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A __________ is a law establishing a maximum rate of permissible interest for which a
lender and borrower of money may contract.
a. wager
b. usury statute
c. Sunday statute
d. None of these.
The final arbiter as to the constitutionality of laws passed by Congress or by the
legislature of a state is the Supreme Court of the United States.
a. True
b. False
The duty of obedience owed by an agent to a principal is not breached and will not
result in liability to the principal by an agent's refusal to do an illegal or tortious act for
the principal.
a. True
b. False
AB Corporation consolidates with ZX Corporation to form A-Z Corporation. The debts
of AB Corporation are:
a. assumed by the stockholders of AB Corporation.
b. discharged by the process of consolidation.
c. assumed by A-Z Corporation.
d. discharged by the issuance of new stock in A-Z Corporation.
The decisions of the U.S. Courts of Appeals are binding on the other federal courts
except for the U.S. Supreme Court.
a. True
b. False
Which type of contractual provision affects remedies?
a. Cover.
b. Liquidation or limitation of damages.
c. Modification or limitation of remedy.
d. Both limitation of damagesand limitation of remedy are correct.
A public figure who brings a defamation suit against a newspaper which prints a false
story about her must prove actual malice to win the suit.
a. True
b. False
Fixit Co., a four-person business, employs Wesley as a full-time mechanic. One day
while welding a frame modification on a sports car, Wesley paid no attention to a
clearly visible oil leak dripping from the engine compartment of the car. The welding
torch ignited the oil, causing a fire in which Wesley was badly burned. Which of the
following BEST describes the rights of the parties?
a. Fixit is probably liable to Wesley under a workers' compensation statute despite the
fact Wesley may have been contributorily negligent when he ignored the oil leak.
b. Wesley cannot recover workers' compensation since federal law requires that an
employer have at least 25 employees before he must provide workers' compensation
benefits.
c. Fixit is not liable to pay Wesley workers' compensation since Wesley fell below a
recognized standard of care by auto mechanics.
d. Wesley cannot recover workers' compensation benefits, but can sue Fixit for failing
to provide a safe working environment.
Arnold has offered to take Bob into his accounting firm as a partner upon payment of
$5,000 cash. In response, Bob says, "I'll give you $3,000 cash now and I will pay you
the remainder in two months after I see whether things are working out as a
partnership."
a. Bob has made a counteroffer and hence there is no contract.
b. Bob has rejected the terms of the original offer, but there is still a contract.
c. Under Article 2 of the UCC, Arnold is a merchant making a firm offer. Hence there is
a contract.
d. Any indefinite provisions in the contract between Arnold and Bob will be supplied by
Article 2 of the UCC.
NEPA imposes the responsibility for maintaining the environment on all federal
agencies.
a. True
b. False
Each partner, unless otherwise agreed, has equal rights in the management and conduct
of the business of a general or a limited partnership.
a. True
b. False
Courts of equity:
a. have remained separate court systems in nearly every jurisdiction in the United
States.
b. ordinarily do not involve juries.
c. in all cases recognized new rights that were not enforceable at common law.
d. All of these.
Handwritten words supersede typewritten words contained in negotiable instruments.
a. True
b. False
If a seller of a product conditions its sale upon the buyer's purchasing a second product
from the seller, this is known as a:
a. tying arrangement.
b. boycott.
c. horizontal restraint.
d. disparagement.
The Contract Clause of the Constitution applies only to the actions of state governments
and not to the federal government.
a. True
b. False
Goble, the seller, obtains authority from Meigs, the buyer, to debit Meigss account after
Goble ships the goods. Article 4A covers this transaction.
a. True
b. False
At common law, __________ was defined as a breaking and entering of a dwelling
house at night with the intent to commit a felony.
a. burglary
b. bribery
c. robbery
d. theft
"Normal value" is the price that would be charged for the same or a similar product in
the ordinary course of trade for domestic consumption in the exporting country, under
the World Trade Organization's:
a. tariff regulations.
b. nontariff barrier.
c. Antidumping Code.
d. export controls.
The right of dissent results in payment of:
a. a damage award to the shareholder.
b. a price in exchange for his shares.
c. treble damages for violation of the charter.
d. a bonus to dissenting shareholders.
