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A power of attorney where a principal confers powers on an agent to act in specified matters on the principal’s behalf is referred to as ________. A) implied power of attorney B) general power of attorney C) limited power of […]

An order of the court that declares that a marriage did not exist is known as a(n) ________. A) divorce B) arraignment C) abatement D) annulment Which of the following is a corporation’s defense against a hostile takeover? A) proxy […]

A whistleblower bounty program allows a person who provides information that leads to a successful SEC action in which more than $1 million is recovered to receive 65 percent to 80 percent of the money collected. Chapter 7 discharge is […]

A unilateral mistake occurs when only one party is mistaken about a material fact regarding the subject matter of the contract. The existence of an LLC begins when the articles of organization are delivered to the office of the secretary […]

If a minor makes a contract with an adult, and the minor does not disaffirm the contract either during the period of minority or within a reasonable time after reaching the age of majority, ________. A) the adult is no […]

The first 12 circuits in the federal court system are geographical. Unilateral rescission of a contract by one of the parties without the other’s consent is enough to discharge an agreement. Answer: FALSE A valuable asset of a target corporation […]

Stephen, the chief of operations of an insurance company, accepts bribes in exchange of expediting paperwork regarding applications for certain insurance policies. In terms of the duty of loyalty, Stephen’s behavior is an example of ________. A) competing with the […]

The ________ branch of the federal government has the power to enact laws. A) legislative B) judiciary C) consulate D) executive Securities coming under the small offering exemptions ________. A) cannot be advertised to the public B) can only be […]

In a chain-style franchise, the franchisor licenses the franchisee to make and sell its products or services to the public from a retail outlet serving an exclusive geographical territory. Liquidated damages are enforceable only if the actual damages are easy […]

Ronald is an independent accountant. He is hired by Procious, Inc. to audit its financial statements. He fails to uncover that Procious, Inc. has been involved in embezzlement. A corporation makes a tender offer for the shares of Procious, Inc. […]

Lou writes a check to Bud but leaves out some essential components that are required on the check. This check would be described as ________. A) valid B) executed C) executory D) unenforceable The Uniform Limited Liability Company Act (ULLCA) […]

One criticism of utilitarianism is that it treats morality as if it were an impersonal mathematical calculation. A noncustodial parent is obligated to contribute to the financial support of his or her biological and adopted children. Answer: TRUE According to […]

The Revised Article 9 of the Uniform Commercial Code governs unsecured transactions in personal property. The FDA may remove from commerce any cosmetics that contain unsubstantiated claims of preserving youth or increasing virility. Answer: TRUE A general partner who breaches […]

Under the ULLCA, at least five members are required to form an LLC. Persons age 18 and older may work at any job, whether it is hazardous or not. Answer: TRUE Secondary boycott picketing is legal if it is directed […]

A(n) ________ is an agreement entered into by the creditor and the debtor whereby the debtor agrees to pay the creditor for a debt that is dischargeable in bankruptcy. A) reaffirmation agreement B) order for relief C) discharge agreement D) […]

A(n) ________ refers to an actual piece of paper, such as a warehouse receipt or bill of lading, which is required in some transactions of pickup and delivery of sold goods. A) codicil B) letter of credit C) document of […]

________ is a subjective test that applies to contracts involving individual taste and comfort. A) Reasonable person test B) Personal satisfaction test C) Express condition test D) Cognitive inventory test Kelly borrows $12,000 from Terry Oswald to pay for her […]

An organization or venture must have a ________ motive in order to qualify as a partnership. A) large-scale expansion B) non-commercial C) profit D) target market Individuals and businesses use the Internet for communication of information and data. Answer: TRUE […]

If a franchisor makes sales or earnings projections based on hypothetical examples, the franchisor must ________. A) display a cautionary statement that warns against misuse of the franchisor’s intellectual properties B) disclose the assumptions underlying the estimates C) register the […]

