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The subject matter of a contract may relate to: a. the performance of personal services. b. the construction of a house. c. the transfer of ownership of property. d. all of the above. A contract provision stating that one of […]

A provision in a lease giving the landlord the right to terminate the lease by notice is strictly construed against the tenant. Parol evidence is allowed to show whether an agent has signed in a representative or an individual capacity. […]

The seller of a painting is not bound by the sales contract if the painting purchased was considered of little value and only later discovered to be valuable to the surprise of both buyer and seller. Requiring buyers to purchase […]

Because administrative agencies have broad powers, they are subject to strict procedural rules as well as disclosure requirements. If a person upon whom the assurance is demanded does not have a good reputation or economic position, a guarantee of performance […]

Employment testing and educational requirements must be “job-related”; that is, employers must prove that employment testing and educational requirements bear a relationship to job performance. The statement, “I doubt that I can perform the contract,” is a repudiation of the […]

The U.S. Constitution has been amended: a. only expressly. b. only by interpretation. c. only by practice. d. by all of the ways listed above. Title VII protects members of which racial grouping(s)? a. black only b. black, Native American, […]

New York follows the “contact” rule in determining when third persons can sue accountants for negligence. Until proven valid, a rule adopted by an administrative agency is considered invalid by the courts. Answer: F If a thief sells stolen property […]

When a drawee bank pays on a check that lacks an essential endorsement: a. the drawer is liable. b. the payee is liable. c. the drawee bank is liable. d. no one is liable. It is lawful to refuse to […]

Which of the following is a correct legal conclusion regarding reorganization bankruptcy? a. Individuals, partnerships, and corporations in business may be reorganized. b. A plan for reorganization may be filed only by a committee of creditors. c. When a reorganization […]

The Constitution may be amended, but it always has been interpreted in the same way. Administrative agencies are, in effect, a fourth branch of the government. Answer: T Arnold was the sole shareholder, president, and chief executive officer of Algernon […]

The scope of an agent’s authority is always known by the third party. Negligence and fraud are easy to prove in a mass production world. Answer: F The relationship of landlord and tenant is always created by an express contract. […]

Revised UCC Article 3 refers to drawers, indorsers, and accommodation parties as ‘secondary obligors.” Employers may avoid liability for “hostile work environment” sexual harassment by following a program that includes expressing strong disapproval of such conduct, advising employees how to […]

A third person who deals with a person claiming to be an agent: a. can rely on the statements made by the agent regarding the extent of the authority. b. cannot ignore any knowledge regarding a limitation of the agent’s […]

Under the common law, an employer is under a duty to furnish an employee with a sufficient number of competent fellow employees for the work involved. In January, a buyer and a seller agreed on the sale of 10,000 pounds […]

Unless language or circumstances indicate the contrary, a general assignment is: a. a transfer of property only. b. both a transfer of rights and a delegation of duties. c. a delegation of duties only. d. a transfer of rights only. […]

Today, what is an important element in determining the validity of a contract? a. the Uniform Contract Code b. whether the agreement might harm the public welfare c. whether the contract is wise or foolish d. whether the contract operates […]

A person who did not necessarily commit the crime can still be held criminally responsible for acts committed by others __________. a. only for non-business crimes b. only for business crimes c. both a. and b. d. neither a. nor […]

Which of the following scenarios would not qualify as a bona fide occupational qualification exception to Title VII? a. a religious school hiring only members of that religion to teach religion b. a women’s store that sells wedding gowns hiring […]

Wilma was an employee of the Electric Storage Battery Company. She was fired. She claimed that she was fired because she was a member of a labor union. The employer asserted that she was fired because she was a poor […]

In an emergency, an administrative agency can act beyond the scope of the statute that created it. A bailee’s duty of care for bailed property depends on the type of bailment. Answer: T A partner admitted as a partner into […]

When a suretyship or guaranty contract is entered into after and separate from the original transaction, there must be new consideration for the promise of the guarantor. The power of a court to decide certain types of cases is called […]

Under the tort of false imprisonment, shopkeepers are prevented from detaining anyone whom they believe has shoplifted. It is worse for the holder to lose order paper than to lose bearer paper. Answer: F A trespass to personal property is […]

A wrong that arises from a violation of a private duty is called a: a. criminal action. b. tort. c. crime. d. de mala. The term apparent authority is used when there is: a. no interaction between the principal and […]

It is possible for a limited partner to be subject to the debts of the firm if the limited partner participates in the control of the business. Sarbanes-Oxley (SOX) allows whistleblowers who are retaliated against an immediate lawsuit in federal […]

