Bea is a shareholder of Candy Confections Corporation. The right to inspect corporate
books and records is
a. held by Bea only if she is a director.
b. held by Bea, without restrictions.
c. held by Bea, with some restrictions.
d. not held by Bea.
Fact Pattern 26-1
Fresh Goods, Inc., wants to make an initial public offering of securities. Fresh believes
that it qualifies for an exemption under Regulation A from the full registration
requirement of the federal Securities Act of 1933.
Refer to Fact Pattern 26-1. If Fresh is exempt from the federal registration requirement,
Fresh is
a. automatically exempt from any state registration requirement.
b. not subject to any state securities laws.
c. not necessarily exempt under a state registration requirement.
d. automatically subject to all state registration requirements.
Expert Capital Company and Frugal Financial Bank are secured parties with security
interests in property owned by Grande Corporation. Between these security interests,
the first to be filed or perfected has priority over other filed or perfected security
interests in
a. most circumstances.
b. no circumstances.
c. states that have not adopted Article 9 of the UCC.
d. states that require a security agreement to be signed and dated by the creditor.
Xavier owns a duplex that he leases to Yvon and Zack. Xavier may sell
a. the duplex at any time.
b. the duplex, but only after the lease expires and the tenants move out.
c. the duplex, but only with the tenants permission.
d. the lease, but not the duplex.
Fact Pattern 6-1
Minka uses her computer to secretly install software on hundreds of personal computers
without their owners knowledge.
Refer to Fact Pattern 6-1. Minkas secretly installed software allows her to forward
transmissions from her unauthorized network to even more systems. This network is
a. a hacker.
b. a bot.
c. a botnet.
d. a worm.
Spencer Hydraulics Corporations ethics committee is asked a business ethics
questionshould the firm bid low to obtain a contract that it knows it can fulfill only at a
higher price? A practical method to investigate and solve this question involves all of
the following steps except
a. absolution.
b. decision.
c. inquiry.
d. justification.
Fact Pattern 28-1
Nika owns land in Ohio. Her ownership rights include the right to sell or give away the
property without restriction, and the right to commit waste, if she chooses.
Refer to Fact Pattern 28-1. Nika deeds some of her land to Polly. The deed states, “To
Polly, for life, then to Quay. Nika has given Polly
a. a fee simple absolute.
b. a leasehold estate.
c. a life estate.
d. an easement.
Solid Tool Companys decision makers view a particular risk in the use of Solids
product as open and obvious. Continuing to market the product without telling
consumers of the risk could be justified from a perspective of
a. duty-based ethics.
b. Kantian ethics.
c. rights-based ethics.
d. utilitarian ethics.
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.
Lou and Mira want to rescind their contract under which Lou sold an MP3 player to
Mira for $50. To rescind the contract
a. Lou must return the $50 and Mira must return the player.
b. Lou must return the $50 only.
c. Mira must return the player only.
d. the parties can keep the “benefits of their bargain.
Jim organized, and owns and operates, Jims Landscaping Service in the simplest form
of business organization. This is
a. none of the choices.
b. a limited liability company.
c. a partnership.
d. a sole proprietorship.
Genetic Seed Company hires Howie to work on Genetics shipping dock, accepting
deliveries and dealing with other companies drivers. With respect to Genetic, Howie is
most likely
a. an agent.
b. an independent contractor.
c. a principal.
d. a work for hire.
Fact Pattern 31-1
First State Bank issues a letter of credit in favor of Oboe Company, an American firm,
to facilitate an international sales contract to buy resources from Lapland Mining, Ltd.,
a Finnish company.
Refer to Fact Pattern 31-1. To obtain payment, Lapland must comply with all of the
requirements of the letter of credit
a. strictly.
b. substantially.
c. reasonably.
d. materially.
Computer World (CW), after repossessing a multimedia system from Dave, a consumer,
decides to keep the system instead of reselling it. CW sends written notice to Dave. CW
can now keep the system
a. only after attempting an unsuccessful public sale of the system.
b. only after notifying any other appropriate secured party.
c. unless Dave objects.
d. under any circumstances.
Chuckie, president of DrinkUp Fresh Beverages, Inc., does not apply utilitarianism to
business ethical issues. One problem with utilitarianism is that it
a. gives business profits priority over production costs.
b. ignores the practical costs of a given set of circumstances.
c. requires complex cost-benefit analyses of simple situations.
d. tends to justify human costs that many find unacceptable.
Olaf is the creditor in a transaction with Phil. Once certain requirements are met, Olafs
rights will attach, which means that Olaf will have
a. an indivisible ownership right to Phils property.
b. an enforceable security interest in Phils property.
c. a notice affixed to Phils property.
d. the permission of a court to seize Phils property.
Pat, an accountant, includes a false statement in a report for Quantity Overstock, Inc.,
that is filed with the Securities and Exchange Commission. Quantity publishes a
misleading ad about its future prospects. Rita sees the ad and calls Stan, who buys stock
in Quantity. Under Section 18 of the Securities Exchange Act of 1934, liability may
attach to
a. Pats report.
b. Quantitys ad.
c. Ritas call.
d. Stans purchase.
Mike owes $12,000 to Nora, $6,000 to Owen, and $6,000 to Pat. The three creditors
enter into an agreement with Mike to discharge the debts on payment of a sum of
$12,000 to them, to be divided proportionately. This is
a. a composition agreement.
b. a guaranty agreement.
c. a judicial lien.
d. a suretyship agreement.
Doral, Eduard, and Francesca are co-sureties of Glendas debt to Hi-Credit Company.
Doral pays Glendas entire debt. Dorals right to seek proportionate payments from
Eduard and Francesca is the right of
a. contribution.
b. redemption.
c. reimbursement.
d. subrogation.
