Regulation Review

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ACT 5744

Fall  2013

 

Pick the best answer.

1.             Carlton executed and delivered to Raymond a $1,000 negotiable note payable to Raymond or bearer.  Raymond then negotiated it to Fred and endorsed it on the back by merely signing his name.  Which of the following is a true statement?

                a.             The instrument is bearer paper, and Fred can convert it to order paper by writing “pay to the order of Fred” above Raymond’s signature.

                b.             Raymond’s endorsement was a special endorsement.

                c.             The instrument was initially bearer paper and cannot be converted to order paper.

                d.             Raymond’s endorsement was necessary to Fred’s qualification as a holder.

 

 

2.             Under the Secured Transactions Article of the UCC, which of the following remedies is available to a secured creditor when a debtor fails to make a payment when due?

                                                                Proceed                                 Obtain a General

                                                against the                            Judgment against

                                                Collateral__                             the Debtor_

                                a.                             Yes                                                         Yes

                        b.                             Yes                                                         No

                c.                             No                                                           No

                d.                             No                                                           Yes

3.             On July 27, 2011 Summerson sent Fallson a letter offering to sell Fallson a vacation home for $150,000.  On August 2, 2011 Fallson replied by mail agreeing to buy the home for $145,000.  Summerson did not reply to Fallson.  Do Summerson and Fallson have a binding contract?

                                a.             Yes, because Summerson’s silence is an implied acceptance of Fallson’s letter.

                b.             No, because Fallson failed to sign the letter that was sent by Fallson.

                c.             No, because Fallson’s letter was a counteroffer.

                d.             Yes, because Summerson’s offer was validly accepted.

 

4.             Cindy, Odsen Corp.’s agent, needs a written agency agreement to

 

                a.             Hire an attorney to collect a business debt owed Odsen.

                b.             Purchased an interest in undeveloped land for Odsen.

                c.             Retain an independent general contractor to renovate Odsen’s office building.

                d.             Enter into a series of sales contracts on Odsen’s behalf.

 

5.             A party who filed a financing statement covering inventory on April 1, 2010 would have a superior interest to which of the following parties?

                a.             A holder of a mechanic’s lien whose lien was filed on March 15, 2010.

                b.             A judgment lien creditor who filed its judgment on April 15, 2010.

                c.             A holder of a purchase money security interest in after-acquired inventory  filed on March 20, 2010.

                d.              A purchaser in the ordinary course of business who purchased on April 10, 2010.

 

6.             In determining whether the consideration requirement to form a contract has been satisfied, the consideration exchanged by the parties to the contract must be

                a.             Fair and reasonable under the circumstances.

                b.             Legally sufficient.

                c.             Exchanged simultaneously by the parties.

                d.             Of approximately equal value.

 

 

7.             Pavers Roadway, Inc., contracts with Best Building Corporation to repave Best Building Corporation’s parking lot. The elements of a contract do not include

                                a.             consideration.

                                b.             contractual capacity.

                                c.             legality.

                                d.             practicality.

 

                 8.    Holly writes a check on her account at Investment Bank to Jerry to pay a debt. Jerry negotiates the check by indorsement to Kelly, who negotiates the check by indorsement to Lisa, who presents it for payment to Interstate Bank.  Holly is

a.

not liable for payment under any circumstances.

b.

primarily liable.

c.

secondarily liable.

d.

simultaneously liable.

 

                 9.    Holly writes a check on her account at Investment Bank to Jerry to pay a debt. Jerry negotiates the check by indorsement to Kelly, who negotiates the check by indorsement to Lisa, who presents it for payment to Interstate Bank.   If Investment Bank dishonors the check, Lisa can obtain payment from Jerry

a.

if Lisa timely notifies Jerry.

b.

only if Holly refuses to pay the check.

c.

only if Holly and Kelly refuse to pay the check.

d.

under no circumstances.

 

10.          Nora enters into a contract with Owen’s Transport Company for the delivery of a shipment of fresh produce. If ambiguities appear in the contract, they will be construed against            

 

                a.             the party who drafted the contract.

                b.             the party with the greater bargaining power.

                c.             the promisor.

                d.             the promisee.

