Business Law Alternate Edition: Text and Summarized Cases 12th Edition

Rupert, an agent for Star Productions, Inc., enters into an unauthorized contract with Theatrical Transport Corporation purportedly on behalf of Star, which refuses to perform. Rupert is liable a. for breach of contract to Star and Theatrical Transport. b. for misrepresentation to Star only. c. for misrepresentation to Theatrical Transport only. d. to no

The death of a customer immediately revokes a banks authority to pay an item. Answer: F Answer: F Answer: F A transfer of contract rights to a third party is a delegation. Answer: F Answer: F Answer: F An imposters indorsement on an instrument can be effective against its drawer or maker. Answer: T Answer: T Answer: T Insurance is classified according

Price and Quint are starting a small machine shopRiverside Boat Repairand are considering whether to organize the business as a limited liability partnership. This form a. does not limit its owners personal liability for business debts. b. limits its owners personal liability for business obligations. c. obviates the need to obtain insurance for

Kay and Leo copy and exchange MP3 music files over the Internet without anyones permission. With respect to songs owned by Natural Recording Company, this is a. copyright infringement. b. fair use. c. licensing. d. protected expression. Answer: A Answer: A Answer: A On Tims eighteenth birthday, he decides that he no longer wants to keep a car

Rita is a surety for Serenas loan from Title Lenders, Inc. Ritas right to 'step into the shoes of Title Lenders, after paying Serenas debt, and exercise any of the Title Lenderss rights against Serena is the right of a. contribution. b. redemption. c. reimbursement. d. subrogation. Answer: D Answer: D Answer: D Diners Corporation, a U.S. firm, signs

Backwater Heavy Equipment Corporation currently employs three hundred full-time workers. Because business has declined, Backwater plans to lay off one hundred workers. If Backwater does not send advance notice of the layoff to the appropriate parties, the employer may be subject to a. fines, employee back-pay awards, attorneys fees, and more. b.

In an express contract, the terms are fully stated in words. Answer: T Answer: T Answer: T A person must have contractual capacity to be an agent. Answer: F Answer: F Answer: F Many remedies are available for confiscation of property by a foreign government. Answer: F Answer: F Answer: F Joan signs a note that states, "Payable in thirty

Kevin, the owner of Livestock Ranch Corporation, signs an instrument that includes the phrase "payment for this note will be made from the proceeds of next years stock sale. This instrument is a. negotiable. b. nonnegotiable, because payment can be made only out of a particular source. c. nonnegotiable, because it states an express

Brians pick-up truck collides with Mirandas semi-trailer on a county highway. Weighing Brians liability for the collision, Rachel, a judge, reasons by analogy. To reason by analogy is to a. compare the facts in previous cases and apply the same rule of law. b. compile summaries of court decisions on particular topics. c.

Bankruptcy relief is provided under state law. Answer: F Answer: F Answer: F "Consideration refers to the legality of the subject matter of a contract. Answer: F Answer: F Answer: F Certificate-of-title statutes establish perfection requirements for security interest in certain types of goods. Answer: T Answer: T Answer: T When dissolution takes place by voluntary action, the shareholders are responsible for

A partner owes to the partnership and the other partners a duty of loyalty. Answer: T Answer: T Answer: T A security agreement can be filed to perfect a security interest. Answer: T Answer: T Answer: T Copyright protection is automaticregistration is not required. Answer: T Answer: T Answer: T In most states, a person must be sixteen years of age to

An offer to form a unilateral contract is accepted by a promise to perform. Answer: F Answer: F Answer: F A substantive law creates or defines legal rights and obligations. Answer: T Answer: T Answer: T The perfection of a security interest will always protect a secured party against other third parties having claims to the collateral. Answer: F Answer:

Traditionally, a professional owed no duty to those with whom the professional had a direct contractual relationship. Answer: F Answer: F Answer: F Using the authority of a court, a plaintiff can obtain from an Internet service provider the identity of a person responsible for a defamatory message. Answer: T Answer: T Answer: T When a bank pays

Price-Cut Discount Stores are open to consumers. The UCC requirement of good faith imposes a. a higher duty on consumers than Price-Cut. b. a higher duty on Price-Cut than on consumers. c. no duty on either Price-Cut or consumers. d. the same duty on Price-Cut and consumers. Answer: B Answer: B Answer: B John is sales manager for

Nominal damages normally establish that the defendant acted wrongly. Answer: T Answer: T Answer: T Unless the parties agree otherwise, the buyer or lessee has an absolute right to inspect the goods before making payment. Answer: T Answer: T Answer: T Liability insurance protects against liability imposed on the insured as a result of injuries to the person

