Which of the following is a correct legal conclusion regarding reorganization
bankruptcy?
a. Individuals, partnerships, and corporations in business may be reorganized.
b. A plan for reorganization may be filed only by a committee of creditors.
c. When a reorganization plan is confirmed by the court, the creditors can revert back to
their original position if they are not satisfied with the plan.
d. Individuals within a particular class of creditors can be treated differently if they
object to the reorganization plan.
The __________ lending market makes loans to consumers who have bankruptcies, no
credit history, low-to-moderate incomes, or a poor credit history.
a. subprime
b. subterranean
c. suboptimal
d. optimus prime
An exculpatory clause most likely would be held to limit or disclaim liability for
malpractice:
a. in an action based on fraud.
b. in a suit brought by a third person.
c. when the accountant can reasonably be expected to stand behind the information in
question.
d. when the clause is conspicuous, unambiguous, and clear.
Which of the following actions is not prohibited by The Foreign Corrupt Practices Act?
a. offers of payments to government officials to influence a decision on behalf of the
firm making the payment
b. payments to government officials to influence a decision on behalf of the firm
making the payment
c. payments to low-level officials for expediting the performance of routine government
services
d. all of the above actions are prohibited by The Foreign Corrupt Practices Act
A crime generally consists of:
a. an act or omission.
b. a mental state.
c. a mental state and an act or omission.
d. a mental state, an act or omission, and harm.
A legally binding agreement that can be rejected at the option of one of the parties is
called a(n):
a. void agreement.
b. revoked contract.
c. voidable contract.
d. optional agreement.
Rights theory:
a. is also known an entitlement theory.
b. states that everyone has a set of rights.
c. believes that it is the government’s responsibility to protect our rights.
d. all of the above.
Which of the following is beyond the enforcement power of an agency?
a. requiring proof of compliance with agency regulations
b. issuing a cease-and-desist order
c. convicting of criminal violations
d. imposing civil penalties
An administrative regulation:
a. is a guideline that may be voluntarily followed.
b. has the force of law.
c. is a suggestion of what will protect the environment.
d. is a standard used to guide an industry at the industry’s discretion.
The FTC rule, which provides that a notice provision must be included in all consumer
credit contracts, requires that the notice:
a. limit recovery under the contract to amounts paid by the debtor plus a reasonable
charge for incidental damages.
b. be in italic type.
c. be at least 20 points in size.
d. has the effect that no subsequent person can be a holder in due course of the
instrument.
The rule of mitigation of damages requires that a party injured by a breach of contract
must:
a. take any and all steps possible to reduce the damages that will be sustained because
of the breach.
b. discharge the contract before filing suit for breach.
c. hire someone else to perform the contract.
d. take reasonable steps to reduce the damages that would otherwise be sustained
because of the breach.
Parol evidence may be admitted to show that a provision was omitted as the result of:
a. fraud.
b. accident.
c. mistake.
d. all of the above.
Hostile work environment sexual harassment:
a. cannot be created by unwelcome sexual flirtation and propositions.
b. cannot result in an injunction being granted against offensive conduct.
c. occurs when a supervisor’s conduct does not affect an employee’s economic benefits,
but causes anxiety and “poisons” the work environment for the employee.
d. can result in the court ordering the business to be sold, upon proper notice, at a
publicly-held auction.
Which of the following acts was passed to ensure that public shareholders faced with a
cash tender offer would not be required to respond without sufficient information?
a. the Mann Act
b. the Robinson-Patman Act
c. the Williams Act
d. the SEC Act
The passage of federal securities disclosure laws occurred largely as the result of:
a. voluntary self-regulation by ethics experts in the securities industry.
b. the stock market crash of 1929.
c. changes in the international market for securities and negotiable instruments.
d. all of the above.
Legal principles expressed for the first time in court decisions are called:
a. statutory law.
b. stare decisis.
c. common law.
d. precedents.
A person who acquires a negotiable instrument with notice or knowledge that any party
might have a defense or that there is any adverse claim to the ownership of the
instrument:
a. has acted in bad faith.
b. has acted illegally.
c. cannot be a holder in due course.
d. has taken unfair advantage of the maker.
Dividends are payable in:
a. money.
b. products manufactured by the corporation.
c. shares of other corporations held by the corporation.
d. all of the above.
A landowner’s promise to pay a contractor a bonus to complete construction of a
building according to the terms of a pre-existing contract between the landowner and
the contractor is:
a. binding if the promise is in writing.
b. binding, since the promise is made by a non-merchant.
c. binding, since the promise is made to a merchant.
d. ordinarily not binding on the promisor.
Which of the following statements describes a check?
a. The drawer is always a bank.
b. The maker is always a bank.
c. A check is generally payable on demand.
d. A check is a particular kind of note.
Persons who are in a partnership are called __________ partners.
a. general
b. silent
c. secret
d. nominal
Isidro issued a negotiable promissory note to his attorney in return for the attorney’s
promise to perform legal services. The attorney never rendered the legal services but
quickly negotiated the note to Anna, a holder in due course. Anna and Mark were
involved in business negotiations and Anna offered to purchase a car from Mark. She
offered as part payment for the car the note issued by Isidro. By coincidence, Mark
knew both Isidro and the attorney and the facts concerning the note and the
unperformed legal services. Despite this, Mark accepted a negotiation of the note from
Anna. Isidro refused to pay the note and Mark eventually sued Isidro to collect. What is
the probable outcome?
