1. Major corporate policy is determined by
[A] managers. [B] officers.
[C] directors. [D] stockholders.
2. Herman, Lily and Marion owned Blackacre in Joint tenancy with right of survivorship. Herman conveyed his interest to
Eddie. After Herman’s conveyance, what is true about Blackacre’s ownership?
[A] Lily and Marion own two-thirds as joint tenents.
[B] Eddie owns a one-third interest as a tenant in common
[C] Herman owns all of Blackacre
[D] A and B are correct.
3. Herman, Lily and Marion owned Blackacre in Joint tenancy with right of survivorship. Herman conveyed his interest to
Eddie. Two months later Eddie marries Evangelina. After Eddie’s marriage, what is true about Blackacre’s ownership?
[A] Evangelina owns one-half of Eddie’s interest as community property
[B] Evangelina owns no portion of Blackacre
[C] Lily and Marion own two-thirds as joint tenants
[D] B and C are correct
4. An assignment is best described as a transfer of
[A] an obligation. [B] a personal responsibility.
[C] a right.
5. The parol evidence rule
[D] all of these.
[A] applies if all dealings between the parties are oral.
[B] allows parties to introduce evidence to change the terms of a written contract.
[C] serves the same purpose as the statute of frauds.
[D] none of these.
6. A disadvantage of the corporate form of business organization is
[A] unlimited liability for debts. [B] double taxation.
[C] limited life. [D] difficulty of transferring ownership interest.
7. For federal income tax purposes, a Subchapter S corporation is treated as a
[A] partnership.
[C] limited partnership.
[B] corporation.
[D] sole proprietorship.
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8. Cheesy Toes, a golf pro, signed a one-year contract with the owner of a private country club as a golf instructor. Three months after Cheesy Toes started work, the owner of the club sold out to Foot Powder. The owner also assigned the remaining nine months of Cheesy Toes’ contract to Foot Powder. Would Cheesy Toes legally be required to work for Foot
Powder?
[A] No, not unless Cheesy Toes consented to the assignment.
[B] Yes, because Cheesy Toes had only nine months left on his contract.
[C] No, not unless the private club was willing to open its membership to the public.
[D] Yes, because a contract had been signed by Foot Powder and the owner of the private club.
9. Which statement is correct regarding the transfer of contractual rights?
[A] The assignor acquires only such rights as the assignee has under the contract.
[B] The assignee acquires only such rights as the assignor has under the contract.
[C] The assignor acquires rights greater than the assignee has under the contract.
[D] The assignee acquires rights greater than the assignor has under the contract.
10. Abel entered into a written agreement with Burrows to buy a horse. In the meantime, the horse died. Under the common law, this contract was discharged by
[A] impossibility.
[B] performance.
[C] substantial performance.
[D] mutual agreement.
11. The rules for managing the affairs of the corporation are called the
[A] corporate minutes.
[B] articles of incorporation.
[C] corporate charter.
[D] corporate bylaws.
12. Moe owed Larry $350. Larry assigned his right to the debt to Curley on March 10. On March 11, Moe paid Larry $200.
On March 14, Moe received notification of the assignment by mail. When Curley attempted to collect the $350, Moe refused to pay more than $150. Must Moe pay Curley $350?
[A] Yes; rights to money are assignable and are binding as soon as the assignment agreement is made.
[B] No; rights to money are assignable but are not binding until the debtor is properly notified of the assignment.
[C] Yes; rights to money are assignable and are binding as soon as the assignment agreement is recorded in the proper office.
[D] No; rights to money are assignable but are not binding until the debtor agrees to the assignment.
2

13. Angelina entered into a contract with Halle to have some electrical work done. Halle later delegated the work to Lil’
Kim (who really is not that little!), another licensed electrician. Which of the following statements is true?
[A] Halle can no longer be held liable if the contract is breached.
[B] The contract is automatically terminated.
[C] Halle cannot legally delegate his contract obligations.
[D] Halle is still responsible for making sure the obligation is carried out.
