Final Exam Business Law
In Green v. Ford Motor Co., the case in the text, the Indiana Supreme Court held that in crashworthiness cases alleging enhanced injuries:
?? (INCORRECT: the plaintiff's alleged negligence is considered, regardless of whether it was the proximate cause of the injuries he sustained.)
The implied warranty of fitness for a particular purpose is violated when the goods are:
?? (INCORRECT: unfit for any use).
Which of the following is true of the period during which parties can file a lawsuit for breach of a sales contract?
?? (incorrect: The parties can extend it for a period longer than six years after the breach occurs.)
Generally, statutes that require proof of character and skill and impose penalties for violation are considered to be _______ in nature.
?? (remedial I think, but NOT revenue-raising)
_____ are legal reasons for avoiding or reducing liability of an individual who is liable on a negotiable instrument.
?? INCORRECT: excuse defenses
Which of the following defeats a bank's liability for failing to observe a stop-payment order?
?? NOT That the bank has the customer sign a disclaimer holding the bank harmless for its failure to exercise ordinary care and good faith regarding its handling of stop-payment orders.
In the case in the text, Janke v. Brooks, the court concluded that:
?? NOT the UCC did apply because the services rendered were incidental.
Which of the following is not considered when determining a reasonable time in which a demand instrument is due?
??? INCORRECT: trade or bank usage
An exclusive manufacturing deal between a manufacturer and a distributor imposes a duty on:
both parties.
Which of the following is a personal defense against a holder in due course?
breach of contract
A bankruptcy petition under Chapter 7:
can be filed either by the debtor or his creditors.
Generally, a buyer in the ordinary course of business can take property free from any security interest. Which of the following buyers is an exception?
A person buying farm products from a farmer
Which of the following is an example of a seller breaching a contract?
Failing to make an agreed delivery
Anticipatory repudiation is disallowed under the UCC.
False
Sam agrees to make partial deliveries of goods over three months to Winston. The first delivery was late by two weeks. Why should Winston object to this late delivery?
Winston may waive his rights to cancel the contract if other deliveries are late.
The transfer of a right under a contract is called a(n):
assignment
Like a false statement of fact, _____ can be the basis for a claim of misrepresentation or fraud.
concealment
In discovery, a(n) _____ employs the oral examination of the other party or of a likely witness, usually from the other party.
deposition
Business compulsion is another term for:
economic duress
Which of the following is a nondischargeable debt?
educational loans
An accidental destruction or mutilation of a negotiable instrument discharges the parties to it.
false
An exculpatory clause imposes strict tort liability on both the parties involved in the contract.
false
Anticipatory repudiation is not a breach that would allow the non-repudiating party to discharge itself from its obligation under a contract.
false
Any authorized ownership and exercise over an instrument is referred to as conversion.
false
As long as there is consideration, it does not matter whether the contract is legal.
false
As master of the offer, the offeror has the power to revoke any offer at any point in time.
false
Assignees typically receive greater contract rights than an assignor.
false
Duress involves the use of unfair persuasion.
false
Generally, the terms of a standardized contract are negotiable.
false
If a buyer accepts a part of a commercial unit of goods, he is considered to have accepted only that part of the unit.
false
If a law is passed after a contract is entered into that makes performance more difficult, the promisor is excused from performing.
false
_____ is the process by which any rights of the mortgagor or the current property owner are cut off.
foreclosure
A clause in a contract that states that disputes between contracting parties must be litigated in a court in a particular state is known as:
forum selection clause
The statute of limitation provision of the UCC holds that for contracts for the sale of goods (in the absence of contractual agreement to the contrary), the period of time within which a lawsuit must be commenced is:
four years
The Fifth and _____ Amendments require that the federal government and the states observe due process when they deprive a person of life, liberty, or property.
fourteenth
Caveat emptor means let the buyer beware.
true
Chapter 12 is available only for family farmers and fishermen with regular income.
true
If the seller has justifiably withheld delivery of the goods because of the buyer's breach, the buyer may:
recover any money or goods he has delivered to the seller over and above the agreed amount of liquidated damages.
Which of the following is a remedy in the case of an erroneous expression of an agreement due to an error in drafting?
reformation
If the purpose of a statute is to protect the public against dishonest or incompetent practitioners, it can be called _____ in nature.
regulatory
A remedy where the court orders a breaching party to perform his or her exact duties under the contract is known own as:
specific performance
A security interest is said to be a property interest in the collateral.
true
An important equitable remedy is an injunction, which is a court order forbidding a party to do some act or commanding her to perform some act.
true
Any contract that creates or transfers an interest in land is within the statute of frauds.
true
Basic assumptions about contracts include the identity, existence, quality, or quantity of the subject matter of the contract.
true
Commercial paper is basically a contract for the payment of money.
true
Electronic funds transfers between business and financial institutions are generally referred to as wholesale wire transfers.
true
Gizmo Inc. manufactures gadgets that are distributed to retailers for further sale. In Gizmo's hands, the gadgets are inventory.
true
Good faith under UCC means behavior that is honest and reasonable.
true
If Grant promises to sell his regular season football tickets to Carson on condition that Indiana University wins the Rose Bowl, Indiana's winning the Rose Bowl is an express condition of Grant's duty to sell the tickets.
true
If a seller gives a written warranty for a product to a consumer, the warranty must be designated as full or limited.
true
If goods are shipped to the buyer through cash on delivery (COD), the buyer must pay for the goods before inspecting them unless they are marked "Inspection Allowed."
true
If no agreement is made regarding the place of delivery, then the goods are to be delivered at the seller's place of business.
true
If the debtor defaults on his agreement with the creditor, one of the creditor's options is to repossess the collateral and then sell it.
true
If the purpose of the legislation is to protect the public against dishonest or incompetent practitioners, it is said to be regulatory.
true
The UCC definition of a "check" includes a "cashier's check" and a "teller's check."
true
The bank's right or duty to pay a check or to charge the depositor's account for the check can be terminated by a depositor's oral stop-payment order.
true
The death of the offeror or offeree will terminate an offer.
true
The enactments made by counties and municipalities are called ordinances.
true
The party who has agreed to pay the negotiable instrument is said to be primarily liable.
true
The practice of judges following the decisions of other judges in similar cases is formalized in the doctrine of stare decisis.
true
The preemption defense rests on a federal supremacy premise—the notion that federal law overrides state law when the two conflict or when state law stands in the way of the objectives underlying federal law.
true
To rescind a contract means to cancel it.
true
Under the UCC, a remedy limitation blocking recovery of personal injury caused by consumer goods is almost always unconscionable.
true
Under the UCC, if a buyer treats goods as if he owns them, the buyer is considered to have accepted them.
true
Which of the following characterizes promissory estoppel?
It prevents unfairness when there is justifiable reliance on a promise.
Which of the following is true of the UCC?
It recognizes the concept of good faith dealing.
Which of the following is NOT covered by Article 2 of the UCC?
Stocks
When there is a conflict concerning the amount on a check between the printed and the handwritten terms, the handwritten term will prevail.
TRUE
The age of majority in almost all states for contract purposes is 21.
false
The assignee of a contract can obtain greater rights than the assignor had at the time of the assignment.
false
The law holds that the mere fact that a party to a contract had been drinking when the contract was formed affects his/her capacity to contract.
false
The legal term for innocent representation is "scienter."
false
The objective of the UCC in regards to remedies for contract breach is to punish the offending party.
false
The parol evidence rule can be used to introduce additional terms in a contract but not for explaining ambiguities in it.
false
The parol evidence rule forbids parties from introducing proof of subsequent agreements.
false
The unsecured credit transaction involves a maximum of risk to the debtor.
false
To accept an offer for a unilateral contract, the offeree must make the promise requested by the offeror.
false
In order for a security interest in goods to attach, one of the requirements is that the debtor must:
have rights in the goods.
The freedom of speech receives a high level of protection by the Constitution because under the "marketplace" rationale:
ideas need to operate freely.
An instrument can be made payable to two or more payees.
true
Petitions for reorganization proceedings can be filed:
voluntarily by the debtor or involuntarily by its creditors.
Which of the following is a negotiable instrument?
"Please pay the bearer the amount of $500."
Which of the following statements, if false, is most likely to create liability for fraud or misrepresentation?
"This crane will lift a 10,000-pound load."
Which of the following would not destroy negotiability?
"This note is secured by a mortgage dated January 1, 2014."
In the case of a family fisherman, the debtor and spouse engaged in a commercial fishing operation are eligible for relief under Chapter 12 if their aggregate debts do not exceed:
$1,868,200 and not less than 80 percent of their aggregate noncontingent liquidated debts arise out of the commercial fishing operation.
Ace Computers (AC) is a manufacturer. It entered into a contract with a retailer, Reliable Computer (RC) for the sale of 100 new XYZ model computers at $1,000 each, for delivery in six months. AC would thus make a profit of $50,000. Six months later however, the XYZ model has become almost obsolete; its market price is only $100 at that time. RC refuses to accept or pay for those computers. If AC sues, how much should it be entitled to in damages? (Ignore any incidental expenses or cost savings to AC.)
$90,000, the difference between market price and contract price.
Under the Electronic Funds Transfer Act how many days do operators of EFT systems have to investigate errors or provisionally recredit a consumer's account?
10 working days
Bob contracts to sell Ben 20 bales of hay at $10 per bale. A bale is the accepted commercial unit in hay transactions. Ben accepts only 9 1/5 of the 20 bales. Ben will have to pay _____.
100$
Gayle agrees to pay Pat $1,000 for painting her house "on condition that" Pat finish the job no later than October 1, 2016. Which of the following statements is false?
?? NOT correct: If Pat does not finish the job by October 1, 2016, he will have breached the contract.
Which of the following can a buyer do if the goods delivered by the seller do not conform to the contract?
?? (INCORRECT: Accept only part of a commercial unit and reject the rest)
Which of the following statements about security agreements is false?
?? (INCORRECT: The security agreement must reasonably describe the collateral so that it can readily be identified.)
Mike operates an upholstering business. He goes to Hans' house to reupholster a sofa for Hans. After the work was complete, Hans refused to pay the agreed price. Mike wants to assert a lien against the sofa in order to collect the money due to him. Is Mike entitled to a lien under these circumstances?
?? (INCORRECT: Yes, because he is an artisan who improved personal property.)
As demonstrated in the case in the text, In re Bernard Madoff Investment Securities, a trustee:
?? (INCORRECT: can seek to prevent discharge of the debtor's unpaid liabilities.)
In a chain of distribution involving defective component parts, the parts may move _____ from their manufacturer to the manufacturer of a product in which those parts are used, and then to a wholesaler and a retailer before reaching the eventual buyer.
?? (INCORRECT: horizontally)
If a state allows disaffirmance despite the minor's misrepresentation of age, which of the following would a court likely hold the minor responsible for?
?? (NOT nothing)
In the case in the text, J.T. ex rel Thode v. Monster Mountain, LLC, why did the court deny the defendant's motion for summary judgment?
?? (NOT that the minor did not sign the pre-injury waiver)
Which of the following statements does NOT affect an instrument's negotiability?
?? INCORRECT An instrument that says: "This confirms my $1,000 debt to Sue Smith."
