1.

_____ means that the commercial paper is freely and unconditionally transferable from one person to another by delivery or by delivery and indorsement.

Select one:

a.Bailment

b.Vertical privity

c.Statute of repose

d.Negotiability

2.

"Goods" under Article 2 would include

Select one:

a.a promissory note

b.standing timber

c.a patent

d.Two of the above

3.

A buyer of consumer goods, for value, who has no knowledge of any security interest, takes

Select one:

a.subject to any purchase-money security interest perfected automatically.

b.subject to any security interest in the goods.

c.free of any pmsi perfected automatically.

d.free of any security interest perfected by filing a financing statement.

4.

A corporation may effectively limit the liability of directors' duty of due care by __________

Select one:

a.Using corporate funds to buy directors liability insurance

b.Using the derivative action rule

c.Specifying in the articles of incorporation that directors will not be liable for willful negligence.

d.a and b

5.

Able, a black male, was not re-hired with Beta company when it recovered from a series of recessionary employee work reductions and began re-hiring. Which would not be a good defense for the company?

Select one:

a.Able's work experience was not as extensive as the white man's who got the job.

b.Able had worked for Beta for six years; the white man had worked there for 17 years.

c.The company was making a movie about 1920s boarding school life in New England prep schools, and in those days the schools were all white.

d.All of these would be good defenses for Beta.

6.

Acme Co. sells arborist tools (chainsaws, peavies, goggles, protective chaps for loggers, safety harnesses, two-cycle engine oil, etc.). It only hires men salespeople because, it says, they relate better to the customers. Which is true? This is . . .

Select one:

a.a bona-fide occupational qualification.

b.a violation of the Equal Pay Act.

c.not a violation of federal law.

d.a yellow dog contract term

7.

Brad owns a piece of land that falls in the path of a new highway planned by the city. The city took Brad's land to build the highway, and , in return, gave him a new piece of land about a mile away. The city's power to do so is known as:

Select one:

a.causa mortis.

b.restrictive covenant.

c.easement appurtenant.

d.eminent domain.

8.

Butch bought a bulldozer for his construction business from Construction Supply (CS), which properly perfected its security interest in the machine. The bulldozer required repairs; Butch took it to Mike Mechanic who performed $1100 worth of repair work on it. Butch then failed to pay either CS or Mechanic, and CS appeared at Mechanic's shop to repossess the machine. As between Mechanic and CS, who gets paid first?

Select one:

a.CS because it perfected its security interest.

b.CS because the bulldozer is not "consumer goods."

c.CS because it has a purchase-money security interest in the bulldozer.

d.Mechanic because he has a mechanic's lien which takes priority over the CS's security interest.

9.

Colleen telephoned an off-campus computer store and ordered five flash drives at $10 apiece. Later that day she observed that they were a very good buy; she called the store the next day to order 60 of them (for resale to her dorm-mates at a slight profit). Which is true?

Select one:

a.The modification is void for lack of consideration.

b.The modified agreement is unenforceable.

c.The changed agreement is entirely enforceable.

d.The modified contract is void.

10.

Dubious in Hammingbell sold a number of auto parts, FOB Hammingbell, in boxes to Dealer in Vernon Mtn.; the goods were shipped via Trucking Co. When the load arrived at Dealer's place Dealer insisted the driver unload the boxes inside the store. The driver refused; sharp words were exchanged, and the goods were not unloaded. Subsequently they were lost. Dubious demanded payment from Dealer. Which is correct?

Select one:

a.Dubious wins because Dealer should have accepted the goods and sued Trucking Co. for breach of contract.

b.Dealer wins because Trucking Co. was an agent of Dubious'.

c.Dealer wins because Dubious acted unreasonably in contracting with Trucking Co.

d.Dubious wins because he made a proper delivery to Trucking Co. in Hammingbell.

11.

George bought a washing machine from Sears, which financed the purchase and which filed a financing statement. George couldn't make the payments, so he sold the machine to his neighbor, Nancy, for her home use.

Select one:

a.Sears must pursue George for payment, Nancy takes free of its interest.

b.Sears can repossess the machine from Nancy.

c.Nancy can keep the machine, but only if she paid a reasonable amount for it.

d.Two of the above

12.

In relation to the rights of the landowners on water in United States, the _____ doctrine permits the benefit to be derived from use of the waterway to be weighed against the gravity of the harm.

Select one:

a.natural flow

b.reasonable use

c.prior appropriation

d.constructive annexation

13.

Jane holds out a piece of paper for her boss and points to the signature line, saying, "This is a receipt for goods we received a little while ago." The boss signs it. If it is not a receipt; but a signature line on a promissory note, Jane has committed _____.