Michael, a citizen of Ireland, and Nina, a citizen of the United States, enter into a contract. When Nina breaches the contract, Michael obtains an award of damages in an Irish court. He asks a U.S. court to enforce the award. The U.S. court defers to and enforces the Irish

Selling securities under an exemption for which the securities do not qualify results in liability. Answer: T Answer: T Answer: T The equal dignity rule requires the parties to a transaction to treat each other with equal dignity. Answer: F Answer: F Answer: F A signature can be made by use of any device or machine. Answer: T Answer:

An undated instrument is not negotiable. Answer: F Answer: F Answer: F When the parties to a contract agree that its performance should directly benefit a third person, the third person is an intended third party beneficiary. Answer: T Answer: T Answer: T Restitution involves one partys recapture of a benefit through which another party has been unjustly

B2B, Inc., an inventory management firm, is a corporation. Cody is one of B2Bs ownersa shareholder. If Codys dies, B2B a. automatically terminates. b. continues in business. c. dissolves unless the other owners agree to continue. d. distributes Codys shares to the other shareholders. Answer: B Answer: B Answer: B Dian, a clerk at an Entertainment Unlimited store,

Antitrust law prohibits anticompetitive practices. Answer: T Answer: T Answer: T Aaron owns a certificate of deposit with Beth, his sister, and an apartment building with Carl, his brother, in both cases as a joint tenant. Aaron, a partner with Debra in Aaron & Debra Accountants, obtains a life insurance policy with Debra as the designated

A limited liability company has less legal flexibility than a corporation. Answer: F Answer: F Answer: F Some states require franchisors to provide presale disclosures to prospective franchisees. Answer: T Answer: T Answer: T When a buyer breaches a contract, the risk of loss remains with the seller. Answer: F Answer: F Answer: F An undisclosed principal is not liable to a

Quin, a clerk at PC Computer Store, takes a computer from the store without PCs permission. Quin is liable for conversion a. if he damages the computer. b. if he does not have a good reason for taking the computer. c. if he fails to prevent a theft of the computer from his

Nadine is a spectator at the Metro City Softball Tournament, an athletic competition. Regarding the risk of injury, Nadine assumes the risks a. attributable to the tournament in any way. b. different from the risks normally associated with the tournament. c. greater than the risks normally associated with the tournament. d. normally associated with

Reformation allows a court to rewrite a contract to reflect the parties true intentions. Answer: T Answer: T Answer: T The basic duty of a trustee is to collect and reduce to cash the property in the bankruptcy estate that is not exempt. Answer: t Answer: t Answer: t General Construction Company (GCC) tells Industrial Supplies, Inc., that

If a buyer accepts a shipment of goods and later discovers a defect, acceptance can be revoked. Answer: T Answer: T Answer: T Diana and Earl incorporate their computer technical support business as Fast Aid, Inc. Diana contracts with Gina to respond to Fast Aids customer service calls on a commission basis. What are

While a minor, Jason buys a large-screen HD TV and home theatre system that he continues to use after reaching the age of majority. After a reasonable time has passed, Jason will be considered to have a. disaffirmed the contract. b. ratified the contract. c. rejected the contract. d. rescinded the contract. Answer: b Answer: b Answer:

To be characterized as a "good under the UCC, an item of property must be movable. Answer: T Answer: T Answer: T A bailee never has a right to use the bailed property. Answer: F Answer: F Answer: F Water-quality standards are set by the states under Environmental Protection Agency supervision. Answer: T Answer: T Answer: T A takeover cannot be challenged

United Industrial Corporation gives preferential treatment in hiring and promotion to the members of all protected classes. This treatment results in discrimination against members of the majority. This is a. a bona fide occupational practice. b. a business necessity. c. constructive discharge. d. reverse discrimination. Answer: D Answer: D Answer: D Glenn and Haji sign a written contract.

An expression of opinion"your customers will like thisis an offer. Answer: F Answer: F Answer: F An order stating "please pay is too courteous to create a negotiable instrument. Answer: F Answer: F Answer: F Borrowers are required to recite the terms of their loans in clear, readily understandable language so that lenders can make rational choices. Answer:

Southwestern Foods Corporation operates a packaging plant near the border between the United States and Mexico. Due to the location, it would be easier for Southwestern to employ noncitizens. It is legal for a U.S. employer to a. hire persons not authorized to work in the United States. b. recruit persons not

General Allied Company obtains insurance policies with Hy-Rate Insurance, Inc., and Ideal InsurCo against the risk of loss of Generals office building in a fire. Each policy includes a multiple insurance clause. A fire partially destroys the building. General can collect from Hy-Rate a. all of the loss. b. half of the

Sonic Board Corporation files a suit against Custom Fabricators Company, claiming that the consideration for their contract is inadequate. The court will most likely not examine the adequacy of the consideration if a. there is a large disparity in the amount of consideration exchanged. b. Sonic asserts that there is inadequate consideration. c.

