The statute of limitations for breach of warranty under the UCC is?
a. one year.
b. two years.
c. three years.
d. four years.
John purchased $600 worth of clothes from Clothing Mart. He paid for the clothes with
a credit card. When he received his statement, he sent the credit card company a check
for $600. The credit card company mistakenly recorded his payment as $60. When John
received his next statement, he noticed the $540 error and contacted the credit card
company.
A few days later when he attempted to use his card to buy gasoline, he was told by the
cashier that the card had been canceled and she was instructed to take his card. John
was shocked, embarrassed, and angry. When he contacted the credit card company, it
pointed out a provision in his initial contract for the card that stated the company could
revoke his card privileges at any time with or without cause.
Consumers have a right to:
a. exclude as obsolete information about a bankruptcy discharge seven years previously.
b. know the name of anyone to whom credit information has been supplied by a
consumer reporting agency within the last three years.
c. have their own version of a disputed credit situation included in their credit file.
d. have their credit rating reviewed at least once a year.
The guiding principal of federal securities law is:
a. to keep investors from making bad investments.
b. to insure investors have full and accurate information.
c. to avoid another stock market crash.
d. to promote the issuance of securities.
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 of the following is most likely to constitute fraud?
a. A false prediction that a painting’s value will rise.
b. A false statement that a used car is “the best deal in town.”
c. A false statement that a $30,000 car attracts members of the opposite sex.
d. Silence as to a toxic waste problem on real property that the buyer would not
reasonably find.
Under what type of securities offering must the issuer determine if the investor is an
accredited, sophisticated, or unaccredited investor?
a. Regulation A offering.
b. Regulation D offering.
c. Public offering.
d. An interstate offering.
An auditor who determines a company is materially misstating certain items on its
financial statements should issue:
a. an unqualified opinion.
b. a qualified opinion.
c. an adverse opinion.
d. a disclaimer of opinion.
Wendell, new to the area, selects a doctor from the telephone book and visits that doctor
to have a splinter extracted. Unbeknownst to Wendell, the doctor has never passed the
state licensing exams. Later, when Wendell discovers the truth, he refuses to pay his
bill. If the doctor sues for recovery of the fee, will the court support the doctor’s claim?
a. Yes, it was up to Wendell to verify the doctor’s qualifications prior to having the
splinter extracted.
b. No, the court is likely to take the position that it is not in the public’s best interests to
enforce contracts with unlicensed doctors.
c. It depends on whether Wendell’s injury healed properly.
d. No, but the doctor could probably recover under quasi-contract.
Rick prepared financial statements for MegaCorp knowing that it was going to use his
statements to apply for a loan with Big Bank. When Big Bank turned MegaCorp down,
it applied to Fourth Bank for a loan. MegaCorp presented the statements prepared by
Rick to Fourth Bank which gave the company a loan. It was discovered that Rick was
negligent in preparing the statements, and Fourth Bank sued Rick. Under which of the
following tests is Rick liable?
a. Ultramares doctrine.
b. Foreseeable doctrine.
c. Restatement doctrine.
d. Rick would be liable under both the foreseeable doctrine and the Restatement
doctrine.
Jim told his manager, Lana, that a co-worker, Diane, had been in prison for theft. Lana
checked into the matter and, when she learned that Diane had served time in prison for
theft, fired her.
a. Jim is liable to Diane for defamation.
b. Jim is liable to Diane for defamation unless he can show a legitimate reason for
having to tell Lana about Diane’s prison history.
c. Jim is liable to Diane for defamation only if she is a public figure.
d. Jim is not liable to Diane for defamation.
Bill is injured while standing on the corner of Hollyhock and Vine when Mia’s new Hog
speeds out of control because of a defective part. In most jurisdictions, Bill:
a. can sue the motorcycle manufacturer even though he does not have privity.
b. cannot sue the motorcycle manufacturer because his injuries are personal injuries as
opposed to economic loss.
c. cannot sue the motorcycle manufacturer because the lemon laws require arbitration.
d. cannot sue the motorcycle manufacturer because there is no privity of contract.
