Quiz answers

A check that is presented more than six months after its date is commonly called a stale check.

True

A copyright must be registered in order for the owner to sue for its infringement.

True

A false statement made in the belief that it is true is known as innocent misrepresentation.

True

Appellate courts include courts of appeals and supreme courts.

True

Government regulates business by means of antitrust laws that seek to promote competition among businesses.

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

In a joint contract, if a promise is not carried out, the aggrieved party may not sue just one party but both parties.

True

In a small claims court, there is no jury and a judge tries the case.

True

Parties can be discharged from an obligation, if there has been the necessary lapse of time provided by a statute of limitations.

True

Statutes are easier to amend than constitutions.

True

When a state law and municipal legislation conflict with each other. The state law will prevail.

True

In the case of a common carrier that transports goods on a regular basis, the term consignee refers to:

a person whom the goods are being shipped to

The difference between a sale and a contract to sell is that:

a sale involves an immediate transfer of title from one party to another while a contract to sell does not.

A temporary transfer of possession of personal property without the intention of further sales is known as a(n) ____

Bailment

A voucher's check is a check drawn by one bank on another bank.

False

According to the Statute of Frauds, an agreement of an executor to pay the debts of the estate from the executor's personal funds, needs to be an oral contract.

False

If commercial paper is made payable to whoever has possession of it, the bearer, it is called order paper.

False

If performance in a contract becomes extremely difficult after the contract is formed, it automatically discharges the contract.

False

The negotiability of an instrument is affected if it is undated.

False

The trailing edge is the right side of a check when looking at it from the front.

False

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

When an alteration is fraudulently made, the party whose obligation is affected by the alteration is discharged.

True

When goods are sold at an auction in separate lots, each lot is considered a separate transaction.

True

Which of the following best describes an allonge?

It is a paper attached to an instrument

Which of the following is true of electronic fund transfers?

It is a transfer of funds begun by a telephonic instrument.

A _____ provides someone with an absolute title to his/her invention for a certain period of time.

Patent

Activities that are illegal regardless of their effect are known as _____.

Per se violations

The purpose of antitrust laws is to:

Promote competition among businesses

The Federal Trade Commission and the Environmental Protection Agency are examples of _____ agencies.

Regulatory

Which of the following is an example of a bailment for the sole benefit of the bailor?

Sally leaving the keys of her house with her neighbor while she goes on vacation

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 maker of a note is primarily liable and may be called on for payment.

True

A minor has the legal right to disaffirm a voidable contract at any time during minority

True

A preauthorized credit allows the amount of regular payments to be automatically deposited in the payee's account.

True

A signature can be electronic as on an e-mail, as well as be written or stamped.

True

A warranty is an assurance that the article sold will conform to a certain standard or will operate in a certain manner.

True

Bailments are governed by contracts.

True

The ____ consists of ten amendments to the U.S constitution specifically designed to protect the civil rights and liberties of citizens in the states.

Bill of Rights

______ 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

A lease of real property for less than one year must be in writing in order to be binding.

False

A limited defense can be used against a holder in due course.

False

A negotiable instrument must be in writing and signed by the party executing it.

False

A person who sells alcoholic beverages to a minor when such a sale is prohibited can recover on the contract.

False

As a general rule, a unilateral mistake made at the time of contracting has an effect on the validity of a contract.

False

As a general rule, one's rights under a contract cannot be transferred freely.

False

Contracts for the performance of personal services can be specifically ordered as remedies in breach-of-contract suits.

False

Contracts which are designed to limit competition are acceptable by law.

False

Felonies refer to crimes that are usually punishable by just a fine.

False

Contracts obstructing the administration of justice are unenforceable.

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

Even if a minor does not have possession of property received under a contract, the contract can be disaffirmed

True

If a decision of an administrative agency conflicts with a statute enacted by a higher legislative body, the agency decision will prevail.

False

If a druggist sells morphine to one who does not have a prescription, a suit to collect the price would be successful.

False

To establish the offense of criminal copyright infringement, a prosecutor needs to prove that the infringement was done for non-financial gain.

False

When a person knows commercial paper is being executed but is induced to execute it because of false representations, this is a defense against a holder in due course.

False

Purchase orders, cash register receipts, sales tickets, invoices, and similar papers satisfy the requirements as to a signature.

True

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 chief function of the court is to interpret and apply laws from any source to a given situation.

True

The location where a case is tried is known as a venue.

True

The name of the place where an instrument was drawn need not be specified.

