An assignee of a partner’s interest does not become a partner without the consent of the
other partners and is only entitled to:
a. participate in the management of the partnership.
b. receive the assignor’s share of the profits during the term of the partnership and the
assignor’s share of capital on dissolution.
c. inspect the books of the partnership.
d. vote on matters concerning the business of the partnership.
When a party expressly declares that performance will not be made when required, this
declaration is a(n):
a. anticipatory repudiation.
b. injunction.
c. negotiating technique.
d. waiver of breach.
Under the CISG, a buyer may reject goods
a. consistent with the right of rejection set forth in the UCC.
b. if the goods are nonconforming to the contract in any way.
c. only if the tender is a fundamental breach of the contract.
d. only if the tender is illegal in subject matter and/or purpose.
If a seller elects to resell the goods remaining in the seller’s possession after the buyer
breaks the contract, the seller:
a. must always give notice of the sale to the original buyer.
b. is never required to give notice of the sale to the original buyer.
c. is required to follow strict standards in the resale of the goods.
d. is not required to give notice of the sale to the original buyer when the goods are
perishable.
Each partner has to a right to:
a. take an equal part in transacting the business of the firm.
b. receive compensation for any work done for the partnership.
c. both a. and b.
d. neither a. nor b.
Which of the following does not describe the European Union (EU)?
a. It was formerly known as the European Economic Community.
b. It had ten members sign on in 2004.
c. It eliminated internal barriers to the free movement of goods, persons, services, and
capital between member countries.
d. It is administered solely by the heads of state of the member countries.
A subpoena to testify or to produce records:
a. is prohibited by the constitutional guarantee against unreasonable searches and
seizures.
b. is an illegal attempt to gain information by compulsion.
c. cannot be opposed on the grounds that such a request constitutes an unreasonable
search and seizure.
d. must be approved by corporate officers to be effective.
Between experienced businesspersons, exculpatory clauses are generally:
a. voidable.
b. void.
c. valid.
d. unenforceable.
When goods are sold for consumer use and personal injuries are sustained, a total
exclusion of liability in the sales contract is:
a. enforceable.
b. unenforceable.
c. unconscionable.
d. both b. and c.
A holder through a holder in due course:
a. has greater rights than a holder in due course.
b. has fewer rights than a holder in due course.
c. has the same rights as a holder in due course.
d. must meet the requirements for becoming a holder in due course in order to achieve
holder in due course status.
The U.S. Constitution is a document that:
a. is clear in allocating the rights and responsibilities of people and our government.
b. can be interpreted only according to the bedrock principles of 1776.
c. can be interpreted only in accordance with current values.
d. must be interpreted to accommodate both stability and flexibility.
What is the purpose of a financing statement?
a. to meet UCC accounting requirements under Article 9
b. to create a security interest
c. to amend a security agreement
d. to alert third persons that a creditor has a security interest in the collateral described
Most courts hold that when a customer takes an item from the shelf in a self-service
store, there is:
a. no sale.
b. a sale.
c. a contract to sell.
d. a conditional sale.
An oral understanding is not binding if:
a. the services performed were not to the satisfaction of the other party.
b. the amount agreed to be paid for services rendered was not a fair and reasonable
amount.
c. the parties intended to formalize their understanding with a written agreement.
d. the understanding may be terminated at will by either party.
A buyer may reject a tender of delivery:
a. if the goods do not conform to the contract in some way .
b. only if the goods have a substantial defect.
c. unless the seller promises to cure the defective tender.
d. unless the goods have been sold on credit.
Consumer defenses:
a. are preserved by a FTC regulation.
b. are provided for by the CISG.
c. are contained in UCC Article 2.
d. none of the above.
Compensatory damages:
a. compensate consumers for their actual loss.
b. are imposed to punish the defendant for wrongdoing.
c. both a. and b.
d. none of the above.
When an insurance policy is ambiguous, the policy is interpreted:
a. against the insurer.
b. in favor of the insurer.
c. according to the dictionary meaning of the words.
d. according to the meaning of the words in the insurance industry.
In which of the following scenarios is the agent exposed to the greatest risk of liability?
a. disclosed principal and authorized contract
b. undisclosed principal and authorized contract
c. partially disclosed principal and authorized contract
d. authorized receipt of money from third person remitted to disclosed principal
The U.S. Constitution:
a. is unwritten.
b. was brought over from England in its entirety.
c. is a written document that specifies the structure of the government.
d. prohibits the states from having their own constitutions.
An affirmative action plan:
a. helps ensure a diverse work force.
b. is an effective means to avoid litigation costs.
c. may provide job preferences for minorities and women.
d. all of the above.
Comparative negligence:
a. has been rejected by most of the states.
b. allows a comparison of negligence between plaintiff and defendant.
c. only applies when the plaintiff has signed a release.
d. is a bar to recovery under common law.
