Theoretically, the relationship between a franchisor and a franchisee is one of:
a. parent and subsidiary.
b. an “arm’s-length” relationship between two (2) independent contractors.
c. an “arm’s-length” relationship between two (2) partners.
d. an “arm’s-length” relationship between two (2) joint tenants.
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
An agreement to restrain trade may be void on the grounds that it is:
a. fraudulent.
b. contrary to public policy.
c. illegal lobbying.
d. unfair to merchants.
Persons who are in a partnership are called __________ partners.
a. general
b. silent
c. secret
d. nominal
Professionals have a duty to perform their jobs at the level of:
a. a reasonable person.
b. a reasonable professional in the same business.
c. an extraordinarily careful person.
d. none of the above.
Statutes which are drafted from Uniform State Laws are often used to regulate:
a. business.
b. foreign countries.
c. criminal behavior.
d. none of the above.
Which of the following statements is not true of common stock?
a. It is ordinary stock that has no preferences.
b. It entitles the holder to share in corporate profits in the form of dividends.
c. It entitles the holder to participate in the distribution of capital upon dissolution.
d. It is ordinarily nonvoting.
What is not a correct statement concerning the Fair Debt Collection Practices Act?
a. It prohibits improper practices in the collection of consumer debts.
b. It applies to original creditors who are collecting from original debtors.
c. The validity of the debt is not a defense.
d. Violators are liable to debtors for damages.
Employers are required to maintain records of certain occupational illnesses and
injuries by:
a. ECHO.
b. ESCHA.
c. OSHA.
d. ECOT.
When an employer intentionally treats some employees less favorably than others, the
legal theory that applies is:
a. disparate impact.
b. affirmative action.
c. reverse discrimination.
d. disparate treatment.
A decedent’s transfer of $10,000 to a trustee, to be held in trust for A, will fail to create
a valid trust if:
a. it was not supported by consideration.
b. the trustee lacks capacity.
c. A is not a family member of the decedent.
d. the trustee had no opportunity to renounce the trust.
A sale of goods or services for $25 or more made to a buyer at home may be set aside
within __________ days.
a. three (3) business
b. three (3) calendar
c. five (5) business
d. five (5) calendar
If appropriate assurance is not given in response to a demand for assurance of
performance, the demanding party may:
a. treat the contract as repudiated.
b. sue for libel.
c. file for an insurance payment.
d. not replace the repudiated contract.
Which of the following debts is not dischargeable in bankruptcy?
a. judgments based on negligence
b. judgments based on breach of contract
c. judgments for willful and malicious injuries
d. judgments in which the creditors would receive no distribution
The Age Discrimination in Employment Act forbids discrimination by employers,
unions, and employment agencies against persons:
a. over 40 years of age.
b. over 50 years of age.
c. over 60 years of age.
d. between the ages of 40 and 65.
I believe that I own a very valuable vase. I tell you this information and state that I will
sell it to you for $800. I sell the vase to you, and you later find out that the vase is worth
only $200. Fraud:
a. has occurred.
b. has not occurred.
c. can always be based upon a statement of opinion or value.
d. none of the above.
Letters testamentary:
a. are given to an administrator.
b. are given to an executor.
c. require a bond to be filed by the person to whom they are given if the will exempts
the requirement.
d. none of the above.
The perfection obtained by filing a financing statement lasts for __________.
a. five (5) years, and is renewable.
b. five (5) years, and is non-renewable.
c. ten (10) years, and is renewable.
d. ten (10) years, and is non-renewable.
A nuisance:
a. is created by every interference that has an effect on others.
b. is established when the plaintiff shows harm as the result of the defendant’s conduct.
c. arises only by an interference that is great enough to be condemned as unreasonable.
d. cannot arise from a lawful activity or business that is conducted in a lawful manner.
An agreement not to compete is enforceable:
a. in the sale of a business.
b. between competitors.
c. in contracts for the sale of goods.
d. in contracts for the sale of securities.
The expense and the risk of return in a sale or return situation is on the:
a. seller.
b. buyer.
c. lienholder.
d. secured creditor.
Winona was a person of average intelligence, education, and experience in business.
She negotiated for the purchase of insurance and paid the premium. The policy was
mailed to her, but before it arrived a loss was suffered. When the policy was read,
Winona could not determine whether the loss was covered because the policy was too
difficult to understand. The loss is:
a. not covered unless expressly stated to be covered.
b. covered because the insurer had an obligation to word the policy in an
understandable way.
c. not covered unless stated to be so in a rider.
d. covered if included in an express exception to the policy.
A sales contract must be evidenced by a writing if the sales price of goods is equal to or
more than:
a. $100.
b. $1,000.
c. $500.
d. $5,000.