True

The offering of money, entertainment, or anything of value constitutes a bribe.

True

The parol evidence rule assumes that a written contract represents the complete agreement.

True

The rescission of a contract releases an aggrieved party from all obligations that are yet to be performed.

True

Using a business computer to play games constitutes computer trespass.

True

When a court orders for specific performance, it is exercising its equity powers.

True

Which of the following is true of warranty of merchantability?

Warranty of merchantability relates only to the fitness of the product made or sold.

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

Default refers to:

a breach of any contractual obligation.

A bill of lading refers to:

a receipt and contract between the shipper of a particular good and a carrier.

Goods that are specifically made for the buyer and are of such an unusual nature that they are not suitable for trade in the ordinary course of the seller's business are called _____.

nonresellable goods

Parol evidence refers to:

spoken words.

To recover for a tort based on negligence, the plaintiff must show

the breach of the tortfeasor's duty to the injured party.

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.

As per the UCC's definition of sale, in which of the following transactions has a sale taken place?

A buys a bicycle from B's shop.

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 is true of contracts of minors?

An adult is bound by a contract if a minor wishes to treat the contract as valid.

Which of the following is true of a negotiable instrument?

An instrument can be partly written and partly typed.

A(n) _____ is a sale in which a seller or an agent of the seller orally asks for bids on goods and orally accepts the highest bid.

Auction

Which of the following is most likely to be a tort based on negligence?

Automobile accidents

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 of common law?

Cases in common law are decided on the basis of precedents.

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.

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 sale cannot serve to prove ownership of a good.

False

A breach of contract by one of the parties bound on a contract immediately terminates the contract.

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

Land is generally considered as intangible personal property.

False

The Law considers a sale to be the same as a contract to sell.

False

The Uniform Commercial Code does not require an allonge to be attached to an instrument.

False

The language used in a promissory note need not show that a promise is intended.

False

The legal system of the United States is based primarily on the French legal system.

False

A(n) _____ is one that the seller did not make but that is imposed by the law.

Implied warranty

Which of the following is true of the Uniform Commercial Code (UCC)?

Individual states have made changes to the UCC

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 a teller's check (sometimes called a cashier's check)?

It is a check drawn by one bank on another bank.

Which of the following statements is true of fraud in the inducement?

It occurs when a party intends to make a contract based on a false statement of terms.

Which of the following is true of undue influence?

It refers to a person in a special relationship causing another's action contrary to free will.

A defense that cannot be used against a holder in due course is known as a _____

Limited defense

The person who executes a promissory note is called the _____

Maker

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) _____.

Notation

A _____ is a draft payable on presentation by the payee or holder.

Sight draft

A _____ indorsement designates the particular person to whom payment should be made.

Special

Which of the following warranties does an assignor make when he assigns rights under a contract to an assignee for value?

That the assignee is the true owner of the right

Which of the following acts govern the sales of movable personal property?

The Uniform Commercial Code

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.

Which of the following is true of appeals made to higher courts?

The division if the appellate court is binding on lower courts.

Which of the following is true of trial courts?

The handle cases that are first instituted in them.

Which of the following is true regarding parties who make mutual mistakes of law?

The parties are expected to have knowledge of the law when making the contract.

Which of the following conditions is a prerequisite for any agreement to be legally enforceable?

The parties entering into the agreement must have the mental capacity to contract.

Which of the following is true of sale of food or drink?

The sale carries an implied warranty that the food is fit for consumption.

Which of the following is true of full warranties?

The seller must remedy any defects without charge.

Which of the following is true of an auction sale?

There is no contract until and unless an auctioneer accepts a bidder's offer.

Which of the following is true of fungible goods?

They are goods that are always homogenous in nature.

Which of the following is true of gambling contracts?

They are transactions wherein the parties stand to win or to lose based on pure chance.

A bill of lading sets out limitations on a carrier's liability.

True

A carrier of goods is not liable for unusual natural occurrences such as floods.

True

A check is considered dishonored if it is returned to the holder stamped "insufficient funds."

True

In order to be the subject of a sale, goods must be existing.

True

In the absence of an extension of credit, a seller has the right to keep the goods until the buyer pays for them.

True

In the event of bankruptcy, the law assigns the rights and duties of the debtor to the trustee in bankruptcy.

True

Negotiable instruments can be made payable to more than one person.

True

Regulatory agencies can use the licensing power to:

allow a business to enter the field being regulated.

