1) Patty, who is divorced, owns a house. She has no reasonable expectation of benefit from the life of Quinn, her ex-spouse, but she applies for insurance on his life anyway. She also obtains a fire insurance policy on the house, which she later sells. Five years later, Quinn dies and the house is destroyed in a fire. Can Patty obtain payment on either the death of Quinn or the loss of the house? Explain.
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2) The equal dignity rule requires the parties to a transaction to treat each other with equal dignity.
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3) An accountant is not liable for a misleading statement that affects the price of a security if the accountant acted in good faith.
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4) U.S. courts follow the adversarial system of justice.
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5) A drawer must have a valid legal ground for issuing a stop-payment order, or the holder can sue the drawer for payment.
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6) A trade name cannot be protected if it is unusual or fanciful.
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7) If delivery of goods becomes impossible, a party who has issued a draft or note under the contract must still pay it.
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8) The first step in the incorporation process is to select a state in which to operate.
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9) If the bailed property was destroyed or stolen, through no fault of the bailee, the bailees obligation to return the property is excused.
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10) An attempted takeover can succeed even if it would result in a substantial increase in the acquiring corporations market power.
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11) A reviewing court reverses a trial courts judgment only in a case in which the plaintiff lost.
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12) Water-quality standards are set by the states under Environmental Protection Agency supervision.
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13) Estes, an accountant, contracts to perform services for Frasier. In performing those services, Estes uncovers a suspicious financial transaction. Estes is most likely not liable if he
a. acted negligently in failing to discover the transaction sooner.
b. conceals the discovery and otherwise finishes the work.
c. investigates and reports the discovery to Frasier.
d. obtains restitution from the perpetrator without Frasiers knowledge.
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14) Chocolate Sundry LLCs members and managers are Devlin, Effie, and Flavia. After Devlins relationship to the firm ends, Effie and Flavia agree to discontinue the business. This is
a. illegal.
b. optional.
c. required.
d. wrongful.
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15) Sierra Lumber Company and Recycle & Resale, Inc., (R&R) enter into an oral contract for Sierras sale to R&R of six used forklifts for $2,900 each. Before R&R takes possession of the goods, this contract is enforceable by
a. Sierra.
b. R&R.
c. any interested third party, such as an R&R customer for the goods.
d. none of the choices.
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16) 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 followed them.
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17) Frida and Gregor want to market a new line of fishing gear. To avoid income taxes at the corporate level, they should form
a. a C corporation.
b. a closely held corporation.
c. an S corporation.
d. a private corporation.
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18) Brick Products, Inc., files a suit against City Trucking Service for breach of contract, based on what Brick claims was Citys offer. For a court to determine if a contract has been breached, under the common law, the offer must include terms that are
a. exactly precise.
b. reasonably definite.
c. unequivocally approximate.
d. vague or uncertain.
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19) The government of Japan sets a limit on the amount of rice that can be imported from the United States. This is
a. a dumping duty.
b. an antidumping duty.
c. a quota.
d. a tariff.
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20) Deloress Restaurante borrows $100,000 at 6 percent interest from El Credito y Dinero Company and signs a promissory note for that amount. El Credito changes the amount of the note to $120,000 and increases the rate to 8 percent. Deloress best defense against payment on the note is
a. breach of warranty.
b. failure of consideration.
c. material alteration.
d. nondelivery of an instrument.
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21) Taki forges Uriels signature on a check payable to the order of Taki drawn on Uriels account in Verity Bank. Most likely, if the bank pays the check
a. the Federal Reserve will reimburse all parties for their costs.
b. the loss will be covered by Veritys insurance policy.
c. Uriel will be liable for the amount.
d. Verity will have to recredit Uriels account.
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22) Merchant Supply Company and National Discount Stores enter into a contract for a lease of cash registers. Merchant assures National that it has valid title to the goods. Under the UCC, this type of title warranty arises
a. automatically in most lease contracts.
b. only if the lessee asks for such a warranty.
c. only if the lessor expresses such a warranty.
d. only in conjunction with sales contracts, not lease contracts.