Which is not considered an alternate means of dispute resolution?
a. civil lawsuit
b. arbitration
c. association tribunals
d. minitrial
Arthur was involuntarily petitioned into bankruptcy by three of his creditors. When the
trustee reviewed Arthur’s books and records, the trustee discovered the following
transactions: (a) Three weeks before the filing of the petition, Arthur paid cash for
$17,000 worth of inventory for his store; and (b) Twelve days before the filing of the
petition, Arthur paid $300 in full satisfaction of his store’s most recent electric bill.
The trustee is considering attempting to set aside both of these transfers as preferential
transfers. Discuss the advisability of the trustee’s attempt to set aside these transfers.
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.
Statutory law is created by:
a. Congress.
b. state legislatures.
c. local governments.
d. all of the above.
If a bank pays a check whose face has been altered to increase the amount above that
which the drawer intended to pay, the bank:
a. is liable to the drawer for the amount of the increase.
b. is liable to the drawer for the full amount of the check.
c. incurs liability only if it failed to examine the check before payment.
d. incurs liability only if the drawer made the alteration.
Computer programs are subject to protection in the U.S. under:
a. copyright laws.
b. patent laws.
c. trade secret laws.
d. all of the above.
Under the Revised Model Business Corporation Act (RMBCA), corporate existence
begins when the articles of incorporation are filed with the secretary of state.
A bequest of a pearl necklace is a:
a. general legacy.
b. specific legacy.
c. specific ademption.
d. residuary ademption.
John owed Barney money. Barney called John’s home several times per day for five
weeks asking for repayment, with some of the calls coming after midnight. Barney
might be liable for:
a. defamation.
b. wrongful interference with a contract.
c. intentional infliction of emotional distress.
d. trespass.
Mabel issues a negotiable promissory note to the order of Rachel. Rachel endorses the
note to Batton, who takes it as a holder in due course. Batton gives the note to his
brother, Albert, as a gift. In this situation:
a. Albert will acquire Batton’s rights.
b. Albert is a holder through a holder in due course.
c. both a. and b.
d. none of the above.
Janice Beadles owns a large cargo vessel that is used primarily for international trade
transactions. Janice is quite concerned about her possible liability and financial losses,
as she has become aware of more and more collisions between ships at sea. What can
you tell her about the different types of insurance that she could obtain that could assist
her in the event of an accident?
A purchaser of a nonnegotiable warehouse receipt:
a. receives no implied warranties.
b. may acquire rights superior to those of the transferor.
c. acquires only the title and the rights the transferor had authority to transfer.
d. may be considered to have the rights of a holder in due course.
In almost all states, a periodic tenancy is implied if the tenant, with the consent of the
landlord, stays in possession of the property after a tenancy for years.
The “American rule” states that the losing party in a lawsuit is responsible for all
attorney fees.
Coppersmith executed and delivered negotiable notes to the payee, Charlene. The payee
indorsed the notes to Whitehurst but did not deliver them. Instead, she kept the notes in
her possession because she wanted to collect the interest during her life and wanted the
indorsee to have the notes on her death. After Charlene’s death, her executor,
Cartwright, found the notes. Both Cartwright and Whitehurst sought to enforce the
notes against Coppersmith. Who was entitled to do so?
If one party to a contract breaks the contract, the other party generally is under a duty to
stop any further performance to avoid sustaining greater damages.
If a lost negotiable instrument is in bearer form at the time of the loss, the finder is
entitled to enforce payment.
Tom was a tall man who operated a successful restaurant that he owned. He believed
that tall people commanded more respect in a restaurant. Accordingly, he never hired a
waiter or waitress who was less than six feet tall. Because of this, he had seventeen
waiters and no waitresses working at the restaurant. Lucinda, a woman less than six feet
tall, applied for a job as a waitress and was not hired. Later, Lucinda learned that a man
who was over six feet in height was hired to fill the position. After a few inquiries, she
learned of Tom’s height requirements and alleged that she was the victim of illegal
discrimination. Decide.
Joint tenancy and tenancy in common both feature the right of survivorship.
Public zoning and restrictive covenants in deeds have a similar purpose, but each has a
different source of authority.
An administrative agency has the power to investigate, to require persons to appear as
witnesses, to require witnesses to produce relevant papers and records, and to bring
proceedings against those who violate the law.
An instrument is order paper when by its terms it is payable to the order of any person
described in it, or to a person or order.
The parol evidence rule does not apply to changes made after the signing of the
contract.
The Equal Pay Act prohibits variation in wage rates paid to men and women based
solely on gender.
An accountant may be liable for damages if the accountant fails to inform a client of the
tax consequences associated with selling a business.
The Federal Register lists all administrative regulations, presidential proclamations, and
executive orders on a semiannual basis.
An option is itself a contract to refrain from revoking an offer.
The parties may agree that the adequacy of performance under a contract is to be
determined by a third party.