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The Americans With Disabilities Act prohibits employers from discriminating against disabled individuals, but does not require that any accommodations be made for such individuals. To make a valid will, the testator must have testamentary capacity. Answer: T Solid waste disposal […]

You plan to enter the export market with a new product that you have just developed. You feel that the product has great promise, but you are confused over whether you are required to obtain an export license. Further, your […]

The FTC rule, which provides that a notice provision must be included in all consumer credit contracts, requires that the notice: a. limit recovery under the contract to amounts paid by the debtor plus a reasonable charge for incidental damages. […]

A bond: a. that is unsecured is called a debenture bond. b. is a negotiable security c. generally has a life of five years or longer. d. all of the above. If an agency causes a substantial loss to a […]

Corporations are entitled to Fifth Amendment protection. Cyril made two contracts. The first was to have his house painted one month from the date of the written contract. The second was for his neighbor’s 1957 Ford Thunderbird. Each contract was […]

Theoretically, the relationship between a franchisor and a franchisee is one of: a. parent and subsidiary. b. an “arm’s-length” relationship between two (2) independent contractors. c. an “arm’s-length” relationship between two (2) partners. d. an “arm’s-length” relationship between two (2) […]

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. The Bill of Rights […]

An assignee of a partner’s interest does not become a partner without the consent of the other partners and is only entitled to: a. participate in the management of the partnership. b. receive the assignor’s share of the profits during […]

A holder in due course must meet all of the following conditions except: a. giving value for the instrument. b. taking the instrument when it is overdue. c. acting in good faith. d. being ignorant of defenses and adverse claims. […]

The bailor must both inform the bailee of known defects and make a reasonable investigation to discover defects in a: a. mutual benefit bailment. b. Bailment for the sole benefit of the bailee. c. both a. and b. d. neither […]

A rule requiring that a franchisor provide a disclosure statement to all prospective franchisees was adopted by the: a. UCC. b. Franchise Tax Board. c. Securities and Exchange Commission. d. Federal Trade Commission. A contract under which one or both […]

The defendant in a civil case is the party who is suing. A will may only be revoked by operation of law; it may not be revoked by act of the testator. Answer: F The category of protected consumers for […]

Copyright of a “work made for hire” runs for the life of the creator of the work plus 50 years. A person has an insurable interest in property if destruction of that property would cause a monetary or pecuniary loss […]

A check is drawn on the assumption that the bank has sufficient funds in the drawer’s account for payment. If the tenant uses the property for any purpose other than the one specified in the lease, the landlord has the […]

A check may be certified by a bank on request of the drawer or the holder. All shares must have a par value of at least one dollar per share. Answer: F The living Constitution has as a characteristic a […]

If an employment contract provides that an employee can be fired only for “good cause” or “just cause,” a lesser standard for discharge such as the employment-at-will doctrine will not be allowed by a court. The law works to cause […]

The warranty liability of a qualified indorser is the same as that of an unqualified indorser. A sale of goods or services for $25 or more made to a buyer at home may be set aside without cause within five […]

The Sarbanes-Oxley Act (SOX) made minor adjustments to penalties and prison sentences for executives of companies. An owner ordinarily is not liable for harm caused a third person by the negligence of an employee of an independent contractor. Answer: T […]

An exclusion of warranties made in the manner specified by the Uniform Commercial Code is not unconscionable. An involuntary bankruptcy case is commenced by creditors filing a petition with a bankruptcy court. Answer: T When purchasing from a website, the […]

Generally, a secured creditor who has repossessed collateral may retain the collateral and cancel the debt. An offer is effective only if it is communicated by the offeror in person. Answer: F Bill decided that it was time to remodel […]

If an agent commits a crime, the agent’s liability will depend on the agency relationship. If a restrictive covenant is valid, it binds only the original grantee in the deed that created the covenant. Answer: F Under the Berne Convention […]

Which of the following can satisfy the statute of frauds writing requirement? a. bills of sale b. Letters c. Telegrams d. all of the above A(n) ______________ principal is liable for a simple contract made by an authorized agent. a. […]

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, […]

Individual rights guaranteed in the United States Constitution: a. have no accompanying duties. b. apply only to a small number of individuals. c. are subject to state legislative laws. d. generally have accompanying duties. A stockholder-approved amendment to the certificate […]

Ethics is a philosophical concept that deals with values related to the nature of human conduct. The tort of invasion of privacy always requires the misappropriation of another’s name or likeness. Answer: F As Courts now tend to accept an […]

When the principal ratifies the act of the unauthorized person, such ratification does not release the unauthorized person from liability, since he or she acted without authority. The term dumping refers to the sale of damaged goods in a foreign […]

