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Obscene speech is protected by the First Amendment.
a. True
b. False
Robert, a minor, buys a stereo from Jane for $200. State law allows a minor to disaffirm
contracts within a reasonable time after turning 18. Robert disaffirms the contract the
day after turning 18 and returns the stereo.
a. This contract was a valid contract, Robert cannot disaffirm.
b. This contract was a voidable contract, Robert can disaffirm.
c. This contract was a void contract.
d. This contract was unenforceable because it needed to be in writing to be enforceable.
What is meant by the term "piercing the corporate veil"?
a. Corporate directors and/or officers may be held personally liable to a person damaged
by an act of the corporation.
b. Corporate shareholders may be held personally liable to a person damaged by an act
of the corporation.
c. Both of the above.
d. None of the above.
Roberto sued Monica for injuries received in a traffic accident. If Monica does not
respond to the complaint and summons served by Roberto within the prescribed time
limits, Roberto may obtain a:
a. judgment on the pleadings.
b. summary judgment.
c. pretrial conference.
d. default judgment.
Which of the following would not be considered a fraudulent conveyance or a voidable
preference under the provisions of the Code? Immediately prior to filing bankruptcy:
a. debtor sells assets well below fair market price to Freddie, a friend.
b. debtor sells his car at a public auction, thinking that it would bring a decent price, but
the car brings an amount well below fair market value.
c. debtor's corporation transfers assets to stockholders in lieu of cash dividends.
d. debtor pays $650 to "Nation on Line" for the past ten months of Internet service.
Terminating a corporation is a three-step process: dissolution, winding up, and
termination.
a. True
b. False
Nella offers to sell her crop of strawberries, which have just been picked, to Morgans
Market. Since she does not specify a time limit for acceptance, Morgans can accept the
offer the following week, as long as Nella has not revoked it.
a. True
b. False
The economic loss doctrine states that, when the injured party is a corporation and the
harm is purely economic, the only remedies available are those under the common law.
a. True
b. False
Spencer, age 18 and of sound mind, has the legal capacity to contract.
a. True
b. False
Under the Americans with Disabilities Act, a person with a disabling illness
a. is not considered disabled once the illness is being managed with medicines.
b. is not considered disabled unless there is no known cure.
c. is considered disabled, but only at times when hospitalization is required for
treatment.
d. is considered disabled, even if the illness is under control.
Marty, a 16-year-old, contracts with Cream-of-the-Crop Cycles to buy an $8,000
motorcycle. Marty agrees to make monthly payments until the purchase price plus
interest are paid in full. Which of the following is correct?
a. The contract is voidable by Marty.
b. The contract is void as soon as it is made.
c. The contract is voidable by Cream-of-the-Crop Cycles.
d. The contract is voidable by either Marty or Cream-of-the-Crop Cycles.
To be a close corporation, the business must be small, with no more than 20 owners and
no more than $500,000 in gross annual income.
a. True
b. False
Martin, Leah, and Pablo are considering forming a business. What factors should they
consider in making a choice of organization?
a. Ease of creation and operation.
b. Whether there is personal liability for the owners.
c. How the owners will be taxed.
d. All of the above.
Multinational enterprises are companies doing business in several countries
simultaneously.
a. True
b. False
Larry has owned $5,000 of stock in E-prise, Inc. for the past 18 months. Under SEC
rules, Larry can require that one proposal be placed in the company's proxy statement to
be voted on at the shareholder meeting.
a. True
b. False
In business law, a lawyers primary job is to represent the client in contract litigation.
a. True
b. False
The Civil Rights Act of 1964, a federal statute, forbids discrimination on the basis of
national origin in employment. The Equal Employment Opportunity Commission
(EEOC) is the administrative agency that oversees the law. The EEOC issued
Guidelines on Discrimination because of National Origin. According to one of the
guidelines, the EEOC will presume a violation of the law if an employer sets a work
requirement that employees must speak only English in the workplace. This is an
interpretive rule because it interprets the Civil Rights Act.
a. True
b. False
The United States has agreed to which of the following?
a. GATT.
b. NAFTA.
c. CISG.
d. All of the above.
