of collection which existed under the law merchant.
False
Consideration is not necessary to support an obligation of record.
True
A person who sells alcoholic beverages to a minor when such a sale is prohibited can recover on the contract.
False
A predated check is unlawful, but a postdated check is not.
False
Checks and trade acceptances are special types of promissory notes.
False
In a situation where an injured party in an accident is partly to blame for the accident, which of the following is most likely to be true under a contributory negligence system?
The injured party cannot recover any damages because it is partially negligent in the case.
The doctrine of strict liability can make the manufacturer of a dangerously defective product liable, even if there's no proof of negligence.
True
If a merchant displays a coat at a particular price, he has a binding requirement to sell at that price.
False
If an unilateral mistake regarding price results arise from misunderstanding an oral quotation of the price, the contract is invalid.
False
If commercial paper is made payable to whoever has possession of it, it is called order paper.
False
Only when performance is standardized, may one delegate its performance to another.
True
Parties can be discharged from an obligation by a discharge of their debts in bankruptcy.
True
When one refrains or promises to refrain from doing something, this conduct is known as _____.
forbearance
The Office of Foreign Assets Control (OFAC) is responsible for:
enforcing economic sanctions against individuals and entities deemed a threat to national security.
A transfer of fungible goods does not constitute a bailment.
False
Even in cases in which the defendant's negligence made the forgery possible, forgery may be raised successfully against any holder.
False
For a promise to constitute consideration, the promise must not impose an obligation on the person making it.
False
If a druggist sells morphine to one who does not have a prescription, a suit to collect the price would be successful.
False
_____ laws are those that state how parties are to go forward with filing civil actions and how these actions are to be tried.
Procedural
Under the Fair Credit Reporting Act, certain types of adverse information may not be maintained in a consumer's credit report for more than seven years.
True
A qualified indorsermakes no warranties regarding the instrument.
False
Generally, the rights of the holder of consumer paper are subject to all claims, defenses, and setoffs of the original purchaser arising from the consumer transaction.
True
If a contract is voidable due to a mistake such as fraud in the inducement, duress or undue influence, a person might elect to rescind the contract.
True
If hotel charges are not paid by a guest within a reasonable time, the hotelkeeper may sell the guest's baggage to pay the charges.
True
The tort of injurious falsehood occurs when:
a person makes false statements of fact that degrade the quality of another's goods or services.
A _______ contract must be in a special form or be created in a certain way.
formal
The _____ consists of ten amendments to the U.S. constitution specifically designed to protect the civil rights and liberties of citizens and the states.
Bill of Rights
A common carrier is liable for a loss if it is transporting goods that pose a menace to health which are seized by a public authority.
False
A contract can never be described as being both joint and several.
False
A small piece of molded plastic shown to a car buyer to illustrate the materials and methods used in the construction of cars creates a sale by sample.
False
A special endorsement is one having no words other than the name of the indorser.
False
A summons is a way for parties to obtain unprivileged information from another party prior to trial.
False
To recover damages for an intentional tort, the plaintiff is required to prove that there was a breach of duty by the tortfeasaer to the plaintiff
False
Which of the following is true of a valid offer?
It is seriously intended.
When there is a contract of agency, on whom does the law impose duties not specified in the contract?
On both the agent and principal.
Which of the following is true when a person hires an independent contractor to perform some tasks?
The contractor is responsible for the proper performance of the contract.
When an employer and a union have a signed contract:
The union speaks and contract for the employees collectively.
Which of the following is true of special federal courts?
They have jurisdiction limited by Congress.
Which of the following statements is true of federal district courts?
They hear all criminal cases that involve a violation of federal law.
According to the Statute of Frauds, an agreement to sell goods for $500 or more must be in writing.
True
Advertisements and catalogs are examples of general invitations.
True
Generally, people can sell only such interest or title in goods as they possess.
True
The Robinson-Patman Act prohibits sales at unreasonably low prices in order to eliminate competition.
True
The warranty liability of a qualified indorser is the same as that of an unqualified indorser.
True
Which of the following types of agreements according to the Statute of Frauds need to be in writing?
an agreement containing a promise in consideration of marriage
If a contract is divisible so that the legal parts can be performed separately from the illegal parts, then the legal parts of the contract are:
enforceable
The statement of the seller in which the article sold is warranted or guaranteed is known as an _____.
express warranty
The maker of a promissory note has accountability for:
expressly agreeing to pay the note according to its terms.