Working times and hours are not restricted for persons between the ages of sixteen and eighteen. Answer: T Answer: T Answer: T There is one set of procedural rules for federal courts and various sets for state courts. Answer: T Answer: T Answer: T An assignment of the interest of a limited partner dissolves a limited partnership. Answer: F Answer:

Rikki sells shares in Sparkling Spa Company to Telsa. Rikki does not deliver the actual possession of the shares to Telsa, but gives her the key to a safety-deposit box in Unity Bank in which the stock certificates are locked. Presenting the key is a. accession. b. constructive delivery. c. confusion. d. conversion. Answer: B Answer:

Opalina asks Paolo, who does not understand English, to sign what Opalina says is an application to open a bank account. In fact, the "application is a note. If sued on the note by an HDC a. Paolo must pay the note. b. Paolos best defense would be fraud in the execution. c.

Bev is a shareholder of All-Terrain Vehicle Company. As a shareholder, Bev does not have a. a right to compensation. b. dividend rights. c. inspection rights. d. preemptive rights. Answer: A Answer: A Answer: A To avoid liability for intentional injuries, Northwest Power Corporation includes in its contracts an exculpatory clause. This is a. enforceable if the other parties

Musicians & Performers Union represents the employees of Poignant Legerdemain, Inc. During negotiations over conditions of employment, each side rejects the others proposal without offering a counterproposal. This indicates a. bad faith. b. good faith. c. each partys attempt to obtain concessions on other subjects. d. reasonable efforts to come to an agreement. Answer: A Answer:

In a sole proprietorship, the proprietor shares the burden of any losses or liabilities incurred by the business enterprise with the government. Answer: F Answer: F Answer: F Modern statutes permit the holder of an artisans lien to foreclose and sell the property subject to the lien to satisfy the debt. Answer: T Answer: T Answer: T The

Designating a third party as a beneficiary in a contract does not indicate whether the beneficiary is intended or incidental. Answer: F Answer: F Answer: F A maker is secondarily liable on an instrument. Answer: F Answer: F Answer: F Under a shipment contract, the risk of loss passes to the buyer when the goods are delivered to

Yves is an accountant charged with negligence by Zesty Soup Company, a client. Yves may successfully defend against the claim if he can show that a. scienter was lacking. b. he complied with all International Financial Reporting Standards. c. the negligence was not the proximate cause of the clients losses. d. the negligence was

Forbearance is a process that allows a lender to legally repossess and auction off the property securing a loan. Answer: F Answer: F Answer: F If a business firm refuses to comply with an agencys request to inspect facilities or business records, the agency must defer to the refusal. Answer: F Answer: F Answer: F Due to the

The distinctions between a surety and a guarantor have been abolished in all states. Answer: F Answer: F Answer: F Monopsony power is market power on the buy side of a market. Answer: T Answer: T Answer: T Land assigned by zoning laws for business activities is designated as being for commercial use. Answer: T Answer: T Answer: T A tender offer

Jen signs a check "pay to the order of Key drawn on Jens account in Lakeland Bank to buy Keys car. Jen asks Lakeland Bank to indicate on the face of the check that it will accept it when Key presents it for payment. If the bank agrees, this will

Dales debts are discharged in a liquidation bankruptcy. With respect to Dales prebankruptcy debt, Even Stevens Credit Reporting Agency must automatically report a. nothing. b. the debt as "discharged, except the nondischargeable debt. c. the debt as "discharged, including the nondischargeable debt. d. the debt as "unpaid. Answer: B Answer: B Answer: B Kailin owns a farm near

Ian steals a business law textbook from Jules. Kris, who does not know that the book is stolen, buys it from Ian. Kris has committed a. conversion. b. disparagement of property. c. no tort. d. wrongful interference with a business relationship. Answer: A Answer: A Answer: A For Petra to recover the benefit of her bargain from a

Rollo is an attorney whose clients include Superior Credit Company. If Rollo is negligent in his work for Superior, under the Restatement (Second) of Torts, Rollo may be liable to Superior and a. any third party. b. no third party. c. third parties who are foreseen users of the work. d. third parties who

Administrative law is created by administrative agencies, not by legislatures. Answer: T Answer: T Answer: T Zoning restrictions are absolute. Answer: F Answer: F Answer: F A transfer of a negotiable instrument can give a holder more rights than its prior possessor. Answer: T Answer: T Answer: T The owners of a limited liability company are called shareholders. Answer: Answer: Answer: F F F Property