The property that is subject to the security interest is called collateral. Title VII requires that employers make reasonable efforts to accommodate their employees’ religious beliefs. Answer: T The primary party on a note or certificate of deposit is the […]

Fire insurance is a personal contract, and in the absence of statutory or contractual authorization, it can be assigned without the consent of the insurer. The Litigation Reform Act of 1995 provides for joint and several liability for defendants who […]

Treaties made by the United States are not deemed part of the law. When a contract falls within the statute of frauds, the signatures of both parties must be shown to the court. Answer: F Testate distribution describes the distribution […]

In the case of a nonshipment contract, risk of loss passes to the buyer upon actual receipt of goods: a. only if the seller is a merchant b. only if the seller is a nonmerchant c. only if the buyer […]

Creditors receive an automatic 30-day temporary perfection in negotiable instruments taken as collateral. If questions of fact are involved, the court will decide the case based on the pleadings alone. Answer: F Licensees are on the premises with the permission […]

When an international sale is made, the parties often set forth in their contract which country’s law will govern a dispute. Fees charged by a lender for the reasonable expense of making a loan, such as the cost of appraising […]

A major disadvantage of the sole proprietorship is: a. no organizational fees. b. the sole proprietor obtains all of the profits. c. the sole proprietor is personally liable for the debts of the sole proprietorship. d. the sole proprietor is […]

Negotiable instruments are: a. formal contracts. b. informal contracts. c. option contracts. d. first-refusal agreements. Which of the following statements is incorrect about fixtures? a. Personal property may become a fixture by annexation to the realty. b. Personal property may […]

Tom Creighton hired Destroy, Inc., a demolition company, to level an old building on a busy downtown lot. Destroy, Inc. was given full rein to decide on the amount of explosives needed and the placement of the charges. Security for […]

Personal property that has become a fixture is still classified as personal property. Under the Litigation Reform Act of 1995, issuers of forward-looking statements that were not knowingly false when made have a safe harbor from related lawsuits if appropriate […]

Stock that is reacquired by the corporation that issued it is commonly called “boomerang” stock. A court with limited jurisdiction can only hear certain types of cases. Answer: T The fact that a tort or crime is committed by an […]

In a corporation, a large number of investors may pool their assets to finance a large business enterprise. Sal was at home going through his normal workout when he bent his barbell bar. Sal is a professional bodybuilder, and this […]

A motion for a directed verdict occurs immediately after the last pleading is filed. A trustee cannot make decisions on matters that could not be foreseen by the settlor. Answer: F To be lawful, affirmative action must be time-limited . […]

The concept of imposing liability for the fault of another is known as __________ liability. a. imperious b. gregarious c. vicarious d. virtual Whatever is received upon the sale, exchange, collection or other disposition of collateral is known as: a. […]

Employee e-mail is: a. spontaneous. b. candid. c. discoverable. d. all of the above. If a man names his wife as beneficiary of his life insurance and the two are thereafter divorced, the insurance policy: a. is canceled automatically. b. […]

A debit transaction occurs when a person making a payment requests such payment be made to the beneficiary’s bank. An auto manufacturer is excused from liability if it can be shown the defect was in a component part purchased from […]

The measure of monetary damages when there has been a breach of contract is the sum of money that will place the injured party in the same position that would have been attained if the contract had been performed. Placing […]

A failure by the settlor to name a trustee renders a trust invalid. A seller cannot be held liable for the breach of an express warranty if the seller honestly believed that the warranted statement was true. Answer: F Nonprofit […]

Advertisements that call for an act may be deemed to be a unilateral contract. In a Chapter 7 bankruptcy, the debtor’s nonexempt assets are liquidated to pay debts. Answer: T A negotiable warehouse receipt states that the goods received will […]

When a credit application is refused, it is sufficient that the lender give the applicant a written statement saying: “application refused.” UCC Article 2 applies not only to contracts for the sale of familiar items of personal property, such as […]

Herman hires Juanita as his accountant. Juanita commits negligence in preparing financial statements for a business Herman owns. Several investors rely on the financial statements and purchase shares of stock in the business. In a state that has adopted the […]

An offer to perform is known as a(n) __________. a. rendering b. offering c. tinder d. tender An employer may be justified in discharging an employee because of the employee’s: a. nonperformance of duties. b. incompetency. c. serious misconduct. d. […]

In January, a buyer and a seller agreed on the sale of 10,000 pounds of tomatoes to be delivered on July The contract stated that the seller would set the price on June 15 and that the buyer would pay […]

