When a drawee bank pays on a check that lacks an essential endorsement:
a. the drawer is liable.
b. the payee is liable.
c. the drawee bank is liable.
d. no one is liable.
It is lawful to refuse to extend credit to a consumer based on the consumer’s:
a. race.
b. marital status.
c. credit history.
d. age.
Universal defenses work against:
a. holders.
b. a holder through a holder in due course.
c. a holder in due course.
d. all of the above.
A direct sale to customers in a foreign country is a(n):
a. foreign distributorship.
b. agency arrangement.
c. licensed sale.
d. export sale.
Negotiation of bearer paper requires:
a. delivery only.
b. indorsement only.
c. both indorsement and delivery.
d. neither indorsement nor delivery.
The relatives of an individual who dies without a valid will may acquire title to the
decedent’s property through:
a. intestate succession.
b. the right of replevin.
c. testate succession.
d. the right of acquisition.
Among the guidelines for balancing the interests of various stakeholders to resolve
ethical dilemmas in business are:
a. identify potential parties who could be injured by the proposed action.
b. define the problem from both the decision maker’s and opposing viewpoints.
c. ask whether you would be willing to describe a proposed action to your family, the
board of directors, a congressional hearing, or other public forum.
d. all of the above.
The transfer of technology rights in a product to allow another firm in a foreign country
to produce a product in return for royalties or other specified payments is called:
a. exporting.
b. licensing.
c. agency representation.
d. subsidiary sales.
The rights of an employee to be compensated are governed primarily by the same
principles that apply to the compensation of a(n):
a. partner.
b. stockholder.
c. agent.
d. independent contractor.
The United Nations Conference on Trade and Development (UNCTAD):
a. represents the interests of less developed countries.
b. arbitrates trade disputes between countries.
c. furnishes letters of credit to expedite trade.
d. all of the above.
The unauthorized use of a computer belonging to someone else is:
a. a crime in all states.
b. a crime in some states.
c. not a crime in any state.
d. a crime under federal law only.
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.
A counteroffer is a(n):
a. acceptance of the original offer.
b. rejection of the original offer.
c. acceptance of the original offer and an invitation to further negotiate.
d. a revocation of the original offer.
__________ liable on contracts with third persons.
a. Agents may intentionally make themselves
b. Agents are never able to make themselves
c. Agents are always
d. None of the above statements are true.
Repeated breaches and waivers are generally interpreted to indicate:
a. poor business practices.
b. illegal behavior.
c. ignorance of the law.
d. modification of contract.
Individual rights guaranteed in the United States Constitution:
a. have no accompanying duties.
b. apply only to a small number of individuals.
c. are subject to state legislative laws.
d. generally have accompanying duties.
The Endangered Species Act gives which of the following cabinet-level officers the
authority to protect various species?
a. the Secretary of the Interior only
b. the Secretary of Commerce only
c. both the Secretary of the Interior and the Secretary of Commerce
d. none of the above
When the name of the payee is spelled incorrectly, the payee:
a. must indorse the instrument with the incorrect spelling of the payee’s name.
b. must indorse the instrument with the correct spelling of the payee’s name .
c. may indorse the instrument with either the correct or incorrect spelling of the payee’s
name.
d. may not indorse the instrument.
The Martin family owned a home that was badly in need of repair. Mrs. Martin worked
outside the home and Mr. Martin took care of the household responsibilities and cared
for the two young Martin children. One day, Mrs. Martin left for work and a home
repair crew drove up and began to put aluminum siding on the Martin house. Mr.
Martin telephoned his wife, told her, and inquired about whether she had hired the
workers. When the Martins realized that they never had ordered this work done, Mr.
Martin sneaked out the back with the children. He later met his wife at work and they
returned home for dinner. By that time, the entire front of the house had been
aluminum-sided. The foreman asked, “Mr. and Mrs. Wolf, how do you like the job?”
The Martins replied that they loved the job, but the Wolfs lived next door. When it
became clear that the repair crew had made an error, the foreman insisted that the
Martins had to pay.
In the case of a nonshipment contract, risk of loss passes to the buyer upon actual
receipt of goods:
a. only if the seller is a merchant
b. only if the seller is a nonmerchant
c. only if the buyer has already paid for them
d. in all nonshipment contracts
Thelma purchased a used truck from Hall that had been manufactured by International
Harvester. To work on the truck engine, Thelma had to have the cab of the truck raised.
