1) The power to merge is conferred by statute.
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2) A service mark distinguishes products used by the government.
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3) A person may not be liable for a defamatory statement if he or she enjoys a privilege.
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4) Acting in good faith gives a business firm a better chance of defending its actions in court.
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5) Unless a limited liability company indicates otherwise, the Internal Revenue Service automatically taxes it as a partnership.
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6) A contract involving a sale is the only contract relating to an interest in land that must be in writing to be enforceable.
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7) Most limited liability company statutes specify how members voting rights must be apportioned.
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8) A special warranty deed provides the most protection against defects of title.
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9) A contract is not discharged by a foreseeable circumstance no matter how difficult or costly the performance may become.
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10) The full faith and credit clause ensures that rights established under a contract in one state are honored by other states.
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11) The Securities and Exchange Commission can seek sanctions against those who violate foreign securities laws.
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12) Vesting gives an employee a legal right to receive pension benefits at some future date when he or she stops working.
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13) A seller who makes a statement that relates to the value or worth of the goods creates an express warranty.
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14) All employers are required to provide health insurance for their employees.
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15) An administrative adjudicatory hearing does not have to meet the constitutional standards of due process.
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16) A usurious contract involves the purchase and sale of usable goods.
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17) Jordan and Kacy own and operate Safety Tables, a small-business enterprise that sells adjustable tables that allow workers to safely work with large, heavy, or oddly shaped objects. The enterprise does not pay taxes on its profits, but distributes them to Jordan and Kacy who pay taxes on these amounts as their individual income. Jordan and Kacys personal liability for Safety Tabless debts and obligations is limited.
Refer to Fact Pattern 43-1. Safety Tables is exempt from legal requirements that relate to
a. health and environmental permits.
b. zoning and building codes.
c. import/export regulations.
d. none of the choices.
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18) Mona is an agent for Nationwide Restaurant Corporation (NRC). In acting as an agent, Mona follows all of NRCs clearly stated instructions. This responsibility arises under
a. no agents duty.
b. the agents duty of loyalty.
c. the agents duty of notification.
d. the agents duty of obedience.
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19) Everyday Loans, Inc., issues a line of credit in Glade Electronics Corporation under a security agreement. Later, Glade buys new HD TVs to add to its inventory. Everyday has a security interest in the new inventory
a. if the security agreement included an after-acquired property clause.
b. if Everyday has not yet filed a financing statement.
c. if Glade bought the inventory with Everyday funds.
d. under no circumstances.
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20) Nano Games Corporations creditors agree to a workout with the firm. This is
a. an agreement to pay a debt dischargeable in bankruptcy.
b. an accountants summary of a debtors financial situation.
c. a privately negotiated adjustment of creditor-debtor relations.
d. a reorganization of corporate debts and debtors.
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21) Sole Savers, Inc., and Rite Fit Footwear Stores enter into a contract for a sale of shoes. The contract indicates that the price includes transportation costs to a specific destination by including the term
a. C.I.F.
b. delivery ex-ship.
c. F.A.S.
d. F.O.B.
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22) Congress enacts a law prohibiting toys made in China from being sold in the United States. The Hawaii state legislature enacts a law allowing the sale of Chinese-made toys. Hawaiis law will most likely be
a. rendered invalid under the supremacy clause.
b. rendered valid the equal protection clause.
c. struck down under the taxing and spending clause.
d. upheld under the commerce clause.
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23) Peg obtains from QT Insurance Company a policy that provides that after it has been in force for a certain time, QT cannot question statements made in the application. This is
a. an antilapse clause.
b. an arbitration clause.
c. an appraisal clause.
d. an incontestability clause.
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24) A Little Bit of Lipstick, Inc., is a small, U.S.-based business that sells nanotechnology-based cosmetics for export. Under the National Export Initiative, the federal government is
a. pursuing trade agreements to improve market access for U.S. firms.
b. banning lending to small businesses, especially for export purposes.
c. placing less emphasis on exports than other governments.
d. playing a less active role in promoting exports in emerging markets.