The term “probable cause” refers to the substantial likelihood that a person either committed or is about to commit a crime. Strict liability requires the injured person to prove that the defendant breached a duty of care. Answer: FALSE A […]

The rent-control ordinance is widely accepted by landlords as the ordinance fixes the rent at a specific amount and provides for minor annual increases. The right of first refusal gives existing shareholders the option of subscribing to new shares being […]

In a contract between a minor and an adult, the duty of restoration lies with the ________. A) adult B) minor C) competent party D) judiciary A(n) ________ is a judgment of a court that permits a secured lender to […]

It is essential for new domain name registrants to verify whether the name is already registered by another individual or business. Only the Federal Trade Commission (FTC) can obtain an injunction under the FTC Act. Answer: TRUE The Americans with […]

Article 3 of the UCC establishes the rules and principles that regulate bank deposit and collection procedures. An unauthorized signature by a purported agent acts as the signature of the purported principal. Answer: FALSE The party to whom the check […]

Greenmart Retailers contracts Wilson’s Foodstuff to purchase biscuit packets in bulk. Greenmart Retailers fulfills its side of the contract by making a complete payment to Wilson’s Foodstuff before the delivery. A week after the payment, Wilson’s Foodstuff becomes insolvent. Which […]

Under the rational basis test, the courts will uphold government regulation as long as there is a justifiable reason for the law. If an accord is not satisfied, the other party can sue to enforce the accord. Answer: TRUE According […]

A ________ is an interest in real property that lasts for a specified person’s lifetime. A) life estate B) fee simple absolute C) life insurance D) fee simple defeasible In a shipment contract, when is the title to the goods […]

An operating agreement or amendment cannot be orally stated. The Williams Act is an amendment to the Securities Exchange Act of 1934 made in 1968 that specifically regulates tender offers. Answer: TRUE According to the moral minimum theory, a business […]

If the movement of goods is not required, and the seller is a nonmerchant, the risk of loss ________. A) passes to the buyer upon “tender of delivery” of the goods B) remains with the seller after acceptance C) is […]

A heading printed in uppercase letters or a typeface that is larger than the rest of the body of a sales or lease contract is meeting the UCC’s requirement of ________ for warranties. A) obscurity B) conspicuity C) crashworthiness D) […]

Which of the following is true of a contract with an adjudged insane person? A) The adjudged insane person is bound by the terms of the contract. B) Such a contract is void. C) Only the competent party can enforce […]

Peter, Preston, and Penny organize an LLC in the month of January. While composing the operating agreement, they forget to include the amendment clause. Six months later, the situation demands an amendment to the operating agreement. Which of the following […]

A decree of specific performance orders the lessor to perform the contract. The right to capture allows a buyer to stop goods while in transit. Answer: FALSE Shareholders of a corporation generally have limited liability. Answer: TRUE Antideficiency statutes are […]

A corporation has the same basic rights to perform acts and enter into contracts as a physical person. The income and losses of partnership flow onto and have to be reported on the individual partners’ personal income tax returns. Answer: […]

Which of the following statements is true of the Labor Management Reporting and Disclosure Act of 1959? A) The act establishes the right of employees to form and join labor organizations. B) The act establishes the right of employees to […]

A ________ is a grant by the federal government upon the inventor of an invention for the exclusive right to use, sell, or license the invention for a limited amount of time. A) geographical indication B) patent C) copyright D) […]

Under Title VII of the Civil Rights Act, if a supervisor harasses an employee but no tangible employment action is taken, then ________. A) the employer is strictly liable for the harassing supervisor’s conduct B) the employer cannot raise a […]

The extent of the agent’s authority under an implied agency is determined from the facts and circumstances of the particular situation. An agent who does not perform his or her express duties or fails to use the standard degree of […]

Sky Toys, a chain of toy stores, charges its franchisees a fee for the use of its name that is approximately 12.5 percent of monthly gross sales. In this instance, the franchisees are paying ________ fees. A) royalty B) contingency […]