Which of the following indorsements is a blank indorsement?
?? INCORRECT: for deposit only
If the drawee bank mistakenly paid a check with a forged or unauthorized drawer's signature on it:
?? INCORRECT: the bank can recover if it paid the check to a presenter who had taken the instrument in good faith and for value.
If Jay signs Mila's name to a negotiable instrument without Mila's authorization or approval:
?? INCORRECT: the signature is not effective as the signature is of the unauthorized signer.
S agrees to sell B 10,000 widgets at a price of $1 per widget. After B breaches the contract, S resells the widgets for $0.90 per widget. As a result of selling the widgets at a lower price, S loses $100 in sales commissions. What amount can S recover from B?
?? NOT 1000
Which of the following is true in case of death or incompetence of a customer?
?? NOT If a bank knows of a customer's death, it can pay checks written by the customer prior to his/her death, for a period of 30 days.
Which of the following statements about a creditor's right to repossess collateral is false?
?? NOT The creditor can obtain the collateral through self-help if she can obtain possession peacefully.
National bank is reluctant to lend money to James because of his shaky financial condition. However, the bank is willing to lend money to James if he signs the note and a friend also signs the note. Here, the friend serves as the:
?? NOT deponent
In the eventuality of nondelivery by the seller, which of the following would be reduced from the amount of damages claimed from the seller?
?? NOT incidental damages
In the case in the text, In re Rogers, the court found in favor of Rogers and held that she was entitled to her full homestead exemption. In reaching this conclusion, the court analyzed:
?? NOT whether Wallace was entitled to recover as a matter of law.
Which of the following is not one of the presentment warranties that the holder of an unaccepted draft makes to the drawee?
?? incorrect: That the draft has not been altered.
Marie wants to buy Ted's farm. She agrees to pay Ted a monthly payment towards the farm, to take possession and to insure the property. Ted retains the legal title while Marie is making payments. What happens if Marie misses a payment?
??? (INCORRECT: Ted can exercise his rights under strict foreclosure.)
In the case in the text RR Maloan Investment v, New HGE, what affect did post-dating the check have on the negotiability of the check at issue?
??? INCORRECT: The check was no longer negotiable because it was post-dated over a month.
In the event of a breach of a presentment warranty:
??? INCORRECT: the drawee's right to recover damages for breach of warranty is annulled by any failure on the part of the drawee to exercise ordinary care in making payment.
Which of the following is true of check collection?
??? NOT Checks and other drafts collected through the banking system usually have two parties—the drawer and the drawee bank.
Which of the following distinguishes the Restatement (Third) from section 402A?
??? NOT It covers manufacturing defects.
Which of the following was the court's holding in the case in the text Music Acceptance Corp. v. Lofing?
??? NOT The FTC rule was inapplicable because the transaction did not exceed $25,000.
Clint wrote a check to pay for his phone bill. The amount of the bill was $50. He wrote out the words "Fifty dollars only" but he also wrote "$60" in the area for numbers. As a result, the check:
??? NOT is disqualified as a negotiable instrument, unless Clint's intent is ascertained.
Which of the following additional terms will render an instrument nonnegotiable?
A clause that provides for an undertaking in addition to the payment of money.
Jack went to the ABC Casino to gamble. ABC offers its customers one free spin of the Million Dollar Wheel if they fill out an application form. Jack filled out the form, spun the Million Dollar Wheel, and won. However, now ABC refuses to pay, claiming that because Jack did not purchase his chance at the Million Dollar Wheel, Jack gave no consideration and therefore, no contract was formed. Identify the accurate statement.
A contract was formed because filling out an application can constitute legal consideration.
What is a liquidated debt?
A debt that is due and certain.
Which of the following is true of postdated checks?
A postdated check can be payable before the date on the check and charged to the customer's account unless the customer has given a notice of it to the bank.
In which of the following circumstances will the UCC gap-filling provisions apply?
A price term that the parties inadvertently left out on an otherwise valid contract.
Which of the following is not an example of an express warranty?
A statement that made that this car gets great gas mileage.
Which of the following is not true under the 2005 changes to the Bankruptcy Code?
A trustee is no longer necessary
Which of the following can a buyer do if the goods delivered by the seller do not conform to the contract?
Accept any commercial units and reject the rest
Apart from the elements of rescission, what must a person who seeks to recover damages for deceit establish?
Actual economic injury
Ian, a lawyer, sent an offer to Raymond on October 1 offering to sell Ian's car for $5,000. The offer did not contain a provision stating when it would terminate. Under these circumstances, when will that offer terminate?
After a "reasonable time."
When one of the contracting parties informs the other party that the performance will not occur as required, this is known as:
Anticipatory repudiation
Which of the following occurs when the promisor indicates before the time for his performance that he is unwilling or unable to carry out the contract?
Anticipatory repudiation
Which of the following statements about consequential damages is false?
Any attempt to limit consequential damages for injury caused to a person by consumer goods is considered unconscionable per se.
If it is not indicated in the memorandum, where should the parties sign to make the document enforceable?
Any place on the memorandum
Negotiable instruments are primarily governed by:
Article 3 of the Uniform Commercial Code
When Oliver Wendell Holmes said, "It is the essence of a consideration that, by the terms of the agreement, it is given and accepted as the motive or inducement of the promise," he was referring to:
Bargained-for exchange
In the case in the text Lehigh Presbytery v. Merchants Bancorp, why did the court find in favor of Lehigh Presbytery?
Because the check contained a restrictive indorsement and the bank had an unwaivable obligation to follow it.
What bodies of law govern contracts in the United State? Article 2 of the UCC Common law related to contracts The United Nations Declaration on Human Rights Both A & B
Both A & B
Mike signs a note payable to a bank. The bank indorses and negotiates the note to Fay, who then indorses and negotiates it to Sam. Sam presents the note to Mike, who dishonors it. Then Sam decides to pursue Fay and the bank on their secondary indorsers' liability. Against whom can Sam proceed?
Both Fay and the bank
Which of the following is the reason why the UCC distinguishes between merchants and nonmerchants?
Buyers tend to place more reliance on professional sellers because they are generally more knowledgeable and better able to protect themselves than nonprofessionals.
If a secured creditor has perfected a security interest by filing a financing statement, how would the creditor extend the five-year period of perfection if the debt is not paid off by then?
By filing a continuation statement.
Which of the following is common way a seller breaches a contract?
By indicating that the contract obligations will not be fulfilled as promised
Xavier deeds to Peter, a trustee, his property in the form of security for the loan, which is lent by Smith, the beneficiary of the trust. The nature of this transaction renders it as a deed of trust. Under these circumstances, if Xavier defaults to pay the loan, which of the following is the appropriate way in which Smith can recover his loan?
By notifying Peter to sell the property
Which of the following is a common way in which a buyer may breach a contract?
By wrongfully refusing to accept goods
Which of the following terms in a contract for the sale of goods requires the seller to insure the goods?
CIF
The test used under the UCC to excuse a person from performance on a contract is which of the following?
Commercial impracticability
Which source of law requires the acceptance to be a "mirror image" of the offer in order to form a contract?
Common Law
Why is silence, in general, not considered to be an acceptance?
Contract law requires an objective indication that an offeree intends to contract.
Dawson entered into a contract with Jensen for the sale of Dawson's boat. Which set of legal rules governs this transaction?
Contract rules of the Uniform Commercial Code
The simple failure to notice a hazardous product defect likely creates which of the following traditional defenses to a product liability lawsuit?
Contributory negligence
Which of the following takes the case away from the jury and provides a judgment to one party before the jury gets a chance to decide the case?
Directed verdict
If a court refused to grant a remedy for breach of a contract because it found the contract to be oppressively unfair, the court is employing which of the following doctrines?
Doctrine of unconscionability
Which of the following can restrict a seller's ability to disclaim implied warranties?
Doctrine of unconscionability
If the seller contracts to deliver goods to a certain destination and the contract says "Ex-ship," the seller bears the risk of loss until it delivers the goods to a shipper.
FALSE
A contract in which one party to the agreement agrees to buy all of the other party's production of a particular commodity is called a requirements contract.
False
Article 2 of the Uniform Commercial Code regulates secured transactions in personal property.
False
Because all goods are replaceable, specific performance is not available under the UCC.
False
Parol evidence can be used to contradict the written terms of a partially integrated contract.
False
Punitive damages are designed to compensate the plaintiff for harm suffered due to a defective product.
False
To accept an offer for a bilateral contract, the offeree must perform the requested act.
False
According to this test, the court might say that the challenged law must be necessary to the fulfillment of a compelling government purpose.
Full strict scrutiny
Payne borrowed $500 from Long Bank. At the time the loan was made to Payne, Gem orally agreed with Long that Gem would repay the loan if Payne failed to do so. Gem received no personal benefit as a result of the loan to Payne. Which of the following is most likely to be true, under the circumstances?
Gem is free from liability concerning the loan.
_____ means honesty in fact as well as the observance of reasonable commercial standards of fair dealing in the trade.
Good faith
When would the amount of liquidated damages agreed to by both parties in a contract be considered unconscionable?
If the amount were too small compared to the possible losses
In which of the following circumstances are offerors free to revoke their offers?
In case of common law rule on revocation.
Which of the following correctly states a purpose of the parole evidence rule?
It aids in resolving ambiguities in a contract.
Why is the contract for the insurance of a building not covered within the real estate provision of the statute of frauds?
It does not involve the transfer of interests in land.
Which of the following statements about the strict performance standard is correct?
It is applied to contracts that can involve a high degree of perfection.
Which of the following is true of a bilateral, executory contract that cannot be performed within one year from the day on which it comes into existence?
It must be evidenced by a writing.
Vibes electrical appliance store sold a new plasma TV to Martha on credit sale, following which Martha signed a purchase money security interest agreement. What must Vibes store do to perfect its security interest?
It need not do anything in order to perfect its security interest.
Which of the following statements holds true for the term "claims in recoupment?"
It refers to claims that arise out of the transaction that gave rise to the instrument.
James contracts to sell Cade three used power saws. The saws are located at James's business. The contract does not state a place of delivery. The place of delivery is:
James's place of business.
Linda agrees to make partial deliveries of goods over two months to Janet. The first delivery was late by a week. Why should Janet object to this late delivery?
Janet may waive her rights to cancel the contract if other deliveries are late.
The parties to a contract may expressly provide in their contract that a specific sum shall be recoverable if the contract is breached. What are such provisions called?
Liquidated damages
In the case in the text, Yung-Kai Lu v. Univ. of Utah, the court held that:
Lu's claim was barred by the statute of frauds and under Utah's parol evidence rule, he could not testify to any pre-contract verbal agreement.
Mike, a minor, buys some real estate as an investment. The contract obligates Mike to make monthly installment payments for 10 years. Mike reaches the age of majority one month after making the contract. After this, Mike makes 25 monthly payments under the contract, but then decides that he wants to rescind the deal. Which of the following is most true?
Mike cannot disaffirm because he has already ratified the contract.
The court in Weil v. Murray, the case in the text, found that the buyer accepted the painting. Which of the following is not one of the reasons the court used to reach this conclusion?
