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 business by enforcement of its laws, that
business:
a. always can hold the agency liable for damages.
b. never can hold the agency liable for damages.
c. may seek damages if the agency acted in bad faith.
d. may seek damages if the agency complied with its own guidelines.
Frank has two interests in property. On property “X,” Frank has a life estate measured
by the life of his Uncle Sal. On property “Y,” Frank has a fee simple estate. Frank
wishes to transfer, upon his death, his interest in the two properties to his wife,
Samantha. Prior to Frank’s executing his will, Uncle Sal dies. Frank still wishes to will
the properties to his wife, but he now is uncertain whether he has the right to do so. Can
Frank will the two property interests to Samantha?
A common carrier must:
a. receive and carry proper and lawful goods of all persons who offer them for
shipment.
b. furnish adequate facilities.
c. follow the instructions of the shipper.
d. all of the above.
Which of the following is a permissive subject of bargaining as opposed to a mandatory
subject of bargaining?
a. wages
b. hours
c. benefits for already retired workers
d. no-strike no-lockout clauses
With used or secondhand goods, what is fit for normal use will be:
a. a higher standard than with new goods.
b. a lower standard than with new goods.
c. the same standard as with new goods.
d. not applicable since the goods are not new.
Voir dire examination is used in connection with:
a. determining whether the pleadings are valid.
b. jury selection.
c. deciding whether to appeal a trial court decision.
d. none of the above.
An illegal provision in a contract:
a. causes the entire contract to be voidable.
b. causes the entire contract to be rescinded.
c. can be ignored by the parties in their performance of the remaining provisions of the
contract, assuming that the remaining portions of the contract can stand on their own.
d. can be ignored by the parties, because an illegal provision in a contract is not deemed
substantial.
The rule that doing or promising to do what one is already legally bound to do is not
consideration applies to a part payment made in satisfaction of a(n) __________ debt.
a. unliquidated
b. superfluous
c. non-superfluous
d. liquidated
Consequential damages may be recovered if:
a. the damages were not a foreseeable consequence of the breach.
b. the damages reasonably flow from the breach as a result of the injured party’s
particular circumstances.
c. the breach did not cause the damages.
d. the loss exceeds $500.
A direct sale to customers in a foreign country is a(n):
a. foreign distributorship.
b. agency arrangement.
c. licensed sale.
d. export sale.
A bank will not be liable for payment of a check on which the drawer’s signature has
been forged if:
a. the bank could not have detected the forgery through a reasonable investigation.
b. there are more than two prior indorsers of the check.
c. the bank gives a cashier’s check in payment of the depositor’s check.
d. the drawer’s negligence contributed substantially to the forging of the signature.
Which of the following statements is correct concerning restrictive covenants?
a. Restrictive covenants that have not been enforced or observed are nevertheless valid
and enforceable.
b. Restrictive covenants take precedence over conflicting statutes.
c. Restrictive covenants generally impose some limitations on the landowner’s use of
the property.
d. If any uncertainty exists in the interpretation of a restrictive covenant, the covenant
will be interpreted liberally in favor of the limited use of the land.
Which of the following is not a product liability theory that protects buyers and allows
them to recover for injury and economic loss?
a. express warranty
b. implied warranty
c. strict tort liability
d. assumption of the risk
All goods other than those existing and owned by a seller at the time of a transaction are
called:
a. existing goods.
b. tangible goods.
c. future goods.
d. intangible goods.
The Revised Model Business Corporation Act:
a. has eliminated the certificate of incorporation.
b. has made the process of incorporation more difficult.
c. states that corporate existence begins when the secretary of state issues a certificate
of incorporation.
d. has eliminated the need for articles of incorporation.
An agreement arises when one person, the __________, makes an offer and the other
person to whom the offer is made, the __________, accepts.
a. grantor; grantee
b. grantee; grantor
c. offeror; offeree
d. offeree; offeror
Which of the following is true?
a. An agent has the power to contract on behalf of a principal.
b. An employee generally does not have the power to contract on behalf of the
employer.
c. An independent contractor controls the work he or she performs.
d. All of the above are true.
A zoning restriction:
a. constitutes an eminent domain “taking.”
b. always entitles the landowner to compensation.
c. never lowers the value of the land it concerns.
d. may prevent the landowner from use of the land.
State statutes designed to protect the public from the sale of worthless stocks and bonds
are called:
a. antifraud acts.
b. blue sky laws.
c. clear sky laws.
d. none of the above.