The time for performance is typically essential in a contract for the sale of perishable property. When a court decides a new question or problem, the decision is called a precedent. Answer: T The right to cut firewood from another’s […]

The Uniform Durable Power of Attorney Act (UDPAA) changes the general rule that insanity of a principal terminates an agent’s authority to act for the principal. Trespass applies to: a. personal property only. b. land only. c. both personal property […]

The purchase of a warehouse receipt by due negotiation eliminates all prior claims. In common usage today, there is no distinction between real and personal property. Answer: F The drawee of a check is always a bank. Answer: T The […]

The authority of an agency is limited to the technology in existence at the time the agency was created. The Robinson-Patman Act guarantees a seller the right to refuse to deal with anyone for any reason or purpose. Answer: F […]

Quasi-contractual liability will generally be imposed when the cost of performing a contract is greater than had been expected. A cured transaction is a pledge of property by the buyer-debtor that enables the seller to take possession of the goods […]

Blackmail is defined as: a. giving money to a person to influence that person’s judgment. b. an illegal demand made by a public official. c. an illegal demand made by a nonpublic official. d. providing improper political influence. The type […]

A change of law discharges a contract if the new law: a. requires a license and none was required before. b. requires the use of fireproof materials. c. requires the use of antipollution devices. d. prohibits the act called for […]

In most states, __________ provides that a security interest in a non-inventory motor vehicle must be noted on the vehicle title registration. a. a non-Code statute b. UCC Article 2 c. UCC Article 9 d. judicial precedent The Fair Credit […]

The normal remedy for breach of contract where the plaintiff has suffered a loss is compensatory damages. Consumer protection laws, which commonly regulate the form of consumer contracts, provide that back-page disclaimers are void if the front page of a […]

The living Constitution has as a characteristic a strong president. The coverage of the Personal Auto Policy (PAP) is limited to claims arising from the “use and operation” of an automobile. Answer: T The Sherman Act applies only to buying […]

The fact that payment on a check has been stopped does not affect its negotiable character. The Market Reform Act of 1990 empowers the SEC to suspend all trading when markets are excessively volatile. Answer: T Mary offered to sell […]

The major advantage to investors in a corporation stems from the fact that their risk of loss is limited to the amount of their investment. The jurisdictional rule of reason addresses the problems that arise when a foreign country has […]

In some cases the court may require specific performance when there is a breach of contract. A general agent is authorized by the principal to do all acts that can be delegated lawfully to a representative. Answer: F Both general […]

The United States constitution places the most significant limitations on administrative investigation in the area of: a. search and seizure of the person. b. aerial inspection. c. search and seizure of papers and records. d. guarantee against self-incrimination. When a […]

A subpoena to testify or to produce records: a. is prohibited by the constitutional guarantee against unreasonable searches and seizures. b. is an illegal attempt to gain information by compulsion. c. cannot be opposed on the grounds that such a […]

Each shareholder owns a proportionate share of the property of the corporation. Agent’s may intentionally make themselves liable on contracts with third persons. Answer: T A customer who has given a purchase order to a salesperson is not bound by […]

With regard to transactions between merchants, failure to repudiate a confirming letter within ten (10) days after receipt binds the non-signing merchant, just as if he had signed the letter or a contract. The Equal Pay Act prohibits variation in […]

Sureties have no rights to protect them from loss, to obtain their discharge because of the conduct of others that would be harmful to them, or to recover money that they were required to pay because of the debtor’s breach. […]

The RMBCA provides that shareholders: a. have no preemptive rights unless the articles of incorporation so provide. b. have preemptive rights regardless of what the articles of incorporation provide. c. cannot have preemptive rights. d. only have preemptive rights with […]

If an insured person tells her current husband that she is going to name him as beneficiary of her life insurance in place of her former husband and dies a year later without having taken any further steps with respect […]

When specifically bequeathed property is sold or given away by the testator prior to death, the bequest is considered “redeemed.” A cooperative consists of a group of two (2) or more independent persons or enterprises that cooperate for a common […]

Negotiable instruments are examples of formal contracts. A tenant can claim that there has been a constructive eviction even if the tenant continues to occupy the rented premises. Answer: F In every contract there exists an expressed covenant of good […]

Which of the following is an example of an improper payment? a. A payment made after a letter of credit has expired. b. A payment made in excess of the amount authorized by the letter of credit. c. Both a. […]

Exchanges, brokers, and dealers who deal in the securities traded in interstate commerce or on any national security exchange must register with the SEC unless exempted by it. Administrative regulations generally do not have the force of a statute. Answer: […]