If the goods are delivered in a credit sale and the seller then discovers that the buyer was insolvent, the seller has 10 days to demand that the goods be returned. When the parties have not agreed in advance, courts […]

The bank where the payee or holder has an account is called the ________. A) payer B) depository C) promissory D) intermediary If a contract specifies “F.A.S. The Oceanking, New Orleans,” the seller bears the risk of loss until it […]

The Sarbanes-Oxley Act of 2002 was enacted to prevent firms from engaging in financial frauds. A trust can be created to become effective after a trustor’s death. Answer: TRUE Country-specific domain names can be purchased privately for commercial use. Answer: […]

For the long-arm statute to be effective, the nonresident defendant in a civil lawsuit must have had some minimum contact with the state such that the maintenance of that lawsuit in that state does not offend traditional notions of fair […]

________ set an upper limit on the interest rate that can be charged on certain types of loans. A) Federal banking reforms B) State usury laws C) Congressional committees D) Chambers of commerce Which of the following is true of […]

The plaintiff in a product liability lawsuit has suffered $100 worth of damages from an automobile accident. A defect in the manufacture of the plaintiff’s vehicle is found to be 70 percent responsible for the accident, while the plaintiff’s own […]

Ashenwaft Sandalwood is contracted by Sphinxia Perfumes to supply fresh sandalwood on a monthly basis. When the goods are delivered, Sphinxia inspects them and finds the sandalwood to be below the quality standards fixed by the contract. Sphinxia accepts the […]

DR-CAFTA removed all tariffs and trade restrictions among member nations. The debtor’s Chapter 13 plan of payment is summarily rejected if an unsecured creditor doesn’t accept the plan. Answer: FALSE Credit extension is a common occurrence with regard to debit […]

OSHA is empowered to inspect places of employment for health hazards and safety violations. The statute of limitations limits the seller’s liability to a certain number of years from the date when the product was first sold. Answer: FALSE For […]

If the plaintiff brings a diversity of citizenship case in state court, it will remain there and the defendant cannot remove the case to federal court. In a deed of trust arrangement, the legal title to a real property is […]

A manager of a manager-managed LLC is appointed by ________. A) the secretary of state B) a vote of a majority of the members C) a unanimous vote of the members D) a unanimous vote of the shareholders ________ is […]

A party who grants a license is called the licensee. An arbitration agreement separate from the actual contract cannot be enforced on a breach of contract. Answer: FALSE A default judgment establishes the plaintiff’s liability. Answer: FALSE If a patent […]

A ________ patent may be obtained for the ornamental nonfunctional design of an item. A) design B) process C) method D) utility If a limited liability partnership fails, ________. A) the general partner alone is liable for all the debts […]

How are the justices of the U.S. Supreme Court appointed? A) They are nominated by the President and confirmed by the Senate. B) They are directly appointed by the President of the United States. C) They are nominated and confirmed […]

The International Financial Reporting Standards (IFRSs) are used primarily by companies operating within the United States. The Statute of Frauds is a state statute that requires that certain types of contracts must be in writing. Answer: TRUE The foreseeability standard […]

Which of the following applies to the right to dispose of goods? A) It mandates any profit made by the lessor on the resale of the goods to be shared with the original lessee. B) It allows lessees to recover […]

________ are defensive strategies that are built into the target corporation’s articles of incorporation, corporate bylaws, or contracts and leases. A) White knights B) Proxies C) Poison pills D) Crown jewels Who among the following is committing wrongful disassociation? A) […]

A counteroffer is effective when dispatched by the offeree. Stakeholder interest theory argues that a corporation should take actions in the interest of all its stakeholders including suppliers, creditors, and customers. Answer: TRUE If the offeror withdraws the offer any […]

A will cannot be amended by merely striking out existing provisions on the will and adding new provisions on the will itself. State antitrust laws are used to attack anticompetitive activity that occurs in intrastate commerce. Answer: TRUE The subjective […]

