1, According to the Uniform Commercial Code (UCC or Code), an oral contract for the sale of goods will not be enforceable if the total value of those goods is:

	A.	More than $100.
	B.	More than $500.
	C.	Neither of the above; oral contracts for the sale of goods are always enforceable.
	D.	None of the above; oral contracts for the sale of goods are never enforceable.

2, According to the fictitious-payee rule, if someone issues a negotiable instrument to someone pretending to be the named payee, then any indorsement in the name of the payee is valid so long as the person who pays is not aware of the fraud. true or false

3, Blake takes an expensive grandfather clock to Harvey's Clock Shop to be refinished. Harvey's specializes in the repair and restoration of old clocks. If an uninformed sales clerk at Harvey's sells Blake's clock to Arnold before Blake can come to pick it up, which of the following is true?

	A.	Arnold will be required to return the clock to Blake.
	B.	Blake can sue Harvey's for fraud.
	C.	Unfair as it may seem, Blake entrusted the clock to Harvey's and now can do nothing to recover the clock.
	D.	Though Arnold now has a legal right to the clock, Blake can sue Harvey's for recovery of the value of the clock.

4, B & K Inc. wanted to borrow $5,000 from Myra. A written promissory note stated that B & K Inc. promised to pay $5,000 on demand to the order of Myra. Tim Blue, President of B & K Inc., was authorized to sign the note and he signed it: B & K Inc. By Tim Blue President of B & K Inc.

	A.	Tim Blue is personally liable to pay the note to Myra.
	B.	Tim Blue is not personally liable to pay the note to Myra.
	C.	B & K Inc. is liable to pay the note to Myra.
	D.	B and C only.

5, There are two parties to a draft: the maker and the payee. true or false

6, In a limited partnership, only the limited partners are personally liable for the debts of the partnership. true or false

7, Money owed for alimony, maintenance, and child support cannot be discharged in bankruptcy. true or false

8, Merchants are oftentimes held to a higher standard of conduct than are non-merchants under the Uniform Commercial Code (UCC). true or false

9, A security agreement may be oral if the secured party retains possession of the collateral. true or false 10, Consumer electronic fund transfers are governed by:

	A.	Consumer law of contracts.
	B.	Uniform Commercial Code (UCC) Article 4.
	C.	Electronic Funds Transfer Act.
	D.	All of the above.

11, Drew issued an incomplete check. Drew gave the check to Ginger, telling Ginger to complete it for $100. Ginger instead completed the check for $500 and she negotiated it to Hank, a holder in due course. Hank presented the check to Drew's bank for payment and it paid $500 to Hank. The bank did not know about the unauthorized completion. Under these facts, the bank may charge Drew's account for:

	A.	$0.
	B.	$100.
	C.	$500.
	D.	Any amount the bank deems reasonable.

12, Oscar issued a check to Juan. Juan negotiated the check to Laura, a holder in due course. On April 2, Oscar gave his bank an oral stop payment order on the check because the check had been issued as payment for goods that breached certain warranties (a personal defense). On April 4, Laura presented the check for payment, and Oscar's bank paid the check. Under these facts:

	A.	The stoop payment order was not binding. Stop payment orders must be made in writing.
	B.	The stop payment order was not binding. A bank has three days before it must act in accordance with a stop payment order.
	C.	The stop payment order was binding, but Oscar is still liable to pay the check to Laura.
	D.	The stop payment order was binding, and it terminated Oscar's liability to pay the check.

13, Article 9 of the Uniform Commercial Code governs secured transactions in personal property. true or false

14, Employer is fraudulently induced by Employer's agent to issue a check to a fictitious (nonexistent) creditor, and Employer gives the check to the agent. In this case, the agent can negotiate the check by indorsing the fictitious creditor's name. true or false

15, A buyer and a seller may have simultaneous insurable interests. true or false

16 IKR Finance loaned $1,000 to Debtor. Debtor agreed to repay the $1,000 in one year, and Debtor signed a written security agreement granting IKR a security interest in an item of equipment owned by Debtor to secure this debt. IKR did not perfect the security interest. In this case:

	A.	The security interest is attached. If Debtor defaults, IKR can repossess and sell the collateral.
	B.	The security interest has not attached because IKR does not have possession of the collateral.
	C.	The security interest has not attached because IKR did not give value.
	D.	The security interest has not attached because IKR failed to perfect the security interest.