Murray proposed a counteroffer, which Weil unequivocally accepted.
Abe took his bicycle to a bicycle shop for repair. By mistake, a sales clerk sold Abe's bike to Leon. This was a sale in the ordinary course of business; neither the clerk nor Leon was aware that the bike belonged to Abe. Can Abe recover his bike from Leon?
No, because Abe entrusted his bike to the bike shop.
"Tool For You" (TFY) is a company that sells power tools to consumers. The sales contract of TFY states that it will not be liable for any consequential damages that the consumer suffers as a result of using power tools purchased from them. Harry purchased a table saw from TFY for use in his hobby of woodworking. Harry was injured when the saw blade flew off. He wants to sue TFY but is not sure whether the contract provision limiting consequential damages will be enforced and seeks your opinion. Will TFY prevail?
No, because Harry is a consumer.
John received a check from his employer marked "pay to the order of John Jones." John used this check to pay for groceries from ABC Foods. He wrote on the back of the check: "pay to ABC Foods, for groceries." Was this check properly negotiated?
No, because John did not indorse the check.
Kate once helped Robin when she was in debt years ago. Robin was grateful to her and promised to help her if she was ever in need of it in the future. Several years later, Kate sends her résumé to Robin's office, seeking a job and reminding her of the promise. Is Robin obligated to hire Kate due to her promise made years ago?
No, because promises of moral obligation lack actual consideration.
In Noble Roman's v. Pizza Boxes, the case in the text, the court held that:
Noble Roman's was only required to pay the "printing prep" charges in the event Pizza Boxes did not manufacture the 2.5 million boxes.
Which of the following is not an example of consequential damages?
Nominal damages
A clause in a contract that prevents an employee from working for an employer's competitor after the employment relationship terminates for a specified time and in a specified geographic area is referred to as a(n):
Noncompete clause
Tony works for Rachel's CPA firm. As part of the employment contract, they agreed that if Tony left Rachel's employment, he would not be able to try to obtain clients from Rachel's to become his clients in another CPA firm. This is an example of which of the following?
Nonsolicitation agreement
Smith Auto Sales has a secured loan on its inventory through Northshore Credit Union, which Northshore filed in February. In March, Smith Auto Sales has another secured loan on its inventory from GMAC credit. GMAC files its security interest in May. Which creditor will have priority in the event of a default by Smith Auto Sales?
Northshore will have priority and it will have its debt satisfied prior to GMAC receiving funds.
Bill submits a time card for a non-existent employee. The employer issues the payroll check. Bill forges the indorsement and negotiates the check to Ted. Which of the following statements is true?
Ted submits the check to the employer and receives the face amount.
Which of the following bankruptcy proceedings allows a debtor to work out a plan to solve his financial problems under the supervision of federal court?
Reorganizations
Which of the following describes depositions?
Oral examinations of a party by the opposing party's attorney.
Which of the following, in the context of contracts, means to terminate the contract as to future transactions or to annul the contract from the beginning?
Rescind
Which of the following is payable to the order of a specific person?
Order paper
Which of the following considers a properly dispatched acceptance sent by any reasonable means of communication within a reasonable time to be effective on dispatch?
Restatement (Second)
In the case of successive assignments, the _____ provides that the first assignee has priority unless the subsequent assignee gives value and, without having reason to know of the other assignee's claim, obtains payment of the obligation.
Restatement (Second) of Contracts
Which of the following is the only form of perfection that occurs without the giving of public notice?
Perfection by attachment
Pete contracts to sell Jill 100 widgets. The 100 widgets are located at Pete's business. The contract does not state a place of delivery. The place of delivery is:
Pete's place of business.
Diane Ellis ordered 50 laptops computers for her staff from Pinnacle Corp. with a clause of immediate delivery. However, Pinnacle had only 25 in stock. Since Pinnacle knew of Diane's urgency, it sent another 25 tablets along with the laptops; it also notified Diane of the development. Which of the following is likely to be the outcome if Diane sues Pinnacle Corp. for breach of contract?
Pinnacle will win because it has notified Diane within reasonable time.
Blood Donation Center is a charitable organization that collects blood to distribute to hospitals. Jennifer Lynn a wealthy philanthropist promises to donate $500,000 to the organization. In reliance on Lynn's promise, Blood Donation Center buys a new mobile blood donation van. Lynn later changes her mind and decides not to donate the money. Which of the following can help Blood Donation Center in enforcing Lynn's promise to donate the money?
Promissory estoppel
Which of the following are damages awarded in addition to the compensatory remedy that are designed to punish a defendant for particularly reprehensible behavior and to deter the defendant and others from committing similar behavior in the future?
Punitive damages
Which of the following states that government action need only have a reasonable relation to the achievement of a legitimate government purpose to be constitutional?
Rational basis test
Which of the following deals with a secured party making sure she has a superior right to pledged collateral compared to other creditors?
perfection
In order to accept an offer to enter a unilateral contract, the offeree must:
perform the requested act given in the contract.
To accept an offer for a reward and be entitled to it, an offeree must:
perform the requested act.
The rule that a holder in due course of a negotiable instrument is not subject to _____ between the original parties to it makes negotiable instruments a readily accepted substitute for money.
personal defenses
When courts are faced with interpreting a contract to determine the meaning and legal effect of the terms used by the parties, the court will first attempt to determine the:
principal objective of the parties.
Notice of adverse action by the government and a fair hearing are cornerstones of:
procedural due process
Unfairness in the bargaining process of an agreement is referred to as "_____" by courts.
procedural unconscionability
Joe writes a check payable to Advanced Autos. The check is drawn on his checking account with Progressive Bank. The drawee on this check is:
progressive bank
Promissory notes and certificates of deposit issued by banks are:
promises to pay someone money.
Jack borrows money from Joey to purchase a house. Joey who makes the loan and takes a mortgage on the house has Jack sign a document for the amount due on the loan. The document signed by Jack is a:
promissory note
The simplest form of commercial paper, simply a promise to pay money, is a ________.
promissory note
When the seller of goods retains a security interest in goods until they are paid for, the security interest that is created and attached to the goods is known as a(n) _____.
purchase money security interest
A _____ indorsement is one where the indorser disclaims her liability to make the instrument good if the maker or drawer defaults on it.
qualified
"Without Recourse" identifies:
qualified indorsements
Ty is hit by a car and is unconscious. Dr. Brayden, a medical doctor happened to be at the scene of the accident and treats Ty's injuries. To prevent any injustice, Dr. Brayden may try to seek payment using the doctrine of a(n):
quasi-contract
The main purpose of the taxing power is to:
raise revenue for the federal government.
_____ means that a person pursues some course of action because of his/her faith in an assertion made to him/her.
reliance
A _____ indorsement is one that specifies the purpose of the indorsement or specifies the use to be made of the instrument.
restrictive
When the bank receives a check to withdraw from a drawer's account which has insufficient funds, the bank may:
return the check.
George has signed a promissory note, and Huber, Nick, and Jeffery are cosureties of their friend George. When George defaults, Jeffery pays the whole obligation. Jeffery is entitled to collect one third from both Nick and Huber. This is known as the:
right to contribution.
In general, courts use the _____ in order to determine whether a manufacturer was negligent in adopting a particular design.
risk-utility test
Which of the following is used when goods are delivered to the buyer primarily for resale with the understanding that the buyer has the right to return them?
sale or return contract
_____ at auctions are generally treated as making an invitation to offer.
sellers
If a payee is so negligent in writing or signing a negotiable instrument that she in effect invites an alteration or an unauthorized signature on it:
she is liable for the instrument in the amount to which it was altered and differed from the amount which she originally issued.
Any person who can trace his title to an instrument back to a holder in due course receives rights like those of a holder in due course even if he cannot meet the requirements himself. This is known as the _____ in Article 3.
shelter rule
Tom purchases a software package. When he opens the bundle, he finds that the CD is sealed in an envelope and that it bears a label stating that by opening the envelope, he is accepting the terms of a license agreement. The label further states that if he does not want to accept the terms of the license, he can return the software. This is an illustration of a(n):
shrinkwarp contract
Jim purchased software on a CD-ROM disc to complete his taxes. The CD-ROM was bundled in a sealed package with a notice that stated that the consumer was agreeing to the terms of the proposed standardized license agreement when he broke the seal on the packaging. This is called a(n) ____ contract.
shrinkwrap
Janet goes to an electronics store to purchase design software. The software comes in a sealed package and when Janet opens it, she finds that the CD containing the program is sealed in an envelope that states, "By opening this envelope, you are accepting the terms of the license agreement that is contained in this packaging. If you do not want to accept the terms of the license, you can return this product." This method of contracting is referred to as:
shrinkwrap contracting.
In order to satisfy the statute of frauds, the parties' writing must be:
signed by the "party to be charged."
The drawee does not have liability on the instrument until it _____ the instrument.
signs
The 2005 revisions to the Bankruptcy Code created a special subclass of "_____" debtors for which a debtor with less than $2 million in debts would qualify.
small business debtors
Consequential damages are also known as:
special damages
Which of the following means that the buyer can require the seller to give the buyer the exact goods covered by the contract?
specific performance
Ashley says to Ford, "I'd like to buy your house," and Ford responds, "You've got a deal." This exchange lacks _____.
specificity
The doctrine of _____ requires that the plaintiff have some direct, tangible, and substantial stake in the outcome of a litigation.
standing to sue
Applying prior cases to decide present ones falls under the doctrine of:
stare decisis.
_____ are created by elected representatives in Congress or a state legislature.
statutes
When the offeror specifies the precise time, place, and manner in which acceptance must be communicated, it is called a(n) _____.
stipulation
When the offeror, as the master of the offer, specifies the precise time, place, and manner in which acceptance must be communicated, it is termed as a(n) _____.
stipulation
A _____ is a request made by a customer of a drawee bank instructing it not to pay or certify a specific check.
stop-payment order
When an assignee reassigns a right to a third party, the third party is referred to as a(n):
subassignee
An example of _____ unconscionability includes a situation in which a party to the contract bears a disproportionate amount of the risk because of the terms of the contract itself.
substantive
A person liable for the payment of another person's debt or for the performance of another person's duty is a:
surety
A(n) "_____" is a person who is liable for the payment of another person's debt or for the performance of another person's duty.
surety
If a person other than the debtor joins the debtor and becomes primarily liable with the debtor in a promise to pay an obligation, the other person would become a ___________for the debt.
surety
A typewriter, which was subject to a prior UCC security interest, was delivered to Ed Fogel for repair. Fogel, who is engaged in the business of repairing typewriters, repaired the typewriter. However, the owner of the typewriter now refuses to pay for the services performed by Fogel. The state in which Fogel operates his business has a statute, which gives Fogel a mechanic's lien on the typewriter. Fogel's mechanic's lien:
takes priority over a prior perfected security interest unless the statute expressly provides otherwise.
An absolute $160,375 homestead cap applies if:
the bankruptcy court determines that the debtor has been convicted of a felony demonstrating that the filing of the case was abuse of the provisions of the Code.
According to legal positivism, law is defined as:
the command of a recognized political authority.
A buyer is entitled to the remedy of specific performance when:
the contract is for unique goods.
