1) A courts review of an arbitrators award may be restricted.
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2) The laws governing franchising are primarily designed to protect franchisors from dishonest franchisees.
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3) Federal statutes and regulations do not cover stationary sources of air pollution.
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4) A merger involves the legal combination of two or more corporations, only one of which continues to exist.
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5) An accountant is required to discover every impropriety, defalcation, and fraud in a clients books.
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6) Common law is the best and only source of legal authority.
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7) Typically, state laws have disclosure requirements and antifraud provisions patterned after Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.
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8) Limited liability organizations do not protect their owners personal assets from liability for the organizations obligations.
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9) Common law is a term for the laws that are familiar to most of us.
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10) Under the Sarbanes-Oxley Act of 2002, chief financial officers must certify the accuracy of information in corporate financial statements.
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11) A seller is not prohibited from charging a lower price to one buyer than is charged to that buyers competitors.
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12) Forbearance is a process that allows a lender to legally repossess and auction off the property securing a loan.
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13) A debtor wishing to file for bankruptcy must complete the means test to determine whether he or she qualifies.
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14) In a civil law system, the only official source of law is a statutory code.
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15) The act of state doctrine provides that only a head of state can make treaties with another nation.
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16) Misstatements or misrepresentations in an application for insurance can void a policy.
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17) The public must be provided with adequate advance notice of scheduled federal administrative agency meetings and agendas.
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18) A will must normally be attested to by two or three mentally competent witnesses.
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19) Brents Barber Shop hires only independent contractors such as Christi as workers. This hiring practice allows the employer to avoid all laws governing
a. employment relationships.
b. workplace safety.
c. business liability.
d. tax obligations.
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20) The payment of Edens debt to Flem is guaranteed by Edens personal property. This property is
a. a secured party.
b. a secured transaction.
c. a security interest.
d. collateral.
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21) Bruno is an accountant. Under the Sarbanes-Oxley Act of 2002, the degree of government oversight over the public accounting practices of Bruno and other accountants was
a. decreased.
b. increased.
c. eliminated.
d. unchanged.
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22) Thom draws a check, on his account in State Bank in New York, payable to Digital Computers, Inc., in San Francisco. Digital deposits the check in its account at First National Bank. First National deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank sends the check to State Bank.
Refer to Fact Pattern 27-2B. When Digitals bank received the check, it was required to pass it on
a. before midnight of the next banking day.
b. before midnight of the next day, whether or not it was a banking day.
c. before noon of the next banking day.
d. within five business days.
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23) Vladimir negotiates a bearer instrument to Wendy by
a. assignment.
b. delivery.
c. presenting it in response to a demand by Wendy.
d. promising to pay.
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24) Roth and Starr are shareholders of Triumph Hotel Corporation. Triumphs directors fail to declare a dividend. Roth and Starr could succeed in asking a court to order the directors to meet and declare a dividend
a. if Triumph has sufficient earnings available to pay a dividend.
b. if Triumph has cash reserves earmarked for a different purpose.
c. if withholding a dividend is an abuse of the directors discretion.
d. under no circumstances.
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25) Mega Corporation wants to gain control of MiniCo, Inc. The companies negotiate for several months, without coming to terms. Mega decides to pursue a takeover attempt. MiniCo decides to resist.
Refer to Fact Pattern 41-2B. MiniCo is
a. an alien corporation.
b. an acquiring corporation.
c. a receiver.
d. a target corporation.
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26) Bret and Cory enter into a contract for the sale of Brets textbook at the end of the fall semester for which Cory agrees to pay Bret $60. Cory wants to transfer her right to payment for the book to Del. This transfer
a. is prohibited.
b. may be oral or written.
c. must be implied.
d. must be in writing.
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27) Cornucopia Bank receives a check drawn on the account of Get-Rich Industries, Inc., one of the banks customers, at 3 p.m. Friday. Harry, the presenter of the check, is not one of the banks customers. The bank uses deferred posting with a 2 p.m. cutoff hour. If it decides to dishonor the check, it must do so by midnight
a. Saturday.
b. Sunday.
c. Monday.
d. Tuesday.
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28) Lara is the chief executive officer of Micro, Inc., which is required to file certain financial reports with the Securities and Exchange Commission (SEC). Under the Sarbanes-Oxley Act of 2002, Lara must
a. certify that the reports are complete and accurate.
b. designate a corporate official to assume liability for inaccuracies.
c. do nothing.
d. read the reports and be prepared to answer questions about them.