Counteroffers against electronic agents that do not have the ability to evaluate the offer cannot be enforced. In civil cases, the jury will assess damages against the defendant if they have decided in favor of the plaintiff. Answer: TRUE Exculpatory […]

Why have checks and balances been built into the U.S. Constitution? A) to keep a check on the number and frequency of amendments made to the Constitution B) to ensure the judiciary is not biased or corrupt C) to prevent […]

How are ethical rules established in Rawls’s social justice theory? A) by a set of universal rules based on consistency and reversibility B) from an original position of a veil of ignorance C) by the ruling class or people in […]

The price and terms of the distributional interest of a disassociating member is decided by federal LLC law. In a relationship that is created when a customer deposits money into the bank, the customer is the debtor. Answer: FALSE[/cpmembership] A […]

Which of the following would be considered as goods? A) company shares B) crops C) trade secrets D) money A(n) ________ is necessary for a bearer paper to be negotiable. A) acceleration clause B) indorsement C) delivery D) specific payee […]

Workers’ compensation benefits are usually paid according to preset limits established by statute or regulation. One of the primary functions of the WTO is to hear and decide trade disputes between member nations. Answer: TRUE A material breach of a […]

An employment-related injury refers to an injury to an employee that arises out of and in the course of employment. Felonies are considered as less serious crimes that are not inherently evil. Answer: FALSE A jury cannot be sequestered in […]

All the countries of the world are members of the United Nations. A sole proprietorship is considered a separate legal entity. Answer: FALSE If no beneficiary is named in a life insurance, the proceeds go the federal government. Answer: FALSE […]

If the object of an offer is made illegal after the acceptance of the offer, it is termed as a supervening illegality. The bank where the payee or holder has an account is called the collecting bank. Answer: FALSE A […]

Miranda Airways, a commercial air carrier, has a contract with Wurtherton, Inc., an airplane manufacturer, to purchase a new plane. Due to a sudden shortage of cash, Miranda Airways goes to MetrosBank. MetrosBank issues a document to Wurtherton that if […]

Upon the termination of a marriage, the separate property owned by spouses is ________. A) equally divided between the spouses B) retained by the respective spouses who owned it C) shared using a fair distribution method for marital assets D) […]

The duty of accountability requires the agent to use the principal’s property in an authorized manner. Joint venturers are shareholders of a joint venture corporation. Answer: TRUE Collision insurance covers damage and loss that the insured causes to third parties. […]

The Sarbanes-Oxley Act officially applies only to a ________ corporation. A) close B) nonprofit C) public D) noncommercial Which of the following is a criticism of stakeholder interest theory? A) The duty of a corporation to do good to the […]

Which of the following is true of an assignment of a right? A) The unconditional assignment of a contract right retains all the assignor’s rights. B) The obligor is entitled to performance from the assignor. C) The assignor loses the […]

The executive branch of the federal government has the power to enact the law. A proxy contest happens when insurgent shareholders challenge the incumbent directors. Answer: TRUE Regulation A is a regulation that permits an issuer to sell $50 million […]

Fraud in the inducement is also known as fraud in the factum. An agreement to share losses of a business is strong evidence of a general partnership. Answer: TRUE In most states, the law restricts the use of LLPs to […]

The ________ is a federal statute that authorizes the EPA to establish national primary potable water standards. A) Comprehensive Environmental Response, Compensation, and Liability Act B) Federal Water Pollution Control Act C) Clean Water Act D) Safe Drinking Water Act […]

Which of the following is true of the Law and Economics School of jurisprudence? A) It believes that law is based on morality and ethics. B) It proposes that legal disputes should be solved by arbitrary rules that are based […]

Which of the following is true of subsurface rights in real property? A) Subsurface rights cannot be used to mine radioactive elements. B) Subsurface rights can be sold separately from surface rights. C) Minerals found beneath real property have to […]