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23) 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 hires OReillys Carpet Company to clean the carpets of her shop. Nia gives OReillys instructions as to what needs to be cleaned and when. OReillys is
a. an independent contractor.
b. Nias employee only.
c. Nias employee and agent.
d. Nias principal.
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24) Kelly files a suit against Lewis in a state court. The case proceeds to trial, after which the court renders a verdict. The case is appealed to an appellate court.
Refer to Fact Pattern 3-2. After the states highest courts review of Kelly v. Lewis, a party can appeal the decision to the United States Supreme Court if
a. a federal question is involved.
b. a question of state law remains unresolved.
c. the party is unsatisfied with the result.
d. the state trial and appellate court rulings are different.
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25) Kettlecorn Investments, Inc., and Lone Tree Bank are secured parties with security interests in property owned by Metal Fabrication Corporation. Priority between these security interests is generally determined by
a. the amount of the claim.
b. the custom in the trade.
c. the time of perfection or attachment.
d. the float of the liens.
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26) The functions of the Social Security Administration, like those of other administrative agencies, include
a. adjudication.
c. declaration.
b. enunciation.
d. pronunciation.
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27) Dillon and Evan are brothers. They agree to act as guarantors on a loan made by their sister, Fiona. Fiona defaults on the payments and Dillon refuses to pay. Evan pays the debt.
Refer to Fact Pattern 28-3B. Evan can recover from Dillon under
a. the right of proportionate liability.
b. the right of reimbursement.
c. the right of contribution.
d. no right, because the parties are brothers.
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28) New Town Construction, Inc., wants to build a parking ramp to connect to its New Town Mall, both of which are on private land. For this action, an environmental impact statement is
a. prohibited.
b. required.
c. unnecessary.
d. voluntary.
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29) Like other corporations, Riveters Construction Company can expand its operations through
a. a liquidation and distribution of its assets.
b. a purchase of substantially all of the assets of another corporation.
c. articles of dissolution filed voluntarily with the state.
d. the appointment of a receiver to wind up the corporate affairs.
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30) The credit department of Mega-Mart calls Nora at work about an overdue bill. Noras employer objects. Mega-Mart continues to call Nora at work. This is a violation of
a. no federal law.
b. the Fair and Accurate Credit Transactions Act.
c. the Fair Debt Collection Practices Act.
d. the Truth-in-Lending Act.
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31) Vehicle Leasing Agency (VLA) and West Coast Trucking Company enter into a contract for a lease of eight cargo vans. VLA delivers eight vans, but they are not cargo-sized. West Coast
a. cannot reject the entire shipment.
b. can reject the entire shipment.
c. must accept the entire shipment.
d. must reject the entire shipment.
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32) Erin and Dooley, a married couple, borrow $120,000 from Capital & Credit Bank to buy a home. When Erin and Dooley divorce, they are unable to make payments on the mortgage. The market value of the home has declined to less than the balance of the loan. Capital & Credit agrees to a sale of the property for this amount. This is
a. a deed in lieu of foreclosure.
b. a home equity loan.
c. a reverse mortgage.
d. a short sale.
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33) Labor Recruiters, Inc., has been ordered to appear at a hearing before an administrative law judge of the National Labor Relations Board. A significant difference between a trial and an administrative hearing is that
a. attorneys are not allowed to attend administrative hearings.
b. clients are not allowed to communicate with their attorneys during administrative hearings.
c. hearsay can be introduced as evidence in an administrative hearing.
d. the burden of proof is on the charged party to prove innocence.
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34) Rock Mining Company operates a gravel pit next to Sids residence. Sid files a suit against Rock, alleging that the pit is a nuisance and unreasonably interferes with Sids enjoyment of his property.
Refer to Fact Pattern 46-1B. The court is most likely to award Sid damages
a. if letting the pollution continue is equally as harmful as stopping it.
b. if letting the pollution continue is less harmful than stopping it.
c. if letting the pollution continue is more harmful than stopping it.
d. under no circumstances.