A letter of intent is not likely to be enforceable unless:
a. there is a clearly stated start date for the contract.
b. both parties agree on compensation.
c. it is clear that both parties intended to be bound by the letter.
d. conditions in the letter are met.
Courts may award damages called “quantum meruit:
a. which means “as much as he deserved.
b. which is money the court believes the plaintiff morally ought to have.
c. even though there was no valid contract entitling the plaintiff to it.
d. All of the above.
Jerry believes his co-worker, Ben, is using illegal drugs. Since both he and Ben are
nurses, Jerry is concerned Ben’s drug usage could result in injury to a patient. He tells
his supervisor, Cyndi. Cyndi talks with Jerry about the alleged drug usage and Ben
produces a bottle of prescription medicine he is required to take for high blood pressure.
The medication does not affect his ability to do his work. When Ben learns it was Jerry
who reported him, Ben claims that Jerry committed an act of defamation when Jerry
told Cyndi he used illegal drugs. Is Ben right?
a. Yes. Jerry committed slander.
b. Yes. Jerry committed libel.
c. No. Ben is, in fact, using drugs.
d. No. Jerry is protected by the qualified privilege defense.
Mike is planning on incorporating his business in the state of Delaware. The corporate
name of Mike’s business must be different from:
a. that of any corporation that already exists in Delaware.
b. that of any limited liability company in Delaware.
c. the name of any sole proprietorship in Delaware.
d. all of the above.
Kent Weston wrote a check for $500 payable to the order of Chester Jones. Chester
indorsed the back of the check as follows: “Chester Jones.” The check is now:
a. order paper.
b. bearer paper.
c. a cashier’s check.
d. special paper.
Under Superfund legislation, to what extent must a hazardous waste site be cleaned?
a. Reasonable conditions under the circumstances.
b. A safe level for the area in which it is located.
c. Pristine condition, regardless of cost, even if this is better than it was before the
hazardous waste was dumped onto it.
d. To the condition of the property before the hazardous waste was dumped on it.
Under the Model Act, who has the right to call a special meeting of the shareholders to
vote on an emergency issue that cannot wait until the next annual meeting?
a. Shareholders who own at least 10 percent of a company’s stock.
b. The board of directors.
c. Both of the above.
d. None of the above.
Two universities located within 30 miles of each other agree to divide their market so as
to help them both. The two schools draw a line down a map and each university agrees
to accept students only on their side of the line.
Such an agreement is:
a. a per se violation of antitrust law.
b. subject to the rule of reason test to determine if it violates antitrust law.
c. not governed by antitrust law since educational institutions are exempt from this area
of law.
d. subject to state regulations but not to the Justice Department.
After Ashley was denied credit for a new car, she checked her credit report with
Equifax. The report showed that several credit cards had been issued to her recently,
and they had large, unpaid balances. Ashley had not applied for or received these cards.
She found out that someone had stolen personal information she had entered onto her
computer and used the information to fraudulently obtain the credit cards. Ashley:
a. is a victim of identity theft.
b. is protected under the Identity Theft and Assumption Deterrence Act.
c. can seek restitution in court.
d. All of the above.
An agreement in which a buyer agrees to buy all the goods produced by a manufacturer
is known as:
a. a requirements contract.
b. an output contract.
c. an exclusive dealing contract.
d. an option contract.
To be negotiable, a check must be in writing. Under the UCC, a check:
a. must be written on standard size paper of 6″ ´ 2.5″.
b. must be written on an official bank form.
c. need not be on any official form or even on paper.
d. Both a and b are requirements for a negotiable check.
Zebra Toy Company invests a large sum of money in retail stores located in a foreign
country. Zebra intends to bring its foreign earnings back home to the United States. This
practice is known as:
a. repatriation of profits.
b. inflow profit streaming.
c. expropriation.
d. comity.