 

 

11.          On November 1, 2013, Ted sent by overnight mail a letter to Zena in which Ted offered  to sell a rare vase. The offer requested that Zena’s respond by telegram and that the response be sent on or before 5:00 p.m. on November 2, 2013. On November 2, 2013 at 3:00 p.m., Zena sent an acceptance by overnight mail.  It did not reach Ted until November 5, 2013. Ted refused to complete the sale to Zena. Is there an enforceable contract?

                                a.             No, because Zena did not accept by telegram.

                                b.             No, because the offer required receipt of the acceptance within the time specified.

                                c.             Yes, because the acceptance was effective when sent.

                                d.             Yes, because the acceptance was made within the time specified.

 

12.          Mary promises to pay her assistant Ned $10,000 in consideration of the services he provided over the years. Mary never pays Ned. Mary is

                a.             liable for payment of the $10,000.

                b.             liable only if Ned still works for Mary.

                c.             not liable, because the consideration is in the past.

                d.             not liable, because the consideration was unintentional.

 

13.          Collection of EZ Sales Company’s debt to First Storage Corporation is barred by a statute of limitations. A new promise by EZ to pay the debt

 

                a.             may become enforceable if payments are made.

                b.             must be in writing.

                c.             requires consideration.

                d.             will not revive the obligation.

 

14.          Auto Body Repair Shop (ABRS) promises to pay Ben $1,000 a week to work for ABRS. Ben accepts and quits his job with Car Care Service. ABRS fails to provide a job for Ben. Ben has a cause of action based on

 

                a.             an illusory promise.

                b.             a release.

                c.             past consideration.

                d.             promissory estoppel.

 

15.          Pat, a world famous musician and composer, agrees to give ten piano lessons to Quinn in exchange for $1,000. Pat’s attempt to delegate his contract to Ruth, an inexperienced pianist, will probably be

                a.             permitted because contracts may be freely delegated.

                b.             permitted because the contract is concerned with music lessons.

                c.             prohibited because contracts may not be freely delegated.

                d.             prohibited because Pat and Ruth have very different skill levels.

 

 

16.          Jill and Karl contract for the sale of Jill’s horse for $1,000. Unknown to either party, the horse has died. Karl is

 

 

a.       entitled to another horse of equivalent value.

 

b.       not required to pay due to the mutual mistake.

 

c.       not required to pay due to the unilateral mistake.

 

d.       required to pay because he assumed the risk the horse might die.

 

17.          Alpha Company offers to sell Beta, Inc., 1,000 computers for a $1 million, states that the offer will be open for six days, and asks for a response by fax. On the fourth day, Beta sends an acceptance to Alpha via the mail, which is received on the sixth day. In this deal

 

                a.             a contract is formed.

                b.             no contract is formed, because Alpha asked for a response by fax.

                c.             no contract is formed, because Alpha received the acceptance late.

                d.             no contract is formed, because Beta sent the acceptance late.

 

18.    Holly writes a check on her account at Investment Bank to Jerry to pay a debt. Jerry negotiates the check by indorsement to Kelly, who negotiates the check by indorsement to Lisa, who presents it for payment to Interstate Bank.  If Investment Bank dishonors the check, Lisa can obtain payment from Kelly

 

a.

if Lisa timely notifies Kelly.

b.

only if Holly refuses to pay the check.

c.

only if Holly and Jerry refuse to pay the check.

d.

under no circumstances.

 

 

 

 

19.          Furnishings, Inc., agrees to lease a desk to Better Resources, Inc. (BRI), which requests that the desk be left outside City Warehouse for BRI to pick up. Before BRI retrieves the desk, it is stolen. The loss is suffered by

                a.             A-1 Furnishings and BRI, but not City Warehouse.

                b.             A-1 Furnishings, BRI, and City Warehouse.

                c.             A-1 Furnishings only.

                d.             BRI only.

 

20.          John, the secured party, perfects its security interest by filing a financing statement.  What is the effect of perfection of John’s security interest?

 

a.             The secured party has priority in the collateral over most creditors who acquire a security interest in the same collateral after the filing.

b.             The security interest becomes enforceable against the debtor.

c.             The debtor is protected against all other parties who acquire an interest in the collateral after the filing.

d.             None of the above.

 

 

21.          Ample Country Stables contracts to buy 1,000 horseshoes from Blacksmith, Inc., for $1 per shoe. When the market price decreases to 50 cents per shoe, Ample refuses to go through with the deal. Blacksmith can recover

                a.             $1,500.

                b.          &nb

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