A rule requiring that a franchisor provide a disclosure statement to all prospective
franchisees was adopted by the:
a. UCC.
b. Franchise Tax Board.
c. Securities and Exchange Commission.
d. Federal Trade Commission.
A contract under which one or both parties have not yet fully performed is termed a(n):
a. void agreement.
b. executory contract.
c. executive contract.
d. executed contract.
A public corporation is:
a. also know as a public utility.
b. organized for charitable and benevolent purposes or for purposes of finance, industry,
and commerce.
c. established for governmental purposes and for the administration of public affairs.
d. all of the above.
Bailment given as security for the payment of a debt is a(n):
a. pledge
b. contribution
c. guaranty
d. indemnity
Which federal agency is most often authorized to adopt standards and regulations to
carry out the provisions of environmental statutes?
a. FTC
b. ICC
c. EPA
d. SEC
The agent of a disclosed principal is liable for harm caused to third persons by:
a. the fraudulent acts of the agent.
b. the malicious acts of the agent.
c. both a. and b.
d. none of the above.
A holder may:
a. demand payment.
b. bring suit for the collection of an instrument.
c. give a discharge or release from liability on the instrument.
d. all of the above.
Sources of American law include:
a. state constitutions.
b. statutes enacted by state legislatures.
c. court decisions.
d. all of the above.
The federal regulation of express warranties:
a. applies only to limited warranties.
b. applies to a seller who makes a written express warranty for a consumer product
costing more than $10.
c. requires all express warranties to be full warranties.
d. requires an implied warranty to be designated as either full or limited.
A forged or unauthorized indorsement is by definition:
a. an indorsement of the person by whom it appears to have been made.
b. no indorsement of the person by whom it appears to have been made.
c. binding on the party who refuses to ratify the instrument.
d. incapable of being ratified.
Which statement is incorrect concerning mortgages?
a. The mortgagee’s interest terminates upon performance of the obligation secured by
the mortgage.
b. The mortgagee has the right to enforce the mortgage by foreclosure upon default by
the mortgagor.
c. The mortgagor must have complete or absolute ownership in the property.
d. Generally, no particular form of language is required to create a mortgage.
Positive law:
a. is enacted by government authority.
b. ensures that businesses will follow a high level of ethical standards.
c. is also known as natural law.
d. all of the above.
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.
When consigned goods are sold by a factor:
a. title passes when the consignor approves the sale.
b. title passes even if the goods have been stolen, provided the factor is ignorant of this
fact.
c. the sale passes the title of the owner to the buyer.
d. strict compliance with the Federal Factors Act is required to pass title.
At an auction sale, each bid is:
a. a counteroffer to the auctioneer’s offer of the merchandise.
b. an acceptance of the auctioneer’s offer.
c. an invitation to negotiate.
d. an offer.
Which is not an element of attachment?
a. the filing of a financing statement
b. a security agreement
c. value received by the debtor
d. the debtor has rights in the collateral
The commercially reasonable charges incurred by a seller in caring for goods after the
buyer’s breach are recoverable by the seller in an action for damages as:
a. contract damages.
b. punitive damages.
c. additional damages.
d. incidental damages.
Armenia purchased life insurance on her life. Regarding the beneficiary:
a. Armenia must name a person with a pecuniary interest in her life.
b. Armenia must name a close relative.
c. Armenia must name a close relative or business associate.
d. Armenia may name whomever she wishes.
Which of the following can constitute an effective delivery of a deed?
a. a physical delivery
b. a symbolic delivery
c. a constructive delivery
d. all of the above
A computer crime generally requires that:
a. the criminal possess a computer.
b. the victim possess a computer.
c. the criminal have some knowledge of computers.
d. the victim have some knowledge of computers.
Disparate impact exists when facially neutral employment practices:
a. adversely impact a protected group.
b. intentionally discriminate against a protected group.
c. favorably impact a protected group.
d. are shown to be job-related.
Rights guaranteed in the United States Constitution:
a. cannot be taken away by statutes or court decisions.
b. can be taken away by statutes.
c. can be taken away by court decisions.
d. can be taken away by local ordinances.
In a bilateral contract, each party will be a promisor and, therefore, each party will:
a. be an obligor.
b. be able to avoid the contract.
c. not be in privity of contract.
d. be an agent for the other side.
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.
An offer that is indefinite may be clarified by reference to another writing through:
a. incorporation.
b. reference.
c. annotation.
d. indexing.
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.
The one-year performance requirement for an oral contract begins:
a. on the day of the agreement.
b. on the first day of performance.
c. on the day following the agreement.
d. the day on which the agreement was placed in writing.
A contract that is deemed to be too harsh or oppressive to one of the contracting parties
may be unenforceable under the concept of:
a. unilateral influence.
b. bilateral influence.
c. unconscionability.
d. conscionability.
Which of the following is not a classification of ordinary bailments?
a. for the sole benefit of the bailor
b. for the sole benefit of the bailee
c. for the sole benefit of the third party beneficiary
d. for the mutual benefit of the bailor and the bailee
When the corporation has the right to sue its directors, officers, or third persons for
damages caused by them to the corporation or for breach of contract, one (1) or more
shareholders may bring such action if the corporation refuses to do so. This is known as
a __________ action.
a. primary
b. derivative
c. deferential
d. preemptive
To have the status of a holder in due course, a person must first be a holder.
A method for determining total emissions in one area is referred to as the emissions
offset concept.
Appropriation involves taking an image, likeness, or name for purposes of commercial
advantage.
A person has to be an owner or lienholder to have an insurable interest in a property.
In general, any form of property that may be sold or conveyed may be mortgaged.
Unless otherwise specified, the place of delivery is the seller’s place of business.
If no time is stated for the duration of an offer, it continues indefinitely if the offer
relates to durable goods or land.
One desiring to leave the balance of an estate to a specified person or group after
specific bequests are satisfied may do so by making a residuary bequest in a will.
Libel is the printed equivalent of the spoken form of defamation known as slander.
A trespass to personal property is any unpermitted entry below, on, across, or above the
land of another.
The Uniform Partnership Act, a codification of partnership law, has been adopted by 49
states.
Pursuant to the commerce clause, the United States Supreme Court has the power “to
regulate commerce with foreign nations, and among the several states, and with the
Indian tribes.”
The legal concept of property includes rights in the property.
A general agent is authorized by the principal to do all acts that can be delegated
lawfully to a representative.
Sally Gomez is interested in starting a new business. Although Gomez has developed
her business plan and is ready to implement her ideas, she lacks the necessary finances
to begin her new business. Along with a lack of finances, Gomez worries about the
potential liability involved with starting a new business. Gomez would hate to lose all
that she has personally accumulated to date in the event of a successful lawsuit against
her. She is considering a sole proprietorship, a partnership, or a corporation as the
organizing structure of her new venture. Which type of business would best serve
Gomez’s needs at this given time?
The creditor first must proceed against the debtor before suing the surety.
All debts are discharged in bankruptcy, whether disclosed by the debtor or not.