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This is due this Saturday at 10 am See attached word document 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
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
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
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
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. $1,000. c. $500. d. 0. 22. Farm Equipment, Inc., makes farming machinery. Gail discovers that her Farm Equipment tractor is defective and sues the maker for product liability based on negligence. To win, Gail must show that a. Farm Equipment sold the tractor to Gail. b. Gail knew and appreciated the risk caused by the defect. c. Gail suffered an injury caused by the defect. d. the “defect” was a commonly known danger. 23. Ida signs a check payable to Jane and gives it to her. Jane indorses the back, and transfers the check to Kyle. To negotiate the check to Leo, Kyle must a. indorse “Kyle” on the back and deliver the check to Leo. b. indorse “pay to the order of Leo [signed] Kyle” on the back and deliver the check to Leo. c. only deliver the check to Leo. d. transfer the check through the drawee bank. 24. Local Appliance Store, the secured party, sells a refrigerator to John, a consumer, for the use of John s family. John signs a sales agreement, a loan note, and a security agreement. Local Appliance Store fails to file either the security agreement or a financing statement with the secretary of state. Which of the following statements is accurate? a. The secured party has priority in the collateral over most creditors who subsequently acquire a security interest in the same collateral. b. The security interest is not enforceable against the debtor. c. The security interest is not enforceable against subsequent creditors. d. The assets subject to the security interest cannot become part of the bankruptcy estate in the event the creditor files an involuntary petition against the debtor. 25. Ruth, a minor, charges groceries at Sam’s Mini-Mart. Two days later, Ruth disaffirms the purchase. Ruth owes Sam’s Mini Mart
26. With regard to a prior perfected security interest in goods for which a financing statement has been filed, which of the following parties is most likely to have a superior interest in the same collateral? a. The trustee in bankruptcy of the debtor. b. Lien creditors of the debtor. c. A buyer of goods in the ordinary course of business. d. A subsequent buyer of consumer goods who purchased the goods from another consumer. 27. Beth is convicted of arson for burning down her warehouse.. On an application for insurance from Cover-All Insurance Company on a new building, in answer to a question about prior convictions, Beth does not disclose her conviction. This makes the contract
Fact Pattern for Question 28 Fred enters into a contract under Gene’s threats. Later, Fred refuses to perform, claiming that he acted under duress. 28. Refer to Fact Pattern B. Gene sues to enforce the contract. In order for Fred to establish duress, Gene must have threatened
29. Century Properties. Inc., and Dandy Capital Corporation enter into a contract for a sale of land. To be enforceable, the contract must be in writing
30. Timber Trees, Inc., and Land Corporation enter into an oral contract for Timber Trees, Inc. to sell its lumber mill to Land Corporation . Before Land Corporation takes possession, this contract is enforceable by
31. Lola agrees to pay Mira’s debt to New Sales Corporation if Mira does not pay it. Lola does not get any personal benefit for or from the agreement. To be enforceable against Lola, the promise must be in writing
Fact Pattern for Question 32 Macro Marketing, Inc. (Macro), and National Food Corporation (NFC) discuss the terms of a contract under which NFC is to provide personal services to Macro. The next day, Macro faxes NFC a memo on Macro’s letterhead that summarizes the items on which they agreed, including a two-year term. NFC immediately begins to perform, but Macro refuses to pay. NFC promptly institutes a law suit seeking damages. 32. Refer to Fact Pattern for question 32. The contract between Macro and NFC is
Fact Pattern for Question 33 Jeff and Kris sign a written contract for the sale of Jeff’s Koffee Kiosk to Kris. The parties intend their written contract to be a final statement of the terms of their agreement. 33. Refer to Fact Pattern for question 33. Kris later disputes some of the provisions of the deal with Jeff. The dispute results in litigation, and the court finds the terms of the agreement are ambiguous. The court will most likely
34. Tom dies owning stock as joint tenant with right of survivorship with his son, having bank accounts in his name in trust for his daughter, and owning real estate as tenants by the entirety with his wife. The trustee of Tom s revocable trust holds title the rest of his assets. Under the terms of the revocable trust, all assets of the trust will be distributed to Tom s son and daughter on Tom s death. Tom s wife, son and daughter survive him. Under the terms of Tom s will, Tom leaves all of his property to his mother, who also survived him. Tom died a. intestate. b. without any probate assets. c. with a last will that will controls the disposition of his assets. d. None of the above. 35. Manny, as buyer, wants to transfer his rights under a written real estate contract with Nila, as seller, to Opie. To ensure that the transfer of rights is valid, Manny must
36. Rural Development Corporation (RDC) and Sid enter into a contract for the clear-cutting of RDC’s fifty-acre tract for which RDC agrees to pay Sid. Sid is the owner of Timber Logging Company. Sid transfers his duty to log the tract under the contract to Timber Logging Company. Timber Logging Company is
37. Mke, a physician, renders aid to Nancy, who is injured and unconscious after an avalanche. Mike can recover the cost of the aid from Nancy
38. Pat, a world famous musician, agrees to give ten piano lessons to Quinn in exchange for $1,000. Pat’s attempt to transfer his contract duties to Ruth, an inexperienced pianist, will probably be
39. Chaz and Dolly enter into a five year contract under which Chaz agrees to provide maintenance services for Dolly’s Ski Resort. Chaz transfers his rights and obligations under the contract to Mark. Mark
40. On August 1, 2010 Delia and Edwin entered into an agreement for Edwin to lease Delia s country home for two months during the following summer for $1000 per month. Delia promised to vacate the property for Edwin by July 1, 2011 with the lease to begin on July 1, 2011. If these promises are not in writing, they are most likely
41. To avoid liability for intentional injuries, Power Corporation includes in its contracts an exculpatory clause. This is
42. MicroCorp hires Nick to work for one month at a weekly salary of $400. A MicroCorp representative orally agrees two weeks later to double Nick’s salary. This agreement is
43. Karen writes on a piece of paper, “I owe you $600,” signs it, and gives it to Lou. This instrument is
44. Pam signs an instrument payable to the order of Quick Credit, Inc., that allows a holder to demand payment of the entire amount due, with interest, if Pam fails to make a payment. This instrument is
45. Wyatt inherits a promissory note from Xena, his aunt. Wyatt has no notice that the note has been dishonored or is overdue. Wyatt has the rights of
46. Kettlecorn Investment Bank, Inc., and Lone Bank are secured parties with security interests in property owned by Metal Fabrication Corporation. Priority between these security interests is generally determined by
47. General Leasing Company (GLC) buys equipment for use as inventory, borrowing $1,000,000 from Helpful Finance Corporation (Helpful), with Helpful taking back a security interest in the equipment. The next day, GLC borrows $500,000 from Interstate Bank (Interstate), which loan is also secured by a security interest in the equipment. GLC defaults on both loans. Suppose that two weeks after GLC takes possession of the equipment, Helpful and Interstate file financing statements, with Interstate filing first. In that circumstance, the party with priority to the equipment is
48. Which is not allowed as a federal exemption under the Federal Bankruptcy Code?
49. Under the liquidation provisions of Chapter 7 of the Federal Bankruptcy Code, a debtor will be denied a discharge in bankruptcy if the debtor
50. Which of the following transfers by a debtor, within 90 days prior to the filing for bankruptcy, could be set aside as a preferential payment?
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