If a negotiable instrument is payable on demand, it is overdue:
the day after demand for the payment has been made in a proper manner and form.
If an involuntary petition is filed against a debtor engaged in business:
the debtor may be permitted to continue to operate the business.
A representative is personally liable to a holder in due course that took the instrument without notice that the representative was not intended to be liable if:
the form of the signature does not show unambiguously that the signature was made in a representative capacity.
Rachel's father gave her a check drawn on his checking account marked "payable to the order of Rachel Stern." This instrument is order paper, because:
the instrument names a specific payee.
If an instrument is negotiable, _____ controls in determining the rights and liabilities of the parties to the instrument.
the law of negotiable instruments in the UCC
In the form of alternative dispute resolution (ADR) called court-annexed arbitration:
the losing party has the right to a regular trial.
If the material terms of the note are not complete when the maker signs it, then:
the maker's obligation is to pay the note as it is completed, provided that the terms filled in are as authorized.
Certified checks must be made available by:
the next day after the day of deposit.
When negotiations occur through the mail, there is usually a limit put on the time:
the offeree has to accept the offer.
In general, the mailbox rule is beneficial to:
the offeree.
A rejection of an offer is generally valid at the time:
the offeror receives it.
The common law placed the risk of loss on _____ at the time of the loss.
the party that had technical title
Courts begin their interpretation of a statute with its actual language. If the statute's words have a clear, common, accepted meaning, courts often employ:
the plain meaning rule.
In Capshaw v. Hickman, the case in the text, the court reversed the trial court's judgment because:
the pleadings did not reveal the underlying reasons for leaving the car in the driveway until Capshaw's check cleared.
To determine whether a proposal qualifies as an offer, courts first look at:
the present intent to contract.
A perfected security interest in fixtures has priority over the conflicting interest of an encumbrancer or owner of the real property if:
the security interest is a purchase money security interest.
The case in the text, Giddings & Lewis, Inc. v. Industrial Risk Insurers, is an example of how:
the type of harm experienced by the plaintiff can be a factor in the determination of whether the case can proceed on a tort theory.
For the creation of a common law lien, it is important that:
the work or service is performed at the request of the owner of the property.
Modern courts stipulate that offerees are bound only by terms that:
they had reasonable notice of.
A claim of undue influence is generally not made among strangers.
true
A condition subsequent is a future, uncertain event that discharges the duty to perform.
true
A consumer's personal defenses are not valid against a holder in due course.
true
A contract in which one party to the agreement agrees to buy all of the produced goods of the other party is called an output contract.
true
A donee beneficiary of a contract can recover under that contract.
true
A fixed price is not essential to the creation of a binding sales contract.
true
A security interest is not legally enforceable against a debtor if it is not attached to one or more particular items of the debtor's property.
true
A statement in an advertisement can sometimes be considered an "express warranty."
true
A stop-payment order is a request made by a customer of a drawee bank to stop payment on a particular check or to certify a specified check.
true
A surety has a right of exoneration.
true
An agreement can be illegal even if no statute specifically states that such an agreement is illegal.
true
An implied warranty is a warranty created by operation of law rather than the seller's express statements.
true
An implied warranty is created by operation of law rather than stated by the seller or written in a contract.
true
An indorsement is a signature of the holder typically on the back of a check.
true
An instrument that is payable "to cash" can be negotiated simply by giving it to the person to whom you wish to transfer it.
true
An offer is the critically important first step in the contract formation process.
true
An offer that is unclear as to the form of the acceptance may be accepted in any manner that is reasonable in light of the circumstances surrounding the offer.
true
Because the real estate mortgage conveys an interest in real property, it must be executed with the same formality as a deed.
true
Ben, a Big Bank checking account customer, wrote a check for $1,000 to Mia. At the time that Mia presents the check for payment to Big Bank, Ben has $1,500 in his account. However, the clerk mistakenly refuses to pay the check and stamps it NSF. Mia then goes to the local prosecutor, and Ben is later arrested for writing a bad check. Ben could recover from Big Bank the damages involved in his arrest, such as attorney's fees.
true
Chica, a women's fashion retailer, buys merchandise from Tammy, a fashion designer, promising to pay for the merchandise within 30 days after receipt. This is an example of an unsecured credit transaction.
true
Contracts induced by misrepresentation or fraud are considered voidable.
true
Control is the only available perfection method if the collateral is a deposit account.
true
Foreclosure is the process by which any rights of the mortgagor or the current property owner are cut off.
true
Generally, a guarantor's promise must be made in writing to be enforceable under the statute of frauds.
true
Generally, the UCC uses the test of commercial impracticability to determine if a person can be excused from performing his contractual obligations.
true
If a buyer breaches a contract, the seller is not accountable to the buyer for any profit that the seller makes on a resale.
true
If a customer does not discover a forged check and report it to the bank within one year from the time of the statement containing the check, the bank is not obligated to recredit his account for the amount of the forged check.
true
If a holder of a negotiable instrument takes the instrument with knowledge that it is overdue, he or she will not have holder in due course status.
true
If the seller demands cash, the seller must give the buyer a reasonable amount of time to obtain it.
true
If there is a conflict between the express terms of the contract and the past course of dealing between the parties, the express terms of the contract prevail.
true
In a contract for a sale of goods the UCC requires that a memorandum or agreement must be signed by the either the party to be charged or his authorized agent.
true
In determining whether consideration exists, the law is generally not concerned with any disproportion in value between the things exchanged in a contract.
true
In employment contracts, noncompetition clauses are one form of agreement that places restrictions on an employee's conduct after the employment is over.
true
In general, ambiguities in a written agreement are resolved against the party who drafted the agreement.
true
In rem jurisdiction is based only on the fact that the property of the defendant is located within the state.
true
In the case of a demand instrument, the facts of the particular case determine a reasonable time for presentment for acceptance or payment.
true
In the case of nondelivery, instead of covering, the buyer can get the difference between the contract price of the goods and their market price at the time he learns of the seller's breach.
true
In the case of strict foreclosure, the creditor has no right to a deficiency and the debtor has no right to any surplus.
true
Indorsers are liable to each other in the chronological order in which they indorse, from the last indorser back to the first.
true
Interrogatories are a form of discovery requiring a party to file written answers to questions submitted to that party.
true
Jim Stanley writes a check on his checking account with a bank. In this instance, the bank is the drawee.
true
Julie receives her bank statement on March 1 and reports a forged check shown on the statement on April 23. Julie's bank must credit her account for the forged check.
true
Many Restatement (Second) provisions are similar to their analogous provisions in UCC Article 2.
true
Most states have passed statutes prohibiting or regulating a wage earner's assignment of future wages.
true
Neither a corporation nor a partnership is eligible for a discharge in bankfruptcy.
true
One example of procedural unconscionability is the use of "fine print" in stating a contractual provision.
true
One way of perfection by possession of the collateral is through a field warehousing arrangement.
true
Only the original offeree can accept an offer from the offeror.
true
Only unsecured creditors are required to file proofs of claims.
true
Parties to a sales contract should act in a commercially reasonable manner and in good faith.
true
Personal defenses arise out of the transaction in which the negotiable instrument was issued and are based on negotiable instruments law or contract law.
true
Procedural unconscionability indicates the lack of voluntariness as shown by a marked imbalance in the parties' bargaining positions.
true
Promissory estoppel is a doctrine used to prevent injustice by not allowing one to enforce a promise, even if a contract may not have been formed.
true
Specific performance applies when the goods covered by a contract are unique and finding substitutes is not possible.
true
Statements of value or opinion are not considered to be an example of express warranty.
true
Straight bankruptcy, also known as liquidation, is covered under Chapter 7 of the Bankruptcy Code.
true
The First Amendment restricts the federal and state government's ability to abridge one's speech.
true
The exercise of the power of judicial review depends on the court's reading of the Constitution.
true
The form of the indorsement that the indorser uses affects future attempts to negotiate the instrument.
true
The instrument of ratification ends the right of a person to rescind a contract.
true
The obligation to carry out a contract in good faith is usually called the implied covenant of good faith and fair dealing.
true
The offeror has the power to include a stipulation in the offer.
true
The offeror is said to be "the master of the offer." This means that offerors have the power to determine the terms and conditions under which they are bound to a contract.
true
The priority claims to a bankruptcy estate are paid after the secured claims but before the unsecured claims.
true
The secured party whose interest in fixtures is perfected will have priority where the security interest is perfected prior to the time the goods become fixtures.
true
The signature constituting an indorsement can be supplied or written either by the holder or by someone who is authorized to sign on behalf of the holder.
true
The sources of assignment law today are the common law of contracts and provisions of the Uniform Commercial Code.
true
The statutes of limitations set an express statutory time limit on a person's ability to pursue any legal claim.
true
The substantial performance standard is more lenient than the strict performance standard of judicial contract legal interpretation.
true
The term condition means an event that may affect a party's duty to perform under a contract.
true
The traditional rule is that, when the consideration given by the adult party under a minor's contract has been lost, damaged, destroyed, or has depreciated in value, the minor can disaffirm without compensating the adult for the loss in any way.
true
To qualify as a buyer in the ordinary course of business, the buyer must transact in good faith and without knowledge that the transaction may violate the ownership rights of a third party.
true
Unfairness in the bargaining process is typically thought of as procedural unconscionability.
true
Warranties may be utilized before presentment has been made or after the time for giving notice has expired.
true
When one of the parties offers a disproportionately small amount of money in settlement of a debt and refuses to pay more, it is a form of economic duress.
true
Wire transfer is used for transfer of funds across the country or around the world. This service is generally used by large business and financial institutions.
true
A seller's ability to disclaim implied warranties is sometimes restricted by the doctrine of:
unconscionability.
A contract that "shocks the conscience of the court" is said to be ______.
unconscionable
Jerry owns a parcel of land. Nate, one of Jerry's closest friends and an attorney, persuaded Jerry to sell the land to Nate at a price substantially below fair market value. At the time Jerry sold the land, he was resting in a nursing home recovering from a serious illness. If Jerry desires to set aside the sale, which of the following causes of action is most likely to be successful?
undue influence
Like duress, undue influence involves wrongful pressure exerted on a person during the bargaining process. In ________, however, the pressure is exerted through persuasion rather than through coercion.
undue influence
An otherwise valid contract whose enforcement is barred by the applicable statute of limitations is an example of a(n):
unenforceable contract.
Ryland told Lane that he would give him $50 if Lane mowed his lawn. Lane said nothing, but mowed Ryland's lawn. Ryland then gave Lane $50. This is an example of a contract that is now:
unilateral and executed
A promise in exchange for performance of a particular action is a(n):
unilateral contract
A good faith dispute about either the existence or the amount of a debt makes the debt a(n):
unliquidated debt
The riskiest transaction for a creditor is a(n) ______.
unsecured credit transaction
Customs and practices of the business that are known by people in the business and that are usually assumed by parties to a contract for goods of that type are known as _____.
usage of trade
A belief of most legal positivists is ______________
validly enacted laws should be obeyed, just or not.