An implied warranty arises automatically from the fact a sale has been made. Under a CF contract, the seller must get the goods to a carrier and buy an insurance policy in the buyer’s name to cover the goods while […]

The Alexo Corporation has been charged in a United States court with violation of American antitrust laws in its foreign dealings. The firm has raised the defense that its actions were compelled by the government of its host country. Alexo […]

When a court finds a clause of a contract unconscionable at the time it was made, it may enforce the remainder of the contract. Contract terms may not be implied from conduct. Answer: F The Insider Trading and Securities Fraud […]

In a sale on approval, the buyer’s approval must be demonstrated by express words. An absolute guaranty creates the same obligation as a suretyship. Answer: T A properly mailed acceptance takes effect when mailed, even if it never is received […]

Funds from the Superfund are used to pay the cost of eliminating or containing condemned waste sites. Generally, the prevailing party in a lawsuit will be awarded the costs of the action, including witness fees and jury fees. Answer: T […]

If a merchant receives and cashes a check for partial payment of a debt and the check bears the notation that the amount is in full payment of a disputed sum, the total debt is released. An employment contract always […]

A negotiable promissory note was issued by Gold. It was properly issued in all ways. Nevertheless, the payee managed to alter the note and raise the amount from $500 to $5,000. A holder in due course presented the note for […]

A prospectus sets forth the key information contained in the registration statement. If an instrument bears a restrictive indorsement, any further transfer or negotiation is effectively barred. Answer: F The authority of corporate employees and other officers is generally limited […]

A nonnegotiable instrument’s terms are not enforceable. A limited liability company is identical to a Subchapter S corporation. Answer: F In general, transferees who are aware of facts that would make a reasonable person ask questions are deemed to know […]

By operation of law, the trustee automatically becomes the owner of all of the debtor’s property in excess of the property to which the debtor is entitled under exemption laws. When a buyer makes a purchase without relying on the […]

Which of the following situations reflects a possible conflict of interest? a. You offer a company contract to a friend without checking competing bids. b. You hire a relative for a company position although another candidate is more qualified. c. […]

NAFTA seeks to eliminate tariffs among which countries? a. all members of the United Nations b. United States, Canada, and Mexico c. United States and Japan d. members of the common market The Pregnancy Discrimination Act does not: a. require […]

Which of the following powers is not reserved solely to the national government? a. power to regulate interstate commerce b. power to tax c. power to coin money d. power to borrow money on the credit of the United States […]

When goods are shipped COD: a. the buyer always has the right to examine them before making payment. b. the underlying contract must specify when the buyer may inspect the goods. c. the buyer has no right to examine the […]

The Federal Trade Commission administers the law prohibiting unfair methods of competition. Strict liability is one type of tort. Answer: T Fraud as to the nature or essential terms of an instrument is a limited defense not available against a […]

The defense that a signature was forged or signed without authority cannot be raised against any holder if the person whose name was signed has ratified it. When a nationally-known neurosurgeon in Chicago, Illinois sells her practice, the contract may […]

The United States utilizes a tripartite division of government. Kant’s theory understood that sometimes you have to use someone to achieve a one-sided benefit. Answer: F The rights of a transferee of a negotiable bill of lading are defeated if […]

In an FOB shipment contract title to the goods pass to the buyer when goods are delivered to the carrier. A surety may not raise the defense of mistake. Answer: F An assignment, if otherwise valid, takes effect the moment […]

Consumer protection laws, which commonly regulate the form of consumer contracts, provide that back-page disclaimers are void if the front page of a contract does not call attention to the presence of the terms on the back page. Drawers are […]

The Lanham Act grants protection for: a. marks. b. patents. c. copyrights. d. trade secrets. A counteroffer is a(n): a. acceptance of the original offer. b. rejection of the original offer. c. acceptance of the original offer and an invitation […]

When specifically bequeathed property is sold or given away by the testator prior to death, the bequest is considered “redeemed.” One advantage of our current legal system is that the growth of technology has not created many new laws. Answer: […]

Title VII does not protect members of all nationalities from employment discrimination. If a leased building is destroyed, the lease is not terminated, and the landlord has a duty to restore the building to its former condition. Answer: F An […]

Before an agency can begin rulemaking proceedings it must be given jurisdiction: a. by congressional enactment in the form of a statute. b. granted by an executive order of the President of the United States. c. from the United States […]

Plaintiffs suing for damages caused by a defective product are limited to taking action only against the manufacturer(s) of such goods. A tenant can claim that there has been a constructive eviction even if the tenant continues to occupy the […]