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29) Expando Global Corporation, a U.S. firm, establishes a wholly owned subsidiary firm in Germany. In this situation, Expando retains complete ownership of
a. all of the facilities.
b. only those facilities in the United States.
c. none of the facilities.
d. less than half of the facilities.
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30) Jack promises to buy Kellys computer for $400. Jack is
a. an executor.
b. an offeree.
c. a promisee.
d. a promisor.
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31) Equipment Rental Corporation and Family Farm, Inc., are parties to an oral agreement for a lease of farm equipment with payments in excess of $10,000. They may satisfy the Statute of Frauds by
a. mutually agreeing not to commit fraud.
b. repeating the terms in a phone call.
c. setting out the terms in a memo.
d. shaking hands on the deal.
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32) Filbert wants to put some money in trust for his son Gregor, but he does not want to lose full control over the funds in case he may need them in the future. One trust suited to Filberts needs is
a. a charitable trust.
b. a constructive trust.
c. a spendthrift trust.
d. a Totten trust.
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33) In selling a house, Robin tells Destry that thewiring and plumbing are of a certain quality. Robin knows nothing about the quality, but it is not as she specifies. Destry buys the house.
Refer to Fact Pattern 14-3. Under these circumstances, Destrys best course of action is most likely to
a. scam Robin.
b. induce Robin to give him the commission on her next sale.
c. recover damages or rescind the contract to buy the house.
d. sabotage Robins career with bad publicity.
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34) Suki works for Renaldo. At the end of her first year, Renaldo promises to pay her a bonus for her four quarters of success. Renaldos promise is
a. unenforceable because Sukis performance was a preexisting duty.
b. unenforceable because Sukis performance is past.
c. enforceable.
d. unenforceable because Sukis performance is not legally sufficient.
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35) Gunmakers Pride Corporation contracts for the sale of twelve hunting rifles to Hunters Supply store. Gunmakers delivers nonconforming goods. Acceptance will be presumed unless Hunters Supply rejects the goods
a. within a reasonable time after delivery.
b. within a reasonable time after ordering the goods.
c. within any time, since hunting rifles are not perishable.
d. before the last day of the current hunting season.
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36) Bread & Pastries Baking Company operates a commercial baking planta major sourcethat emits hazardous air pollutants for which the Environmental Protection Agency has set maximum levels of emission. The plant does not use any equipment to reduce its emissions. Under the Clean Air Act, this is most likely
a. a violation.
b. not a violation because baking is not considered to be polluting.
c. not a violation because the plant does not use any equipment.
d. not a violation because the plant is not a mobile source.
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37) Dingo Bangles Company wants to present information in disclosure documents via the Internet to prospective franchisees. Among other legal requirements with which Dingo must comply, prospective franchisees must
a. agree to settle any lawsuits that may arise over the documents.
b. be able to download or save all electronic documents.
c. provide e-mail addresses for Dingo to verify users authenticity.
d. register with the Federal Trade Commission via Dingos Web site.
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38) Feta is a partner in the game design firm GR8 Games, Inc., which obtains key-person life insurance on Feta in the amount of $1 million from Halo Insurance Company. Feta quits GR8 Games to join Icy Applications, Inc. Feta dies. Under the principle of insurable interest, Halo must pay the $1 million to
a. Fetas spouse Jo.
b. GR8 Games.
c. Icy Applications.
d. no one.
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39) Bartleby owes $5,000 to Countryside Credit Union. As a prejudgment remedy to collect the debt, Countryside could use
a. attachment.
b. contribution.
c. execution.
d. subrogation.
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40) Charlie, the owner of Charlies Foreign Auto Repair Service, files a suit against the state of Delaware, claiming that a state law violates the commerce clause. The court will agree if the statute
a. affects citizens private activities.
b. imposes a substantial burden on interstate commerce.
c. imposes a substantial burden on the state.
d. promotes the public order, health, safety, morals, or general welfare.
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41) Benny dies without a will, with no surviving spouse or child. Bennys survivors include his granddaughter Callie, his nephew Doug, and his cousin Earl. In most states, his estate would pass to
a. Callie.
b. Doug.
c. Earl.
d. the state.
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42) Kurt persuades Leo to buy his bicycle by telling Leo that the bike rides like the wind. Kurts statement is
a. duress.
b. fraud.
c. puffery.
d. undue influence.
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43) Eula signs a check pay to the order of Eula and presents to First National Bank for payment. The types of liability associated with this check are
a. fitness and quality.
b. potential and real.
c. sealed and delivered.
d. signature and warranty.