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25) The Office of Postsecondary Education, like other federal administrative agencies, is part of the governments
a. administrative branch.
b. executive branch.
c. judicial branch.
d. legislative branch.
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26) Omega Company operates a computer chip production plant. Paula is the president of Omega. Ron, a representative of the Occupational Safety and Health Administration, inspects the plant and, citing a certain regulation, orders Omega to take specified steps immediately to improve sanitation at the plant. Paula believes that Ron is either exceeding his authority or that the regulation Ron claims to be enforcing is excessive. Can Omega ask a court for an order to stop enforcement of the regulation? If not, what can Omega do?
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27) Solar Power, Inc., files a suit against Thunder Bay Utility Company and seeks to examine certain documents in Thunders possession. A legitimate reason for this examination is that the documents contain
a. evidence about the case.
b. private information about Thunders operations.
c. public information about energy generation.
d. irrelevant data that can be eliminated from consideration.
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28) Donato borrows the funds from Eveready Bank to buy real estate and build a home. Donatos first draw of funds pays for the land. Subsequent draws occur at various stages of construction until the house is ready for occupancy. This is
a. a balloon mortgage.
b. a construction loan.
c. a participation loan.
d a reverse mortgage.
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29) Blayne writes a check pay to the order of Cherry drawn on Blaynes account at Dixie Bank. Cherry presents the check for payment to Dixie Bank, which accepts it. The bank is
a. not liable for payment.
b. primarily liable for payment.
c. secondarily liable for payment.
d. simultaneously liable, with Blayne, for payment.
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30) Natural Gas Company does not use proper filters on its smokestacks, which consequently pollute the air. Obie, a Natural Gas employee, suffers respiratory illness. To succeed in a suit against Natural Gas on the ground of negligence, Obie must show that he suffers from
a. a distinct harm separate from that affecting the general public.
b. a lesser harm than an injunction would impose on Natural Gas.
c. Natural Gass failure to use reasonable care to avert herm to Obie.
d. the same harm as that affecting the general public.
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31) Tony is an accountant whose clients include U-All Company. If Tony is negligent in his work for U-All, most courts would hold him liable to U-All and
a. any third party.
b. no third party.
c. third parties who are foreseen users of the work.
d. third parties who are reasonably foreseeable users of the work.
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32) Orlys debts are discharged in a liquidation bankruptcy. Pester & Recover, Inc., buys the discharged debt obligations. With respect to these debts, Pester
a. can do nothing.
b. can pressure Orly into paying them.
c. must give Orly additional help to rebuild her life after the discharge.
d. must report the debts to credit reporting agencies as discharged.
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33) The Anti-Counterfeiting Trade Agreement is most likely to apply to
a. pirated copyrighted works distributed via the Internet.
b. personal financial information on its owners laptop.
c. legally downloaded recordings on a users iPod.
d. a business firms trade secrets cached on the firms server.
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34) Molly shoots Norm with Opals pistol. The proximate cause of Norm being shot is most likely attributable to
a. Molly and Opal.
b. Molly only.
c. Opal only.
d. neither Molly nor Opal.
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35) Dorothy eats a candy bar made and sold by Eastwich Candy Corporation and becomes ill. Dorothy files a suit against Eastwich, alleging that the candy bar was not merchantable. Merchantable food is food that is fit to eat on the basis of
a. consumer expectations.
b. what constitutes a perfect condition.
c. its makers intentions.
d. its producers experience.
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36) Excel Aviation Corporation is required to register its securities under Section 12 of the Securities Exchange Act of 1934. Section 14(a) of the act regulates
a. the declaration of dividends by Excels board of directors.
b. the later re-registration of Excels securities.
c. the short-swing activities of Excels insiders.
d. the solicitation of proxies from Excels shareholders.
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37) Kris is a member of Laboratory Services, LLC, a limited liability company. Kris can participate in the firms management
a. only to the extent that she assumes liability for the firms debts.
b. only to the extent of her investment in the firm.
c. to any extent.
d. to no extent.