To finance the purchase of a house from Tuna, Uri signs an instrument promising to pay to "Verity Mortgage Service $160,000 with interest in installments with the final payment due July 10, To be negotiable, this instrument must include the signature of a. a non-party witness. b. Tuna or Tunas realtor. c. Uri. d. Veritys

Nick, or Nora, or any U.S. citizen, can bring a civil suit in a U.S. court against a foreign entity a. for a tort allegedly committed in the United States only. b. for a tort allegedly committed in the United States or overseas. c. for a tort allegedly committed overseas only. d. under no circumstances. Answer:

On behalf of the jazz group Synco-Passion, their manager Raul agrees to a performance in the Quay Club on May Portia, acting for Quay Club, sends a written copy of the agreement to Raul to be signed. Typically, businesspersons put their contracts in writing to a. ensure proof of the contracts existence. b. create

If one corporation owns all of the shares of another corporation, it is referred to as the target corporation. Answer: F Answer: F Answer: F Before a lawsuit begins, the court must have proof that the defendant was notified. Answer: T Answer: T Answer: T Promises of fact made during the bargaining process are not express warranties. Answer: F Answer:

Diaz and Cuzco enter an express contract for the construction of a warehouse. Express contract terms are given, in relation to the parties course of performance, a. less priority. b. the same priority. c. no priority. d. more priority. Answer: D Answer: D Answer: D Mia, a physician, renders aid to Noel, who is injured and unconscious. Mia

Any crime committed with a computer is a cyber crime. Answer: F Answer: F Answer: F Tank is a director and the majority shareholder of Unique New Investment Corporation (UNIC). Tank buys, for $1,500, an option to purchase a tract of real estate for $50,000. Tank forms Vista Property, Inc., to hold the option.

An accountant is not liable for a false statement that affects the price of a security if the buyer or seller of the security knew the statement was false. Answer: T Answer: T Answer: T A mere acknowledgment of a debt is not sufficient to create a negotiable instrument. Answer: T Answer: T Answer: T Punitive damages are

A holder takes an instrument for value by performing the promise for which the instrument was issued. Answer: T Answer: T Answer: T The use of a persons likeness for commercial purposes without permission is not an invasion of privacy. Answer: F Answer: F Answer: F Any breach allows the nonbreaching party to sue for damages. Answer: T Answer:

Service of process is the process of obtaining information from an opposing party before trial. Answer: F Answer: F Answer: F A "donee beneficiary is a type of an "incidental beneficiary. Answer: F Answer: F Answer: F A restriction on commercial speech is valid as long as it forbids only the expression of views on controversial issues. Answer: F Answer:

Jim is an appliance salesperson. To make a sale, he asserts that a certain model of a Kitchen Helper refrigerator is the "best one ever made. This is a. fraud if the statement is the truth. b. fraud if Jim believes that this statement is not true. c. fraud if Jim is stating

Under an antilapse clause, an insurance policy will lapse only if no premium is paid on the date due. Answer: F Answer: F Answer: F An employer may be liable for the harassment of nonemployees if the employer knew about the harassment and failed to take corrective action. Answer: T Answer: T Answer: T Insider trading occurs when

Fact Pattern 24-2A Commodity Sales Corporation and Resource Purchasing Company enter a contract for a sale of unprocessed silver. Commodity Sales draws a draft unconditionally ordering Resource Purchasing to pay $50,000 to Commodity Saless order in sixty days. Resource Purchasing signs and dates the draft. Refer to Fact Pattern 24-2A. This instrument is a.

An invitation to submit bids"how much would you charge to do this work?is an offer. Answer: F Answer: F Answer: F The principle of comity is based primarily on an international treaty. Answer: F Answer: F Answer: F For a defendant to be convicted in a criminal prosecution under the securities laws, a jury is allowed to speculate

Somethin-in-the-Oven Corporation and Cookin Good, Inc., transact a deal under the UETA. Other state law applies to a dispute between the parties relating to a. attributing a partys e-signature. b. the formation of the parties contract. c. the sending and receiving of e-records. d. the legal effect of the parties e-signatures and e-records. Answer: B Answer:

With a guaranty arrangement, the guarantor is secondarily liable. Answer: T Answer: T Answer: T A deposition is sworn testimony by a party to a lawsuit or any witness. Answer: T Answer: T Answer: T In most sales, sellers warrant that they have good and valid title to the goods sold. Answer: T Answer: T Answer: T A shareholders right to inspect

Under Check 21, the maximum time that a bank can hold funds from deposited checks before making them available to the depositor will increase. Answer: F Answer: F Answer: F Specific performance is the remedy customarily used when one party has breached a contract for the sale of goods. Answer: F Answer: F Answer: F Goods that