Which of the following may be changed to ensure a fair trial?
venue
Once _____ occurs, courts have held that a beneficiary's rights cannot be lost by modification or discharge.
vesting
Which of the following is usually not considered an element of valid contract formation?
writing
According to the UCC classifications of collateral, chattel paper includes:
written documents that evidence both an obligation to pay money and a security interest in specific goods.
Which of the following factors is most important in deciding who bears the risk of loss between merchants when goods are destroyed during shipment?
The agreement of the parties
David writes a check of $4,500 to Jackson Supply Company for renovating his house. Unfortunately, David dies in a car accident two days later. His heirs inform his bank to not honor any checks payable to his account. Jackson Supply Company presents the check the next week. Which of the following can the bank rightfully do in this case?
The bank does not have the authority to honor the check since it has received notification from David's heirs.
In the case in the text, Forcht Bank v. Gribbins, what did the court hold?
The bank failed its duty to exercise ordinary care when it honored eight forged checks.
Which of the following is true of the bank's right to charge to a customer's account?
The bank has the right to charge any properly payable check to the account of the customer even though payment of the check creates an overdraft in the account.
Abyss handed over a $500 check to Howard Brothers for building him a terrace garden. The next day, Abyss notices that one part of the garden has not been finished. He calls his bank to order it to stop payment on the check. When Howard Brothers presents the check next week, the bank honors it. Which of the following is true in this case?
The bank is liable to recredit Abyss's account, since Abyss has suffered a loss by the bank's payment.
Which of the following is most true regarding checks with altered amounts?
The bank may pay such checks as altered where the alteration is due to the customer's negligence and the alteration is not obvious.
In the case in the text Jones v. Wells Fargo Bank, N.A., what was the court's holding?
The bank was liable for conversion because it paid someone not entitled to enforce the check.
Helga deposits $1,000 in cash at her bank in person. Which of the following is true according to the Federal Reserve Board Regulation CC in this regard?
The cash will be made available to Helga the next day of the deposit.
Susan Smith steals a valuable necklace from Pamela Jones. The necklace bears Jones's full name. Smith takes the necklace to a pawnshop, sells it to the shop, and gets a check for $10,000 in the name of Pamela Jones. Smith then indorses the check in Jones's name and transfers it to Harry Anderson. Which of the following is true?
The check has been negotiated to Harry.
In a Chapter 7 liquidation proceeding, the claims of creditors are paid in which of the following order?
The claims of secured creditors are satisfied first, followed by priority claims, and lastly claims made by unsecured creditors.
On May 4, Tint, a computer wholesaler, purchased 30 computers. This comprised Tint's entire inventory and was financed under an agreement with Dome Bank, which gave the bank a security interest in all computers on the premises, all future acquired computers, and the proceeds of sales. On May 8, Dome filed a financing statement that adequately identified the collateral. On June 9, Tint sold one computer to Bean for personal use and four computers to Green Co. for its business. Which of the following is true with regard to the above situation?
The computer sold to Bean will not be subject to Dome's security interest.
In order for the consideration requirement in a contract to be met:
The consideration may consist of anything that has legal value.
In which of the following cases will perfection by attachment not be effective?
The consumer good is a motor vehicle.
What is the usual remedy for a contract entered into because of an innocent misrepresentation?
The contractual remedy for innocent misrepresentation is rescission.
Which of the following conditions can prevent additional terms from becoming a part of a contract formed between parties who are merchants?
The offer expressly limits acceptance to its own terms.
Which of the following is true of contracts of adhesion?
The person presented with such a contract has no opportunity to negotiate the terms of the contract.
Which of the following is a requirement for a case of strict liability to be imposed on a seller?
The seller must be engaged in the business of selling the product.
Which of the following is true about the seller's right to reclaim goods from an insolvent buyer?
The seller must make a demand for the goods within ten days of their receipt by the buyer.
Which of the following characterizes a written agreement covered under the statute of frauds?
The signature of the party to be charged can appear anywhere on it.
Which terms of the offer are typically binding on the offeree who accepts it? Focus only on the rules regarding offers.
The terms of which the offeree had actual or reasonable notice.
Abby orally offers to sell Carl 100 premium-grade fountain pens but neglects to state the price. Such pens typically sell for $1 each. Carl orally accepts. Immediately thereafter, Abby tries to back out of the deal. At this point in time, which of the following is most likely to be true?
There is a contract because the offer contained all material terms.
Why is a promisee's promise not to commit a crime not seen as consideration?
There is already a public duty involved.
Which of the following is generally true about state statutes establishing mechanic's and materialman's liens?
They require that work be done in the performance of a contract to improve real property.
Which of the following is a characteristic of legal realists?
They sometimes believe in the use of discretionary powers.
What remedy is provided by the states that allow disaffirmance to adults who suffer losses due to a minor's misrepresentation of age?
Tort of deceit
A creditor who fails to file suit to collect a debt within the time prescribed by the appropriate statute of limitations loses the right to collect it.
True
A typed or rubber-stamped signature is sufficient if it was put on the instrument to validate it.
True
If a promise or order contains a conspicuous statement that the promise or order is not negotiable, it is not a negotiable instrument even if it meets the test for negotiability.
True
The creditor must give something of value to the debtor, such as loaning money or advancing goods on credit to the debtor for a security interest to be attached to the debtor's goods.
True
In Royal Indemnity Co. v. Tyco Fire Products, LP, the case in the text, why did the high court of Virginia affirm the trial court's judgment?
Tyco did not provide an express warranty of future performance for an indefinite period of time.
In Royal Indemnity Co. v. Tyco Fire Products, LP, the case in the text, why did the high court of Virginia affirm the trial court's judgment?.
Tyco did not provide an express warranty of future performance for an indefinite period of time.
Under Chapter 7, a debtor is denied discharge of all debts when:
Under Chapter 7, a debtor is denied discharge of all debts when:
On Thursday, Trista Dylan receives a letter from Charlie Holmes offering to sell her a diamond ring and stating that: "if you choose to accept, you must do so prior to 2:00 p.m. tomorrow." Trista had a telegram of acceptance dispatched well before 2:00 p.m. on Friday but it is delivered to Charlie's home at 2:15 p.m. Do Trista and Charlie have a binding contract?
Yes, because Trista dispatched the telegram prior to 2:00 p.m.
According to the 2005 revisions of the Bankruptcy Code, individual debtors must file, along with their schedules of assets and liabilities:
a certificate from the Clerk of the Bankruptcy Court that they must receive credit counseling to be eligible for relief.
A cashier's check is:
a check on which the bank is both the drawer and the drawee.
In Heritage Bank v. Bruha, the case in the text, the court held that:
a promissory note that evidenced a revolving line of credit was not a negotiable instrument.
Sarah, age 17, buys a car on credit from Lora. Sarah signs a promissory note, agreeing to pay $1000 a month on the note until the note is paid in full. Lora has Sarah's father cosign the note. Under these circumstances, Sarah's father is:
a surety
If goods that are shipped are nonconforming to the contract, which of the following is an option for the buyer?
accept all of them
A manifestation of assent to the terms of the offer by the offeree in the manner required by the offer is:
acceptance
Which of the following occurs when a buyer, after having a reasonable opportunity to inspect them, either indicates that he will take them or fails to reject them?
acceptance of goods
A(n) _______ is a person who signs a negotiable instrument for the purpose of adding his or her name and liability to another party to the instrument.
accommodation party
A friend of yours who cosigns a note for you as a favor without taking any consideration for it is an example of a(n) _____.
accommodation surety
A person who has signed a negotiable instrument for the purpose of lending her credit to another party to the instrument but is not a direct beneficiary of the value given for the instrument is known as a(n):
accomodation party
If a promisee who has an existing claim agrees with the promisor that he will accept some performance different from that which was originally agreed on, and the promisor performs that duty, there has been a(n):
accord and satisfaction.
Section 15 of the Restatement (Second) of Contracts provides that a person's contracts are voidable if she is unable to ____ in a reasonable manner in relation to the transaction and the other party has reason to know of her condition.
act
If a liquidated damages clause is unenforceable because a court deems it to be unconscionable, the injured party can still recover ______.
actual damages suffered
Ratification of a contract entered into by a minor can only be done:
after the minor reaches the age of majority
Where the person asserting the preclusion failed to exercise ordinary care in taking or paying the instrument and that failure substantially contributed to the loss, Article 3:
allocates the loss between the two parties based on their comparative negligence.
A party not equally in the wrong of an illegal agreement will generally be:
allowed to recover what he has parted with
An offer which is unclear about the form of acceptance that is necessary to create a contract, is called a(n) _____ offer.
ambiguous
In case of the presentment of a check or a draft:
an acceptance is the drawee's signed commitment to honor the draft as presented.
Under the UCC Revised Article 3, if there is a breach of a transfer warranty:
an amount equal to the loss suffered as a result of the breach can be recovered.
A valid assignment always requires:
an intention to assign
According to the 2005 revisions of the Bankruptcy Code:
any eviction proceedings in which the landlord obtained a judgment of possession prior to the filing of the bankruptcy petition can be continued.
The use of a non-judicial neutral third party that helps parties reach a binding resolution of their dispute is the process of:
arbitration
What Article of the UCC deals with carriers' liens and warehousemen's liens?
article 7
When there has been an assignment, the person to whom the right has been transferred is called the:
assignee
Rosie contracts with First Bank to obtain a mortgage. First Bank assigns the contract to National Bank. Rosie is notified of the change. Rosie's contract is now with National Bank and she makes her payment there. First Bank is the:
assignor
A(n) _____ does not release the primary delegator from liability; rather, it makes the delegator and the intended delegatee liable to the obligee.
assumption
Which of the following occurs when a plaintiff voluntarily consents to a known danger?
assumption of risk
To be a holder, a person must have a complete chain of ______ indorsements.
authorized
Buyers of defective goods have not received full value for the goods' purchase price. The resulting loss is known as which of the following?
basis-of-the-bargain damages.
The most important requirement of goods regarding their merchantability is that they must:
be fit for the ordinary purposes for which they are used.
If an instrument is payable "to cash," it is called _____.
bearer paper
A difference between a surety and a guarantor is that the guarantors:
become liable only if the principal debtor first defaults.
In case the party who repudiated the contract changes his mind, the repudiation can be withdrawn:
before the other party has canceled the contract.
Calvin tells Sara that he will sell her his car for $5,000. Sara agrees. The exchange is to take place in 10 days. The contract between Calvin and Sara is now:
bilateral, executory, and express.
A _____ indorsement is one where the indorser merely signs his name and does not specify to whom the instrument is payable.
blank
A voluntary petition under Chapter 7:
cannot be filed by an insurance corporation.
A check on which one bank is both the drawer and the drawee is called a:
cashier's check
Which of the following contains both an acknowledgement by a bank that it has received money and a promise to repay money?
certificate of deposit
The type of check where the drawee bank substitutes its undertaking to pay a check for the drawer's undertaking and becomes obligated to pay the check is known as a:
certified check
_____ is a process which begins with the buyer giving the seller a check, and the seller using the information on that check to name itself as the payee and forwarding it for collection through an automated clearing house.
check conversion
If the drawee bank keeps the original checks and provides its customers with images of the canceled checks on electronic bank statement it is called:
check truncation.