In the absence of a liquidated damages clause and in the absence of proof of greater
damages, the seller’s damages are computed as
a. 25% of the purchase price or $500, whichever is less.
b. 25% of the purchase price or $500, whichever is greater.
c. 20% of the purchase price or $500, whichever is greater.
d. 20% of the purchase price or $500, whichever is less.
An obligor may delegate his or her duties to perform under a contract when the:
a. performance of the duty is standardized and nonpersonal.
b. obligor is unable to perform his or her duties.
c. contract is silent as to the right of assignment.
d. obligor is an expert in his or her specialized duties under the contract.
Members of a limited liability company share profits:
a. according to their status (general or limited) in the firm.
b. in proportion to their contribution of services.
c. in proportion to their capital contribution.
d. according to the terms of the operating agreement.
Provision for exemption from the registration requirements of the Securities Act of
1933 is made for offerings made solely to accredited investors by SEC Regulation:
a. A.
b. B.
c. C.
d. D.
When goods are shipped COD:
a. the buyer always has the right to examine them before making payment.
b. the underlying contract must specify when the buyer may inspect the goods.
c. the buyer has no right to examine the goods until payment is made.
d. the buyer gives up all rights to inspection of the goods.
The standard for commercial impracticability is:
a. hypothetical.
b. conjectural.
c. objective.
d. subjective.
Law is:
a. a body of religious principles held by all members of society.
b. a body of principles that society establishes to keep things running smoothly.
c. always the result of case-law decisions.
d. derived solely from the United States Constitution.
A homeowner who refinances her home mortgage may cancel the transaction:
a. if the terms of the contract were less favorable than anticipated.
b. within three business days.
c. only if she was the victim of fraud.
d. upon payment of a $1,000 penalty, as required by a Federal Trade Commission rule.
In mediation, the mediator acts as a:
a. judge.
b. attorney.
c. messenger.
d. expert witness.
In most instances, the mere fact that a sale was made gives rise to a(n):
a. express warranty.
b. limited warranty.
c. implied warranty.
d. full warranty.
Insurance designed to protect an insured driver or owner from the claims of others is
called:
a. collision insurance.
b. financial responsibility insurance.
c. liability insurance.
d. comprehensive insurance.
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.
Private citizens lack the authority to have polluting activities halted through the use of
injunctions.
Jones and Clark entered into a written contract for the purchase of an apartment
building by Clark. The contract was carefully drafted to set forth the agreement of the
parties. It was signed by both parties. Clark subsequently claimed that the contract did
not cover all the terms included in the written and oral agreements that the parties had
made during their prior negotiations.
Jones claimed that the parol evidence rule barred proof of all of their prior agreements.
Which claim would be upheld in court?
Newlog, which had developed a new process for making artificial logs, entered into an
oral contract with Specialty Manufacturing. The contract provided that Specialty would
manufacture a special part that Newlog needed to make its artificial log machinery. The
contract provided that Specialty would make the part to Newlog’s specifications.
Newlog orally agreed to pay $5,000 for the part. Specialty made the part to Newlog’s
specifications, but Newlog refused to pay, claiming that the oral contract was
unenforceable because of the statute of frauds. Is Newlog correct?
Acceptance of an offer to form a unilateral contract need not be communicated to the
offeror to be effective.
The rights of an employee with respect to compensation are governed in general by the
same principles that apply to the compensation of an agent.
When a buyer has broken a sales contract, the seller may resell the goods or the balance
of them in the seller’s possession.
Title to abandoned property may be acquired by the first person who obtains possession
and control of it.
A lease is the relationship by which one person is in lawful possession of real property
owned by another.
In contrast to contributory negligence principles, comparative negligence principles are
never applied to malpractice situations.
A promise to pay an attorney a fee owed by a third person can be enforced without a
writing.
An absolute guaranty creates the same obligation as a suretyship.
Vacarro gave her son Mark a car on the day Mark left for college. Vacarro told Mark
that she expected him to use the car for school purposes and to earn good grades. Mark
flunked out of college in his second semester. Vacarro sued to regain title to the car on
the ground that the gift was conditional on Mark’s earning good grades and remaining
in college. Will Vacarro win the case?
Statutes are the only source of law.
An express warranty is basically any statement of fact or promise made about the goods
that becomes part of the basis of the bargain.
Shareholder control is generally limited to voting at shareholders’ meetings to elect
directors.
When a partner executes an agreement outside the limitations of that partner’s agreed
scope of power, the other partners are always able to set aside the contract.
Testamentary intent makes the provisions of the testator effective and binding during
the testator’s life.
A country can borrow money from other International Monetary Fund (IMF) members
or from the IMF by means of special drawing rights (SDRs) sufficient to permit that
country to maintain the stability of its currency’s relationship to other world currencies.
All current rights against governmental intrusion are expressly stated in the
Constitution.
A corporation generally may avoid a transaction because of a director’s secret
disqualification, such as a conflict of interest.