ValuRich Tools, Inc., sells tools, tool parts, and related supplies under “full warranties.
Under the Magnuson-Moss Warranty Act, this means that ValuRich must provide
a. a choice between a refund or replacement if a product cannot be fixed and repair or
replacement of defective parts.
b. neither a choice of a refund or replacement, or repair of defective parts.
c. only a choice of a refund or replacement if a product cannot be fixed.
d. only repair or replacement of defective parts.
QuizBooks LLC is a limited liability company. Like any other LLC, unless QuizBooks
chooses otherwise, the firm will be taxed as
a. a corporation.
b. a natural person.
c. a partnership.
d. a sole proprietorship.
To “publish a will means to release it to the media.
Ben, who runs a livestock breeding business, owes the Circle C Ranch $40,000. Ben
agrees to pay the Circle C a percentage of his profits each month until the debt is paid.
Because of this agreement, the Circle C is
a. Bens creditor and partner.
b. Bens creditor only.
c. Bens partner only.
d. neither Bens creditor nor his partner.
Milo borrows $125,000 from North State Bank to buy a home. To comply with the
Statute of Frauds, the mortgage must be
a. a highly formal document.
b. a particular form.
c. in the same format as the lenders other loans.
d. in writing.
The United States taxes each barrel of imported oil at a flat rate. This is
a. an antidumping duty.
b. a dumping duty.
c. a quota.
d. a tariff.
Wilbur files a petition in bankruptcy for relief through an individuals repayment plan.
Wilbur is granted a discharge. Debts that will not be discharged include claims for
a. contributions to employee benefit plans.
b. money to be paid for services not rendered.
c. fraudulently incurred debt.
d. long overdue credit-card debt.
On April 1, OK Contractors, Inc., contracts to build a store for Lo-Cost Jewelers at a
specific location in Metro City. On May 1, Metro changes its zoning laws to prohibit
the construction of a commercial building at that location. When the store is not built,
Lo-Cost files a suit against OK. In this situation
a. OK is in breach of contract.
b. Metro is in breach of contract.
c. the contract is discharged.
d. the contract is suspended.
Mica, a minor, signs a contract to pay Natural Health Club a monthly fee for
twenty-four months to use its facilities. Six months later, after reaching the age of
majority, Mica continues to use the club. This act is
a. a disaffirmance.
b. an emancipation.
c. a ratification.
d. a restitution.
Ida, Jerzy, and Kit are the directors of Liberty Convenience Stores, Inc. Liberty has nine
officers and forty-six shareholders. Dividends are ordered by the firms
a. board of directors.
b. incorporators.
c. officers.
d. shareholders.
Sam, a citizen of New Mexico, wants to file a suit against Tanya, a citizen of Texas.
Their diversity of citizenship may be a basis for
a. any court to exercise in rem jurisdiction.
b. a federal district court to exercise original jurisdiction.
c. a U.S. court of appeals to exercise appellate jurisdiction.
d. the United States Supreme Court to issue a writ of certiorari.
Fresh Seasonal Fruit Company has assets of less than $10 million and fewer than fifty
shareholders. Gourmand Pastries, Inc., has assets of more than $50 million and more
than five hundred shareholders. The Securities Exchange Act of 1934 applies to
a. Fresh Seasonal Fruit and Gourmand Pastries.
b. Fresh Seasonal Fruit only.
c. Gourmand Pastries only.
d. neither Fresh Seasonal Fruit nor Gourmand Pastries.
KupaJava hires Lola to manage one of KupaJavas seven drive-through coffee stands.
KupaJava agrees to pay Lola a salary, plus commission. KupaJava stipulates the
standards that should be observed, the goals that should be attained, and the methods
that should be used. Lola is most likely KupaJavas
a. employee.
b. independent contractor.
c. principal.
d. work for hire.
Through a certain transaction, Corporate Properties, Inc., acquires all of the shares of
Downtown Realty Corporation for some of Corporate Propertiess shares. Both
Corporate Properties and Downtown Realty continue to exist. This is
a. a consolidation.
b. a share exchange.
c. a short-form merger.
d. a hold-up.
Kai files a suit against Lana based on one of Lanas statements that Kai alleges is
fraudulent. To give rise to fraud, the statement must be one of
a. emotion.
b. fact.
c. illusion.
d. opinion.
An integrated contract is a contract with more than one subject or part.
An assumption of risk defense does not require that a risk be voluntarily assumed.
For an effective bailment, the bailor must deliver possession of the bailed property with
its title.
International law is the law of a foreign nation and varies from country to country.
It is presumed that a co-tenancy is community propertty unless there is a clear intention
to establish a joint tenancy.
Liability insurance protects against liability imposed on the insured as a result of
injuries to the person or property of another.
A principal owes an agent a duty of accounting.
An unauthorized signature binds the person whose name is forged.
Phishing occurs when a criminal poses as a member of the rock group Phish.
An unconscionable contract is a contract so one-sided and unfair at the time it is made
that enforcing it would be unreasonable.
A security interest may attach to intangible collateral but cannot be perfected.
Land includes the artificial structures attached to it.
Violations of the Securities Exchange Act of 1934 may be subject to criminal
prosecution.
A stock warrant is a distribution of corporate profits or income.
Inadequate consideration may indicate undue influence.
Only a statement made after a contract is entered into can be an express warranty.
A registration statement must include a financial statement certified by an independent
public accounting firm.
A product liability action may be based on warranty theory.
If collateral consists of consumer goods subject to a purchase-money security interest,
the secured party must “purchase the goods on default.
Trade dress has the same legal protection as trademarks.