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38) Ross e-mails Super Surfboard Companys marketing campaign to Summer Sports Corporation, Supers competitor, without its permission. This is
a. a sneaky but legal method to shock a business rival.
b. a secretive but lawful way to exact revenge on a supervisor.
c. a simple, legitimate attempt to create a job opportunity.
d. a theft of trade secrets.
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39) Liberty Bank provides Michelle with a standard mortgage with an unchanging rate of interest to buy a home. Payments on the loan remain the same for the duration of the mortgage. This is
a. a fixed-rate mortgage.
b. an adjustable-rate mortgage.
c. an interest-only mortgage.
d. a violation of the law.
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40) Edie is the payee of a bearer instrumenta promissory note in the amount of $1,000. Frank offers to irrigate Edies ranch next week in exchange for the note. Edie agrees and delivers the note to Frank. Frank is
a. an HDC, because he promised to perform services at a future date.
b. not an HDC, because he did not take the instrument without notice.
c. not an HDC, because he did not acquire the instrument in good faith.
d. not an HDC, because he did not yet give value for the instrument.
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41) When possible, Sunee pays recurring monthly bills through automatic bank transfers and person-to-person payments to e-mail addresses or cell phone numbers. Compared to the use of paper checks, Sunees payment methods
a. aid sustainability.
b. hurt sustainability.
c. will never affect sustainability.
d. are poised to take a step toward sustainability.
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42) Town Transport Company (TTC) agrees to pick up two containers for Unlimited Sales, Inc., and store their contents, to be delivered later. While TTC unloads one container, the other disappears from TTCs loading dock.
Refer to Fact Pattern 49-1B. These facts give rise to
a. a presumption of negligence by TTC.
b. a presumption of theft by a third party.
c. a presumption of theft by TTC.
d. Unlimited Saless liability for the containers loss.
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43) Maia hires Nero, a real estate broker, to sell her warehouse. The warehouse burns down before being sold. Nero is
a. Maias agent until Maias insurer pays Neros commission.
b. Maias agent until the burnt warehouse is sold.
c. Maias agent until the warehouse is rebuilt and sold.
d. no longer Maias agent.
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44) Leather & Suede Stores, Inc., rejects a shipment of goods that does not conform to its contract with Genuine Cowhide Corporation, but is unable to obtain instructions from the seller. Leather & Suede can
a. destroy the goods.
b. cure the goods to make them conform to the contract.
c. retain the goods without paying for them.
d. reship or store the goods for the seller.
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45) Squeaky Clean Corporation wants to make an offering of securities to the public. This offering is not exempt from registration under the Securities Act of 1933. Before Squeaky sells its securities, it must provide investors with
a. a forward-looking financial forecast.
b. an investment contract.
c. a prospectus.
d. samples of is products.
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46) Liz and Molly work as clerks in Nias Dress Shop. Nia withholds federal taxes from their pay, and controls the methods and details of the performance of their work. Liz and Molly are not authorized to modify the prices or other terms of a sale at the shop.
Refer to Fact Pattern 32-1B. Nia authorizes Liz to sell clothes at remote locations at prices that Liz negotiates in those locations. With respect to sales at those locations, Liz is
a. an independent contractor.
b. Nias employee only.
c. Nias employee and agent.
d. Nias principal.
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47) GR8 Products, Inc., warrants its goods to be free of defects. Heck issues a note to obtain goods from GR8 that prove defective. If GR8 presents the note for payment
a. Hecks best defense would be breach of warranty.
b. Heck must pay the note.
c. Hecks best defense would be fraud in the inducement.
d. Hecks best defense would be failure of consideration.
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48) Shelby offers to make digital copies of Relay Companys business conference videotapes, CDs, DVDs, and other media for $500. Under the mailbox rule and the Uniform Electronic Transactions Act (UETA), Relays acceptance by e-mail will be considered effective when
a. received.
b. sent.
c. followed up by a confirmation letter sent by regular mail.
d. composed on a Relay computer.
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