1)Brenda wrote a check to Keli for $50 to be drawn from her account at Beverly Bank. Beverly Bank refused to cash the check. Which of the following correctly states Brenda's liability in this situation?

a. Brenda is secondarily liable if she is given timely notice of the dishonor

b. Brenda is primarily liable regardless of any notice of dishonor

c. Brenda is primarily liable if she is given timely notice of the dishonor

d. Brenda is secondarily liable regardless of any notice of dishonor

2) _________ is a method of commercial dealing that's commonly used in a particular field or industry.

a. Correct for sale

b. Good faith

c. Firm offer

d. Usage of trade

3) Carl is a holder in due course of a negotiable instrument. What defenses can be asserted against Carl against enforcing that instrument by persons with whom Carl has not dealt?

a. Both personal and real defenses

b. Only personal defenses

c. Only real defenses

d. Neither real nor personal defenses

4)Tom wants to change the oil in his automobile, and to do so, he needs to purchase an oil filter. He goes to the auto supply store and tells the clerk that he needs to change the oil in his vehicle and wants an appropriate oil filter for his make and model of vehicle. The clerk recommends oil filter ZYZ-2. Tom purchases the oil filter, takes it home, and puts it on his vehicle. The oil filter isn't suited for the vehicle and, as a result, the vehicle is damaged. Tom can sue successfully based on breach of

a. Implied warranty of title

b. Implied warranty of fitness for a particular purpose

c. Implied Warranty of merchantability

d. Express warranty

5)Sal, who owns and operates an appliance store, comes to Dian's house and convinces her to purchase a vacuum cleaner for $50. Two days later, Diana changes her mind. Diana can avoid the contractual obligation under the __________rule

a. Negative option

b. Cooling off

c. Antislamming

d. Telemarketing

6)In a written contract, Hogan agrees to sell Kitchen Cabinets to Jason and to deliver them before December 21. On October 21, two months before delivery is expected, Hogan tells Jason that he won't sell him the cabinets. Which of the following can Jason do in this situation?

a. He can sue Hogan for breach of contract, but must wait until December 21 to do so

b. He can't sue Hogan for breach of contract, since Hogan served an advanced notice to Jason

c. He can sue Hogan for breach of contract immediately

d. He can sue Hogan for breach of contract if he isn't able to find another vendor by December 21

7)Under the _________, sellers must ship orders within the time promised in their advertisements. If no time period isn't promised, sellers must either ship the order within 30 days or send the consumer an option notice

a. Negative option rule

b. Telemarketing sales rule

c. Mail and Telephone Order Rule

d. Cooling-Off Rule

8)Even though Spice gives her four-year old car to Homeless Helpers Charity, she

a. Need not provide an odometer statement

b. Must set the odometer to zero before resale

c. Need not provide an odometer statement, since the car is less than 15years old

d. Must provide an odometer statement

9)Attorney Smith receives a check from the defendant to settle a case. The check is made payable to Smith. Smith indorses the check, adding the words 'without recourse" and gives it to Clara Client. Clara deposits the check but it fails to clear. Which of the following statements is true?

a. Smith will have to pay the check amount to Clara but can sue the defendant for reimbursement

b. Smith doesn't have to pay the amount of the check to Clara

c. Smith will have to pay the check amount to Clara

d. Clara has no remedy against Smith or the defendant because the check contained the words "without recourse".

10) Tom orders $24000 worth of bicycles from Budnitz, a premium bicycle manufacturer, to sell in his store. After the bicycles are loaded into the freight truck and are on their way to Tom, Budnitz discovers that Tom is insolvent and likely can't pay for them. Budnitz has the right to

a. Stop the delivery and sue for any damages

b. Cover the tender and sue for any damages

c. Cure the delivery and sue for any damages

d. Seasonably reject the tender

11)Which of the following is true of an exclusion of the implied warranty of fitness for a particular purpose?

a. The Exclusion must be in writing, bold type, and be conspicuous

b. The exclusion can occur by excusing buyers from examining the goods, the sample, or model

c. Using expressions such as "as is", "with all faults", or some similar language wouldn't exclude the implied warranty of fitness for a particular purpose

d. The exclusion can be an oral or written statement, promise or other representation about the quality of a product