14. When Kobe finished painting Shaq’s house, Shaq paid him the agreed price. The contract was discharged by
[A] full performance.
[B] mutual agreement.
[C] novation.
[D] accord and satisfaction.
15. In assessing damages for an actual loss, a court will usually grant a plaintiff
[A] punitive damages.
[B] nominal damages.
[C] compensatory damages.
[D] liquidated damages.
16. Serena contracted to build a wooden garage for Venus. Before construction began, a local ordinance was enacted prohibiting wooden structures in the zone where the garage was to be located. The agreement is ineffective under the common law because of
[A] accord and satisfaction.
[B] impossibility.
[C] rescission.
[D] release.
17. Individuals must file a Chapter 11 Bankruptcy if:
[A] they decide that it is better than a Chapter 7.
[B] they are not U.S. citizens.
[C] Their unsecured debt exceeds $269,250 and their secured debt exceeds $807,750.
[D]Their unsecured debt exceed $269,250
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18. When one party makes a material change in the terms of the contract without the approval of the other party, the contract is discharged by
[A] alteration.
[B] accord and satisfaction.
[C] waiver.
[D] substantial performance.
19. A debtor who is hopelessly in debt may be relieved of debt through
[A] breach of contract.
[B] rescission.
[C] bankruptcy.
[D] specific performance.
20. The disadvantage of the sole proprietorship is
[A] lack of flexibility in managing the business.
[B] ease of formation.
[C] unlimited liability for debts of the business.
[D] none of these.
21. A victim of a breach of contract will be granted specific performance in a contract to
[A] purchase 100 shares of stock.
[B] hire a professional singer for a party.
[C] buy a 1990 car.
[D] purchase a $130,000 house.
22. A corporation is owned by its
[A] directors.
[B] officers.
[C] executive committee.
[D] stockholders.
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23. For federal income tax purposes, partnerships
[A] pay one third of the income taxes if there are two partners.
[B] file and pay income taxes.
[C] pay one fourth of the income taxes if there are four partners.
[D] file an informational return only.
24. An example of a contract obligation that may be delegated to another person is a
[A] singer’s obligation to sing on a TV show.
[B] seller’s obligation to deliver 20 tons of coal at a set price.
[C] surgeon’s obligation to perform a throat operation.
[D] painter’s obligation to paint a portrait.
25. A contract right that may not be assigned is the right to
[A] receive standard merchandise.
[B] an attorney’s services.
[C] the damages awarded for a breach of contract.
[D] collect money.
26. A partnership may be terminated by
[A] the death of a partner.
[B] agreement among the partners.
[C] bankruptcy of the partnership.
[D] all of these.
27. Steven, an attorney, who performed various and substantial services for Paris, a small business owner, earned a $5,000 fee over a three-month period. Steven then assigned this fee to his bank to apply toward a loan. Based on this information, which of the following statements is correct?
[A] Steven’s right to collect $5,000 is not assignable without the bank’s permission.
[B] Legally, Steven’s claim is not assignable.
[C] Only claims other than money are assignable.
[D] Steven’s right to the $5,000 fee is assignable because it involves a claim for money.
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28. Tina entered into a contract with Ike to build an indoor swimming pool. Tina wanted to sing “What’s Love Got To Do
With It” and she swam laps throughout the day and thought this would be a great way to keep her legs nice and firm. The price was $15,000. Ike decided to go rolling on a river and failed to do the work, so Tina contracted with Big Steven to do the work for the same price ($15,000). Of course, Big Steven performed to Tina’s satisfaction. Tina then sued Ike for breach of contract. Tina will receive
[A] both compensatory and nominal damages.
[B] liquidated damages.
[C] nominal damages.
[D] compensatory damages.
29. The parties to a contract may end the contract through agreement, but this method does not include
[A] change in the law.
[B] accord and satisfaction.
[C] rescission.
[D] novation.
30. Which generalization concerning the statute of limitations is true?
[A] It applies only to written contracts coming under the statute of frauds.
[B] It frequently helps to avoid a breach of contract.
[C] It is a federal statute that is in effect in all 50 states for the same period of years.