Nancy was a partner of a small business. She could see that the business was beginning
to fail and that it was very unlikely it would recover. Not wanting to lose her
investment, she asked that the court require the partnership to dissolve since she did not
have a legal right to withdraw at that time. Does a court have the authority to order a
partnership to dissolve?
a. Yes. A court can dissolve a partnership when it is convinced that the partnership is
unlikely to succeed.
b. Yes. Under the UPA, if a partner can show the court the business suffered a loss the
year before the case was filed, the court can dissolve the partnership.
c. No. A court can only dissolve a partnership at the request of all the partners.
d. No. A court does not have authority to dissolve the partnership.
Maureen, a shareholder of Metra, Inc., is unhappy with how the corporation was being
managed. Maureen wants to be a member of Metra’s board of directors. Which
statement is correct?
a. If Maureen owns at least 1 percent or $2,000 of Metra’s stock, she can require the
company to include her name as a candidate for the board of directors in its proxy
statement.
b. If Maureen has a proper purpose, she can require the company to include her name as
a candidate for the board of directors in its proxy statement.
c. If Maureen can show cause, she can require the company to include her name as a
candidate for the board of directors in its proxy statement.
d. Maureen cannot require that the company put her name in the proxy statement, but
she can prepare and distribute her own proxy.
Jim agreed to show Donna’s car to a potential buyer. Donna was not able to be home
since she had to attend a meeting. After showing the car, Jim left the keys in it and the
car was stolen. Which statement is correct?
a. Since Jim is a gratuitous agent, he will only be liable for the loss of the car if his
conduct constitutes gross negligence.
b. Since Jim is a gratuitous agent, he will be liable for the loss of the car if his conduct
constitutes ordinary negligence.
c. Since Jim is a gratuitous agent, he has no liability for the car.
d. Since Jim is a gratuitous agent, he is strictly liable for the loss of the car.
Acme Co. offers to buy 1000 widgets from Widget World Co. The written offer
provides for 1000 at $10 per widget, to be delivered May 1. The offer has no other
provisions. Widget World sends a written acceptance. However, the acceptance also
states that if any claim arises under this contract, Widget World must be notified within
10 days. Acme does not object to this provision. Both parties are merchants. Which of
the following best describes this situation?
a. No contract exists. The purported acceptance contains additional terms, so it is a
counteroffer, which has not been accepted.
b. No contract exists if the additional terms are construed to be material terms.
c. A contract exists. If the additional terms are construed to be material, they are not part
of the contract. If the additional terms are not material, they are part of the contract.
d. A contract exists, but the additional terms are not part of the contract no matter what.
Factors influencing whether a servant is acting within the scope of employment include
all but which of the following?
a. The act is similar to the one the principal authorized.
b. The act is not seriously criminal.
c. The act took place during hours that the servant is generally employed.
d. All of the answer choices are factors in determining if an act is “within the scope of
employment.
Ron’s Furnace Repair advertised it would inspect any homeowner’s furnace for free.
Janet had Ron’s come to inspect her furnace. The servicewoman dismantled the entire
furnace then refused to put it back together unless Janet paid her $250. The FTC
considers such a practice to be:
a. an unfair practice.
b. a deceptive practice.
c. an act that violates public policy.
d. All the above.
With regard to a corporations delivery of securities documents to investors and to the
SEC:
a. the SEC does not permit issuers of securities to deliver documents to investors
electronically since the issuer cannot assume that all investors have computers and want
to receive data this way.
b. almost all filings with the SEC must be made electronically using the EDGAR
system.
c. companies have the option of communicating with investors by simply posting
information on their Web sites.
d. filing with the SEC can be done electronically only if the standards of consent,
notice, and access are met.
Which of the following may not be used as collateral within the scope of UCC Article
9?
a. Certificates of deposit.
b. Accounts receivable.
c. Goodwill.
d. A 250-acre farm.
Section 16 of the 1934 Act prohibits short-swing trading on the part of any person who
is:
a. an officer of a corporation.
b. a director of a corporation.
c. any shareholder who owns ten percent or more of the corporate stock.
d. All the above.