Under the Electronic Communications Privacy Act:
a. violators are subject to both criminal and civil penalties.
b. violators may be subject to civil, but not criminal, penalties.
c. only the unauthorized disclosure of e-mail messages constitutes a violation.
d. only the unauthorized interception of e-mail messages by the government or an ISP
constitutes a violation.
Tim wrote a negotiable note. Subsequently, Tim's debts were discharged in bankruptcy.
If a holder in due course presents the note for payment, Tim does not have to pay.
a. True
b. False
Marco Manufacturing contracted to sell Kurtz Industries 3,000 iron clasps. The contract
specified: F.O.B. Kurtz Industries. Upon arrival and inspection, the goods were rejected
by Kurtz Industries because they did not conform to the contract specifications. In
transit back to Marco Manufacturing, the common carrier's truck overturned and
completely destroyed the clasps. Which statement is correct?
a. Marco may sue Kurtz for the contract price, as risk of loss transferred to Kurtz at the
F.O.B. point.
b. Kurtz will not be liable for the purchase price. The risk of loss had not yet transferred
since the goods were nonconforming.
c. The loss will be split between the parties upon a 50/50 basis.
d. The loss will be assigned to the party who could best bear the loss.
Although the United States government officially signed the GATT treaty, the United
States Congress has refused to ratify the agreement.
a. True
b. False
Char-Glo Industries contracted with Evergreen Lawn Service to mow and trim the
companys lawn. In the contract, Char-Glo included a clause prohibiting Evergreen from
delegating its duties. Courts will ordinarily not enforce such a clause.
a. True
b. False
Either party may demand rescission of a fully executed oral contract if it was required
to have been in writing under the statute of frauds.
a. True
b. False
If Ray agrees to rake leaves for Michelle in exchange for Michelle's promise to pay off
the debt Ray owes to Dean, then Dean is a donee beneficiary of the agreement between
Ray and Michelle.
a. True
b. False
Grand Lighting Co. has filed a petition for voluntary bankruptcy under Chapter 7 of the
Code. The following property will be exempt from the bankruptcy process:
a. work tools.
b. up to three company cars.
c. up to $20,200 in the value of the companys real property.
d. All of the above.
e. None of the above.
Roger parked his car at a garage that has a large sign at the entrance saying, "This
garage is not liable for items stolen from a car." This type of notice is referred to as an
exculpatory clause.
a. True
b. False
George's Greenery orders two dozen live dogwood trees from Nancys Nursery. George's
is to keep the dogwoods healthy by keeping them in a greenhouse following certain
instructions to keep the air at the right temperature, etc. The sale is made on a trial basis
and George's may return all unsold dogwood trees at the end of 30 days. This contract is
a:
a. contract to sell future goods.
b. conditional sale.
c. sale or return.
d. sale on approval.
Which statement most accurately describes third party beneficiary rights?
a. A beneficiary may enforce a contract if the parties intended to benefit him and if
enforcing the promise will satisfy a duty of the promisee to the beneficiary.
b. If a promisee intended to make a gift to the beneficiary, the beneficiary may not
enforce the contract.
c. An intended third party beneficiary has no enforceable rights in a contract.
d. Incidental beneficiaries have enforceable rights against both contracting parties.
A sellers form clearly states no warranty is included. The buyers form states that the
seller warrants the goods for one year. In this case:
a. no contract can be created.
b. the warranty term is a "different term, and the majority of states hold that a contract
can be formed but the contradictory terms cancel each other out.
c. the warranty term is an "additional term that becomes part of the contract in most
states.
d. the warranty term is a "different term, which in most states becomes part of the
contract unless the seller promptly objects.
