Flynn, an accountant, helps Grange Supply Company prepare and file a false federal
corporate income tax return. Under the Internal Revenue Code, this is
a. a felony punishable by a fine and imprisonment.
b. a felony punishable only by a fine.
c. a misdemeanor punishable only by a fine.
d. a civil violation subject to a liability suit but not a crime.
Grover Nut Company files a suit against Hud, its former accountant, alleging actual
fraud. Grover must prove
a. intent to deceive.
b. misrepresentation of a non-material fact.
c. the lack of an injury.
d. unjustifiable reliance.
Fay pays $800 for a new iPad to Global Goods, Inc. Global holds the iPad until Fay
picks it up. Global is
a. a bailee.
b. a consignee.
c. a lessee.
d. a seller.
Ocean Vessels, Inc., and Pacific Harbor Company enter into a contract for a sale of a
boat. Ocean is a merchant who deals in goods of the kind sold. The goods are defective.
Under the UCC, the implied warranty of merchantability is breached
a. only if Ocean did not know about and could not have discovered the defect.
b. only if Ocean did not know about the defect.
c. only if Ocean knew about or could have discovered the defect.
d. regardless of what Ocean knew or could have discovered.
Bean Vendors, Inc., and Java Bistros Corporation dispute a term in their contract.
The least expensive method of resolving the dispute between Bean and Java may be
a. arbitration because the case will be heard by a mini-jury.
b. litigation because each party will pay its own legal fees.
c. mediation because the dispute will be resolved by a non-expert.
d. negotiation because no third parties are needed.
Sigrud buys spiked mountain-climbing shoes from Rockridge Gear store. The spikes
come out of the shoes when Sigrud is on the side of a mountain, causing her to be
injured in a fall. Rockridge breached
a. an express warranty.
b. an implied warranty of fitness for a particular purpose.
c. an implied warranty of merchantability.
d. a warranty of title.
Under federal law, the calorie content of the food on a menu must be posted by Organic
Mix, LLC, if Organic Mix is
a. a restaurant chain with twenty or more locations.
b. a food distributor with twenty or more customers.
c. a food processor with twenty or more products.
d. a food producer with twenty or more acres.
Ruby is young and healthy when she gives Pearl a prize-winning horse. The gift meets
all the requirements to be effective. This is a gift
a. inter vivos.
b. causa mortis.
c. by accession.
d. by confusion.
Flynn is a drug addict who has completed a supervised drug-rehabilitation program.
Gert used drugs casually in the past. Heath reports to work while under the influence of
alcohol. Considered to have a disability under the Americans with Disabilities Act of
1990 is
a. Flynn.
b. Gert.
c. Heath.
d. all of the choices.
Jenilee promises to pay Kyle $500 because “he does not have as much money as other
people.” Jenilee’s promise is
a. enforceable because society wants people to keep their promises.
b. enforceable because the redistribution of wealth is a valid social goal.
c. not enforceable because Jenilee could have paid Kyle more.
d. not enforceable because Kyle has not given consideration in return.
City Bank’s financing statement in collateral owned by Delta Waters Corporation will
expire in less than a year. Filed timely, a continuation statement could extend the
effectiveness of the financing statement for
a. one year.
b. two years.
c. five years.
d. ten years.
Bo and Clancy decide to do business as Marketing & Promotion Services. To be a
partnership, this association can result from an agreement that is
a. express, but not from an agreement that is implied.
b. implied, but not from an agreement that is express.
c. oral, written, or implied by conduct.
d. written, but not from an agreement that is oral or implied.
Velma borrows $110,000 from Watershed Bank to buy a home. If she fails to make
payments on the mortgage, the bank has the right to repossess and auction off the
property securing the loan. This is
a. a short sale.
b. forbearance.
c. foreclosure.
d. the equitable right of redemption.
Benny dies without a will, with no surviving spouse or child. Benny’s survivors include
his granddaughter Callie, his nephew Duncan, and his cousin Earl. In most states, his
estate would pass to
a. Callie.
b. Duncan.
c. Earl.
d. the state.
