Individual rights guaranteed in the United States Constitution:
a. have no accompanying duties.
b. apply only to a small number of individuals.
c. are subject to state legislative laws.
d. generally have accompanying duties.
A stockholder-approved amendment to the certificate of incorporation may indemnify
directors who:
a. acted in bad faith.
b. acted negligently.
c. breached their duty of loyalty.
d. gained an improper personal benefit.
The tort of invasion of privacy includes:
a. intrusion into private affairs.
b. public disclosure of private facts.
c. misappropriation of another’s name.
d. all of the above.
Statutory protections for privacy in cyberspace:
a. include state laws that are difficult to enforce against web sponsors with no presence
in the state.
b. often address specific issues such as financial information rather than general
protections .
c. may not protect an individual from federal agency “routine use”.
d. all of the above.
A life insurance contract is a third-party:
a. beneficiary contract.
b. assignment contract.
c. payment contract.
d. performance contract.
The transferring of an instrument in such a way as to make the transferee the holder of
the paper is termed:
a. an assignment.
b. a conversion.
c. a sale.
d. a negotiation.
When a buyer has possession of goods after rightfully rejecting them, the buyer is
treated:
a. the same as a seller in the possession of goods after default by a buyer.
b. as being strictly liable for the safety of the goods.
c. the same as if an entrustment had been created.
d. as an insurer of the goods until the seller retakes possession.
A customer went into a store and saw a beautiful leather jacket bearing a price tag of
$29. The customer handed the cashier a $50 bill and said, “I accept. We have a deal.”
The cashier then noticed the price tag and told the customer an error had been made and
that the price was $229. In this case:
a. the customer validly accepted the store’s offer.
b. the price tag was a firm offer.
c. no contract was formed because the customer’s offer was refused.
d. the customer is the offeree.
An unconditional written promise made by one person to another, signed by the maker,
that promises to pay on demand a specific sum of money to the bearer is a:
a. nonnegotiable draft.
b. bill of exchange.
c. promissory note.
d. certificate of deposit.
A system in which a central government is given power to administer to national
concerns and individual states administer to local concerns is called:
a. bicameral.
b. constitutional.
c. federal.
d. tripartite.
Concerning administrative investigations:
a. agencies are severely limited by the constitutional protection against unreasonable
searches and seizures.
b. a search warrant is always required to search premises.
c. papers and records generally may be subpoenaed by an agency.
d. a person does not have constitutional protection against unreasonable searches and
seizures.
The maximum amount of time that a minor has to disaffirm a contract is:
a. one year from the date of the agreement.
b. 30 days from learning of his or her right to disaffirm.
c. the age of majority.
d. a reasonable period of time after reaching the age of majority.
A contract based on a mutual mistake in judgment is:
a. voidable by the adversely affected party.
b. not voidable by the adversely affected party.
c. void ab initio.
d. none of the above.
The substitution of an old contract for a new one that replaces an obligation or a party
for another is a:
a. novation.
b. warranty.
c. assignment.
d. delegation of duties.
Which of the following will not result in dissolution of the partnership by court decree?
a. A partner becomes incapable of performing the terms of the partnership agreement
b. A partner persistently or willfully acts in such a way that it is not reasonably
practicable to carry on the partnership business
c. The withdrawal of a partner.
d. All of the above.
The majority of fraud complaints received by the FBI relate to:
a. sales from large online only retailers.
b. sales from traditional retailers who also operate on the Internet.
c. private Internet sales (one individual to another).
d. Internet auctions.
Sheriff Jane desires to search your home. What law requires that the sheriff obtain a
search warrant?
a. the Fourth Amendment of the United States Constitution
b. the Equal Protection Clause
c. state statute
d. local uniform police ordinances
Upon a default by a buyer, the secured seller may resell the collateral:
a. not less than three (3) months after the buyer’s default.
b. not less than six (6) months after the buyer’s default.
c. only at a public sale.
d. at either a public or a private sale.
Voluntary improvements in the fairness and ethics of business behavior are:
a. less effective than those brought about by government regulation.
b. less costly and intrusive than those brought about by government regulation.
c. virtually nonexistent in corporate America.
d. more common in third-world countries than in the United States.
The common law rights and duties of a warehouser, in the absence of modifying
statutes, are for the most part those of a bailee in:
a. a bailment for the sole benefit of the bailee.
b. an ordinary mutual-benefit bailment.
c. a bailment for the sole benefit of the bailor.
d. none of the above.