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44) Cotton Brokers, Inc., enters into a contract to sell denim clothing to Delite Natural Fashion store, which in turn sells a pair of jeans to Esm, a consumer. In comparison to standards that apply to consumers, the UCC imposes on merchants
a. less strict legal standards.
b. special business standards.
c. stricter ethical standards.
d. the same overall standards.
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45) Krystal is a federal judge. Krystals judicial decisions are part of case law. This law includes interpretations of primary sources of law. These sources include
a. administrative regulations.
b. articles in law reviews and other legal journals.
c. compilations summarizing court decisions on particular topics.
d. legal encyclopedias.
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46) Kelly files a suit against Lewis in a state court. The case proceeds to trial, after which the court renders a verdict. The case is appealed to an appellate court.
Refer to Fact Pattern 3-2. After a final determination in the case of Kelly v. Lewis, any judgment will be satisfied
a. if the losing party pays the judgment, or his or her property is sold and the proceeds paid to the winner.
b. only if the court orders the sheriff to pay the winner.
c. only if the losing party pays the judgment in cash.
d. only if the losing partys property is sold and the proceeds paid to the winner.
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47) Harvey, a resident of Indiana, has an accident with Janette, a resident of Kentucky, while driving through that state. Janette files a suit against Harvey in Kentucky. Regarding Harvey, Kentucky has
a. diversity jurisdiction.
b. in personam jurisdiction.
c. in rem jurisdiction.
d. no jurisdiction.
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48) When Flash Flush Company is incorporated in Georgia, the state agency with which the business name is filed approves it as a trade name. This filing will protect the name
a. only within Georgia.
b. throughout the United States.
c. in every United Nations member country.
d. wherever the name might be used.
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49) Elle is a trustee for a federal bankruptcy court. Elles duties include
a. collecting the property in a bankruptcy estate.
b. establishing priority for the payment of unsecured creditors.
c. operating a debtors business to obtain maximum profit for creditors.
d. submitting to an examination under oath by the creditors.
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50) Mei writes a check to Nat in an amount that represents half of her debt to him. On the back of the check, Mei includes the words payment in full. Nat cashes the check. This discharges the entire debt
a. if the debt is liquidated.
b. if the debt is past due.
c. if the debt is unliquidated.
d. under no circumstances.
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51) To bid on a job, Budget Construction Company relies on the oral promise of Coldwater Plumbing, Inc., to perform certain work at a certain price. Coldwater fails to perform. Budget can
a. not recover due to the principle of freedom of contract.
b. not recover due to the Statute of Frauds.
c. recover under the concept of unconscionability.
d. recover under the doctrine of promissory estoppel.
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52) Like the bylaws of other corporations, the bylaws of Farmland Equipment, Inc.,
a. establish the operating name of the corporation.
b. establish the value and classes of corporate stock.
c. were adopted at its first organizational meeting.
d. were submitted for approval to the public official in charge.
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53) Jims Jewelry Store orders Sho-Off-brand display racks from Kinos Merchandise Presentation, Inc. Kinos mistakenly ships racks of the wrong size and color, which Jims rejects and returns via Longroad Shipping Company. During the return, the racks are lost. The loss is suffered by
a. Jims.
b. Longroad.
c. Sho-Off.
d. Kinos.
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54) Yvon, a golf pro, convinces Zach, who has no athletic ability, that he has considerable talent and induces him to pay Yvon $10,000 for golf lessons. When Zach realizes the truth, he files a suit against Yvon. Zach is most likely to recover on the basis of
a. duress.
b. misrepresentation.
c. unconscionability.
d. none of the choices.
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55) Petro Industries, Inc., operates an oil refinery near Quigley River, which flows into Royal Lake. Discharging oil from the refinery into the river can result in
a. penalties and damages.
b. penalties only.
c. damages only.
d. no penalties or damages.
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56) Comfort Furniture Store sells household consumer goods. To create a purchase-money security interest, Comfort Furniture must
a. assign, to a collecting agent, a portion of its accounts payable.
b. assign, to a collecting agent, a portion of its accounts receivable.
c. extend credit for part or all of the purchase price of the goods.
d. refer purchasers to a third-party lender.
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57) Lew believes an old comic book he owns has little value, but Murray is convinced it is a valuable collectors item. Lew sells it to Murray for $10 before learning it is worth $1,000. Lew can
a. not rescind the contract.
b. rescind the contract on the basis of fraud.
c. rescind the contract on the basis of mistake.
d. rescind the contract on the basis of puffery.
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