The bailor must both inform the bailee of known defects and make a reasonable
investigation to discover defects in a:
a. mutual benefit bailment.
b. Bailment for the sole benefit of the bailee.
c. both a. and b.
d. neither a. nor b.
Under recent statutes, the articles of incorporation must contain all of the following
except the:
a. name of the corporation.
b. name and address of each incorporator.
c. purpose for which the corporation is organized.
d. number of shares the corporation is authorized to issue.
What is a principal purpose of the Superfund?
a. to establish environmentally-friendly zoning plans
b. to establish appropriate eminent domain compensation
c. to pay the cost of eliminating or containing condemned waste sites
d. to pay the cost of funding environmental impact statements for public projects
The legal relation that arises when one person delivers possession of personal property
to another under an express or implied agreement to return the property at a later date is
called a:
a. tenancy agreement.
b. bailment.
c. rental agreement.
d. trust arrangement.
A party to a sales contract who is afraid that the other party will not perform may seek
to gain additional confidence by demanding some form of:
a. bailment.
b. security.
c. assurance.
d. assignment.
A change of law discharges a contract if the new law:
a. requires a license and none was required before.
b. requires the use of fireproof materials.
c. requires the use of antipollution devices.
d. prohibits the act called for by the contract.
A bill of lading that consigns the goods “to bearer” is called a:
a. nonnegotiable bill of lading.
b. straight bill of lading.
c. negotiable bill of lading.
d. common bill of lading.
Which of the following contract defenses cannot be raised as a defense against
suretyship obligations?
a. Lack of capacity
b. Absence of consideration
c. Mistake
d. All of the above defenses may be raised.
A corporation may be prosecuted and convicted of:
a. a criminal offense if its agent committed the offense while acting within the scope of
the agent’s authority.
b. an error in business judgment, assuming that no other reasonable corporation would
have committed such an error.
c. operating without a corporate charter if the corporation has never sought a charter
from the secretary of state’s office, or if its directors and/or officers either knew of
should have known that the secretary of state’s office had revoked the charter.
d. none of the above; a corporation itself is not subject to criminal prosecution and
conviction.
Generally, what would not be considered a “reasonable accommodation” for persons
with disabilities?
a. making an accommodation that would constitute an “undue hardship” for the
employer
b. making existing facilities accessible to and usable by individuals with disabilities
c. modifying work schedules
d. restructuring jobs
The right to privacy applies to protect you from unreasonable searches:
a. to you personally.
b. to your home.
c. to your business.
d. all of the above.
Sarbanes-Oxley would prohibit which of the following individuals from serving on an
audit committee of the company’s board?
a. a director who accepts consulting fees from the company
b. a director who is affiliated with the company
c. a director who is affiliated with a subsidiary of the company.
d. all of the above.
Technology:
a. has not created situations that require the application of new rules of law.
b. has indeed created situations that require the application of new rules of law.
c. has done away with the right of privacy.
d. has made it easier to identify when one’s privacy has been invaded.
An offer is terminated upon rejection by the offeree unless:
a. the period of time for which the offeror agreed to keep the offer open has not yet
expired.
b. the offeror renews the offer.
c. the offeree revokes the rejection.
d. the offeree makes a counteroffer.
Goods that are not yet in existence or are not yet owned by the seller are__________
goods.
a. fungible
b. nonexistent
c. future
d. contingent
In a merger situation, what is the right of a dissenting shareholder?
a. to block the merger until satisfied regarding its terms.
b. to have their shares appraised and purchased by the corporation.
c. to enforce a consolidation instead of a merger.
d. dissenting shareholders have no rights with respect to a merger.
Normally in a franchise operation:
a. both the franchiser and the franchisee will be liable to third persons for contracts that
are breached by the franchisee.
b. only the franchisor will be liable to third persons for contracts that are breached by
the franchisee.
c. only the franchisee will be liable to third persons for contracts that are breached by
the franchisee.
d. neither the franchisor nor the franchisee will be liable to third persons for contracts
that are breached by the franchisee.
The main purpose of the International Monetary Fund (IMF) is to:
a. provide easy access to money for multinational corporations.
b. facilitate the expansion and balanced growth of international trade.
c. create a model simplified lending system.
d. facilitate currency exchanges.
To protect themselves against liability, franchisors often require individual franchisees
to:
a. take out fraud insurance.
b. register with the attorney general.
c. publicly disclose their own separate business identities.
d. disavow any connection with the franchisor.
A sole proprietorship is taxed:
a. only on a personal.
b. only on the corporate level.
c. on a personal and a corporate level.
d. none of the above.