A force majeure event is:
a. anything that makes the contract unprofitable for either party.
b. a natural disaster that claims human life or leads to the declaration of a state of
emergency.
c. a disruptive, unexpected occurrence for which neither party is to blame that prevents
one or both parties from complying with the contract.
d. any happening that fulfills one of the conditions in the contract, making it
enforceable.
Corporate stock can be divided into categories called ________, which can be further
divided into ________.
a. authorized shares, classes.
b. classes, series.
c. equity, assets.
d. debentures, classes.
Who makes up the Stakeholders
a. Shareholders, community, employees, customers
b. CEO & shareholders
c. Landowners, taxpayers, shareholders
d. None of these answers are true
Generally, filing bankruptcy stops the collection activity of creditors.
Amanda buys a vacuum cleaner to use in her home from retailer Andy. Amanda
promises to pay for it in six monthly installment of $50 each. Andy assigns the contract
to Big Finance Co. who paid value and took without notice of any defense. Amanda has
stopped making payments because the vacuum stopped working and Andy refuses to
honor the express warranty he made to her at the time of the sale. Big Finance Co. sues
Amanda for nonpayment. Generally, any defense that Amanda may have against Andy
is good against Big Finance Co.
A buyer who accepts nonconforming goods may revoke the acceptance under limited
circumstances.
James Packard, a lawyer representing Robert Marino, received a check for $16,000 in
settlement of Roberts case. Instead of turning over the money to Robert or putting it
into a trust fund for him, James forged Roberts indorsement and deposited the money
into his own account without notifying Robert. Discuss the claims the parties have.
Congress passed the federal OSHA establishing job safety standards. Illinois passed its
own statute, which had slightly more lenient standards. Illinois workers are only held to
the state standards unless they are involved in interstate commerce.
An auditor suspects its client is committing illegal acts that will have a material impact
on its financial statements. What is the auditor legally required to do and under what
circumstances would the auditor directly notify the SEC?
Explain the origin and purpose of the World Trade Organization.
A & D, Inc. wrote a negotiable note payable to Vicy, Inc. for the purchase of some
satellite receivers. A & D left the amount of the note blank because it was uncertain as
to amount of the applicable tax. Vicy completed the note for $3,000 more than A & D
actually owed for the receivers it purchased. The note was negotiated to a holder in due
course. A & D will not have to honor the note as this constituted fraud in the execution.
A crime is a violation of statutory law.
While hunting, Roger enters Adeles property without permission and is injured by
falling into a ditch that was obscured by the underbrush. Under the common law, Adele
is liable for Rogers injuries.
Abdulla hired Granite Construction to build an addition onto his home. Granite
Construction dug the foundation but then abandoned the project. Granite Construction
is entitled to receive the full contract price minus the value of the defects.
Although RICO was passes to deal with gangsters it is often used against businessmen
who break the law.
Incorporators of Maizey Co. signed and delivered the corporate charter to the proper
office, but due to inefficiencies in the government office, the filing was delayed. During
the period between the delivery of the charter and the filing, a promoter of Maizey Co.
entered a contract for the delivery of goods using the corporate name. The supplier, if it
finds out the filing had not been completed when the contract was entered, may hold the
promoter personally liable on the contract.
Courts have ruled that negligently retaining a violent employee is a tort.
By creating three independent and equal branches of the federal government, the U.S.
Constitution prevented the federal governments power from being concentrated in one
person.
Most states recognize some form of comparative negligence.
Discuss the requirements of the Family and Medical Leave Act.
When Randy accepted a job with Buren Construction, Randy signed the following
agreement, “Upon termination of my employment with Buren Construction, I agree
never to work for another employer as an electrician.” If Randy resigns from Buren
Construction, this agreement would be upheld under the theory of freedom of contract.
Heather applied for a promotion, but her manager promoted a co-worker because the
manager knew Heather was seven months pregnant. The manager did not want to
promote someone who would probably be taking time off of work for childbirth and
child care. The manager has acted legally and reasonably to protect her companys
interests.