12)The words "without recourse" on an endorsement means the indorser is

a. Not liable if the instrument is dishonored

b. Not liable for any problems associated with the instrument

c. Liable personally, but not other parties

d. Only liable for up to fifty percent of the loss

13)Mary and George enter a contract in which George agrees to sell Mary vases made in his vase factory in Bedford Falls, New York. Mary lives in Los Angeles, California. The contract expressly states that the sale is F.O.B. (free on board) Los Angeles. The vases are damaged during transport between Bedford Falls and Los Angeles. Who bears the risk or loss?

a. George

b. Mary

c. Mary's insurance carrier

d. Both George and Mary

14)X company manufactures bicycles. X Company shipped a group of bicycles to Y Sporting Goods in a small town. Johnny purchased one of the bicycles manufactured by X Company from the Sporting Goods store. While he was riding the bicycle the day after purchasing it, the front wheel fell off, and Johnny fell and broke his arm. The cause of the accident was a defect that existed when X company shipped it to Y Sporting Goods. Will Johnny be successful if he files a lawsuit alleging strict liability?

a. No, the defendant must normally be engaged in the business of selling or distributing the product

b. Yes, each of the requirements for an action in strict liability is met

c. No, the goods must not have been substantially changed from the time the product was sold to the time the injury was sustained.

d. No, the product must be unreasonably dangerous to the user or consumer because of its defective condition

15)Lulu orders 20 pairs of navy blue pants from Peter for $400. On receipt of 20 pairs of sky blue pants, Lulu begins offering the pants for sale in her store. After a few days, when no one buys the pants, Lulu ships them back to Peter, claiming that the pants aren't the color that was specified in the contract and claiming that Peter needs to ship her conforming goods. Peter claims he doesn't have to do anything and that Lulu owes him $4000. Which of the following statements is true?

a. Lulu owes Peter nothing because she hasn't accepted the pants until she either pays or signifies that the pants conform to the requirements of the contract

b.Lulu owes Peter $4000 because she accepted the pants

c. Lulu owes Peter $4000 because the pants approximate what was required under the contract

d. Peter must ship to Lulu 20 pairs of navy blue pants

16) Lori went into an electronics store that had a sign posted declaring "All sales final!" She told the salesperson that she was looking for an iPod with Pandora, so that she could listen to streaming music while working out in her WIFI-enable health club. The salesperson selected a WIFI-capable IPOD and told Lori that she could receive Pandora as long as the fitness center had WIFI. The next day, when Lori tried to use the iPod at the fitness center with WIFI, she found that she could only hear static. Which of the following is true of this situation?

a. Lori can claim a refund of the iPod on the basis of an implied warranty of fitness for a particular purpose created by the salesperson

b. Lori may not be able to claim a refund, since the iPod will be declared as merchantable.

c. Lori can't return the iPod because the store's policy said "All sales final "at the time of the purchase.

d. Lori can claim a refund from the store based on a limited warranty that is practiced in the electronics industry

17) A holder in due course of a negotiable instrument

a. Is a person to whom the instrument is transferred as a gift

b. Can receive more rights than the previous holders

c. Can't transfer greater rights that they have themselves

d. Can take an instrument even when it's not indorsed to him or her

18)Green Grocer Wholesale Inc. received an $850.00 check from Bob for a grocery purchase. The check was from Forest Enterprises to Ana and had been indorsed to Bob, who, in turn, indorsed the check to Green. The clerk at Green failed to carefully examine the check, not noticing that the number 5 had been changed to an 8. Green Grocer has

a. Taken the instrument in good faith

b. Not taken the instrument in good faith

c. Not taken the instrument in good faith to $500

d. Taken the instrument in good faith to $300

19) Omar receives a check from Trudy drawn on Shelfari Bank. Shelfari Bank improperly dishonors the check when Omar attempts to cash it. Which of the following is true of this case?

a. Omar is the holder of the check, and hence, has recourse against Trudy, the drawer

b. Shefari Ban, the drawee bank, is liable to Omar, the holder, for improperly dishonoring the check

c. Omar has recourse against both the parties-the drawer, Trudy, and the drawee bank, Shelfari Bank

d. Omar has recourse against Shefari Bank, in case Trudy doesn't reimburse Omar

20) Bob writes a check to Sally. Sally endorses it over to Carl. Carl endorses and deposits it in his account at Big Bank. It turns out there are insufficient funds in Bob's account to cover the check and the check is dishonored. Which of the following statements is true?

a. Bob is primarily liable to satisfy the check

b. Sally is primarily liable to satisfy the check

c. Big bank is primarily liable to satisfy the check

d. Bob is secondarily liable to satisfy the check