A _____ is a claim of the person obligated on the instrument against the original payee of the instrument.
claim in recoupment
An exculpatory clause that is written in ______ and conspicuous print is more likely to be enforced than one written in _______ and presented in fine print.
clear language; legalese
Standardized online contracts that come along with downloaded software from the Internet are often called:
clickwrap contracts.
In a(n) _____, a person (the guarantor) agrees to pay the debt or obligation that a second person owes to a third person (the obligee) if the principal debtor fails to perform.
collateral contract
Which of the following comes into effect when there is no applicable statute or other type of law and if social and public policies require the gap to be filled?
common law
Which of the following requires all critical terms to be defined in an offer for valid contract formation?
common law
When the contract calls for the parties to perform at the same time and each person's performance is conditioned on the performance or tender of performance by the other, it is called a(n):
concurrent condition
_____ indorsements indicate that they are effective only if the payee satisfies a certain situation.
conditional
A(n) _____ clause authorizes the creditor to go into court if the debtor defaults and, with the debtor's acquiescence, to have a judgment entered against the debtor.
confession of judgment
Under a(n) _____, the seller's bank agrees to assume liability on the letter of credit.
confirmed letter of credit
Enumerated powers in the Constitution are given to ______.
congress
When a buyer is able to show that she has suffered special damages as the result of the seller's breach, she will recover:
consequential damages
Which of the following distinguishes a gift from a contract?
consideration
Which of the following is not classified as inventory?
consumer goods
Which of the following results when one party has superior bargaining power, leaving the other party with little choice but to accept its terms?
contract of adhesion
In a case where a merchant mistakenly sells a good that was entrusted to it, under what theory can the entruster sue for damages?
conversion
A person who commits fraud may be liable for punitive damages under the tort of:
deceit
The concept of judicial review allows for the courts to:
declare the actions of other government bodies to be unconstitutional.
When a borrower deeds property that is to be put up as security to a trustee, this is called a _____.
deed of trust
The appointment of another person to perform a duty under a contract is called a(n):
delegation
When a person is obligated to perform a duty under a contract, and then appoints another person to perform that duty, it is a(n):
delegation
If a contract contains the phrase "all my rights under the contract" to show an assignment, it would be considered to additionally mean a:
delegation.
No arrival, no sale, ex-ship, and FOB destination are common shipping terms in which of the following type of contracts?
destination contracts
The right of minors to avoid a contract as a means of protecting themselves against their own improvidence and against overreaching adults is called:
disaffirmance
Jason wrote a check on his account at Bank of Finance that is payable "to the order of Austin Cramer." Austin took the check to Bank of Finance to cash it. Bank of Finance refused to pay the check because Jason had insufficient funds in his account to cover it. This is an example of an:
dishonored instrument.
A contract is said to be _____ if the legal part can be separated from the illegal part.
divisible
In Cordas v. Uber Technologies, Inc., the case in the text, the court held that:
dont know: but it is NOT Uber's terms and conditions constituted an enforceable browsewrap agreement.
Shania Watson has a checking account at the Capital Bank of New York. She goes to Lowe's and agrees to buy an electric water heater priced at $700. She writes a check to pay for it. Shania is the _____ of the check.
drawer
_____ is a wrongful coercion that induces a person to enter or modify a contract.
duress
The purpose of the means test established by the 2005 revisions of the Bankruptcy Code is to:
ensure that individuals who will have income in the future that might be used to pay off at least a portion of their debts must pursue relief under Chapter 13.
The powers specifically listed in the Constitution that the Congress can exercise are termed:
enumerated powers.
According to the concept of _____, the mortgagor has the absolute right to discharge the mortgage when due and to have title to the mortgaged property restored free and clear of the mortgage debt.
equity of redemption
A person who rescinds a contract is entitled to the return of:
everything that person has given the other party.
A contract is _____ when all of the parties have fully performed their contractual duties.
executed
A bank is a creditor when money is deposited in the bank by a customer.
false
A cashier's check is the same as a certified check.
false
A guarantor is primarily liable for the debtor's obligation, and the debtor can demand performance from the guarantor at the time the debt is due.
false
A holder in due course gets the same rights as the transferee of an instrument.
false
A minor can disaffirm agreements to support their children.
false
A mortgagee has what is known as the right of redemption in the mortgaged real estate.
false
A novation is the intention to assign as well as delegate in a contract.
false
A perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory if the purchase money security interest is perfected subsequent to the debtor receiving possession of the inventory.
false
A product warranty is a clause in the sales contract whereby the seller attempts to eliminate liability it might otherwise have.
false
A promisee's expectation interest is his interest in being compensated for losses that he has suffered by changing his position in reliance on the other party's promise.
false
A promissory note is an order to pay money.
false
A qualified indorsement is one where the indorser accepts the liability to make the instrument good if the maker or drawer defaults on it.
false
A sale or return contract is a contract for goods that are primarily for buyer's use.
false
A term authorizing the confession of judgment on an instrument when it is due affects the negotiability of the instrument.
false
A voidable contract is one that meets the basic legal requirements for a contract but may not be enforceable because of some other legal rule.
false
According to the UCC, acceptance of shipped goods happens before the buyer inspects the commercial goods.
false
According to the courts, past consideration is valid and legal.
false
After the sale of collateral by the creditor, the proceeds are first used to satisfy the debt of the creditor for conducting the sale.
false
All agreements are enforceable contracts.
false
All contracts for sales of goods must be in writing to be enforceable.
false
All promises are contracts.
false
As per the 2005 amendments, the trustee of a bankruptcy estate has the authority to sell personally identifiable information to persons not affiliated to the debtor.
false
Bankruptcy cases are filed in state trial courts.
false
Banks are not required to disclose their funds availability policy to all of their customers.
false
Commercial speech receives the full variety of First Amendment protection that is given to political speech.
false
Consequential damages do not include an injury to a person or property caused by a breach of warranty.
false
Contributory negligence is the plaintiff's voluntary consent to a known danger.
false
Dave, who is in financial trouble, has ten creditors. An involuntary bankruptcy petition against Dave requires that three of these creditors sign the petition.
false
For federal district court diversity jurisdiction to exist, the amount in controversy must be less than $75,000.
false
Government action that discriminates on the basis of sex is subject to full strict scrutiny.
false
If a check or note has been altered, the drawer or maker usually is liable for the instrument in the altered amount to which it was raised to.
false
If an executory contract is within the statute of frauds but has not been evidenced by the type of writing required by the statute, it will be treated as an illegal contract.
false
If the seller has justifiably withheld delivery of the goods because of the buyer's breach, the buyer cannot recover any money or goods he has delivered to the seller over and above the agreed amount of liquidated damages.
false
In a contract for Adam to sell Carrie a steam boiler, Carrie's obligation to pay is conditioned upon her personal satisfaction with the boiler. Even though the boiler meets every mechanical test imaginable, Carrie refuses to pay because she just does not like the boiler for some reason. She is not obligated to pay, because the contract said that he must be personally satisfied, and a contract is a contract.
false
In a requirements contract, one party is obligated to sell its entire output of particular goods and the other party is obligated to buy the entire output.
false
In recent years, courts have adopted a less liberal version of the "mirror image" rule in contractual disputes.
false
Instruments cannot be negotiable if they are payable in a foreign currency.
false
Jackson Farms entered into a contract with Greenfields Grocer to supply 25 bushels of oranges, and Jackson Farms supplied it. Due to the oranges being in non-conformance with the contract, Greenfields has accepted only 16.5 bushels. Under these circumstances, it is considered that Greenfields has accepted 16 bushels.
false
Judges with lifetime tenure cannot be removed from office.
false
Legal principles regarding assignment are found in the UCC but not in the common law of contracts.
false
Like an option, a firm offer also requires consideration to be given in exchange for the promise to keep the offer open.
false
Like the intent to contract, the intent to accept is judged by a subjective standard.
false
Minor criminal cases and civil disputes are originally decided in the appellate courts.
false
Negotiability is the same as collectibility.
false
No contract can ever explicitly forbid assignment.
false
Notification of the obligor is necessary for the assignment to be valid.
false
Past course of dealing between contracting parties will trump express contract terms in the event of a contract dispute.
false
Patent cases must be litigated in state courts.
false
Price quotations are not examples of offers of negotiation.
false
Repudiation can be withdrawn by a party even if the other party has canceled the contract or has materially changed position.
false
Restatements contain statutory laws, but not common law rules.
false
Secured creditors are required to receive at least liquidation value under the Chapter 12 plan.
false
Substantive law controls and regulates the behavior of government bodies, mainly courts.
false
The Bankruptcy Code provides for an initial 120-day period after the petition is filed during which only the creditor can file a reorganization plan.
false
The Constitution has 27 amendments, the first 5 of which are considered the Bill of Rights.
false
The Contract Clause applies to federal laws regarding agreements between private parties.
false
The UCC contains very strict standards regarding the "definiteness" of contracts.
false
The UCC statute of limitations for breach of contract for the sale of goods is one year.
false
Under Chapter 12, once a plan is approved it may not be subsequently modified under any circumstances.
false
Unlike many other federal consumer protection measures, the Electronic Fund Transfer Act does not require disclosure of important terms to the consumer.
false
When performance of a contractual duty becomes impossible after the formation of the contract, the duty will be discharged on grounds of accord and satisfaction.
false
Which of the following principles states that the U.S. Constitution, federal laws, and treaties are the supreme law of the land?
federal supremacy
The Takings Clause is part of which Amendment to the Constitution?
fifth
Political speech made by a corporation is given what level of First Amendment protection?
full protection
Later extensions of credit stipulated by a security agreement are known as _____.
future advances
Which of the following helps a plaintiff seize the property that belongs to the defendant but is in the hands of a third party?
garnishment
If an instrument is nonnegotiable, the _____ control in determining the rights and liabilities of the parties to the instrument.
general rules of contract law
Which of the following is not one of the Code classifications of collateral?
general tangibles
John agrees to be secondarily liable to guaranty a debt for his son Frank if Frank were to default on his payments. John is a(n)
guarantor
A(n) _____ is a person who has good title to the instrument, paid value for it, acquired it in good faith, and had no notice of certain claims against payment.
holder in due course
A(n) _______ takes a negotiable instrument free of all personal defenses, claims to the instrument, and claims in recoupment either of the obligor or of a third party.
holder in due course
Where the goods are to be delivered in installments, an installment delivery may be rejected only if the nonconformity substantially affects the value of that delivery and:
if the nonconformity cannot be corrected by the seller.
