Regulation Review

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