Drake pushes Evon into the path of an oncoming car driven by Flip. Gina tries to rescue Evon, but the car hits both of them. Drake is liable for the injuries of a. Evon and Gina. b. Evon only. c. Gina only. d. neither Evon nor Gina. Answer: A Answer: A Answer: A Edy obtains a homeowners insurance policy

Resources Recovery, Inc., uses dynamite in its remote mining operations. Sabrina stores household cleaners in his suburban garage. Most likely liable under the doctrine of strict liability for any injury caused by an abnormally dangerous activity is a. neither Resources Recovery nor Sabrina. b. Resources Recovery and Sabrina. c. Resources Recovery only. d. Sabrina only. Answer:

Va-Va-Voom Products, Inc., engages in deceptive advertising when it markets its product Weight-No-More as able to help consumers lose weight in their sleep. Va-Va-Voom is ordered to include in all future advertising of Weight-No-More the statement, "This product will not cause anyone to lose weight while sleeping. This is a. a

Nesbit publishes in a newspaper an account of the sex life of Merinda, who is not a public figure. The information is true. This is most likely a. an invasion of privacy. b. defamation. c. trespass to personal property. d. wrongful interference with a contractual relationship. Answer: A Answer: A Answer: A Pluto accuses Quark, an accountant, of

Under a finance lease, the lessee can stop performing and making lease payments if the leased equipment turns out to be defective. Answer: F Answer: F Answer: F A negotiable instrument can function as a substitute for cash. Answer: T Answer: T Answer: T Corporations can be good citizens by promoting goals that society deems worthwhile. Answer: T Answer:

Cold Calls Corporation a telemarketing firm, files a suit to block the enforcement of the Federal Trade Commissions (FTC) amendment to the Telemarketing Sales Rule establishing a national Do Not Call Registry, on the ground that it violates the First Amendment to the U.S. Constitution. The court is most likely to

Janet and Julie work at ABC Interiors. Janet is a designer who works with clients of ABC on interior design projects. ABC closely supervises all of its designers, and dictates their work schedules. Julie works part-time in the evenings cleaning the offices. Refer to Fact Pattern 32-1A. Janet is ABCs a. employee,

The assets in Dongs estate, including the value of his home on Elm Street and its contents, are insufficient to pay in full all of the gifts provided for in his will. His heirs will receive a. full payment in order of seniority until the assets are exhausted. b. nothingthe assets will

Marie, an employee of Nickel Tool Company, files a sexual-harassment suit against Owen, her supervisor. Marie wins. Nickel may also be liable if it had effective harassment policies and complaint procedures, and a. none of the employees followed them. b. Marie followed them. c. all of the employees were aware of them. d. Owen

Through a certain transaction, Corporate Properties, Inc., acquires all of the shares of Downtown Realty Corporation for some of Corporate Propertiess shares. Both Corporate Properties and Downtown Realty continue to exist. This is a. a consolidation. b. a share exchange. c. a short-form merger. d. a hold-up. Answer: B Answer: B Answer: B Posing as Platinum Bank, Oswald

Convenience Mart, Inc., is a closely held corporation. Convenience Mart is a. eligible to make public offerings of securities. b. exempt from filing a certificate of incorporation. c. generally allowed to restrict the transfer of its stock. d. taxed in the same manner as a partnership. Answer: C Answer: C Answer: C Fact Pattern 28-1A Dollar Value Motors asks

Hearsay evidence is what someone heard someone else say. Answer: T Answer: T Answer: T To be considered material, a fact must be significant enough that it would likely affect an investors decision to buy or sell a companys securities. Answer: T Answer: T Answer: T An offer may invite an acceptance to be worded in such specific

Most other nations antitrust laws do not apply extraterritorially. Answer: F Answer: F Answer: F An employer must verify a prospective workers identity and eligibility for employment in the United States and abroad. Answer: F Answer: F Answer: F If an agency decides that an environmental impact statement is unnecessary, it need not issue a statement supporting this

The bank on which a check is drawn is the depositary bank. Answer: F Answer: F Answer: F The United States Supreme Court can review any case decided by any of the federal courts of appeals. Answer: T Answer: T Answer: T Under a coinsurance clause, a homeowner who insures a home for 80 percent of its value

Credit & Debt Corporation loans Evelyn $25,000 to start a new business. Evelyn does not pay, but Credit & Debt fails to sue within the time prescribed by the applicable statute of limitations. Evelyn promises to pay a portion of the debt even though recovery is barred. Credit & Debt