An agreement is considered to be _____ when it threatens public policy.
illegal
The mutual agreement necessary to create a contract may also be demonstrated by the conduct of the parties. When the surrounding facts and circumstances indicate an agreement, it is called a(n):
implied contract
A(n) _______ is a person who poses as someone else and convinces the drawer to make a check payable to the person being impersonated.
imposter
Jurisdiction based on the presence of property within the state is called _____ jurisdiction.
in rem
Generally, when a municipality enters into a contract in the regular course of performing its normal functions, members of the public are ______ to the contract.
incidental beneficiaries
When a third party is unable to establish that the contract was intended to benefit the third party, the third party is referred to as a(n):
incidental beneficiary
Which of the following compensate for reasonable costs that the injured party incurs after the breach in an effort to avoid further loss?
incidental damages
Several firms within an industry are involved in manufacturing a harmful product. It is impossible to prove which firm produced the product and caused injury. Identify the type of liability that would arise in these circumstances.
industrywide liability
_____ is a ground for lack of capacity only when it is so extreme that the person is unable to understand the nature of the business at hand.
intoxication
_____ refer(s) to the goods held for sale or lease or to be used under contracts of service.
inventory
Wonder Widget Company manufactures widgets that are sold to retailers. The retailers, in turn, sell these widgets to consumers for their own use. These widgets are:
inventory in the hands of Wonder.
A stove in the hands of a manufacturer is classified as _____; if it is used in a restaurant it is _____; if it is used in a home it is classified as ______.
inventory; equipment; consumer goods
A fully "integrated" contract under the parol evidence rule is one that:
is intended by the parties to be the complete and final statement of their agreement.
Insolvency occurs when a debtor:
is unable to pay his/her debts as they become due.
A contract that cannot be performed within one year from the day on which it comes into existence:
is within the statute of frauds.
If an offer does not state a time for its acceptance:
it is valid for a "reasonable time."
If a negotiable instrument due on a certain date is not paid by that date, then:
it will be overdue at the beginning of the next day after the due date.
The rate of interest courts impose on losing parties until they pay the winning parties is known as a(n):
judgement rate
Which of the following is generally not considered a real defense?
lack of consideration
An installment contract for the purchase of land is known as a:
land contract
Rick tells Dan that Sue will inherit a mansion if she pays him back an old debt. Since Sue is unable to pay the debt, Dan offers to pay it, provided that he gets the mansion from Rick. The agreement between Dan and Rick need not be in writing under the:
leading object rule.
Which of the following is a transfer of the right to possess and use goods belonging to another?
lease
Money damages are generally considered to be _______________.
legal remedies
An artisan who makes an improvement on a personal property is given a _____ on it until he is paid.
lein
A disclaimer attempts to eliminate ______; a remedy limitation attempts to block ______.
liability; certain damages
The parties to a contract agree on a reasonable amount of damages that will be paid to the injured party if there is a breach of the contract. This amount is known as _____.
liquidated damages
An acceptance is valid upon dispatch, not when it is received because of the ______.
mailbox rule
In order to accept a bilateral contract, the offeree must:
make a promise requested in the offer.
The _____ of a promissory note makes an unconditional promise to pay a fixed amount of money and is responsible for making good on that promise.
maker
Which of the following refers to a person who executes an instrument?
maker
In case of a misrepresentation, a person seeking to rescind the contract must prove that the fact asserted was:
material
A type of ADR in which a neutral third party is involved, who generally makes non-binding decisions, is which of these?
mediation
Which of the following claims would not be considered a priority claim under the Bankruptcy Code?
medical bills
The traditional contract law rule is that an acceptance must be the _____ of the offer.
mirror image
According to contract law, a(n) _____ is a belief about a fact that is not in accord with the truth.
mistake
In which of the following cases can the remedy of rescission be invoked by the affected party?
mistake of fact
When deciding what to do with the unfinished goods after a buyer breaches a contract, the seller must follow a reasonable course of action to _____ her damages.
mitigate
A party cannot recover for losses that he could have avoided without undue risk, burden, or humiliation. This is an example of:
mitigating damages
Which of the following is not a type of equitable relief granted by courts?
money damages
What is the security interest in real property given by the owner as security for a debt owed to the creditor called?
mortgage
A buyer who is not a merchant rejects nonconforming goods. She:
must hold the goods for the seller for a reasonable time.
If the shipping terms are cash on delivery (COD), then the buyer:
must pay for the goods before inspecting them unless they are marked "Inspection Allowed."
Under a Chapter 13 proceeding if the debtor's income is above the state median income for a family of the size of his family, then the plan:
must provide for payments over a period of five years unless all claims will be fully paid in a shorter period.
The term for when both parties to a contract have an erroneous assumption about the same fact is:
mutual mistake
A(n) _____ is something which is essential for the minor's continued existence and general welfare and has not been provided by the minor's parents or guardian.
necessary
In contrast to classical contract law, the UCC sees courts as:
necessary for furthering justifiable expectations.
A disclaimer for the implied warranty of merchantability:
need not be written.
John, a minor, writes a check. The state law in which all the parties live makes infancy a defense to a simple contract. The check is voidable and it is also:
negotiable
The transfer of possession of a negotiable instrument by a person (other than the issuer) to another person, is called __________.
negotiation
The general common law rule on contract modifications holds that an agreement to modify an existing contract requires a(n):
new and independent consideration.
In Welsh v. Lithia Vaudm, Inc., the case in the text, the court held that:
no additional consideration existed where Lithia had a preexisting duty under the oral contract.
Gratuitous promises can be made to look like true bargains with the help of:
nominal consideration.
_____ differs from concealment in that there is a failure to volunteer information.
nondisclosure
Toby, an Ohio real estate broker, misrepresented to Allen that he was licensed in Michigan under Michigan's statute regulating real estate brokers. Allen signed a standard form listing contract agreeing to pay Toby a 6% commission for selling Allen's home in Michigan. Toby sold Allen's home. Under the circumstances, Allen is:
not liable to Toby for any amount because Toby violated the Michigan licensing requirements.
In case of resale of goods arising out of a breach of contract, if the seller sets aside goods intended for the contract or completes the manufacture of such goods, he is:
not obligated to try to resell the goods to someone else.
If a promissory note contained the legend "NONNEGOTIABLE," it would:
not qualify as a negotiable instrument even if it otherwise met the formal requirements for one.
"If I have the money next week, I will buy your computer" is
not valid offer language
Penny agrees to sell Scott 5,000 widgets at a price of $1.00 per widget. After Scott breaches the contract, Penny resells the widgets for $1.20 per widget in a public sale. What amount does Penny owe Scott?
nothing
Which of the following is a type of substituted contract in which the obligee agrees to discharge the original obligor and to substitute a new obligor in his/her place?
novation
Who controls the method of acceptance, if the method is specified in the offer?
offeror
Ads that (1) limit the power of acceptance to one offeree or a small number of offerees, (2) are highly specific about the nature and number of items offered for sale and what is requested in return, and (3) leave nothing further to be negotiated are considered to be _____.
offers
Which of the following is payable to the order of a specific person?
order paper
Contracts in which one party to the agreement agrees to buy all of the other party's production of a particular commodity is called a(n):
output contract.
When the vendee (purchaser of land) acts in clear reliance on an oral contract for the sale of land, the doctrine of _____ permits the vendee to enforce the contract notwithstanding the fact that it was oral.
past performance
During a trial, a _____ enables the removal of jurors without having to show bias or other causes.
peremptory challenge
Apple assigns the same contract rights to Enzo, and then to Sam. Sam immediately notifies the obligor of the assignment to him; Enzo never notifies the obligor. When Sam notified the obligor, he did not know about the earlier assignment to Enzo. Sam will have the better right under the:
"English Rule"
A conditional indorsement:
?? Incorrect: does not destroy the negotiability of the instrument but invalidates it.
Which of the following is not one of the Code classifications of collateral?
(?? INCORRECT :ACCOUNTS)
According to Revised Article 3 if a bank pays a check that contains a forged indorsement:
?? INCORRECT: the person whose indorsement was forged is liable to the bank.
If a debtor has 12 or more creditors, an involuntary petition to declare him bankrupt must be signed by at least _____.
3 creditors
After entering into a contract, a buyer becomes concerned that the other party may not be able to perform his contract obligations. The buyer demands assurance from the other party that the contract will be performed. What is the maximum time period that the buyer would have to wait before considering the other party has repudiated the contract?
30 days
William agreed to deliver goods worth $100 to Tom. William and Tom agree that if delivery is not made on time, William will pay Tom some amount as liquidated damages for the lost sales. Which of the following amounts if agreed upon would most likely be considered to be penal?
5,000
In the case in the text, In re Burt, the court concluded that:
?? INCORRECT: the transaction could be dissected into smaller segments and therefore, any purchase money security interest that existed did not include the negative equity.
A check drawn by a credit union on its account at a federally insured bank would be an example of a:
?? Incorrect: cashier's check
Sam, a plumber, entered into a contract for $75,000 with Orr, Inc., to perform certain plumbing services in a building owned by Orr. After Sam had satisfactorily performed the work, Orr discovered that Sam had violated the state licensing statute by failing to obtain a plumbing license. As a result, Orr refused to pay Sam. The licensing statute was enacted merely to raise revenue for the state. An independent appraisal of Sam's work indicated that the building's fair market value increased by $70,000 as a result of Sam's work. The cost of the materials that Sam supplied was worth $35,000. If Sam sues Orr, Sam will be entitled to recover:
75,000
Mark contracts to sell Bob 12 bales of hay. A bale is the accepted commercial unit in hay transactions. Bob accepts only 7 1/5 of the 20 bales. Under the UCC, Bob is considered to have accepted:
8 bales
Which of the following statements about delegable duties is false?
?? THIS one is not correct: The Uniform Commercial Code allows delegation unless the parties agreed to the contrary.
An example of chattel paper is a:
?? (INCORRECT: document of title)
To be relieved of obligations as surety, a compensated surety must show that:
A change in the contract was material and prejudicial to him
In which of the following transactions is the buyer most likely to be entitled to specific performance of the contract?
A contract for purchasing a rare 1922 baseball card.
Which of the following poses a liability for the seller in a misrepresentation case under Restatement (Third) of Torts: Products Liability?
A material fact about the product
Which of the following is not considered when determining a reasonable time in which a demand instrument is due?
A party's individual circumstances
Which of the following statements holds true for primary liability?
A person who is primarily liable has agreed to pay the negotiable instrument.
Which of the following corresponds to the basic priority rule established by the UCC?
A security interest has priority when it has been filed or perfected before the other interest on the same collateral.
For which of the following is the filing of a financing statement necessary for perfection to occur?
A security interest in general intangibles
Which of the following is not a category of illegal agreements?
Agreements to bring more profit to one party than the other
The _____ published the first Restatement of Contracts in an attempt to codify and systematize the soundest principles of contract law.
American Law Institute
Which of the following is an example of a consequential damage?
An injury to a person caused by a breach of warranty
Megan has purchased two tickets for a lucky draw at the local supermarket, which are with the store's cashier. Tracy, her friend, who knows about this, convinces the cashier that she is Megan and takes the tickets. She then goes and sells the tickets to Anya, who has no knowledge of the case. Which of the following statements is true?
Anya is a good faith purchaser.
Which of the following is true of assignments?
Article 2 of the UCC deals with assignments of rights under a contract for the sale of goods.
_____ is the plaintiff's voluntary consent to a known danger.
Assumption of risk
A counteroffer will be found to have arisen in which of the following actions?