Which of the following events excuses a promisor from performing his or her
contractual obligations?
a. a riot
b. a shortage of materials necessary for production of goods and/or provision of
services called for under the contract
c. an unanticipated increase in the cost of performance
d. destruction of the subject matter through no fault of either party
An obligor may delegate his or her duties to perform under a contract when the:
a. performance of the duty is standardized and nonpersonal.
b. obligor is unable to perform his or her duties.
c. contract is silent as to the right of assignment.
d. obligor is an expert in his or her specialized duties under the contract.
In a guaranty contract, the obligor is called a:
a. surety.
b. principal.
c. guarantor.
d. creditor.
The Uniform Durable Power of Attorney Act (UDPAA) changes the general rule that
insanity of a principal terminates an agent’s authority to act for the principal.
Vertical mergers:
a. occur between firms that have a competitor relationship.
b. occur between firms that have buyer and seller relationships.
c. are not covered by the Clayton Act.
d. are always protected by the federal government.
A right can exist:
a. by itself.
b. only if created by a court.
c. only if there is a corresponding duty.
d. only under local law.
The validity of a contract is not affected by:
a. the effect of the contract on the community.
b. unconscionability.
c. the absence of good faith.
d. the fact that the contract turned out to be a bad bargain for one of the parties.
John’s son was not his agent but contracted to purchase a computer in the name of John.
When John learned of this, John sternly rebuked his son but continued to use the
computer for several weeks. After losing interest in the computer, John offered to return
it, saying that the purchase was unauthorized. John:
a. is not liable on the purchase.
b. expressly ratified the purchase.
c. is liable because all children have the apparent authority to contract for their parents.
d. ratified the purchase by John’s conduct.
Characteristics of the fee simple estate include all of the following except:
a. it is alienable during life.
b. it is not subject to rights of the owner’s surviving spouse.
c. it is alienable by will.
d. it can be attached or used to satisfy the owner’s debts before or after the owner’s
death.
When a written contract does not correctly state the agreement already made but the
parties either party make seek a(n):
a. rescission
b. injunction
c. reformation of the contract
d. action for specific performance
A disclaimer or exclusion of the warranty of merchantability will be invalid if:
a. the goods cost $500 or more.
b. the defects in the goods are obvious to all buyers.
c. it is made at the time of the sale.
d. it is not conspicuously set forth in a writing.
The policing of fraudulent advertising is entrusted to which of the following
administrative agencies?
a. IRS
b. FTC
c. UCCC
d. FDA
The relationship between a corporation and its agents is governed by the:
a. statute under which the corporation was formed.
b. corporate charter.
c. corporate bylaws.
d. same rules as are applicable when the principal is a natural person.
A common carrier transporting goods under a COD shipment may:
a. make delivery without first obtaining payment.
b. not make delivery without first receiving payment.
c. accept a check as payment and have no liability.
d. not avoid liability without a signed release.
In a mutual rescission, both parties, acting in good faith, renew their commitment to
perform all obligations set forth in their original agreement.
Sarbanes-Oxley (SOX) allows whistleblowers who are retaliated against an immediate
lawsuit in federal district court.
An insurer may cancel any contract of insurance by the insurer’s unilateral act as long as
the insurer gives advance written notice.
In a sale or return transaction, until the actual return of the goods is made, title and risk
of loss remain with the buyer.
Under the Sherman Act competitors are permitted to agree not to deal with certain
buyers.
The business judgment rule is applied by the courts as a presumption that must be
overcome by the person challenging a director’s actions.
Governments may regulate prices but not credit terms.
If a prospective employee offers a driver’s license and a Social Security card to verify
employment eligibility in the United States the employer is prohibited from requiring
other documentation.
A crime consists of three elements: the mental state, the intent, and the act.
Someone who finds and resells stolen property passes on a good title to a good faith
purchaser.
When parties contract expressly for a particular subject matter, the contract is
discharged if the subject matter is destroyed through no fault of either party.
A holder of a single share of stock who objects to a merger has the power to stop the
merger.
An administrative agency whose erroneous decision causes a regulated person or
enterprise substantial loss is liable for such loss regardless of whether the agency acted
in good faith.
Whenever a sale of goods is made, certain warranties are implied unless they are
expressly excluded.
On January 15, 2012, Anders brought an action against Barnes for breach of a contract
for the sale of electronic parts. The breach occurred on January 10, 2008, and Anders
discovered the breach on January 20, The state statute of limitations for contract actions
is five years. Barnes raised the UCC statute of limitations as a defense to the action. Is
this defense valid?
Corporate securities evidenced by a certificate are negotiable.