[D] It protects debtors from an unreasonable delay on the part of a creditor in collecting debts.
31. One of Mr. Ed’s debts was outlawed under the statute of limitations. Later, upon inheriting a large sum of money, Mr.
Ed wrote to the creditor promising to pay the previously outlawed debt. Two months later, since the debt was still unpaid, the creditor sued Mr. Ed for collection. Should the creditor succeed?
[A] Yes; a creditor may legally put in a claim to seize any future assets a debtor may acquire after a debt has been outlawed.
[B] No; an outlawed debt can never be revived against a previously excused debtor.
[C] Yes; a written promise to pay an outlawed debt revives the debt.
[D] No; a written promise to pay an outlawed debt creates only a moral obligation to pay the debt.
6

32. To be legally enforceable as a contract, the courts require that each party to an agreement give up something of value called
[A] a written document.
[B] witnesses.
[C] consideration.
[D] none of these.
33. Miller said to Bud, a retail merchant, “Deliver this $1,500 computer to my nephew Coors and send the bill to me.” Bud did as he was requested, but Miller refused to pay the bill, claiming that the nephew was really not interested in using the computer. Is Miller liable?
[A] No; an oral promise to pay the debt of another is not binding.
[B] Yes; an oral promise to pay one’s own debt is binding.
[C] Yes; an oral promise to pay the debt of another is binding.
[D] No; there was no consideration for the oral promise.
34. A “Chapter 20” Bankruptcy is
[A] a specific section of the bankruptcy code.
[B] when a person files a Chapter 7 bankruptcy to unsecured debts, and then immediately follows up with a Chapter 13 bankruptcy to pay off the remaining debt.
[C] is the type of bankruptcy used by a struggling business.
[D] none of these.
35. Benson orally promised to give his 19-year-old son a car as a birthday gift. Benson was not legally bound to his promise because
[A] a promise to make a gift is unenforceable.
[B] the promise was a past consideration.
[C] the promise was made orally.
[D] an executed gift requires consideration.
36. When a debtor and a creditor are in agreement about how much money is owed, the debt is said to be
[A] adequate.
[B] liquidated.
[C] unliquidated.
[D] pre-existing.
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37. Past consideration
[A] usually induces the offeree to act.
[B] is a promise made for an act about to take place.
[C] is synonymous with moral consideration.
[D] is a promise made for an act that has already taken place.
38. Bush promises to pay Kerry $75 if Kerry repairs his car. A day later Kerry repairs the car to Bush’s satisfaction. This is an example of a
[A] bilateral contract.
[B] unilateral contract.
[C] void contract.
[D] quasi contract.
39. Mintz sued Jacobs for breach of contract. The court awarded Mintz $1 as damages. This amount is known as
[A] nominal damages.
[B] premeditated damages.
[C] abnormal damages.
[D] liquidated damages.
40. Which agreement is unenforceable because of lack of valid consideration?
[A] Johnson agreed to donate $1,000 to the United Hospital Building Fund. Based upon this and similar promises, construction was started.
[B] Boyd agreed to sell his used motorboat to Yates for $300. Yates tendered the $300.
[C] Davis promised to give his neighbor’s young son $50 if the boy would refrain from trespassing on his property.
Because of Davis’s promise, the boy complied.
[D] Philips promised his nephew $5,000 if the boy would refrain from smoking until he reached 21 years of age. Because of this promise, the nephew complied.
41. After a minor reaches the legal age of majority, he or she may disaffirm an executed contract for a luxury made while a minor only if he or she
[A] accurately represented his or her age when the item was purchased.
[B] acts within a reasonable length of time.
[C] returns the luxury item in new or unused condition.
[D] disaffirms in writing.
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42. An agreement is illegal and void if it violates
[A] state licensing statutes.
[B] state usury statutes.
[C] state criminal statutes.
[D] all of these.
43. Martinson used his van to deliver illegal drugs to users throughout a particular city. Because the van was old, he decided to trade it in for a new van. The contract that Martinson makes with the car agency to purchase a new van is
[A] illegal; therefore, Martinson would not have to pay for the van when it is delivered to him.