If an offeror receives something of value in return for a promise to hold the offer open, it is said to be a(n) ________, and this type of offer cannot be revoked.
option
A _____ provides someone with an absolute title to his/her invention for a certain period of time.
patent
Which of the following is true of the Children's Online Privacy Protection Act (COPPA)?
* A.) It imposes certain requirements on operators of websites directed to children under the age of 13.
Which of the following is an example of a contract contrary to public policy?
A agrees to appoint B as sheriff, provided he helps him win the local elections.
Which of the following is true of contracts that limit the freedom of marriage?
An agreement not to marry during minority is valid.
Which of the following is true of the liability of a common carrier of people?
It begins when the passenger enters the waiting platform.
When goods are sold at an auction in separate lots, each lot is considered a separate transaction.
True
A person not party to contract but whom parties intended to benefit is known as a(n) _____.
third-party beneficiary
Which of the following is an example of a contract discharged by impossibility of performance?
A new law makes the contract illegal
Which of the following is a duty a principal has toward the agent?
A principal must reimburse the agent for expenses incurred during the agency.
Which of the following is true of the Uniform Commercial Code (UCC)?
Individual states may make changes to the portions of the UCC that they have adopted.
Whenever delivery is made in connection with the original issue, it must be unconditional.
True
A person who fashions goods at home, sells them via the internet and then ships them to customers may be referred to as:
a consignor
An executory contract is defined as:
a contract in which the terms have not been fully carried out by all parties.
What precaution can a business person take when contracting with a minor?
A business person can require an adult to join the contract as a cosigner.
Which of the following statements is most likely to be true of administrative agencies?
Administrative agencies have the power to implement laws.
Which of the following statements is true of contracts of agency?
All people legally competent to act for themselves may act through an agent.
As a general rule, a promise must be supported by consideration. Which of the following is anexception to the rule?
An obligation of record such as a judgment
Which of the following is true of bailments for the sole benefit of the bailee?
Any loss or damage to bailed property due to no fault of the bailee falls on the owner.
Which of the following is most likely to be a tort based on negligence?
Automobile accidents
A contract is indivisible if it can be performed in ways other than as an entity.
False
If a debtor tells a creditor "I am ready to pay you now," a sufficient tender of payment has been made.
False
Which of the following is true of the theory of respondeat superior?
It imposes liability on an employer for torts caused by employees.
An donee beneficiary is best described as a person:
who is a third-party beneficiary and for whom performance is a gift.
How does negotiation differ from assignment?
A party receiving an instrument by negotiation may obtain rights superior to those of the original holder.
Which of the following statements is true of common law?
Cases in common law are decided on the basis of precedents.
When an assignment is made by an act of the parties, which of the following is true?
If the original contract was required be in writing, the assignment must also be in writing.
Which of the following statements best describes a several contract?
It is a contract where two or more people individually agree to perform an obligation.
Which of the following statements best describes specific performance?
It refers to the carrying out of the specific terms of a contract.
Allen enters into a contract with Joe to sell his car. However by mistake, he undervalues his car. Though the actual value of the car is $6000, he sells it to Joe for $3000. During the purchase, Joe is aware of the actual value but does not communicate this fact to Allen. Which of the following is likely to be true in such a scenario?
Joe is entitled to keep the car because the contract is valid.
A force majeure clause in a contract is a contract provision that excuses performance by a party when:
an extraordinary event outside the party's control occurs.
A hotel that caters to both permanent residents and transients is a hotelkeeper with respect to every person to whom it provides services.
False
Only financial items can constitute consideration.
False
Probate courts handle divorce and child custody cases.
False
Regulatory agencies are also called social regulatory agencies.
False
Tangible property left as security is a pledge
False
The Uniform Commercial Code states that when a contract for the sale of goods is modified by agreement of the parties, consideration is necessary to make it enforceable.
False
The law is uniform throughout the United States in binding minors on contracts induced by misrepresenting their age.
False
As a general rule, a unilateral mistake made at the time of contracting has an effect on the validity of a contract.
False
The law considers everyone under the age of twenty-one to be a minor.
False
What is the chief function of the courts?
They interpret and apply the law from whatever source to a given situation.
A common carrier of people is required to assist passengers when necessary for alighting.
True
A constructive bailment is a bailment for the sole benefit of the bailor.
True
Appellate courts include courts of appeals and supreme courts.
True
As a general rule, the adequacy of the consideration is irrelevant because the law allows bargains.
True
Unless otherwise agreed, a merchant warrants that goods shall be delivered free of the rightful claim of any third person by way of patent or trademark infringement.