The owners of a limited liability company are known as:
a. members.
b. partners.
c. contributors.
d. electors.
If instrument is negotiable, it can be:
a. paid on demand.
b. cancelled by the maker.
c. assigned by contract.
d. transferred by negotiation.
The Immigration Reform and Control Act of 1986 (IRCA) sets forth what types of
penalties against employers who knowingly hire aliens who have illegally entered the
United States?
a. criminal
b. civil
c. both criminal and civil
d. neither criminal nor civil
The phrase “time is of the essence” means that:
a. the court is in a hurry to dispose of the case.
b. performance under the contract at the times specified in the contract is vital or
essential.
c. the contract expressly states that time is of the essence.
d. the price stated in the contract is subject to change without notice.
The remedy of specific performance will most likely be granted in the case of a(n):
a. employment contract.
b. contract to buy shares of publicly-traded stock.
c. contract for the sale of a business.
d. contract for the sale of Florida oranges.
The statute of frauds applies to:
a. the lease of an apartment on a month-to-month basis.
b. the cancellation of a written agreement for the sale and purchase of land.
c. an employment agreement.
d. the sale of goods priced at less than $500.
When a lease covers rooms or an apartment in a building, a destruction of the leased
premises:
a. temporarily suspends the tenant’s obligation to pay rent.
b. terminates the lease.
c. requires the landlord to repair or restore the property.
d. has no effect on the obligations of the tenant or the landlord.
Judges of the United States:
a. are appointed by the president, with the approval of the Senate.
b. are appointed by the Senate, with the approval of the president.
c. cannot be impeached.
d. are elected by the public.
The first action generally attempted by the EEOC is:
a. litigation.
b. conciliation.
c. mediation.
d. arbitration.
An assignment is valid only if:
a. it is in a particular form.
b. it is written.
c. there is a manifestation of the intent to assign.
d. the assignment is paid for by the assignee.
Ownership of shares of stock may be transferred by any of the following methods
except:
a. delivery of the stock endorsed by its owner in blank.
b. delivery of a notice of intent to transfer.
c. delivery of the stock endorsed by its owner to a specified person.
d. delivery of the certificate and a separate power of attorney executed by the owner.
When the filing of a financing statement is defective:
a. the security interest is lost.
b. the filing fails to perfect the security interest.
c. the security interest is perfected through the court’s application of equitable
principles.
d. the public notice of the creditor’s interest is still effective.
Margo had only one son, and her husband had predeceased her. The son was reckless
and extravagant, but Margo loved him dearly. She left all her property to a trustee in
trust for her son and provided that the trust was a spendthrift trust. Margo further
provided that the income from the trust was to be paid to her son quarterly until he
reached the age of 30 at which time the full trust corpus was to be paid over to him.
After Margo’s death and before the son had reached the age of 30, the son signed a
contract that purported to transfer the entire trust corpus to a finance company. The son
was paid for this. The son had also run up many unpaid bills on which he was sued and
judgments entered against him. The finance company and the other judgment creditors
are seeking to compel the trustee to turn over the trust corpus to them. Decide.
The SEC requires that annual shareholder reports be submitted to shareholders in any
proxy solicitation on behalf of management.
An issuer has an obligation to honor drafts under a letter of credit if the conditions
specified in the letter have been satisfied. This obligation includes the bank’s obligation
to assure that the goods sold by the seller in fact conform to the contract.
A partner admitted as a partner into an existing partnership has unlimited liability for all
obligations of the partnership arising before such admission.
The scope of an agent’s authority is always known by the third party.
A buyer who cancels a sales contract because the seller fails to deliver the goods is
entitled to recover as much of the purchase price as had been paid.
Some types of instruments of crime are automatically forfeited.
A person entitled to receive money may generally assign that right to another person.
The Toy Corporation issued 200 shares of stock with no par value. The articles of
incorporation provided that the board of directors had the right to fix the value of the
stock. Through subscription agreements between the directors and two subscribers, 101
shares were issued to Maria Perez for $5,000, and 99 shares were issued to Ken Pilar
for $15,000. Toy is now insolvent and is unable to pay the $6,000 it owes to Pine, its
major supplier. Pine has brought suit against Perez, claiming that the subscription
agreement was invalid. How will the case be decided?
An altered instrument can be enforced according to its original terms.
Under an indemnity contract, one person pays another consideration in return for a
promise to pay a specified sum of money in the event that a specified loss is suffered.
A sole proprietor must file a certificate indicating that he or she is commencing
operations and pay a single organizational fee.
The assumption of risk defense has been abolished in several states.
A corporation may be convicted of a criminal offense if it is shown beyond a reasonable
doubt that the offense was committed by its agent acting within the scope of the agent’s
authority.
An insurance company cannot refuse to pay the fire loss of the buyer of a house on the
grounds that the sales contract for the house was not binding because it was not
properly signed.