Which of the following is part of an administrative agency’s power to investigate? a. an investigation to determine whether additional administrative rules need to be adopted b. an investigation to ascertain facts with respect to a particular suspected or alleged […]

Corporations are subject to a form of double taxation. A consent decree is an informal settlement of an enforcement action brought by an administrative agency. Answer: T Generic terms that refer to a type or class of goods are never […]

The parol evidence rule may not apply if: a. the contract is materially incomplete. b. the parties disagree on the meaning of the contract. c. there is no ambiguity regarding the terms of the contract. d. one party is unable […]

The contact rule does not require that the accountant meet or communicate with the third party to establish a relationship equivalent to privity. A defined contribution plan is an employer commitment to make specific future payments to participants upon retirement. […]

Because nonprofit corporations have a more restricted range of powers than business corporations, actions not authorized by the charters of nonprofit corporations are more likely to be found ultra vires. Ordinarily, every party to a contract is presumed to have […]

To be effective, checks must be executed on forms that are printed expressly for that purpose and issued by a bank or other financial institution. Franchisors may be found liable for the wrongful conduct of their franchisees on an apparent […]

The rights of the mortgagor after default include the right to obtain a stay of foreclosure to prevent undue hardship and a right of redemption. A trustee can delegate the performance of personal duties. Answer: F In dealing with the […]

Consumer leases: a. must always be evidenced by a writing. b. are always three- party transactions. c. require the lessor to make all usual warranties made by a seller in a sale of goods.. d. all of the above. Federal […]

While most states have adopted limited liability company statutes, few states have created statutes allowing the formation of limited liability partnerships. Protection for trade dress is available under the Lanham Act. Answer: T The sole issue addressed in the Fair […]

A condominium and a cooperative are essentially the same. The field of business ethics recognizes that social values typically must yield to the profitability motive. Answer: F Exoneration is an agreement that a party shall not be liable for loss. […]

Legal issues in cyberspace include appropriation and competition issues. Perfection can occur merely by possession of the collateral by the creditor. Answer: T Public zoning and restrictive covenants in deeds have a similar purpose, but each has a different source […]

Criminal penalties for corporations are based on a percentage of sales. Tuttle died at age 96, leaving a will that she made at age 40 that provided that her three children would share her estate equally. At the time of […]

Roberta, an educated person, purchased real estate from Maurice. Roberta did not read entirely the contract that she signed. As a result, she did not notice the provision in the contract about the interest imposed on the unpaid portion of […]

The Securities Act of 1933 deals with the original distribution of securities by the issuing corporations. Only government agencies can sue for violations of an environmental protection control. Answer: F A bilateral contract is essentially an exchange of promises. Answer: […]

The trustee may void any fraudulent transfer made by the debtor within two (2) years of bankruptcy when the debtor’s actual intent was to hinder, delay, or defraud creditors by engaging in the transfer. The general view is that the […]

A corporate officer, while still employed by his or her firm, may be in breach of the officer’s fiduciary duty of __________ by recruiting key management employees to join a competing company. a. obedience b. loyalty c. conflict of interest […]

A consignment sale is treated as a(n) __________ under UCC Article 2, and the dealer-consignee has full authority to sell the goods for the consignor and can pass title to the goods. a. ordinary sale b. final sale c. sale […]

__________ of the federal environmental laws carry criminal penalties for violations. a. All b. Most c. Very few d. None In which of the following scenarios is the agent exposed to the greatest risk of liability? a. disclosed principal and […]

Consideration is not required to establish or modify a letter of credit. A principal is not bound by statements made by an agent during the transaction of business that is within the scope of the agent’s authority. Answer: F Breach […]

Employers are required to give notice to employees that they will monitor their employees’ e-mail. Corporations are entitled to Fifth Amendment protection. Answer: F Civil disobedience is the remedy natural law proponents use to change positive law. Answer: T Unwillingness […]

The finder of lost property is usually entitled to a judicially-determined reward for finding and caring for the property until the rightful owner reclaims it. Charitable subscriptions by which individuals make pledges to finance the construction of a college building, […]

Trademarks or service marks may be registered if they utilize terms that are: a. suggestive of characteristics of the product or service to which they relate. b. fanciful, arbitrary, or coined. c. descriptive and have acquired a known secondary meaning […]

Initially, ratification is a question of: a. intention. b. consideration. c. form. d. implication. What is the primary function of the National Labor Relations Board? a. to mediate labor-management disputes b. to decide unfair labor practice cases brought before it […]