[B] legal; therefore, Martinson would have to pay for the van when it is delivered to him.
[C] illegal; therefore, Martinson would not have to pay for the van when it is delivered to him, but when Martinson receives the van, he must return it to the car agency.
[D] illegal; therefore, when Martinson receives the van, he must return it to the car agency.
44. If the purpose of a licensing statute is to raise money, an agreement with an unlicensed person is
[A] voidable.
[B] valid.
[C] unenforceable.
[D] void.
45. The interest rate a borrower is charged
[A] is illegal.
[B] is often set by a state agency.
[C] can be charged only on sales of merchandise.
[D] may not be usurious.
46. A contract between an adult and a minor is
[A] voidable only by the minor.
[B] voidable only by the adult.
[C] unenforceable.
[D] void.
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47. A provision excusing one party from liability for negligence is
[A] forbearance.
[B] an exculpatory clause.
[C] a disaffirmatory clause.
[D] a revocation clause.
48. Martin sold his used car to Nixon for $2,000. Later Martin discovered that the car was worth $3,000. Martin then claimed that Nixon owed him an additional $1,000. If Martin attempted to take legal action to collect the additional $1,000, he would be entitled to
[A] $3,000 minus $1,000.
[B] $1,000 only.
[C] nothing.
[D] $1,000 plus legal fees.
49. One example of a contract that must be in writing is a contract to
[A] rent an apartment for six months.
[B] purchase a computer for $350.
[C] pay a friend’s debts.
[D] care for someone for the rest of her or his life.
50. A partnership agreement must be in writing if
[A] one of the partners is a minor.
[B] there are more than two partners.
[C] the partnership is to last three years.
[D] the partnership is for professional purposes.
51. Anderson agreed to pay Dawes for acting as a real estate agent. Dawes was not properly licensed. This agreement was
[A] permissible.
[B] illegal and void.
[C] legal and valid.
[D] illegal and voidable.
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52. Damages to be awarded to an injured party in case of a breach of contract may be determined by the parties in advance and stated in the contract. These damages are called
[A] inconsequential damages.
[B] liquidated damages.
[C] equitable damages.
[D] substantial damages.
53. As soon as a breach occurs, the victim has a duty to
[A] notify the court.
[B] sue the breaching party.
[C] contact a lawyer.
[D] mitigate the damages.
54. Under threat of bodily harm, Jones signed a contract for the purchase of an apartment building. He may later have this contract set aside on the grounds of
[A] duress.
[B] undue influence.
[C] fraud.
[D] battery.
55. Angelina, who owned a retail dry-cleaning establishment, planned a trip to Florida for health reasons. She had made an appointment to see Steven who is also known as Dr. Feel Good. On March 13 she orally agreed to hire Myron for one year to manage her business while she was away. Myron was to manage the establishment from May 1 of that year to April 30 of the next year. Which of the following statements is correct?
[A] The statute of frauds does not apply to this situation.
[B] The statute of frauds does apply to this situation.
[C] This agreement is void.
[D] This agreement is voidable.
56. Covenants not to compete are generally upheld in court if
[A] a minor is not part of the business transaction.
[B] the territory and time restrictions are reasonable.
[C] goodwill is present.
[D] the agreements interfere with the proper administration of justice.
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57. If a mentally ill person is determined by a court to be insane, a subsequent agreement by this insane person to purchase a TV set from the TV Home Center would be
[A] illegal.
[B] enforceable.
[C] void.
[D] voidable.
58. The type of business organization formed most easily is the
[A] partnership.
[B] limited liability company.
[C] sole proprietorship.
[D] limited partnership.
59. Cole owed Williams $150. When Cole couldn’t pay the $150, Williams accepted $75 and a shaver worth $50 as full settlement. The contract was discharged by
[A] substantial performance.
[B] accord and satisfaction.
[C] breach of contract.
[D] waiver.
