Edward is hired to manage Fred’s business. Which of the following is untrue regarding
Edward’s authority?
a. Edward has authority to sell a used cash register when he buys a new computerized
checkout system for the store.
b. Edward has authority to send bills to customers and to accept payments on behalf of
Fred.
c. Edward can hire employees, but he cannot fire them without Fred’s consent.
d. Edward can enter into contract with wholesalers for merchandise in the store.
The Credit Card Fraud Act contains criminal penalties for violations of its provisions.
a. True
b. False
A letter of credit is a promise by a buyer’s bank to pay the seller, provided certain
conditions are met.
a. True
b. False
A defamatory communication that is spoken or oral is designated as libel.
a. True
b. False
Postdating an instrument will destroy its negotiability.
a. True
b. False
If Gil assigns his lease to Jim, Gil has no further obligations to his landlord.
a. True
b. False
Vernon is an accountant for a major accounting firm. One day at work, he is discussing
his collection of rare coins with one of his co-workers. Vernon tells his co-worker that
he keeps his collection at home and that he has recently purchased several Chinese gold
Panda coins at an exceptional price. The co-worker expresses an interest in buying two
of the coins at a price of $250, and a contract is duly formed. If no place for delivery is
expressed, where are the coins to be delivered?
a. At the office of the major accounting firm where the parties to the contract work.
b. At Vernon’s home.
c. At the co-worker’s home.
d. In the parking lot of the major accounting firm.
Sexual harassment is covered by Title VII of the Civil Rights Act of 1964.
a. True
b. False
When is a buyer deemed to have accepted goods that are delivered pursuant to a
contract?
a. If he fails to reject the goods after he has had a reasonable opportunity to inspect
them.
b. Immediately upon delivery.
c. Only when he pays for them.
d. Only after an express acceptance.
How much force may an individual use to protect her property?
a. As much as is necessary.
b. Deadly force.
c. Reasonable force, but not deadly force.
d. All of these are correct.
The cause of action of infliction of emotional distress protects a person from abusive
language by a supervisor.
a. True
b. False
Most states have statutes protecting merchants from charges of false imprisonment
when detaining suspected shoplifters as long as the merchant detains the suspect:
a. without physical discomfort.
b. with probable cause, in a reasonable manner, and for not more than a reasonable
time.
c. for no more than 30 minutes.
d. in a way that will not cause embarrassment or physical injury to the suspect.
The use of the qualifying word(s) __________ is/are understood to place purchasers on
notice that they may not rely on the credit of the person using this language.
a. “Accepted”
b. “Certified”
c. “Without recourse”
d. “Insufficient funds”
On April 6, Ellen sends a check out to a magazine publisher and then discovers she has
already paid for the subscription. She calls her bank and orders that the bank not make
payment. That order will be good until:
a. April
b. October
c. April 13 if confirmed in writing.
d. October 6 if confirmed in writing.
Andria, an attorney, has a personal injury case which is set for trial next week. She
needs a good doctor to testify on behalf of her client, so she contacts Dr. Wood who
agrees to testify on behalf of Andrias client at the trial. In return for Dr. Wood’s
testimony, Andria agrees to pay Dr. Wood $10,000 if they win the case, and $5,000 if
they lose. Dr. Wood agrees. The agreement between Andria and Dr. Wood is
unenforceable.
a. True
b. False
A corporation that buys the assets of another corporation does not assume the other’s
liability unless:
a. the purchaser expressly or impliedly agrees to assume the seller’s liabilities.
b. the transaction amounts to a consolidation or merger of the two corporations.
c. the sale is for the fraudulent purpose of avoiding the liabilities of the seller.
d. All of these.
The term “eminent domain” refers to a governmental taking of private property for
public use.
a. True
b. False
The FTC remedy of “affirmative disclosure” would require:
a. a new ad that admits the first ad was false.
b. providing certain information in a company’s ad.
c. that the advertiser desist from deception in all products it markets.
d. All of these would be required.
Most statutes and the amended ULLCA make an LLC member’s dissociation a
mandatory cause of dissolution.
a. True
b. False
Administrative agencies operate only at the federal level.
a. True
b. False
Shannon has just become a partner in A & R Accounting Partnership. Her capital
contribution is $10,000, which she paid from her savings. Shannon:
a. has no liability for partnership debts that existed at the time of her admission as a
partner.
b. is liable only to the extent of her capital contribution for partnership debts that occur
after her admission as a partner.
c. has unlimited personal liability for all partnership debts regardless of whether they
were incurred before or after she became a partner.
d. has unlimited personal liability for all partnership obligations that occur after she
became a partner; she has liability to the extent of her capital contribution for
obligations that existed at the time she became a partner.
Past actions unbargained for by the parties in an agreement can become valid
consideration for a contract.
a. True
b. False
Unless otherwise provided by statute, an assignment may be made orally.
a. True
b. False
Alice says to Brian, “If I decide to buy a word processor next year, I will buy it from
you.” This is an example of:
a. an illusory promise.
b. past consideration.
c. the pre-existing duty rule.
d. good consideration.
Margaret told Bill she would give him her concert tickets. Later she changed her mind
and decided she wanted to use the tickets after all. Is Margaret required to give Bill the
tickets?
a. No, because there was no intent to make a present transfer.
b. No, because there was no delivery.
c. No, because there was no acceptance.
d. All of these are correct.
Which of the following is a common criticism of ethical relativism?
a. It promotes open-mindedness and tolerance.
b. It assumes that a person’s actions are always correct for that person, but if that is true,
then all behavior is, by definition, moral.
c. It is rigid and excessively formal.
d. It is too judgmental.
A plumber hired to redo the plumbing in a building is an independent contractor and an
agent of the owner of the building.
a. True
b. False
The __________ is composed of a distinguished group of lawyers, judges, and law
teachers who assumed the task of preparing “an orderly restatement of the general
common law of the United States.”
a. New York City Bar
b. American Law Institute
c. National Conference of Commissioners on Uniform State Laws
d. National Reporter System
An employment contract that is in any way capable of being performed within one year
from the date of the agreement falls within the requirements of the statute of frauds.
a. True
b. False
A distribution may be in the form of:
a. declaration or payment of a dividend.
b. a purchase, redemption, or other acquisition of shares.
c. a distribution of indebtedness.
d. All of these.
Which of the following is a contract with a condition subsequent?
a. Rhonda enters into a contract to buy a new car conditional upon her getting a loan
from her bank.
b. Roger bought a VCR but he may return the VCR within ten days and get all of his
money back.
c. Both (a) and (b) are examples of a condition subsequent.
d. Neither (a) nor (b) is an example of a condition subsequent.
In order to induce a car dealer to sell her son a car on credit, Mary promises that she
will pay for the son’s car if the son defaults on his monthly payments to the dealership.
Mary’s promise must be in writing or have a sufficient electronic record.
a. True
b. False
The Uniform Electronic Transactions Act, which has been adopted by all of the states
and the District of Columbia, gives full effect to electronic contracts and develops a
uniform legal framework for their implementation.
a. True
b. False
Title insurance protects an owner of real property from losses due to defects in title and
undisclosed liens or encumbrances.
a. True
b. False
In most states, an officer can be removed for no reason if the board decides to do so.
a. True
b. False