17, Which of the following is not a requirement for obtaining a patent on a device?

	A.	The device must be useful.
	B.	The device must be new.
	C.	The device must be non-obvious.
	D.	The device must be capable of commercial exploitation.

18, In general, an agent who signs a negotiable promissory note on behalf of a principal may be personally liable for payment of the note unless the agent indicates that he or she is signing as an agent and states the name of the principal. true or false

19, A seller has an insurable interest in goods so long as the seller has title to or a security interest in the goods. true or false

20, Betty and Dan intend to jointly establish and operate a for-profit catering business. Betty and Dan wish to use a form of business organization that: (1) will permit them to share their profits; (2) have the income of the business taxed to them personally, and; (3) will not entail any organizational fees to establish the business organization. These are the sole considerations of the parties. Under these facts, which form of business organization is most appropriate?

	A.	Sole proprietorship.
	B.	General partnership.
	C.	Professional corporation.
	D.	Franchise.

21, Over a five-year period, Jackson Corp. spent considerable time and money to develop a private list of 200,000 area homeowners. This list tracks home values, year of construction, and last home-repair project. This list has proven invaluable for marketing its home-improvement services. Under these facts, Jackson Corp. should protect this information as a:

	A.	Patent.
	B.	Trade Secret.
	C.	Trademark.
	D.	Service Mark.

22, Ramon filed for Chapter 7 bankruptcy, and he received a discharge. Certain debts were not paid in Ramon's bankruptcy. Which of the following unpaid debts was discharged?

	A.	$2,000 in child support owed for the support of Ramon's minor children.
	B.	$1,500 owed to Master Card.
	C.	$1,000 in federal income taxes owed for the prior year.
	D.	$5,000 judgment resulting from Ramon's embezzlement of money from a former employer.

23, B & B Bakery just filed for Chapter 7 bankruptcy. B & B is in default on a loan from Arco Finance. Arco has a perfected security interest in B & B's equipment to secure payment of this debt. Under these facts:

	A.	Arco can file a lawsuit against B & B in state court to collect the loan.
	B.	Arco can immediately repossess and sell B & B's equipment pursuant to its security interest.
	C.	Arco cannot sue B & B in state court and it cannot immediately repossess the equipment due to an automatic stay, but Arco will have priority to the equipment in the bankruptcy action.
	D.	Arco no longer has a right to be paid; the bankruptcy filing terminated this right.

24, Kelly, Pinky, and Bill are planning to start a for-profit manufacturing firm. It is important to the parties that they not have personal liability or obligations of the business, and that the business will continue even if one of the parties dies. These are the sole considerations of the parties. Under these facts, which form of business organization is most appropriate?

	A.	Sole proprietorship.
	B.	Partnership.
	C.	Corporation.
	D.	Joint Venture

25, In an allegation of fraud, a fact is considered material if it was of significant importance to the decision to enter into the contract.

True

False

26, When you present a check for payment, you warrant that the check has not been altered. In this situation, if the check has been altered, then the bank may demand that you repay the sum it paid to you.

True

False

27, You cannot be a holder in due course if you know that the original parties to the instrument have a dispute amongst themselves.

True

False

28, In sales law pursuant to Art. II of the Uniform Commercial Code (UCC), the words, As Is mean there are no implied warranties.

True

False

29 Alex intends to start a for-profit construction business. Alex wants to control the entire business and he wants to directly receive the entire net profits from the business. These are Alex's only considerations. Under these facts, which form of business organization is most appropriate for Alex?

	A.	Sole proprietorship.
	B.	Partnership.
	C.	Corporation.
	D.	Joint Venture.