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35) Bayside Construction Company enters into a contract with Clio to remodel Deweys Home Store, using products from Eagle Building Supplies. Fresh Food Caf is next to Deweys Home Store.
Refer to Fact Pattern 16-1. Halfway through the project, Bayside refuses to finish the job. The contract can be enforced against Bayside by
a. Clio only.
b. Clio or Dewey only.
c. Clio, Dewey, or Eagle only.
d. Clio, Dewey, Eagle, or Fresh Food.
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36) Bren leases an apartment from Cris for one year. After two months, she sublets the premises for the next six months to Dee, without obtaining Criss consent. Dee pays the rent for only four months. For the last two months of Dees six-month term, Bren is
a. liable for the rent, because Dee defaulted.
b. liable for the rent, because the sublease lacked Criss consent.
c. not liable for the rent, because Bren does not own the apartment.
d. not liable for the rent, because Bren sublet the premises to Dee.
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37) Petro Oil Company wants to conduct genetic testing of its workers to identify those who might develop significant health problems in the future. Under federal law, Petro may use genetic information to
a. make decisions about hiring or firing.
b. make decision about job placement or promotion.
c. deny group health-care coverage or charge a higher premium.
d. none of the choices.
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38) Thom draws a check, on his account in State Bank in New York, payable to Digital Computers, Inc., in San Francisco. Digital deposits the check in its account at First National Bank. First National deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank sends the check to State Bank.
Refer to Fact Pattern 27-2B. Thoms bank is
a. the cashing bank.
b. the depositary bank.
c. the intermediary bank.
d. the payor bank.
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39) Tyrone draws a check payable to Cash and presents it to Urban Bank for payment. This instrument is
a. a bearer instrument.
b. an order instrument.
c. valid but nonnegotiable.
d. void.
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40) Ilise, an employee of Pyro Displays, Inc., pays Gavin, an employee of Pyros competitor Fire Worx Company, for a secret Fire Worx pricing schedule. This may be
a. an effective marketing strategy.
b. commercial bribery.
c. creative legal bookkeeping.
d. money laundering.
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41) Quotient Corporation and Precision Products, Inc., are the principal suppliers of their product in their market. They agree that Quotient will sell exclusively to retailers and Precision will sell exclusively to wholesalers. Under antitrust law, this is most likely
a. a per se violation.
b. a violation only if their competitors make similar deals.
c. a violation only if their customers agree to honor the deal.
d. not a violation.
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42) Pete, a Quality Company employee, is authorized to use Quality checks to buy supplies. Pete alters one of the checks to increase its $700 amount by $100, and exchanges it at Retail Office Supply for $700 worth of supplies and $100 cash. He keeps the cash. On the check, Retailan HDCmay obtain payment for
a. $0.
b. $100.
c. $700.
d. $800.
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43) Iggy hires Joy to act as his agent to purchase Kup-a-Koffee Kompany. Iggy tells Joy to reveal only that she is buying the firm on behalf of a third party, without telling Kup-a-Koffees seller who that third party is. Iggy is
a. a disclosed principal.
b. an implied principal.
c. an undisclosed principal.
d. a partially disclosed principal.
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44) High Pointe LLCs members include Irvin. For purposes of holding title to property, High Pointe is
a. an aggregate of Irvin and the other members.
b. a natural person in the members family.
c. a legal entity apart from the owners.
d. a non-participating third party.
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45) In many states, a release requires a signed writing.
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46) Merchants are absolute insurers against all accidents arising in connection with the goods.
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47) Entrusting goods to a merchant who deals in goods of the kind gives the merchant power to transfer all rights to a buyer in the ordinary course of business.
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48) Any copyrighted work created by an employee, whether or not an employer requested it, is a work for hire.
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49) A partys oral promise to pay anothers debt is enforceable if the guarantors main purpose is to secure a personal benefit.
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50) An instrument is nonnegotiable unless the word negotiable is printed on it.
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