(Attendance)
60. The greatest football team in all the land is a. The Oakland Raiders b. The Dallas Cowboys c. The New York Giants d. The New York Jets
Fact Pattern A-1
On March 1, 1999 Dr. Dre and Ice Cube enter into the following agreement: Dr. Dre agrees to work for Ice Cube from May
15, 1999 through March 31, 2000.
61.Refer to Fact Pattern A-1 and the contract entered into on March 1, 1999. The agreement is a. Unenforceable if challenged because it needs to be in writing b. Enforceable by Dr. Dre if challenged and need not be in writing c. Unenforceable due to the preexisting duty rule. d. Enforceable because good faith will be implied by a court of law.
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62. Refer to Fact Pattern A-1. Suppose that on March 1, 2000 Dr. Dre and Ice Cube agree that Dr. Dre will work for Ice
Cube from May 15, 2000 “for the rest of Dr. Dre’s life.” The agreement is a. Enforceable if it is in writing b. Enforceable whether it is in writing or not c. Unenforceable d. Not enforceable because it is contrary to the 13th Amendment and must be in writing
63.Refer to Fact Pattern A-1. Suppose that on March 1, 2001 Dr. Dre promised to pay his daughter $1,000 in exchange for her promise to marry Ice Cube. The agreement is a. Enforceable b. Unenforceable unless it is in writing c. Unenforceable because it is contrary to public policy d. Enforceable as long as Dr. Dre’s daughter is at least 18 years old.
64. Extra Credit If all Laps are Lops, all Lops are Loops, and all Loops are Lups, then which of the following is not true?
A. All Laps are Loops
B. All Loops are Laps
C. All Laps are Lups
D. All Lops are Lups
65. Ann is taller than Jill, and Kelly is shorter than Ann. Which of the following statements would be most accurate?
A. Kelly is taller than Jill
B. Kelly is shorter than Jill
C. Kelly is as tall as Jill
D. It's impossible to tell
66. If Kentwood is closer to Marshall than Bershire, and Marshall is closer to Kentwood than Bershire, then Bershire is closer to:
A. Kentwood
B. Marshall
C. It is impossible to know
I really enjoyed you guys! Now it is time for a or
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[32] [C]
[33] [B]
[34] [B]
[35] [A]
[36] [B]
[37] [D]
[38] [B]
[39] [A]
[40] [C]
[41] [B]
[42] [D]
[43] [B]
[44] [B]
[45] [D]
[46] [A]
[47] [B]
[48] [C]
[49] [C]
[50] [C]
[51] [B]
[52] [B]
[53] [D]
[54] [A]
[55] [B]
[56] [B]
[16] [B]
[17] [C]
[18] [A]
[19] [C]
[20] [C]
[21] [D]
[22] [D]
[23] [D]
[24] [B]
[25] [B]
[26] [D]
[27] [D]
[28] [C]
[29] [A]
[30] [D]
[31] [C]
[1] [C]
[2] [D]
[3] [D]
[4] [C]
[5] [D]
[6] [B]
[7] [A]
[8] [A]
[9] [B]
[10] [A]
[11] [D]
[12] [B]
[13] [D]
[14] [A]
[15] [C]
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[57] [C]
[58] [C]
[59] [B]
{60} {B}
[61] [B]
[62] [B]
[63] [B]
[64] [B] If all Laps are Lops, and all Lops are Loops, then all Laps are Loops (so A is true). Now, if all Loops are Lups, then all Laps are Lups (so C is true). Now if all Lops are Loops and all Loops are Lups, then all Lops are Lups (so D is true). The only one that is not true is B - so this is the correct answer
[65] [D] The only information supplied in the question is that Ann is taller than both Kelly and Jill. Since there is no information in the question about the difference in height between Kelly and Jill and there is no way to draw conclusions from their shared relationship to Ann, it is impossible to tell how much taller or shorter Kelly is from Jill. Therefore, the correct answer is "D."
[66] [c]Kentwood and Marshall are closer to one another than they are to Bershire. But since there is no information about how far Bershire is away from Kentwood or Marshall, it's impossible to know to which it is closer. Therefore the correct answer is C.
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