Attempting to make changes in the terms of the offer
Carter sold a $20,000 boat to Davis on credit for personal use. As part of the deal, Davis completed an installment note payable to Carter and a security agreement giving Carter a security interest in the boat, which was attached on July 1. Carter never filed a financing statement. On August 1, Davis borrowed $15,000 from Bank, by completing a security agreement giving the Bank a security interest in the boat. This interest attached on the same day and the Bank filed a financing statement on August 6. Davis defaulted on both his installment payments to Carter and his loan obligation to the Bank. Each of these parties wants to satisfy Davis's obligation by repossessing and selling the boat. Whose security interest in the boat has priority and why?
Bank's interest has priority because Carter never filed a financing statement.
How have the drafters of the Code tried to promote fair dealing and higher standards in the marketplace?
By imposing the doctrine of good faith.
In a case where a merchant mistakenly sells a good that was entrusted to it, under what theory can the entruster sue for damages?
CONVERSION
The federal law that is designed to enable banks to handle more checks electronically is known as:
Check 21.
Which of the following is an agreement by the seller's bank to assume liability on a letter of credit?
Confirmed letter of credit
Which of the following includes personal injury, property damage, and indirect economic loss?
Consequential damages
Which of the following terms refers to legal value that is bargained for and given in exchange for an act or promise?
Consideration
Which of the following observations is true under the UCC?
Consideration is not required to support a modification of a contract for the sale of goods.
Which of the following are imposed by law rather than by the agreement of the parties?
Constructive condition
Which of the following is also known as an implied-in-law condition since they are imposed by law rather than by agreement of the parties?
Constructive condition
Which of the following is governed by Article 2 of the UCC?
Contracts for the sale of used cars
Which of the following is a dischargeable debt?
Credit card debt for older consumer purchases.
In which of the following may silence constitute an indication of acceptance?
Customary trade practices
Which of the following is the most important type of "motion to dismiss"?
Demurrer
Dorothy bakes various items and supplies them to different patisseries. Friendly Neighborhood Baker has placed an order for 50 cupcakes and 50 brownies daily from Dorothy. A month after entering into the contract, the bakery is demanding that Dorothy increase the supply to 500 for each item for its other outlets. In such a case:
Dorothy will have to supply only according to the actual contract.
When a person enters into a contract because of the threat against his or her economic interests, this is known as which of the following?
Economic Duress
Which of the following clauses is a provision in a contract that purports to relieve one of the parties from tort liability?
Exculpatory clause
The domestic wire transfer system operated by the Federal Reserve is known as:
Fedwire
_____ is an agreement by a promisee to refrain from pursuing a legal claim against a promisor, and which can be valid consideration to support a return promise usually to pay a sum of money by a promisor.
Forbearance to sue
Bart promised to wash Brian's clothes for $30 and clean his house for $60, but only washed the clothes. Which of the following is correct about Bart?
He can recover the contract price for the activity he performed.
What happens when an artisan or other lienholder gives up the possession of a good voluntarily?
He loses the lien.
Palmer goes to a truck dealership and asks for a truck capable of handling a 5000-pound load. He makes it clear that it is up to the salesman to select an appropriate truck. Without saying anything about the truck's load-carrying capacity, the salesman selects a certain truck for Palmer. Relying on the salesman's choice, Palmer buys the truck in question. However, the truck can only handle a 2500-pound load. Palmer wants to sue the dealership because he did not get the truck he desired. Which of the following product liability theories gives Palmer his best chance of recovery?
Implied warranty of fitness
Which of the following is a doctrine under which a party to a contract is relieved of his duty to perform when that performance can no longer be completed because of the occurrence of an event unforeseen at the time of contracting?
Impossibility
Which of the following rules apply when a person poses as someone else and convinces a drawer to make the check payable to the person being impersonated?
Impostor rule
When is an oral contract, within the UCC statute of frauds, enforceable without a writing in some situations?
In the case of specially manufactured goods
_____ include expenses that the buyer incurs in receiving, inspecting, transporting, and storing goods shipped by the seller that do not conform to those called for in the contract.
Incidental damages
What can an offeror do to minimize the risk posed by the mailbox rule?
Include a receipt stipulation in the contract
Which of the following is not considered a primary class of people who lack capacity for contract purposes?
Individuals who do not understand English.
Which of the following is an element of promissory estoppel?
Injustice to the promisee as a result of reliance
If an otherwise valid negotiable instrument is destroyed accidentally, which of the following is correct?
It does not discharge the parties to it.
Which of the following excuses a written agreement when the guarantor makes a collateral promise for the main purpose of obtaining some personal economic advantage?
Leading object rule
Which of the following items of a debtor's property are exempt in a bankruptcy proceeding under the federal set of exemptions?
Life insurance contracts valued at $10,000.
Which of the following stands for the notion that a properly addressed and dispatched acceptance can become effective when it is dispatched, even if it is lost and never received by the offeror?
Mailbox Rule
Which of the following is true of preexisting contractual duties and their modification under the UCC?
Modification requires "mere agreement" on the part of those involved.
Which of the following actions constitutes acceptance of an offer?
Offeree reflected assent to the terms of the offer in the requisite manner
Under the _____ system, subcontractors or materialmen have direct liens and are entitled to liens for the value of labor and materials furnished, irrespective of the amount due from the owner to the contractor.
Pennsylvania
Ronnie contracts to sell Winston five bookshelves. The bookshelves are located at Ronnie's business. The contract does not state a place of delivery. The place of delivery is:
Ronnie's place of business.
Sarah receives a check from Jimmy drawn on Fourth National Bank. Fourth National Bank improperly dishonors the check when Sarah attempts to cash it. Which of the following is true of this case?
Sarah has recourse against Jimmy.
Which of the following is most true regarding noncompetition clauses in contracts?
Such clauses will be enforced if they have a legitimate business purpose.
Which of the following statements about the United Nations Convention on Contracts for the International Sale of Goods (CISG) is true?
The CISG permits parties to a written contract to require that any modifications of the contract be in writing.
Which of the following statements about consideration is correct?
The gross inadequacy of consideration can give rise to an inference of fraud for setting aside a contract.
Which of the following is NOT a requirement in the enforceability of a noncompetition clause?
The noncompetition clause must be regarding the sale of goods.
Section 2-608 of the UCC gives the buyer what right in sales contracts?
The right to revoke a sales contract within a reasonable period for nonconformity
Which of the following characterizes cases filed under section 402A?
The seller must be engaged in selling the product that allegedly caused harm.
Which of the following warranties has the effect of leaving with the drawee the risk that the drawer's signature is unauthorized?
The warrantor has no knowledge that the signature of the drawer of the draft has not been authorized.
Which of the following statement holds true for warranties?
They apply even when the transferor did not indorse.
Which of the following statements regarding contracts for real property is correct?
They are covered under the statute of frauds.
Which of the following, according to the UCC, is the most important requirement for goods to be merchantable?
They must be fit for the ordinary purposes for which they are used.
Sam enters into an oral contract to supply goods worth $300 to Amber. Later, Amber demands that the quantity of the goods supplied be increased to a total amount of $550. Which of the following is statements about the contract is correct?
This contract must be evidenced in writing.
Which of the following is true of the Code's rules on title to goods?
Title passes to a buyer only when the seller performs his duties completely.
If there is a default on a secured debt, and a secured party sells a piece of collateral, which of the following statements is correct?
Until the collateral is actually disposed of by the creditor, the buyer can redeem it.
Which of the following instances is a sufficient reason to cause commercial impracticability?
War
A court, following stare decisis, may decide not to use a common law rule from an earlier case in which of these situations?
When the court distinguishes the earlier decision.
In which of the following situations has the holder of a negotiable instrument not given value for it?
Where the holder receives the instrument as a gift.
In which of the following situations is an instrument termed as overdue?
Where the principal on a note is due in installments and an installment has not been paid.
If a seller fails to deliver goods called for in the contract, the buyer may purchase substitute goods and recover as damages the difference between the contract price and the cost of the substituted goods. This is known as:
cover
If a seller fails to deliver goods called for in the contract, the buyer may purchase substitute goods. This is known as _____.
cover
Imprisonment and fines are examples of:
criminal penalties
A stop-payment order is authorized by the:
drawer
Which of the following is NOT a basic element of a contract?
goods
A merger clause is also known as an:
integration clause.
The Restatement (Third) indicates that a product that does not conform to its intended design at the time it leaves the manufacturer's hands is known as a(n):
manufacturing defect
A stale check is one that is:
more than six months old.
In ascertaining intent to benefit the third party, a court will look to all of the following, except:
whether the benefit to the third party had any value.
An obligor is one:
who owes a duty to perform under a contract.
A disclaimer of the implied warranty of merchantability can be oral.
TRUE
Which of the following means not utterly null, but annullable?
Voidable
The settlement of an unliquidated debt is called a(n):
accord and satisfaction.
Jury trials are conducted at the appellate court level.
false
Creditors of the debtor under a Chapter 13 proceeding:
may not file an involuntary petition.
Which of the following is an important state legislative power that works concurrently with many congressional powers?
police power
A party who has materially breached a contract might recover the reasonable value of any benefits he has conferred on the promisee by bringing an action under a(n):
quasi-contract.
_____ refer to some claims and defenses to payment of an instrument that go to the validity of the instrument.
real defenses
The procedure followed in the foreclosure of a mechanic's lien on real estate follows closely the procedure followed in a court foreclosure of a:
real estate mortgage
A _____ indorsement contains the signature of the indorser along with words indicating to whom, or to whose order, the instrument is payable.
special
A check on which one bank is the drawer and another bank is a drawee is a:
teller's check
A check or draft that one bank draws upon another bank is called a:
teller's check
In determining the debtor's interest in property:
the amount of any liens against the property must be deducted.
XYZ Bank pays a check that contains a restrictive indorsement "for collection." This indicates that:
the bank has converted the check.
Article 2 of the UCC expressly applies only to contracts for:
the sale of goods.
A third party is classified as a donee beneficiary when:
the promisee's primary purpose in contracting is to make a gift of the agreed-on performance to the third party.
A minor's contract for necessaries makes the minor liable for the reasonable value of the necessaries furnished to him.
true
A mortgage is a security interest in real property or a deed to real property that is given by the owner as security for a debt owed to the creditor.
true
A person who is claiming damages based on a contract claim cannot recover damages for anything that he does after learning of the illegality of the contract.
true
A person who lacked capacity to contract due to mental impairment can ratify the contract once he/she regains his/her normal mental faculties.
true
A promise to make a gift to a charitable organization when the organization has relied on the promise is typically enforced despite the absence of consideration.
true
A quasi-contract is also called unjust enrichment or contract implied in law.
true
According to the objective theory of contracts, the offeror's intent is judged by:
what his words, acts, and the circumstances signify about his intent.
No federal law governs payments made in:
virtual currencies
A(n) _____ contract is one in which one or more of the parties have the legal right to cancel their obligations under the contract.
voidable
A seller who has a _____ has the power to pass good title to a good faith purchaser for value.
voidable title
When a party to a contract voluntarily relinquishes any right he has under a contract, including the right to receive return performance, it is called a(n) _____.
waiver
In the case in the text, Beer v. Bennett, the trial court ordered Beer to hold the Fiat for Bennett until Bennett made shipping arrangements. On review, the court held that this requirement:
was proper under the UCC and Beer must hold the Fiat with reasonable care.