When a drawee has signified in writing on a draft the willingness to make a specified payment, the drawee is called the acceptor. The creditor first must proceed against the debtor before suing the surety. Answer: F The issuing or […]

An agreement between real estate brokers to never charge a commission less than 6% is not an example of price fixing. A payee or indorsee whose name is misspelled may indorse the wrong name, the correct name, or both. Answer: […]

The widest range of tort liability arises in the area of: a. negligence. b. absolute liability. c. violation of statute. d. assumption of risk. A depositor issued a check and, after mailing the check, suffered a heart attack and died. […]

Due process includes the right to be heard, question witnesses, and present evidence. When necessary medical care is provided to a minor, a parent is liable at common law for the medical expenses provided the minor child. Answer: T An […]

The Federal Trade Commission (FTC) has begun to take positions on Internet issues that are: a. tailored to Cyberspace. b. specific to the type of website that has the issue. c. identical to its stances of other types of commerce […]

Value is similar to consideration.. A lease provision requiring a tenant to obey regulations that may be subsequently adopted by the landlord is void because it is unconscionable. Answer: F The UCC does not specify the form that the assurance […]

UCC Article 2 applies not only to contracts for the sale of familiar items of personal property, such as automobiles or chairs, but also to the transfer of commodities, such as oil, gasoline, milk, and grain. In the United States […]

Ethical violations can cause lasting detriment to a company’s ability to do business through impacts on the company’s reputation. An instrument may be transferred by negotiation or by assignment. Answer: T A debtor must have rights in the collateral for […]

A finding of undue influence would most likely not occur in a contract between: a. parent and child. b. attorney and client. c. neighbor and neighbor. d. guardian and ward. A decedent’s transfer of $10,000 to a trustee, to be […]

Generally, misdemeanors are more serious than felonies. Coppersmith executed and delivered negotiable notes to the payee, Charlene. The payee indorsed the notes to Whitehurst but did not deliver them. Instead, she kept the notes in her possession because she wanted […]

Under the RMBCA, a preincorporation subscription agreement is irrevocable for three (3) months unless the subscription agreement provides a longer or shorter period, or all of the subscribers agree to revocation. It is necessary that a third-party beneficiary be identified […]

If an offer does not state how long it shall remain open, it remains open for ten days. An agency may arise by appointment, conduct, ratification, or operation of law. Answer: T A person who is prevented from enforcing a […]

The effectiveness of an exception to coverage is limited by: a. strictly interpreting the exception to coverage against the insurer. b. placing on the insurer the burden of proving that the exception applies. c. both a. and b. d. neither […]

In a case of the sale of property, time is not regarded as of the essence when there has not been any appreciable change in the market value or condition of the property and when the person who delayed does […]

The scope of warranties remains the same regardless of whether the seller is a merchant or a casual seller. Documents filed by both parties at the beginning of a lawsuit are called the pleadings. Answer: T Answer: F

Forgery includes signing another person’s name to a check with the intent to defraud. The obligation of all parties to perform in good faith is the same because everyone is required to be honest. Answer: F A negotiable instrument may […]

An agent’s liability as a party to a contract with a third person is not affected by the degree of disclosure. If questions of fact are involved, the court will decide the case based on the pleadings alone. Answer: F […]

Jeff purchased in good faith a warehouse receipt for 1,000 pairs of running shoes without notice of any defense to it, for value, and in the regular course of his business. Unknown to Jeff, the goods had been stolen from […]

When it comes to the constitution, stability is more important than flexibility. Administrative agencies never allow members of the industry that is to be regulated to participate in rule-making deliberations. Answer: F A tenancy by sufferance describes a tenancy that […]

Anne Robertson obtained telescopes from the See-Well Optics Company at dealer prices on the pretense of being a dealer in optical equipment. See-Well later determined that Robertson was not, had never been, and did not plan to be a dealer […]

A franchisor is the person to whom the franchise is granted. Under the majority view, a contract that does not satisfy the statute of frauds is not enforceable. Answer: T Whenever a contract is intended to benefit a third person, […]

Federal regulation of the sale of securities is based on the: a. Securities Act of 1933 and the Securities Exchange Act of 1934. b. Securities Act of 1933 and the Federal Trade Act of 1936. c. Federal Trade Act of […]

Anderson Clock Company is in the business of selling and repairing clocks. Jay purchased a grandfather clock from them. Laurie had left the clock at Anderson’s for a cleaning and calibration. When Laurie found out the clock had been sold, […]

If a common carrier delivers goods to the wrong person, the carrier is liable for breach of contract and for the tort of conversion. Mediation is a generally accepted method of resolving disputes. Answer: T A firm offer is effective […]