Select one:

a.fraud in the execution

b.fraud in the inducement

c.perjury

d.forgery

14.

Jenny contracts to buy a new washing machine from a dealer; however, the dealer breaches the contract. Jenny finds and buys the same washing machine from another dealer at the same price that the first one was to sell it for. In this case, Jenny is entitled to _____.

Select one:

a.incidental damages

b.punitive damages

c.nominal damages

d.consequential damages

15.

Of the following, who can become an acceptor?

Select one:

a.The person to whom a note or bill is indorsed

b.A drawer who directs the bank to pay a sum of money

c.The person who is to receive payment on a draft or note

d.A drawee who signs the draft

16.

Pauline's Print Mart (PPM) discussed with Martin Mason printing up elegant brochures advertising Mason's business, at a price of $700. Mason took possession of about 500 brochures; then, pressed by a big national competitor, he quit that business. He then refused to pay for the 1000 brochures still stored in boxes at PPM, denying he had ordered any more than the 500 he'd taken. As to the remaining 1000 brochures . . .

Select one:

a.Mason will win: the relevant statute of frauds requires contracts in excess of $500 to be evidenced by a writing.

b.Mason will win: the parol evidence rule precludes admission of contemporaneous oral agreements that alter the terms of otherwise unambiguous written contracts.

c.Mason will win: the brochures were printed by normal printing mechanisms, nothing special.

d.Mason will win because under Article 2 if a person accepts goods, he admits a contract for that much.

17.

The Federal Trade Commission (FTC) in 1976 promulgated a trade regulation rule that applied only to:

Select one:

a.credit card transactions.

b.purchases of interests in real property.

c.purchases of goods or services for commercial purposes.

d.consumer credit transactions.

18.

Under the Code, an acceptance that varies from the offer

Select one:

a.violates the "mirror image" rule and is not effective as an acceptance.

b.cannot legally be communicated to the offeror.

c.would be an acceptance even if the offeree conditions its acceptance on the offeror's assent to the different terms.

d.is an acceptance unless the variation is material or objected to.

19.

Under the Uniform Commercial Code of offer and acceptance as a contract issue, _____.

Select one:

a.merchants should be held to particular standards because they are more experienced

b.an offer can be revoked at any time prior to acceptance unless the offeror has given the offeree an option

c.if the acceptance differs from the offer, no contract results

d.a contractual obligation may arise even if the agreement has open terms

20.

Which of the following is not necessary for an instrument to be negotiable? It must . . .

Select one:

a.be signed

b.contain a promise or an order to pay

c.must be for a certain amount

d.must be payable on demand

21.

Which of the following is true in case of express warranties?

Select one:

a.An express warranty is one created by law, acting from an impulse of common sense.

b.An affirmation of the value of the goods or a statement purporting to be merely the seller's opinion does not form a warranty.

c.A warranty imposed by law that comes along with a product automatically.

d.Claims of breach of express warranty are claims of misrepresentation.

22.

Which of the following is true of copyrights?

Select one:

a.Copyright law protects original ideas in either tangible or intangible form.

b.A copyright in the U.S. lasts for the life of the author or fifty years, whichever is shorter.

c.The Berne Convention mandated the use of the copyright symbol in order to establish copyright.

d.A copyright begins when the work is fixed in tangible form, for example, when a book is written.

23.

Which of the following is true of the rule of priorities regarding the disposal of a debtor's property when the debtor defaults?

Select one:

a.Persons who become lien creditors before or after the security interest is perfected win.

b.If the security interest was perfected at the time of filing for bankruptcy, the bankruptcy trustee can take the collateral.

c.The Bankruptcy Act provides that a bankruptcy trustee can avoid a transfer of an interest of the debtor in property to or for the benefit of a creditor.

d.A perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods.

24.

Which of the following must a transferee fulfill in order to be a holder in due course?

Select one:

a.Have a valid reason to question the instrument's authenticity

b.Be able to issue an enquiry into the face value of a negotiable instrument

c.Should not hold a negotiable instrument

d.Should accept that the instrument contains an unauthorized signature or has been altered

e.Should be able to question whether the instrument has been dishonored or not

25.

Which of the following should be the Supreme Court's preferred course of action, if it wants to determine the degree with which margarine can act as a substitute product for butter due to the latter's increase in prices?

Select one:

a.The Supreme Court should encourage monopolistic competition between two primary margarine producers.

b.The Supreme Court should determine the degree of the second-line injury between two margarine distributors.

c.The Supreme Court should look at the cross-elasticity of demand between margarine and butter.

d.The Supreme Court should look into alcohol and all its related beverage consumption patterns.