A debtors signature or authentication is required to create a security interest. Answer: T Answer: T Answer: T An action in strict product liability requires that the goods be substantially changed from the time the product is sold to the time the injury is sustained. Answer: F Answer: F Answer: F Jade, Kelly, and Lila organize a nonprofit

Discount Mart, Inc., is an East Coast-based firm that does business throughout the United States. With respect to this circumstance, the UCC has been adopted by, and applies in, a. all of the states, in whole or in part. b. most of the states on the Atlantic and Pacific coasts. c. none of

Luke owns a farm near Marshalltown, Iowa, with stands of trees serving as windbreaks. Luke grows corn on the property. When Luke sells the farm to Nina, if the contract does not specify otherwise, the sale includes a. neither the crops nor the trees. b. the crops and the trees. c. the crops only. d. the

Fact Pattern 39-1B Bertram, Claudia, and Dynah form Eat Local, Inc., a closely held corporation, and agree to restrict the transfer of its stock to anyone else. The agreement provides that if one of the shareholders dies, his or her shares of stock in Eat Local will be divided to maintain the

An agency coupled with an interest is an agency created for the agents benefit. Answer: T Answer: T Answer: T Federal immigration laws do not require verifying whether workers are U.S. citizens or are otherwise authorized to work in this country. Answer: F Answer: F Answer: F Bait-and-switch advertising occurs when an ad appears to be based on

Rita is appointed as an agent for Superior Sales, Inc. The agency agreement is silent as to the level of sales that Rita is expected to achieve. She must a. achieve nothing because the agreement says nothing on the issue. b. attain the level that Rita achieved with her previous employer. c. maintain

Lena offers Miguel a job, representing falsely that it will be long term. In reliance, Miguel takes the job but is laid off shortly thereafter and successfully sues Lena for fraud. With respect to the employment-at-will doctrine, this is a. an example of the doctrine. b. an exception based on contract theory. c.

Dissolution is the legal death of the artificial "person of a corporation. Answer: T Answer: T Answer: T The first step in the incorporation process is to select a state in which to operate. Answer: T Answer: T Answer: T Securities that are exempt from the registration requirement can not generally be resold without being registered. Answer: F Answer: F Answer:

An Internet service provider is generally not liable for publishing a defamatory statement that comes from a third party. Answer: T Answer: T Answer: T A principal can ratify an agents unauthorized act in its entirety or merely in part. Answer: F Answer: F Answer: F Recreation & Sports Equipment Corporation sells a product that is capable of

Damages compensate a party for harm suffered as a result of anothers wrongful act. Answer: T Answer: T Answer: T A mere reference in an instrument to another writing makes the promise or order conditional. Answer: F Answer: F Answer: F A party who would sustain a financial loss from the destruction of property has an insurable

A corporation is referred to as a domestic corporation by its home state. Answer: T Answer: T Answer: T An incidental third party beneficiary can sue directly to enforce the contract. Answer: F Answer: F Answer: F There are additional disclosure requirements for a loan that carries a high rate of interest or entails high fees for the

The Securities and Exchange Commission can seek sanctions against those who violate foreign securities laws. Answer: T Answer: T Answer: T When a bank properly dishonors a check for insufficient funds, it has no liability to the customer. Answer: T Answer: T Answer: T When no delivery terms are specified in a contract for a sale of goods,

To incorporate, you must first choose a corporate name and file it with the appropriate state office. Answer: T Answer: T Answer: T When a customers negligence contributes to a forgery, the bank normally is obligated to recredit the customers account for the amount of the check. Answer: F Answer: F Answer: F If a contract in which goods

Alpha Communications, a partnership, publishes consumer periodicals, including Science Today. Beta Publications, also a partnership, publishes professional periodicals, including Technology Review. Alpha and Beta agree to pool their resources in a one-time deal to print and market a book, Unlimited Future. In contracting with Gamma Printing Supplies, Inc., for paper to print

Each state has its own constitution. Answer: T Answer: T Answer: T Even after a tenant sublets leased premises, he or she may be obligated to pay rent. Answer: T Answer: T Answer: T An instrument payable "with interest must specify a particular rate to be negotiable. Answer: F Answer: F Answer: F In some states, obtaining the unanimous written consent of

Delia refuses to pay Ewing $500 in cash on their contract to repair certain theater sets, which Ewing still possesses. Ewings lien on the sets will terminate a. if Ewing continues to maintain possession. b. if Ewing does not file a written notice of lien within thirty days. c. if Ewing voluntarily surrenders

Flo tells Gregor that she will buy his textbook from last semester for $65. Gregor agrees. Flo and Gregor have a. an executed contract. b. an express contract. c. an implied contract. d. a quasi contract. Answer: B Answer: B Answer: B Mitchell buys 100 bales of hay from New Grain Fields. The parties agree that the hay

