Erica’s supervisor told her to arrange for a conference room at the Kelly Inn. Erica has
express authority to contract for the room.
a. True
b. False
An assignment is valid from the moment it is made, regardless of whether the assignor
notifies the obligor.
a. True
b. False
Trein, Inc. entered into a one-year, $1 million contract with Mia, a sports celebrity, to
promote Trein’s products. E-presto Inc., a competitor of Trein, was interested in having
Mia promote its products and knew of her contract with Trein. E-presto offered Mia a
three-year, $5 million contract. Mia left Trein and signed with E-presto. Which
statement is correct?
a. Trein is liable for tortious interference with a contract.
b. Mia is liable for tortious interference with a contract.
c. E-presto is liable for tortious interference with a contract.
d. Both Mia and E-presto are liable for tortious interference with a contract.
The IRS files criminal charges against Rich for evasion of federal taxes. Rich’s
accountant, Sonya, is summoned to appear in court to testify against Rich. The state
where the incident occurred recognizes an accountant-client privilege. Does Sonya have
to testify in federal court against her client?
a. Yes.
b. Yes, but only if she is granted immunity by her state.
c. No, the federal court must recognize her state’s accountant-client privilege.
d. No, the federal accountant-client privilege will protect her from testifying.
Under the TILA, a qualified mortgage (QM)
a. limits up-front points and fees to 5 percent.
b. limits all of a borrower’s debt to 43 percent of his or her income.
c. allows balloon payments only if the borrower agrees up front.
d. must allow for negative amortization.
Which of the following is a rightful dissociation?
a. A partner in a partnership at will serves notice that he intends to withdraw.
b. A partner in a term partnership withdraws before the end of the term.
c. A partner in a term partnership becomes bankrupt.
d. A partner violates the partnership agreement.
A buyer who accepts nonconforming goods may revoke the acceptance under limited
circumstances.
a. True
b. False
Valerie promises Teresa that she will pay Teresa $75 if Teresa will clean Valerie’s house
by noon on Saturday. If Teresa cleans the house by noon on Saturday and Valerie pays
the $75, then this is an implied, bilateral, executory contract.
a. True
b. False
Clint is auditing MegaCorp. In reviewing the sales ledger, Clint saw that MegaCorp had
sold 3,000 disk drives to CompSales, Inc. Clint reviewed the original invoice of this
sale to ensure that the date, price, quantity, and customer’s name all match. He then
verified each step along the paper trail until the disk drives left the warehouse. This
illustrates
a. tracing.
b. vouching.
c. following.
d. monitoring.
If a company has violated antitrust laws,
a. the Justice Department can initiate only noncriminal charges against the violator.
b. the Federal Trade Commission may file criminal proceedings against the violator.
c. any private person or company that has been harmed by the violator can file a lawsuit
to recover damages.
d. both the Justice Department and the Federal Trade Commission can bring criminal
proceedings.
The intent of the offeror to extend an offer to the offeree is generally determined by
reference to
a. the beliefs of the offeror.
b. the subjective intention of the offeror.
c. the assumptions of the offeror.
d. the words and conduct of the offeror.
Tyron purchased a $2900 promissory note from Jared for the discounted amount of
$2500. Tyron paid value, in good faith and without notice of any outstanding claims
against this promissory note that read, “Pay to the order of Jared $2900 on July 1, 2009,
for the purchase of a 2001 Ford Taurus provided no major problems with the car arise
prior to said payment date.” Tyron is a holder in due course of a negotiable note.
a. True
b. False
After the SEC completes its review of a preliminary registration statement, it sends the
issuer a comment letter setting forth changes that must be made.
a. True
b. False
Banner enters into a contract with Sylvia to buy her house for $150,000. Sylvia decides
later not to sell because she is so emotionally attached to the house. Banner insists that
he is entitled to the house. Banner can successfully sue for specific performance.
a. True
b. False
Unsolicited commercial e-mail (UCE) or unsolicited bulk e-mail (UBE) messages
a. are commonly known as “cookies.”
b. constitute about 90 percent of all e-mail.
c. are estimated to be fraudulent either in content or packaging in approximately
one-fourth of all cases.
d. although annoying, do lower the cost of connecting to the Internet.
The European Union has adopted a currency known as the
a. Yuri.
b. Common Union.
c. Yen.
d. Euro.
