Regarding distribution of assets upon winding up a partnership, what is paid first?
a. debts to outside creditors
b. return of capital
c. debts of partners who are creditors
d. profits
A taker of an instrument who is a holder in due course at the time of the transfer but
who thereafter learns of a defense:
a. becomes a holder through a holder in due course.
b. becomes an ordinary holder.
c. remains a holder in due course.
d. becomes an assignee.
Which of the following does not describe the European Union (EU)?
a. It was formerly known as the European Economic Community.
b. It had three members sign on as recently as 1995.
c. It eliminated internal barriers to the free movement of goods, persons, services, and
capital between member countries.
d. It is administered solely by the heads of state of the member countries.
A rule requiring that a franchisor provide a disclosure statement to all prospective
franchisees was adopted by the:
a. UCC.
b. Franchise Tax Board.
c. Securities and Exchange Commission.
d. Federal Trade Commission.
The concept of perfection concerns:
a. the creation of the security interest.
b. protection against the claims of others to the collateral.
c. the rights of the creditor against the debtor.
d. converting unsecured creditors into secured creditors.
The Securities Exchange Act of 1934 deals with the __________ distribution of
securities.
a. primary
b. secondary
c. aftermarket
d. direct
The delegator of construction duties remains liable if:
a. the delegatee performs the work properly, but the obligee did not approve of the
delegation.
b. the delegatee performs the work improperly.
c. the obligee objects in writing to the delegatee’s performance of the work, even if the
delegatee performs the work properly.
d. the value of the contract is $500 or more and the delegatee performs the work
properly.
An agent who commits a tort and a crime is:
a. generally liable for the crime but not the tort.
b. generally liable for the crime but not the tort, assuming that the tort was committed to
advance the interests of the principal.
c. liable for both the tort and the crime.
d. not liable for the tort or the crime, assuming both were committed to advance the
interests of the principal.
Under the Clayton Act, when large-scale enterprises plan to merge, they must in
advance:
a. notify the New York Stock Exchange.
b. notify the President of the United States.
c. complete the necessary financing arrangements.
d. notify the Antitrust Division of the Department of Justice.
A term of a lease required that the landlord provide exterminating services monthly to
control rats and other pests. The landlord failed to do this despite numerous requests
placed by the tenant, and the premises became overrun by rats. This may be considered:
a. a breach of the covenant of quiet enjoyment.
b. a physical eviction.
c. active waste.
d. a constructive eviction.
The statute of limitations in a tort action for malpractice runs from:
a. the date when the harm occurs.
b. the date when the harm is discovered.
c. the date when the plaintiff determines the total amount of damages caused by the
harm.
d. either the date when the harm occurs or when it is discovered, depending on the type
of damages sustained.
The Martin family owned a home that was badly in need of repair. Mrs. Martin worked
outside the home and Mr. Martin took care of the household responsibilities and cared
for the two young Martin children. One day, Mrs. Martin left for work and a home
repair crew drove up and began to put aluminum siding on the Martin house. Mr.
Martin telephoned his wife, told her, and inquired about whether she had hired the
workers. When the Martins realized that they never had ordered this work done, Mr.
Martin sneaked out the back with the children. He later met his wife at work and they
returned home for dinner. By that time, the entire front of the house had been
aluminum-sided. The foreman asked, “Mr. and Mrs. Wolf, how do you like the job?”
The Martins replied that they loved the job, but the Wolfs lived next door. When it
became clear that the repair crew had made an error, the foreman insisted that the
Martins had to pay.
SEC Rule 10b-5:
a. is the principal antifraud rule relating to the secondary distribution of securities.
b. provides that a civil action for damages may be brought by any private investor who
purchased or sold a security and was injured because of false, misleading, or
undisclosed information.
c. applies to all securities, whether registered or not, as long as use is made of the mail,
interstate commerce, or a national stock exchange.
d. all of the above.
In a Chapter 11 rehabilitation plan, the debtor:
a. keeps all of the assets (both exempt and nonexempt).
b. remains in business.
c. makes a settlement that is acceptable to the majority of the creditors.
d. all of the above.
An illegal sale:
a. can be enforced if the illegality is unknown to the buyer.
b. is unenforceable.
c. qualifies as a bailment.
d. qualifies as a conditional sale.
An application for insurance:
a. may be oral.
b. generally is attached to the policy and becomes a part of the insurance contract.
c. must be prepared by an attorney.
d. has no binding effect on the applicant.
The person to whom the order in a draft is addressed is known as the:
a. payee.
b. drawee.
c. drawer.
d. maker.
An agreement to slander a third person would not be enforceable because slander is
a(n):
a. crime.
b. civil wrong.
c. infringement of privacy.
d. assault.
A sales agreement that does not satisfy the statute of frauds is:
a. a quasi contract.
b. criminal.
c. unenforceable.
d. unlawful.
Which of the following statements is correct concerning restrictive covenants?
a. Restrictive covenants that have not been enforced or observed are nevertheless valid
and enforceable.
b. Restrictive covenants take precedence over conflicting statutes.
c. Restrictive covenants generally impose some limitations on the landowner’s use of
the property.
d. If any uncertainty exists in the interpretation of a restrictive covenant, the covenant
will be interpreted liberally in favor of the limited use of the land.
Louise Feldspar obtained the exclusive right to sell TastyCrunchy Chicken in a
specified area. Under the agreement, Feldspar was permitted to use the TastyCrunchy
name and logo for her restaurant and she agreed to comply with TastyCrunchy’s
restaurant requirements. She purchased her equipment, as well as the chicken she
served, from the firm. She agreed to devote a certain percentage of her revenues to
promoting the TastyCrunchy operation in local media. The operation was successful
from the start, and Feldspar has had no problem meeting the sales quotas imposed by
TastyCrunchy. The past year TastyCrunchy informed Feldspar that it intended to open a
new restaurant on an interstate highway that had just been completed in her exclusive
area of trade. Because her operation would be competition for the new store, Feldspar’s
right to sell TastyCrunchy products and use the name TastyCrunchy was revoked. What
can Louise do?