A defendant is a person against whom a lawsuit is brought. Answer: T Answer: T Answer: T An offer that a statute makes illegal automatically terminates the offer. Answer: T Answer: T Answer: T Any breach excuses the nonbreaching partys duty to perform. Answer: F Answer: F Answer: F Federal laws often provide more sweeping and significant protections for the consumer

False imprisonment can be a tort if confinement or restraint is unjustified. Answer: T Answer: T Answer: T An insurable interest in property must exist when a policy is purchased. Answer: F Answer: F Answer: F Anyone who wrongfully obtains inside information and trades on it for his or her personal gain can be liable under SEC Rule

A promoter is personally liable for a preincorporation contract until the corporation assumes liability. Answer: T Answer: T Answer: T A guarantor can assert the principal debtors bankruptcy as a defense to avoid liability on the obligation. Answer: F Answer: F Answer: F Independent regulatory agencies include the cabinet departments of the executive branch. Answer: F Answer: F Answer: F All oral

An ordinary person standard determines whether allegedly negligent conduct resulted in a breach of a duty of care. Answer: F Answer: F Answer: F Any crime that requires knowledge of computer technology for its perpetration is a computer crime. Answer: T Answer: T Answer: T Promises made to an employee in a contract or a handbook may prevent an

Eden Property Sales Corporation and Dion agree to resolve their dispute in arbitration. The arbitrators decision is called a. a conclusion of law. b. a finding of fact. c. an award. d. a verdict. Answer: C Answer: C Answer: C A Fact Pattern 17-A2 Evelyn, who owns and operates Eves Farm & Garden Company, agrees to sell Hill &

The states and the Securities and Exchange Commission jointly created a simplified securities registration process for large businesses. Answer: F Answer: F Answer: F The measurement of compensatory damages for breach of contract is the same for all types of contracts. Answer: F Answer: F Answer: F Firms are obligated to return a principal amount per share to

Under the UCC, a sale is the passing of title from a seller to a buyer for a price payable in cash only. Answer: F Answer: F Answer: F To be enforceable, a memorandum evidencing an oral contract that would otherwise be unenforceable must include the essential terms. Answer: T Answer: T Answer: T In certain instances

An arbitrary use of ordinary words may not be trademarked. Answer: F Answer: F Answer: F The doctrine of promissory estoppel does not apply if there is a clear and definite promise. Answer: F Answer: F Answer: F A quasi contract is a fictional contract. Answer: T Answer: T Answer: T A franchisee can operate as an independent businessperson but cannot

When a limited liability company is dissolved, any member who did not wrongfully dissociate may participate in the winding up process. Answer: T Answer: T Answer: T A limited liability company can sue or be sued, enter into contracts, and hold title to property. Answer: T Answer: T Answer: T Protection against discrimination under the Civil Rights Act

The U.S. Green Building Council verifies that a building meets certain standards before issuing a Leadership in Energy and Environmental Design (LEED) certification. Lolly hires Myron, a subcontractor, and insists that his work conform to the requirements of the LEED rating system. If the standards are not conformed to, then a. certain

A consumer who receives unsolicited merchandise must return it within three business days. Answer: F Answer: F Answer: F In a limited liability limited partnership, the liability of a general partner is limited to the amount of capital he or she has invested in the partnership. Answer: T Answer: T Answer: T A bank that encodes information on

Matchless Clothing Company buys clothing assembled by Nantra, Ltd., a foreign firm that employs young children for long hours and low pay. Nantras nation does not enforce its child labor laws. Human International Politics (HIP), a political activist organization, discovers Matchlesss connection to Nantra and plans to reveal this information.

Deleon trespasses on Capital Corporations property. Through the use of reasonable force, Capitals security guard Brenda detains Deleon until the police arrive. Capital is most likely liable for a. abuse of process. b. false imprisonment. c. trespass to personal dignity. d. none of the choices. Answer: D Answer: D Answer: D Property Financial Corporation makes loans that qualify,

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. Answer: C Answer: C Answer: C Lew angrily accuses Meg,

Fact Pattern 14-A3 Flip, an accountant, certifies an audit for Erstwhile Corporation, Flips client, knowing that Erstwhile will use the audit to obtain a loan from Deepwater Bank. Flip believes that the audit is true and does not intend to deceive the bank, but does not check the audit before certifying

Orin owns Pilots Landing Office Park. His ownership rights include the right to sell or give away the property without restriction, as well as the right to commit waste, if she chooses. Orins ownership interest is a. a fee simple absolute. b. a leasehold estate. c. a life estate. d. the power of eminent