Which of the following statements could most likely create an express warranty?
a. “This is the best car available in town.”
b. “This motorcycle will double in value in the next ten years.”
c. “These tires have 10,000 miles on them.”
d. “This antique is quite a bargain.”
John Akers, former chairman of IBM, argued that ethics are not important to economic
competitiveness.
a. True
b. False
Under utilitarian ethics, if a decision maximizes happiness in the most people and
minimizes pain, it is ethical
a. True
b. False
An auditor for Ralco Accounting firm was auditing the financial statements of E-prise.
The auditor suspected that E-prise was engaged in illegal activity. Under Section 10A of
the 1934 Act, the auditor is required to notify E-prise’s board of directors of the
suspicions.
a. True
b. False
Teresa is suing her accountant for fraud. To win, Teresa must show that she justifiably
relied on the accountants fraudulent statement.
a. True
b. False
Employees of Truan went on strike because of unfair labor practices. After the strike,
the striking workers are
a. entitled to get their jobs back.
b. not entitled to get their jobs back.
c. entitled to get their jobs back but only as they become available.
d. fired.
For the first 70 years after the Sherman Act was enacted, most scholars and judges took
the view that large concentrations of economic power were suspect even if they had no
obvious impact on competition itself.
a. True
b. False
Congress passed the federal OSHA establishing job safety standards. Illinois passed its
own statute, which had slightly more lenient standards. Illinois workers are only held to
the state standards unless they are involved in interstate commerce.
a. True
b. False
John owns a thoroughbred horse named Prince Charming that just ran in the Kentucky
Derby. Prince Charming came in last, much to John’s frustration and embarrassment.
John exclaims in a loud voice, “I’m selling that horse to the first person who hands me
$100!” John has
a. made an offer to anyone within hearing distance and will be bound by his offer to the
first person who produces $100.
b. made a firm offer and will be bound by his offer for a reasonable period of time.
c. made an acceptance to the first person who can produce $100.
d. not made an offer because under the circumstances a reasonable person would not
conclude that John had intent to make an offer.
Rest Well Hotel orally ordered 1,000 blankets monogrammed with its initials, RWH,
from TriColor Textiles. TriColor had just finished monogramming the blankets when
Rest Well called and canceled the order. TriColor will be able to enforce the agreement
even though there was no writing.
a. True
b. False
When a dispute arises between different countries, the preferred method of resolution is
to litigate the case through the foreign court system because it is less expensive and
more private to do so.
a. True
b. False
In many states today a landlord must use reasonable care to maintain safe premises and
is liable for foreseeable harm.
a. True
b. False
You should hire a lawyer to review any legal papers you have to sign, especially such
papers as lease agreements or car purchases.
a. True
b. False
Which of the following statements best describes common law?
a. Common law is law that is the same or similar in all states.
b. Common law is derived from statutes and codes made by legislatures.
c. Common law is based on Justinian and Napoleonic codes.
d. Common law requires judges to base their decisions on prior cases.
Pastor Tom was employed by the First Church for 40 years. On Pastor Tom’s retirement
there was no adequate pension plan. Two months after the retirement, a wealthy
parishioner, in consideration for Pastor Tom’s 40 years of faithful service and for being
such a ‘sweet” man, promised to pay him $500 per month for the rest of his life. This
promise probably is not enforceable.
a. True
b. False
Buck, fearing death from severe injuries suffered in a machinery accident, assigned
over a certificate of deposit worth $100,000 and delivered the certificate to Pearl, a
friend, who gladly accepts. Buck ends up recovering from the injuries. Why must Pearl
give the certificate of deposit back to Buck?
a. This type of gift is known as a gift causa mortis. It is a conditional gift which is
conditioned on Buck’s actually dying. Because Buck recovered, the gift is automatically
revoked.
b. This is an inter vivos gift because Buck was still alive when the gift was made. Any
inter vivos gift is revocable because there is no consideration to make Buck’s delivery
of the certificate binding under contract law.
c. This is an inter vivos gift and due to state laws, gifts in contemplation of death must
be written into a valid will or otherwise the deceased’s assets will be distributed
according to state statute.
d. This gift is an ordinary gift, but it is revocable because we don’t know if the
certificate of deposit has matured or not.
Elion was a partner in a partnership. Elion’s death would be considered a wrongful
dissociation.
a. True
b. False
At what stage are the partnership debts paid and the proceeds distributed to the
partners?
a. During dissolution
b. During winding-up
c. During termination
d. During dissociation