Which of the following is NOT a duty of a collecting bank in the collection process?
a. Duty of care.
b. Duty to act in a timely manner.
c. Duty to honor a valid stop payment order.
d. Duty to honor a restrictive endorsement.
After an agency terminates, the agent is free to disclose to third persons any information
acquired during the agency relationship.
a. True
b. False
While she was 17, Trina purchases a laptop computer. Discuss the implications of her
actions as to whether she can disaffirm the contract of purchase if she: (a) tries to sell
the computer one year later; (b) continues to use the computer for eighteen months; or
(c) has not yet made all of the payments when she turns 18, but continues to make
monthly payments.
A court may dissolve a corporation in a proceeding brought by a shareholder when:
a. the corporate assets are being misapplied.
b. the directors are deadlocked and the shareholders are unable to break the deadlock.
c. the shareholders are deadlocked and have failed to elect directors for at least two
consecutive annual meetings.
d. All of these.
Under the Revised Act and an increasing number of other statutes, by a majority vote,
shareholders may remove the entire board of directors without cause.
a. True
b. False
Accountants liability under the 1933 and 1934 Securities Acts is less extensive and has
more limitations than liability under the common law.
a. True
b. False
Delivery of a deed may be made by giving it to a third party to hold until the grantee
performs certain conditions.
a. True
b. False
Three of the airline companies agree that they will not go any lower than $100 each
way for coast-to-coast tickets. This is:
a. vertical price maintenance.
b. a horizontal group boycott.
c. vertical market allocation.
d. horizontal price fixing.
Rule 10b-5 applies to any:
a. buyer of a registered security.
b. seller of a registered security.
c. person who buys or sells a registered security.
d. person who buys or sells any security.
To establish trespass to land, a plaintiff:
a. must show an invasion that interferes with the plaintiff’s right of exclusive possession
of property that is at least an indirect result of the defendant’s actions.
b. need not show the plaintiff’s right to exclusive possession, but must show that the
defendant’s actions were unreasonable.
c. must show an invasion that interferes with the plaintiff’s right of exclusive possession
of property and that it is a direct result of the defendant’s actions.
d. need not show the plaintiff’s right to exclusive possession.
In order for Beth to receive a permit for her plastics factory in a nonattainment area, she
must show that the factory’s emission rates will be within the average range for the
industry.
a. True
b. False
The law of torts is primarily made up of statutory law.
a. True
b. False
Assuming no special provision in the articles of incorporation, special shareholder
meetings may be called by:
a. the president of the company.
b. any individual director.
c. any individual shareholder.
d. holders of at least 10% of shares.
The parties, by agreement, may divide the risk and shift the allocation of risk.
a. True
b. False
Bill Bonney, the sole stockholder of Kidd Corporation, wrongfully used the corporation
to avoid a personal liability. A court order that disregards the corporate entity and holds
Bonney personally liable is called:
a. limited liability.
b. ultra vires.
c. diversity of interest.
d. piercing the corporate veil.
A buyer in Atlanta enters into a sales contract with a seller in Chicago. If the contract
does not mention the place for delivery of the goods, the place of delivery will be:
a. at the seller’s business or residence in Chicago.
b. as stated in all destination contracts.
c. at the buyer’s business or residence in Atlanta.
d. irrelevant since the contract is void.
Michelle’s Boutique places an ad in the Sunday paper for beautiful, top-of-the-line
designer suits for $3.00. Alice sees the ad in the paper and goes to the store to stock up
on business suits for her new job. Michelle apologizes for the misprint. Alice has just
finished a class in contract law and insists that the store sell her five suits for $15. Alice
threatens to sue Michelle for breach of contract.
a. This is a valid contract based on commercial reasonableness.
b. The ad in the newspaper is an offer to sell, Alice accepted the offer, and there is an
enforceable contract.
c. The ad in the newspaper is a solicitation seeking offers, but is not an offer to sell;
therefore, Alice will not be able to successfully sue for breach of contract.
d. None of these.
The legal concept which deals with the location where a lawsuit should be brought is:
a. venue.
b. in personam jurisdiction.
c. subject matter jurisdiction.
d. stare decisis.
A breach of contract always gives rise to a cause of action for damages by the injured
party.
a. True
b. False
In the Keser v. Chagnon case, the Colorado court found that disaffirmance two months
after reaching majority was within a reasonable time and that, since Chagnon had
obtained the contract by false representation of his age, he could not recover his full
consideration upon disaffirmance.
a. True
b. False
If private entities engage in public functions, constitutional guarantees such as free
speech and due process may apply to their actions under the __________ doctrine.
a. state action
b. federal preemption
c. interstate commerce
d. supremacy
The provisions of Section 17(a) of the 1933 Act:
a. primarily allow for a private right of action for persons injured by the act.
b. make it unlawful to engage in any transaction, practice, or course of business that
operates as deceit upon the issuer.
c. make it unlawful in the offer or sale of any securities to obtain property by any
statement that omits a material fact without which the information is misleading.
d. None of these.
The maker is the primary party on every note.
a. True
b. False
Which of the following is correct with regard to “par value”?
a. It indicates the worth of the stock at issue.
b. It is the minimum price at which the corporation may sell the stock at issuance.
c. It represents the maximum price at which the stock may be sold at issuance.
d. It represents the amount for which the stock must be traded.
The court in the Weichert Co. Realtors v. Ryan case held that the performing party was
entitled to recoup the reasonable value of the services rendered under:
a. an express contract.
b. quantum meruit.
c. promissory estoppel.
d. Article 2 of the UCC.
John and Megan are at a crowded theater. In the press of people exiting the theater, John
accidentally steps on Megan’s big toe and breaks it. Megan can sue John for the tort of
battery.
a. True
b. False
In order to be legally binding, a contract must be in writing.
a. True
b. False
The Code’s classifications of collateral according to nature are: (a) goods; (b) tangibles;
and (c) dispensable paper.
a. True
b. False
The ethical decision making approach that views ethical decisions from the actor’s
perspective and then judges whether the decisions were ethical is:
a. ethical fundamentalism.
b. ethical relativism.
c. situational ethics.
d. act utilitarianism.
Most states have adopted the:
a. title theory, which gives the mortgagor the right of ownership and possession.
b. lien theory, under which the mortgagor retains title and is entitled to possession to the
exclusion of the mortgagee, even if the mortgagor defaults.
c. title theory, which brings no right of redemption.
d. position that the person who owns property subject to a mortgage will not be liable to
the creditor for “waste.
A __________ is a specialized form of promise to pay money given by a maker in
which the bank is the maker.
a. note
b. certificate of deposit
c. trade acceptance
d. cashier’s check
Contracts induced by threats of __________ are voidable, regardless of whether the
coerced party has committed an unlawful act.
a. civil prosecution
b. criminal prosecution
c. tortious conduct
d. a lawsuit to recover a debt
If Russell’s mortgage debt is greater than the amount for which his farm is sold in a
foreclosure action, he is excused from payment of the remainder.
a. True
b. False