The unauthorized exercise of ownership rights over another's property is known as a(n) _____.

conversion

The statement of the seller in which the article sold is warranted or guaranteed is known as an ______

express warranty

A(n) _____ refers to a person in a relationship of trust and confidence, such as a trustee.

fiduciary

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 commercial paper, which is made payable only to a named person, is called _____.

order paper

The power of a regulatory agency to fix the prices that a business may charge is known as _____.

rate-making power

When a party sues to enforce an alleged contract, the Statute of Frauds requires that:

there be a note in writing signed by the party against whom the claim for breach of contract is made.

A document of title issued by a storage company for goods stored is known as a _____

warehouse receipt

Which of the following is most likely to fall in the category of intangible personal property?

Copyrights

The individual against whom a case is filed is called the _____.

Defendant.

A check drawn before the time it is dated is a predated check.

False

A contract can never be described as being both joint and several.

False

Ratification to a contract can be made any time before reaching majority.

False

Regulatory agencies are also called social regulatory agencies.

False

Return of a check lacking a proper indorsement constitutes dishonor.

False

Specially enforced contracts such as student loan agreements are voidable contracts.

False

Which of the following is true of oral contract payments?

In the case of part payment, an oral contract may be enforced for goods, for which payment has not been made and accepted.

Which of the following is true of special federal courts?

The have a jurisdiction limited by congress.

Which of the following is true of usury laws?

They limit the rate of interest that may be charged for the use of money.

Documents that show ownership are called documents of ____

Title

A hotelkeeper is not liable if a guest's behavior increases the risk of a criminal attack.

True

Administrative agencies primarily set policy through the issuance of rules and regulations.

True

After a discharge in bankruptcy, creditors' rights of action to enforce most of the contracts of a debtor are barred.

True

All holders are subject to the defense that a discharge in bankruptcy has been granted.

True

Failure to disclose information when there is duty to do so is known as passive fraud.

True

For an act to be established as a tort of injurious falsehood, the false statements of fact must be communicated by the defendant to a third person.

True

Generally, people can sell only such interest or title in goods as they possess.

True

The safest way to contract with minors is to have the minor's guardian join in the contract as a cosigner.

True

The theft of trade secrets is a federal crime.

True

To be called a guest, a person ought to have traveled a long distance and reached the hotel.

True

Which of the following is true of civil law?

Civil law deals with the enforcement or protection of private rights

_____ are writings drawn in a special form that can be transferred from person to person as a substitute for money or as an instrument of credit.

Commercial paper

_____ is a means of destroying another's free will by one party obtaining consent to a contract as a result of a wrongful threat to do the other person or family members some harm.

Duress

In an auction, the auctioneer is the one who makes the offer.

False

Which of the following is true of a collateral note?

It is a note secured by personal property.

A holder who takes a negotiable instrument in good faith and for value is a holder in due course.

True

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

An employee who picks up inventory tools from his office with the intent to deprive the owners of the property is an example of larceny.

True

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

Goods may be offered for sale in an auction with reserve or without reserve.

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

Private citizens are entitled to sue on the basis of the Water Pollution and Control Act.

True

The consideration in a sales contract is known as the price.

True

The contract and the memorandum required by the Statute of Frauds must set forth all the material terms of the transaction.

True

Those defenses thought to be so important that they are preserved even against a holder in due course are called real.

True

When a person dies intestate, the laws of the decedent's state of residence will dictate how his personal property will be divided among his heirs.

True

A person not party to contract but whom parties intended to benefit is known as a(n) _____.

third-party beneficiary

A _____ is a written contract obligation, usually under seal, generally issued by a corporation, a municipality, or a government, that contains a promise to pay a fixed amount of money at a set or determinable future time.

Bond

Which of the following best describes a restrictive indorsement?

It is an indorsement that attempts to prevent the use of the instrument for anything except the stated use.

Which of the following best describes alteration?

It is an unauthorized change in an instrument that purports to modify in any respect the obligation of a party.

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.

Which of the following best describes delivery?

It is the intentional transfer of possession and control of something.

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.

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.

Which of the following is a requirement of negotiability?

The instrument must be in writing and signed by the party executing it.

Which of the following is true of a jury trial procedure?

The jury is selected before an opening statement is made by the attorney.

A dentist who performs services without a license is entitled to sue to collect for the services.

False

Administrative agencies cannot hire scientists and researchers to study industries on their own accord.

False

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.

If two minors enter into a contract, each has the right to avoid it.

True