True
While many states have repealed their former laws restricting the capacity of a convict to contract, some states still have restrictions.
True
Generally, the drawer draws a trade acceptance at the time goods are sold.
True
If a party intentionally and without the consent of the other party alters a written contract, the other innocent party is discharged.
True
The promise or obligation of each party to a contract must be supported by consideration in order for the contract to be valid.
True
The rescission of a contract releases an aggrieved party from all obligations that are yet to be performed.
True
Blake has subscribed to a local charitable association where he needs to make a monthly payment of $100. However, a few months later, Blake stops paying this amount. Which of the following exceptions to the requirement of consideration will enforce that Blake pays the amount?
Voluntary subscriptions
Which of the following is true of a warranty of merchantability?
Warranty of merchantability relates only to the fitness of the product made or sold.
Which of the following warranties applies to all sellers?
Warranty of title
AB Developers signs a contract with CL Corp., agreeing to build a $20 million office for the corporation. The construction contract was substantially performed. There were, however, a few minor breaches of the contract by AB Developers that made CL Corp. incur damages worth $10,000. Which of the following is most likely to be true in this scenario?
CL Corp. needs to pay the full price under the contract less the damages suffered by it.
Which of the following statements is true about bailments?
In some cases, a bailment may exist when the recipient does not return the actual goods.
Which of the following is true of the parol evidence rule?
It allows a written contract to be modified by oral testimony if there is evidence of fraud.
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) seeks to:
ensure the cleanup of waste from previous business activities.
One contracting with an independent contractor may be held liable for any injuries the contractor negligently causes to third parties.
False
Which of the following is true of the United States Supreme Court?
It has appellate jurisdiction in cases based on the U.S. Constitution.
Which of the following best describes the term "consideration"?
It indicates what the promisor demands and receives as the price for a promise.
Which of the following is legally permissible in the case of a theft of a negotiable instrument?
A thief can pass on the title to the person the paper was made out to.
Jones acted as Blake's agent for 12 years before this contract of agency was dissolved by Blake. However, Blake failed to convey this fact to those vendors with whom Jones contracted in the past. Which of the following is likely to occur if Jones negotiates future contracts with these vendors on Blake's behalf?
Blake would be bound by those contracts and would have to pay the contracted price.
Which of the following is a definition of a universal defense?
It is a defense that can be used against any holder.
An offeree's inquiry about the terms of an offer that differ from the offeror's terms will have what effect?
The inquiry will not reject the offer, and if the offeror says no, the original offer may still be accepted if it has not been revoked.
A contract is void if parties to a contract are mutually mistaken about their expectations.
False
To whom must goods shipped under an order bill of lading be delivered:
to the person who presents the order bill of lading to the carrier at delivery.
When might a seller retain its right to possession of goods after delivery to a carrier?
By making the shipment cash on delivery.
A debt that has been prohibited from collection by a statute of limitations can never be revived.
False
A deceased employee's family cannot recover damages for death which occurred during the course of employment.
False
All agreements are contracts.
False
An agent does not incur liability for any losses caused by disobeying a principal's instructions.
False
An agent does not incur personal liability for fraud or any other wrongdoing caused by disobedience.
False
An agreement not to marry during minority is invalid.
False
Jack, a second-hand dealer of cars, provides his clients with the opportunity to examine them. Jenny test-drove a car and got it checked by her mechanic as well. However, the mechanic missed a broken valve and the car broke down after the purchase. Which of the following is likely to happen in this scenario?
Jack is exempt from prosecution as the principle of caveat emptor applies.
Jim agreed to pay Jose $1,000 by check, provided he is able to sell his farm. However, he did not mention the number of days it would take for him to sell the farm nor did he provide a contingency date. Which of the following is legally permissible in this scenario?
Jim's promise to pay is conditional and therefore Jose should obtain a negotiable instrument.
A depository bank receiving a check with a restrictive indorsement, such as "for deposit " must always honor the restriction.
True
A donnee beneficiary is one to whom the promisee owes no duty but for whom performance is a gift.
True
A false statement made in the belief that it is true is known as innocent misrepresentation.
True
A finder of lost property has a right of possession against all but the true owner, as long as the finder has not committed a wrong of some kind.
True
A minor, upon reaching the age of majority, must ratify none or all parts of a contract.
True
An insurable interest may arise when a party has sufficient economic interest in the transaction to entitle them to insure the property involved.
True
A _____ is an ordinary check accepted by an official of the drawee bank.
certified check