“Service of process” refers to:
a. a demand letter sent by the plaintiff to the defendant.
b. a reply sent to the plaintiff by the defendant.
c. giving the defendant proper notice that a legal action is pending.
d. a record of the court’s preliminary hearing.
The scope of an agent’s authority may be determined from the:
a. express words of the principal.
b. words or deeds of the principal.
c. customs of the trade or business.
d. all of the above.
The writing required by the statute of frauds in the case of a contract for the sale of land
must:
a. be addressed to the other party to the contract.
b. be made with the intent to create a writing to satisfy the statute of frauds.
c. be signed at the end of the writing.
d. describe the land to be sold.
The United States constitution places the most significant limitations on administrative
investigation in the area of:
a. search and seizure of the person.
b. aerial inspection.
c. search and seizure of papers and records.
d. guarantee against self-incrimination.
To analyze a copyright infringement claim in the context of computer programs, courts
will primarily examine:
a. the total number of program steps that are substantially similar.
b. the number of significant program steps that are substantially similar.
c. whether the programs appear substantially similar in ordinary language.
d. whether the programs appear substantially similar in machine language.
Laws can be classified in terms of:
a. Roman and English law.
b. substantive and procedural law.
c. law and equity.
d. all of the above.
Consideration is:
a. the concern shown by the other contracting party.
b. what is demanded by the promisor as the price for the promise.
c. a stated number of dollars.
d. the concern of both contracting parties for the protection of the environment.
Our rights flow from:
a. the Constitution.
b. federal statutes.
c. city ordinances.
d. all of the above.
What is not a correct statement concerning consumer protection legislation?
a. It prohibits the consumer from suing in his or her own right and gives the right to sue
solely to an agency or to the attorney general.
b. It recognizes that the theoretical right of the consumer to sue may be of little practical
value.
c. It provides special remedies.
d. It provides certain agencies to police statutes passed to aid consumers.
Members of administrative agencies are ordinarily
a. pre-selected.
b. elected.
c. assigned.
d. appointed.
Computer programs are subject to protection in the U.S. under:
a. copyright laws.
b. patent laws.
c. trade secret laws.
d. all of the above.
A trust is invalid if a beneficiary lacks capacity.
Economic growth tends to be fastest among developing countries where payments to
key administrators can increase transaction efficiency.
General contract law determines whether a limitation clause is a part of the contract
between the warehouser and the customer.
A debtor may redeem collateral at any time prior to the time that the secured party has
disposed of the collateral or entered into a binding contract for resale by tendering the
entire obligation that is owed plus any legal costs and expenses incurred by the secured
party.
Oswaldo Enterprises began to do business in a small East African nation. The
representatives of Oswaldo bid on government contracts. Although Oswaldo was by far
the lowest bidder and offered a superior product, the company was not awarded a
contract. Oswaldo officials learned after inquiring that the company would have to give
substantial sums of money to high-level government officials in order to receive a
contract. Oswaldo officials are considering this as a necessary cost of doing business,
but they are concerned about violating U.S. law. Discuss the implications of this under
the Foreign Corrupt Practices Act.
If a landlord agrees to a subletting by a tenant, the tenant is released from all further
liability on the original lease.
Antilapse statutes commonly provide that the gift to the deceased beneficiary shall not
lapse but that the children or heirs of that beneficiary may take the legacy in the place
of the deceased beneficiary.
An offer to buy or sell goods may be accepted in any manner that is reasonable under
the circumstances.
Sharing of gross returns, as compared to the sharing of profits, is strong evidence of a
partnership.
The standard of care for bailments is reasonable care under the circumstances.
In addition to issues of social responsibility, business values and ethics play an
important role in the success or failure of a business.
A person who has knowledge of a limitation on an agent’s authority cannot disregard
that limitation.
An offer is effective only if it is communicated by the offeror in person.
When the principal ratifies the act of the unauthorized person, such ratification does not
release the unauthorized person from liability, since he or she acted without authority.
Treaties made by the United States are not deemed part of the law.
Unfortunately, there is no evidence that commitment to ethical values is linked with
financial performance of business organizations.
Bart was a self-made millionaire who had earned his fortune by dedicated hard work.
Bart had worked so hard that he never had developed much of a social life. Bart met
Linda and fell in love with her. When Bart proposed to Linda, she told him that she
needed time before making such an important decision. Pressing her for a favorable
response, Bart telephoned Linda and promised her $100,000 if she would marry him.
Linda then accepted the proposal.
Bart contracted with Quick Builders for the construction of a home Bart intended to
move into with Linda after their marriage. Construction by Quick was not very quick
because Quick was not paying subcontractors the sums that they were owed. They, in
turn, were not completing their work. To expedite matters, Bart called the
subcontractors and assured them that Bart would pay any sums that Quick Builders did
not pay if they would complete the construction.
Bart and Linda married and the subcontractors completed the work. Quick Builders did
not pay the subcontractors in full. Bart failed to pay Linda the $100,000. Both Linda
and the subcontractors sued Bart. Discuss the probable outcome of the lawsuits.
A buyer is not barred from revoking acceptance of goods because the buyer has delayed
until attempts of the seller to correct the defects proved unsuccessful.
If a merchant receives and cashes a check for partial payment of a debt and the check
bears the notation that the amount is in full payment of a disputed sum, the total debt is
released.
When a corporation acts in excess of or beyond the scope of its powers, the
corporation’s act is described as “ultra vires.”