The subject matter of a contract may relate to:
a. the performance of personal services.
b. the construction of a house.
c. the transfer of ownership of property.
d. all of the above.
A contract provision stating that one of the parties shall not be liable for damages in
case of a breach is called a(n) __________ clause.
a. liquidated damages
b. exculpatory
c. waiver.
d. due process
A contract is:
a. a binding agreement.
b. an agreement creating an obligation.
c. an agreement that creates enforceable duties and obligations.
d. all of the above.
Ordinarily, a temporary impossibility __________ the duty to perform.
a. suspends
b. excuses
c. discharges
d. none of the above
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.
Penalties for crimes are:
a. always paid to the government.
b. always paid to the victim(s).
c. shared equally between the government and the victim(s).
d. subject to forfeiture.
The right of privacy consists of:
a. the right to be secure against unreasonable searches by the government only.
b. the right to protection against intrusions by others only.
c. both the right to be secure against unreasonable searches by the government and the
right to protection against intrusions by others.
d. none of the above.
A landlord who continuously accepts late rental payments without collecting the late fee
provided in the lease:
a. waives the late fee.
b. will collect the late fee at a later date.
c. is ignorant of the late fee.
d. allows the tenant to repudiate the lease.
A(n) __________ is an undertaking by one person, for consideration, to pay another
person a sum of money in the event of a specified loss.
a. absolute guaranty
b. indemnity contract
c. guaranty of payment
d. surertyship
Torts are classified as:
a. intentional only.
b. negligence only.
c. strict liability only.
d. intentional, negligence, and strict liability.
Any adversely affected person may challenge the validity of an Occupational Safety
and Health Administration (OSHA) standard in a U.S. Court of Appeals.
Straight voting:
a. increases the voting power of minority shareholders.
b. is the normal method for shareholder voting on corporate matters.
c. restricts each shareholder to one vote, regardless of the number of shares owned.
d. all of the above.
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 administrative action can appeal only after the agency has made a final
decision.
d. administrative agencies tend to work very hard.
The usual method of creating an agency is by:
a. express authorization.
b. conduct.
c. operation of law.
d. ratification.
Which of the following is not an example of a state penalty for violating usury law?
a. restricting the lender to the recovery of the loan but no interest whatsoever
b. allowing the lender to recover the loan principal and interest up to the maximum
contract rate
c. restricting the lender to the recovery of the loan plus seventy-fifty percent (75%) of
the interest
d. requiring the lender to pay, as a penalty, double the interest the borrower paid on a
usurious loan
Regarding the sale of food or drink, there is an implied warranty that:
a. the food item is of average quality.
b. the food item is fit for human consumption.
c. that no foreign substances such as a nail or screw will be found.
d. all of the above.
What is not a correct statement concerning consumer protection legislation?
a. It prohibits the consumer from suing in his or her own right and gives the right to sue
solely to an agency or to the attorney general.
b. It recognizes that the theoretical right of the consumer to sue may be of little practical
value.
c. It provides special remedies.
d. It provides certain agencies to police statutes passed to aid consumers.
Which of the following events excuses a promisor from performing his or her
contractual obligations?
a. a riot
b. a shortage of materials necessary for production of goods and/or provision of
services called for under the contract
c. an unanticipated increase in the cost of performance
d. destruction of the subject matter through no fault of either party
The Litigation Reform Act of 1995 was passed because of:
a. congressional concern over an excess of frivolous private securities lawsuits.
b. the financial burdens placed on accountants and other professional advisors due to an
excess of frivolous private securities lawsuits.
c. concern that the investors in a class action lawsuit have their interests fairly
represented.
d. all of the above.
A corporation that does business in the state in which it was created is called a(n):
a. domestic corporation.
b. foreign corporation.
c. alien corporation.
d. home corporation.