When it was so raised, the cab fell unexpectedly and fatally injured Thelma. Suit was
brought for her wrongful death against Hall and International Harvester. The suit was
based on theories of negligence, strict tort liability, and breach of warranty. The defense
was raised that there was no liability because the sale to Thelma had been made “as is”
and the truck was a used truck. Were these defenses valid?
An apparently voluntary agreement may in fact not be voluntary if:
a. undue influence is present.
b. physical duress is present.
c. economic duress is present.
d. all of the above.
For violation of the Sherman Act, the maximum fine that may be imposed on a natural
person is:
a. $1 million.
b. $500,000.
c. $0.
d. $100 million.
The debtor will be denied a discharge if:
a. the debtor had been extravagant.
b. the debtor incurred debts because of negligence.
c. the debtor received a discharge ten (10) years previously.
d. the debtor refused to obey a lawful order of the court.
Who may bring an action for relief under consumer protection legislation?
a. the Federal Trade Commission
b. a state attorney general
c. the consumer
d. all of the above
A provision stipulating the amount of money damages to be paid in the event of default
or breach of contract is known as a __________ damages clause.
a. nominal
b. contract
c. liquidated
d. breach
The dissolution and winding up of a limited partnership is governed by the same
principles applicable to a __________.
a. “Subchapter S” corporation.
b. limited liability company.
c. general partnership.
d. none of the above.
Misrepresentation:
a. is the same as fraud.
b. is a false statement of fact made with the intent to deceive.
c. is a false statement of fact made without any intent to deceive.
d. can be used as a limitation to excuse an accountant from liability.
A prospectus sets forth:
a. the key information contained in the registration statement.
b. information on stocks approved by the SEC.
c. information that the SEC has not reviewed.
d. none of the above.
State supreme courts primarily have what type of jurisdiction?
a. appellate
b. limited trial court
c. general
d. none of the above
What form of tort liability was developed to provide guaranteed protection for those
who are injured by conduct the law deems both serious and inexcusable?
a. strict liability
b. negligence
c. both a. and b.
d. neither a. nor b.
Only the Secretary of Labor can bring court actions to enforce the provisions of ERISA.
What federal act regulates the federal government in terms of its operations and impact
on the environment?
a. the Environmental Protection Act
b. the National Environmental Policy Act
c. the Clean Water Act
d. the Resource Recovery Act
A will may be contested on grounds of:
a. lack of mental capacity of the testator.
b. undue influence, duress, or mistake.
c. forgery.
d. all of the above.
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.
Dave Tompkins was up late one night watching a television campaign for a charitable
organization. The organization was seeking donations in order to construct a new
building that would serve as the organization’s headquarters. One of Tomkins’ favorite
performers appeared to promote the campaign, and this prompted Dave to telephone in
a pledge. Tomkins pledged $10,000 to the charity and, feeling good about his action,
finally went to sleep. The next morning, Tomkins regretted making the pledge because
its enforcement would cause great personal financial hardship. Will the charity be able
to legally enforce the pledge Tomkins made? If so, why might the charity choose not to
enforce a lawful pledge?
Placing property in the possession of another gives that person apparent authority to sell
the property.
The UCC statute of limitations applies when a party is seeking recovery on strict tort
liability, fraud or negligence.
An estate in fee simple grants ownership in property for a specific period of time.
Pay raises based on seniority generally are considered lawful.
The effect of an implied contract is not the same as the effect of an express contract.
Most courts hold that joint ventures are not subject to the same principles of law as
partnerships.
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.
A buyer may stop payment on a certified check issued to a seller if the goods are
defective when received.
A mediator has the power to actually make a decision in a dispute.
The amount of credit specified in a letter of credit must be taken by the beneficiary in
the form of a lump-sum payment.
If the negligence of the franchisee causes harm to a third person, the franchisor is not
liable because the franchisee is an independent contractor.
In a self-service store a sale cannot occur until the goods are paid for.
A principal may ratify an action taken by an agent that the principal would not have
been capable of authorizing at the time that the action was taken.
Federal laws on the disclosure in the sales of securities and shareholder relations were
developed following the stock market crash of 1929.
Impossibility of performance applies when the debtor does not have sufficient funds to
pay a debt.
Computer software licensing agreements include restrictions on the use of software and
give the licensor greater protection than that provided by copyright law.
Directors are usually allowed to vote by proxy.