Damages in excess of actual loss are called:
a. punitive damages.
b. compensatory damages.
c. restitution.
d. nominal damages.
The Freedom of Information Act:
a. is to be strictly construed to prevent unauthorized disclosures.
b. has too many exemptions to be useful.
c. is intended to subject agency action to public scrutiny.
d. puts the burden of proof upon the person requesting the information.
If there are two or more sureties and one pays more than its proportionate share of the
debt, such surety has the right against the co-sureties known as:
a. indemnity.
b. exoneration.
c. subrogation.
d. contribution.
A merchant cannot revoke a firm offer to buy or sell goods if the merchant has:
a. promised to keep the offer open.
b. declared in the presence of two or more reputable witnesses that the offer will be kept
open.
c. received consideration to keep the offer open.
d. stated in a signed letter that the offer would not be revoked for a specified period of
time.
Torts arise from a violation of a ____ duty.
a. public
b. private
c. contractual
d. criminal
The Clayton Act prohibits:
a. all unfair methods of competition.
b. conspiracies in restraint of trade.
c. attempts to monopolize.
d. price discrimination between buyers of like commodities.
When a buyer demonstrates in some way that the goods conform to the contract, the
buyer has made a(n):
a. acceptance of the goods.
b. assignment of the goods.
c. substitution of the goods.
d. avoidance of the contract.
The principal must:
a. perform the contract according to its terms.
b. compensate the agent for services.
c. indemnify the agent for loss in some circumstances.
d. all of the above.
Which of the following must be proven by a plaintiff to recover for strict liability in
tort?
a. negligence of the seller or manufacturer
b. recklessness of the seller or manufacturer
c. unreasonably dangerous defects in goods that cause harm
d. privity of contract between the manufacturer and the buyer
A __________ indorsement consists of the signature of the indorser and words
specifying the person to whom the indorser makes the instrument payable.
a. qualified
b. restrictive
c. special
d. blank
When an agreement is illegal, parties are usually not entitled to help from the courts.
When it comes to the constitution, stability is more important than flexibility.
In a bankruptcy case, after all creditors have been paid, any balance is turned over to
the debtor.
The often competing rights of both debtors and creditors are balanced and protected
from excesses under United States law.
Administrative agencies never allow members of the industry that is to be regulated to
participate in rule-making deliberations.
A mediator has the power to actually make a decision in a dispute.
Corporate officers may avail themselves of all business opportunities that come to them
in an individual capacity regardless of whether or not the opportunity lies within their
field of duty.
Franklin, a hobby-shop supplier, and Gordon, a hobby-shop owner, entered into a
contract that provided that Franklin would sell Gordon fifty World War II battleship
models at Franklin’s cost of $2.95 each, plus a reasonable profit. Gordon brought suit to
enforce the contract against Franklin, who refused to deliver the models. Franklin
claimed that there was no contract because of indefiniteness. Is Franklin correct?
Each of the states and the federal government have statutes and regulations that prohibit
unfair methods of competition.
Osvaldo was attempting to promote a corporation to be named Xavier, Inc. In that
capacity, Osvaldo signed a lease in the name of Xavier and ordered furniture in the
company’s name. The corporation was in fact formed and the board of directors,
knowing of the actions of Osvaldo, moved into the space Osvaldo had leased. Upon
delivery and inspection of the furniture Osvaldo ordered, numerous defects were
discovered, and the furniture was accordingly rejected and returned to the seller. The
corporation was not successful, and as a result, the rent was not paid. Osvaldo was sued
for the unpaid rent and for breach of contract concerning the furniture. The corporation
was sued on the same grounds. Decide the cases against Osvaldo and Xavier, Inc.
The Age Discrimination in Employment Act forbids discrimination by employers
against persons over 30 years of age.
One of our most important rights is the right of privacy.
If a thief sells stolen property to a good-faith buyer, the buyer acquires title to the
property.
If there is a breach of contract, the law requires that the other party terminate the
contract and bring a lawsuit.
When an oral contract is made to sell a 75-inch LED LCD TV for $6,800, payment and
acceptance of part of the purchase price avoids the bar of the statute of frauds.
The officers of a corporation are liable for errors of judgment that cause a loss to the
stockholders.
Franchising is a form of licensing that now is very common in international business.
Despite the importance of ethical behavior for business success, few Fortune 500
companies have codes of ethics to resolve ethical dilemmas.
A limited liability company pays federal income tax.
The transfer and collection of negotiable instruments between banks requires specific
indorsements.