Women who are unable to work as a result of pregnancy, childbirth, or related medical conditions must be provided the same benefits as all other workers. Such benefits include temporary disability insurance, long-term disability insurance, and sick leave. The key […]

The Fifth Amendment to the United States Constitution’s protection against self-incrimination applies to: a. individuals only. b. corporations only. c. both individuals and corporations. d. individuals, but only in their official capacity within a business. Which of the following does […]

An offer to buy or sell goods may be accepted in any manner that is reasonable under the circumstances. The UCC statute of limitations applies when a party is seeking recovery on strict tort liability, fraud or negligence. Answer: F […]

Under the __________approach, consideration is defined as a benefit received by the promisor or a detriment incurred by the promisee. a. pro-con b. I win, you lose c. gain-loss d. benefit-detriment Which of the following acts was passed to ensure […]

A check that is postdated ceases to be order paper. The sole issue addressed in the Fair Labor Standards Act is child labor. Answer: F An owner of a copyright may license some of his or her rights to another […]

For the past century, the United States Supreme Court has generally followed the “living document” view in interpreting the Constitution. The covenant of quiet enjoyment protects the tenant from interference with possession by the landlord or the landlord’s agent, and […]

Under the Revised Uniform Limited Partnership Act, a limited partner probably will not lose the protection of limited liability when the limited partner: a. becomes a contractor for, or an agent or employee of, the limited partnership or of a […]

In terms of defamation liability, members of the United States Congress enjoy an absolute privilege when they are speaking on the floor of the Senate or the House of Representatives. Criteria used to make employment decisions that have a disparate […]

Manufacturers who prepare goods to the buyer’s specifications are under exceptionally stringent warranty obligations for fitness for a particular use. Pamela was the agent in charge of distribution and collections for the Coble Dairy Products Cooperative. Thrower operated a grocery […]

In approximately 50% of all bankruptcies no unsecured creditors receive any payments. In order to satisfy the statute of frauds, all partnership agreements must be in writing. Answer: F A registration certificate for a partnership’s fictitious name contained the names […]

Which of the following categories of individuals are exempt from the minimum wage provisions of Fair Labor Standards Act (FLSA)? a. executives b. factory workers c. full-time babysitters d. housekeepers The standard for commercial impracticability is: a. hypothetical. b. conjectural. […]

For accountants, fraudulent malpractice always involves upgrading the financial condition of the firm. Directors are usually allowed to vote by proxy. Answer: F A federal agency planning to adopt a new regulation must give public notice of such intent and […]

When supervisors seek sexual favors in return for job benefits, the practice is called: a. tangible employment action sexual harassment. b. hostile work environment sexual harassment. c. res ipsa loquitur sexual harassment. d. none of the above. A corporation or […]

The right of an employee to pension benefits paid into a pension plan in the employee’s name by the employer is referred to by the term: a. venue. b. accrual. c. vesting. d. investing. Partners hold title to firm property […]

Limited liability companies may be formed without filing formal articles of organization with the secretary of state. Automobile lemon laws protect only persons buying automobiles for personal, family, or household use. Answer: T An express warranty can be disclaimed even […]

The term “exhaustion of administrative remedies” means that: a. parties to an agency action must be diligent in pursuing their case. b. parties to an administrative action must take their appeal to a court of law. c. parties to an […]

Commercial General Liability (CGL) policies apply to product liability cases, actions for wrongful termination of employees, sexual harassment cases, damages caused by business advertising or employee dishonesty, and trademark infringement suits. A country can borrow money from other International Monetary […]

The concept of equal protection of the law: a. applies to both state and federal governments. b. prohibits any classifications whatsoever. c. applies only to conduct by private parties. d. does not permit reasonable classifications. A Federal Trade Commission regulation […]

When a person makes a contract as an agent for another but lacks authority to do so, the contract: a. binds the principal but not the agent. b. binds the principal and the agent. c. does not bind the principal. […]

The “living” Constitution has which of the following characteristics? a. strong federal government b. strong president c. various administrative agencies with significant power d. all of the above In the case of an illegal contract, both parties usually are prohibited […]

White-collar crimes generally involve violence. One of the concerns reflected in Sarbanes-Oxley was that auditors were not exercising sufficient discretion and independence in conducting audits of their clients. Answer: T No writing is required for a service contract that can […]

The UCC does not specify the form that the assurance of performance is to take. Unclaimed property is often transferred to the government under the concept of escheat. Answer: T Upon the debtor’s default, the creditor may sell the collateral […]

A consumer who notifies the issuer of an EFT card within two (2) days after learning of a loss or theft of the card can be held to a maximum liability of $500 for unauthorized use of the card; failure […]