Performance of an accord discharges an original contractual obligation. Answer: T Answer: T Answer: T An assignee can compel the obligor to perform. Answer: T Answer: T Answer: T In a situation involving a price-fixing agreement, normally each competitor is liable for the total amount of any damages. Answer: T Answer: T Answer: T Most states do not limit the governments

Due care must be exercised in designing a product. Answer: T Answer: T Answer: T State courts are independent of federal courts. Answer: T Answer: T Answer: T Smartt Software Company borrows $10,000 from Term N All Loans, Inc., but cannot repay the loan when it comes due. Term N All refuses to extend the time for repayment

Lena buys a used MP3 player for $50 and a new laptop for $1,500, and signs a one-year employment contract for a $4,500 monthly salary to start at the beginning of the next month. The Statute of Frauds covers a. the employment contract, and the laptop and MP3 purchases. b. the employment contract

Fact Pattern 12-B1 Sal contracts with Tasty Pizza Company to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract. Sal and Tasty a. may rescind their entire contract. b. may rescind their contract to the extent that it is executory. c. must

Generally, an accountant must possess the skills that an ordinarily prudent accountant would have. Answer: T Answer: T Answer: T The right to due process of law applies to corporations. Answer: T Answer: T Answer: T If a corporation is dissolved, its asset can be liquidated without further notice to a party who has a claim against the

Kris is an administrative assistant with Little Financial Corporation, but has no authority to sign Little Financial checks. Kris orders merchandise from My-T-Fine Retail Company delivered to her home and pays with a Little Financial check, signing "Little Financial Corp. by Kris, admin. assist. My-T-Fine does not know that Kris

A court may depart from a precedent if the precedent is no longer valid. Answer: T Answer: T Answer: T Certain employers must provide their employees with up to fifteen weeks of unpaid family or medical leave during any fifteen-month period. Answer: F Answer: F Answer: F A gift of personal property other than by will is called

Jean is playing a computer game on a bad disk that melts in her drive, starting a fire that injures her hands. Jean files a suit against K-Tech, Inc., the games manufacturer. K-Tech is held liable under the doctrine of strict liability. A significant application of this doctrine is in the

State Banks policy requires that indorsements on checks exactly match the names of the payees. Tovar, an employee of United Company, issues and indorses several payroll checks in the names of former employees and deposits them into her account at State. United files a suit against State to recover the funds.

Mabel and Nahim want to start up and incorporate a new business enterprise. The first step in the incorporation process is to a. choose and file a corporate name with a state office. b. draft the bylaws to govern the corporation. c. hold an initial board of directors meeting. d. prepare and file articles

An outside director is a director who is also an officer of the corporation. Answer: F Answer: F Answer: F Protection against retaliation under the Civil Rights Act of 1964 does not extend to an employee who speaks out about discrimination on his or her own initiative. Answer: F Answer: F Answer: F In most states, the courts

Lita is a holder of preferred stock in Mighty Clean Detergents, Inc. Lita has priority over holders of Mighty common stock as to a. nothing. b. payments of dividends. c. the date on which Mighty must repurchase the shares. d. upward changes in the market price of the shares. Answer: B Answer: B Answer: B Bryces accountant is

In Call-Me Cell Companys suit against Rude Ringtones, Inc., the jury returns a verdict in Call-Mes favor. Call-Me will most likely ask the court to a. enter a judgment in accordance with the verdict. b. enter a judgment n.o.v. c. enter a judgment on the pleadings. d. order a new trial. Answer: A Answer: A Answer: A Hobby

Normally, all employees who deal with third parties are deemed to be agents. Answer: T Answer: T Answer: T Statutory law does not include county ordinances. Answer: F Answer: F Answer: F Dian is injured in an accident while driving an off-road vehicle made by Eagle Recreation, Inc., an out-of-state corporation. Dian files a suit against Eagle, alleging

A contract in which goods and services are combined never falls within the scope of UCC Article 2. Answer: F Answer: F Answer: F If the bailed property has been lost or is returned damaged, a court will presume that the bailee was negligent. Answer: F Answer: F Answer: F The existence of an insurable interest is a primary

Lake Port Services enters into a contract to load Maxs Great Lakes barges with the cargo that Max designates. Lake Ports offer to perform, when Lake Port is ready, willing, able to do so, is a. complete. b. substantial. c. tender. d. tough. Answer: C Answer: C Answer: C A specific grade of corn that fills Dean and

Sigrud buys spiked mountain-climbing shoes from Rockridge Gear store, telling the clerk that she wants the shoes to climb Mount Sharptop. The spikes come out of the shoes when Sigrud is on the side of the mountain, causing her to be injured in a fall. Rockridge most likely breached a. an