The Consumer Financial Protection Bureau has rulemaking, supervisory, and
enforcement authority over all but which of the following?
a. Persons engaged in extending credit and servicing loans.
b. Automobile dealers.
c. Check cashing establishments.
d. Consumer credit report providers.
e. Persons engaged in deposit-taking activities.
The Packer Video Company files for Chapter 7 bankruptcy. Its only non-exempt asset is
a piece of equipment valued at $15,000. The claims that have been approved by the
trustee are as follows:
(1) $2,500 in expenses of the trustee in the administration of the estate.
(2) $4,000 in wages, salaries, and commissions earned by employees within ninety days
before the filing of the bankruptcy petition and the cessation of the business.
(3) $500 in employment taxes owed to the state.
(4) Unsecured claims in the amount of $10,000.
(5) A perfected security interest in the amount of $2,000 which is held by First Bank
and which is secured by the item of equipment.
How much money will be available to pay the general unsecured creditors who have no
priority?
a. $15,000
b. $13,000
c. $10,500
d. $6,000
e. No money will be available to pay the general unsecured creditors.
Steve defaults on a car loan secured by his car and guaranteed by both Sam and Dave.
Subrogation would allow Sam, who paid Steve's full obligation to:
a. repossess the car.
b. collect from Dave.
c. collect from Steve.
d. All of these.
Corporations have achieved dominance in which of the following ways?
a. This form of organization accounts for 85 percent of the gross revenues of all
business entities.
b. Over 50 percent of all U.S. businesses are organized in the corporate form.
c. Over 75 percent of American adults own stock directly or indirectly.
d. All of these.
Arthur offers Bob, an employee of Carl, a yearly salary of $10,000 more than Bob
receives under the contractual relationship between Bob and Carl. Arthur knows about
the contract between Bob and Carl and knows that the contract should run for another
five years, but Arthur badly wants Bob to work for him. Arthur probably is liable to
Carl for intentional interference with contractual relations.
a. True
b. False
Whitaker has reasonable grounds for believing Crosslin will not perform his obligations
under their contract. Discuss what Whitaker might do if their contract is governed by:
(a) the UCC and (b) the CISG.
Zoron Company purchased a truck from Ace Motors. The sales personnel at Ace know
that Anton Green is an executive at Zoron. To pay for the truck, Anton delivered a
$26,000 note to Ace and signed it "Anton Green, Agent." In this case:
a. the signature of the maker is incomplete. Neither Zoron nor Anton is liable on the
note.
b. since "Zoron Company" does not appear on the note, only Anton is liable to Ace for
payment of the note.
c. as long as Ace Motors remains holder of the note, Zoron Company is liable for
payment.
d. if ABC bank becomes a holder in due course of the note and Zoron Company does
not pay, the bank has no recourse against Anton.
When the defendant's property located within a state is seized to obtain payment of a
judgment from a court from another state that is unrelated to the property being seized,
the jurisdiction over the property is known as __________ jurisdiction.
a. quasi in rem
b. in personam
c. in rem
d. forum non conveniens
Those interpretative rules of administrative agencies that are exempt from the APAs
notice and comment requirements are not automatically binding on the courts.
a. True
b. False
If a manufacturer of a consumer product tells a buyer that he is selling it with no
warranties, there is a violation of the Magnuson-Moss Act.
a. True
b. False
A merger involving noncompeting firms producing unrelated goods and services is
termed a:
a. tying arrangement.
b. vertical merger.
c. conglomerate merger.
d. horizontal merger.
The doctrine of respondeat superior is most often applied in situations involving:
a. torts of the agent.
b. negligence of the principal.
c. contracts negotiated by the agent.
d. crimes committed by the agent.
Clint contests the amount of a bill he received from Car Care Specialists. Under the
Restatement, settlement of the claim:
a. is not valid consideration.
b. is not a legal detriment to Clint if his contentions were not made in good faith.
c. is valid consideration if at the time of the settlement the claim was doubtful because
of uncertainty as to the facts.
d. does not involve a disputed debt unless Clint contests both the existence of the
obligation and the amount of the bill.
The purpose of tort law is to punish the wrongdoer.
a. True
b. False