A bailment is created:
a. when a person rents space in a building
b. when a person rents a safe deposit box at a bank
c. both a. and b.
d. neither a. nor b.
When an individual owns a share of stock in a corporation, that individual:
a. has an ownership interest in the corporation.
b. is a creditor of the corporation.
c. generally has no voting rights.
d. is in possession of a debt security.
Which exemption to registration requirements exempts offerings of less than $5 million
to no more than 35 nonaccredited purchasers over a 12-month period?
a. Rule 504 exemption
b. Rule 505 exemption
c. Rule 506 exemption
d. Rule 507 exemption
A shareholder has:
a. an absolute right to dividends.
b. a right to dividends when declared.
c. a right to insist that dividends be declared.
d. to share equally all dividends with fellow shareholders.
State intestacy statutes commonly provide for distribution in the following order:
a. spouse, parents, lineals, collateral heirs.
b. spouse, lineals, collateral heirs, parents.
c. spouse, lineals, parents, collateral heirs.
d. spouse, lineals, collateral heirs, parents,.
To which of the following parties does the landowner owe a duty to take reasonable
steps to discover any danger and a corresponding duty to warn the party of or correct
the discovered danger?
a. trespasser
b. licensee
c. invitee
d. all of the above
If an express warranty is breached:
a. the warrantor is not liable if due care was exercised in the manufacture or handling of
the product
b. the seller has no warranty obligation if the buyer had the opportunity to inspect the
goods before purchasing them.
c. the warrantor is not liable if (s)he honestly believed that the warranty was true.
d. the warrantor is always liable.
A(n) __________ contract is a contract to buy all requirements of the buyer from the
seller.
a. output
b. essentials
c. necessaries
d. requirements
The Economic-Espionage Act (EEA):
a. makes it a crime to use a fraudulently obtained device to obtain money through a
electronic fund transfer system.
b. makes it a crime to send unsolicited bulk emails.
c. makes it a crime to transfer proprietary files, documents and information from a
computer to an unauthorized person.
d. all of the above.
Bailments may be:
a. created orally or through a writing.
b. created for either real or personal property.
c. created for nonpossessory personal property.
d. made only after delivery to the bailor is accomplished.
An agreement to modify a contract for the sale of goods:
a. is only binding if supported by consideration.
b. has to be voluntary in order to be enforceable.
c. is only binding if the original contract is invalid.
d. all of the above.
The tort of invasion of privacy has some application to cyberspace communication.
Generally, a promise is legally enforceable even if nothing is given or received for the
promise.
To stabilize the industry, manufacturers of the same or similar products may agree that
each will market its product in a specified geographic area of the country and will not
market its product in the territory assigned to other manufacturers.
Only written words that show an intention to transfer or assign will be given the effect
of an assignment.
A sole proprietor is subject to unlimited personal liability for the debts of the business.
A trustee is not permitted to profit personally from the position of trustee, other than to
receive the compensation allowed by contract or law.
A school district supplied school bus service for all children 12 years of age or under
who lived at least one mile from school. This service was provided for transportation to
and from school. Joanna was a 13-year-old student who lived in that school district.
Joanna’s home was 2 miles from school. Her parents brought suit against the school
district alleging that Joanna was entitled to school bus service and the failure to provide
such service denied her the equal protection of the law. Discuss the probable outcome
of the lawsuit.
Under the doctrine of promissory estoppel, a promisor may be prevented from asserting
that his or her promise is unenforceable because the promisee gave no consideration for
the promise.
Most states have a general corporation code, and anyone who satisfies code
requirements and files the necessary papers with the government may automatically
become a corporation.
Potential employers are free to do pre-hiring monitoring of applicants without their
knowledge.
Fraud requires a misstatement of either a fact or an opinion.
When a corporation acts in excess of or beyond the scope of its powers, the
corporation’s act is described as “ultra vires.”
To be patentable, an invention must be new and not obvious to a person of ordinary
knowledge and skill in the art or technology to which the invention is related.
When a person rents space in a locker or building under an agreement that gives the
renter the exclusive right to use that space, the placing of goods by the renter in that
space creates a bailment.
As a general rule, a hotelkeeper has a lien on the property of boarders or lodgers.
Employment law is based on a combination of contract law and the law established by
courts, lawmakers, and administrative agencies.
Individuals who steal valuable nonpublic information in breach of a fiduciary duty to
their employers and trade in securities on that information are guilty of insider trading
as “misappropriators.”
A contract for the sale of goods with a price of $500 or more requires written proof to
be enforceable.