Which of the following agreements represent(s) an unreasonable restraint of trade?
a. a combination to create a monopoly
b. an agreement to obtain a “corner” on a market
c. an association of merchants to increase prices
d. all of the above
Through which of the following circumstances may a contract be discharged?
a. mutual cancellation
b. mutual rescission
c. accord and satisfaction
d. all of the above
The major purpose of field warehousing is to:
a. create warehouse receipts that the owner can pledge as security for loans.
b. create additional space in the firm’s own warehouse.
c. allow warehousers an opportunity to service common carriers.
d. transfer title to buyers without requiring them to pick up merchandise at the plant’s
location.
Which of the following is a defense to an action against an agent for breach of the
implied warranty of authority?
a. The agent acted in good faith.
b. The agent misunderstood the scope of authority.
c. The third person knew that the agent was acting beyond the authority given by the
principal.
d. All of the above are defenses.
Companies with concerns over the possibility of expropriation could lessen the harm or
the likelihood of this occurring by:
a. fully investigating a host government’s stability.
b. establishing treaty commitments.
c. obtaining insurance.
d. all of the above.
Which of the following groups may legally be paid less than minimum wage?
a. Full time college students
b. Individuals with impaired productive capacity due to mental disability
c. Both a. and b.
d. Neither a. nor b.
Oral or spoken defamation is:
a. slander.
b. libel.
c. privilege.
d. perjury.
An agreement to slander a third person would not be enforceable because slander is
a(n):
a. crime.
b. civil wrong.
c. infringement of privacy.
d. assault.
What type of insurance is written for a specified number of years and terminates at the
end of that period?
a. term insurance
b. whole life insurance
c. endowment insurance
d. universal insurance
Within the past five years, the U.S Supreme Court has:
a. placed some limitations on the commerce clause.
b. increased Congressional authority for all activities that have economic impact.
c. given states the ability to override the federal government on interstate commerce
issues.
d. all of the above
An absolute privilege is available as a defense to slander liability when:
a. the statement is made to only a few people.
b. libel exists.
c. a witness testifies in a court proceeding.
d. no intent to harm is present.
Bankruptcy results in a discharge of contractual obligations by __________.
a. default
b. equity
c. operation of law
d. oath or affirmation
Theo, a member of TGI partnership, withdrew from the partnership and duly notified
the other members. The firm was an at-will partnership and the parties parted amicably,
posting a notice in the local newspaper of the dissolution of their firm. Cosmo, a
customer who had conducted business with Theo several times, did not see the
newspaper notice and was not informed of the dissolution. Later, Theo approached
Cosmo concerning a transaction similar to those Cosmo had engaged in before with
Theo acting on behalf of TGI. Cosmo placed an order, gave a substantial down payment
to Theo, and received a receipt on TGI stationery from him. Theo thereafter absconded
with the down payment, and TGI failed to honor the contract. Cosmo sued the other
members of TGI partnership. Discuss their potential liability.
The greatest change to the Constitution has been made by the United States Supreme
Court through interpretation.
The UCC permits a court to refuse to enforce a sales contract that it finds to be
unconscionable.
Supply chain management refers to the management issues of risk and title as goods
flow through commerce.
Preferred stock cannot have priority over common stock with respect to dividends.
Ordinarily, a court will not consider whether a contract is fair or unfair.
Under the Sherman Act competitors are permitted to agree not to deal with certain
buyers.
The issuer of a letter of credit must verify that the underlying transaction has been
performed.
To make an offer, the offeror must appear to intend to create a binding obligation.
The privity rule permits the filing of an accounting malpractice lawsuit by a third party
against an accountant.
A corporation may be judicially dissolved when its management is deadlocked and the
deadlock cannot be broken by the shareholders.
Sock-puppeting is anonymous blogging that flatters the blogger’s company and bashes
one or more competitors.
An unrecorded mortgage is not valid and binding between the parties.
If an instrument is payable to bearer, it may be negotiated by transfer of possession
alone.
A person who has drunk too much alcohol at a party and signs a contract may be able to
rescind that contract.
In a corporation, a large number of investors may pool their assets to finance a large
business enterprise.
Rule 10b-5 only applies to registered securities.
The standard for rejection requires that any defect in the good be material.