The Arkansas state legislature enacts a statute that prohibits the advertising of video
games “because the games might be harmful to minors.” Despite this new statute, the
president of Games Marketing, Inc. (GMI), orders GMI marketers to place ads in
various media. When a GMI ad appears on HDTV, a local television station, GMI and
HDTV are charged with violating the statute. What is the defendants’ best defense
against a conviction?
In negotiations with Coastal Distribution Company, Briggs Trucking, Inc., insists that
their contract be drafted according to certain plain language laws. These laws concern
the phrasing of
a. contracts.
b. ads.
c. product instruction manuals.
d. documents of delivery.
RiteMade Machinery, Inc., designs, makes, and sells a drill press. Steel Equipment
Company copies the design without RiteMade’s permission. Steel’s conduct is
actionable provided that
a. consumers are confused.
b. Steel’s conduct is intentional.
c. Steel’s conduct reduces the value of RiteMade’s design.
d. RiteMade’s design is patented.
North American Properties, Inc., and its officers, directors, and shareholders, buy and
sell securities. Section 16(b) of the Securities Exchange Act of 1934 covers
a. all purchases and sales of securities.
b. only purchases and sales of securities involving misappropriation.
c. only purchases and sales of securities involving short-swing profits.
d. only purchases and sales of securities involving tippers and tippees.
Squeaky Clean Corporation wants to make an offering of securities to the public. This
offering is not exempt from registration under the Securities Act of 1933. Before
Squeaky sells its securities, it must provide investors with
a. a forward-looking financial forecast.
b. an investment contract.
c. a prospectus.
d. samples of its products.
Valley Furniture Store sells household consumer goods on credit for which Valley files
a financing statement to perfect a security interest in the goods. With the filing of
subsequent continuation statements, the effectiveness of the statement can be continued
a. indefinitely.
b. for no longer than five years.
c. for no more than six months.
d. up to five years and six months.
Food Packagers Union represents the workers of Garden Variety, Inc. The company
does not require its workers to join the union as a prerequisite to obtaining employment.
The union would like the employer to require the workers to join after a specified
amount of time on the job. This would violate
a. federal labor law.
b. federal full employment law.
c. federal employment discrimination law.
d. no federal law.
Klondike and Leola own 10,000 shares of stock in My-T Gro Corporation. On the death
of either owner, that owner’s interest in the stock passes to the surviving owner. This is
a. a joint tenancy.
b. community property.
c. a tenancy in common.
d. ownership in fee simple.
Jeff’s grandmother is the payee of a promissory note for $7,500. Jeff’s grandmother
gives Jeff the note for his sixteenth birthday. Jeff is
a. an HDC.
b. not an HDC, because he received the note as a gift.
c. not an HDC, because he is a minor.
d. not an HDC, because the note was for less than $10,000.
Cleaners & Solvents, Inc. (CSI), engages in deceptive advertising when it markets its
product Dirt Remover as able to kill germs over long periods of time. In an action
against CSI regarding Dirt Remover, the firm is ordered to stop its false advertising of
Dirt Remover and other products. This is
a. a counteradvertising order.
b. a multiple product order.
c. a “cooling-off” law.
d. a validation notice.
Svetlana, a fifty-five-year-old member of a racial minority with a disability, believes
that she is a victim of employment discrimination. Potentially the most widespread
form of discrimination is based on
a. age.
b. disability.
c. gender.
d. race.
Reed borrows $150,000 from Suburban Credit Union to buy a home, which secures the
loan. Three years later, Reed stops making payments on the loan. After Suburban Credit
repossesses and auctions off the property to Tyler, equity remains. This amount most
likely belongs to
a. Reed.
b. Suburban Credit Union.
c. Tyler.
d. the county in which the property is located.
MeatMen, Inc. spends a great deal of money and effort to ensure that all employees are
safe on the job, that all products are safe for consumers, and that the environmental
impact of the corporation is minimal. MeatMen appears to strongly believe in the
concept of
a. the moral minimum.
b. corporate social responsibility.
c. “grey areas” in the law.
d. government oversight.
Jason is the creditor in a transaction with Carol, who is the debtor. Which of the
following requirements is not necessary for Jason to have an enforceable security
interest?
a. The collateral must be in Jason’s possession, or there must be a written or
authenticated security agreement.
b. Jason must give value to Carol.
c. Carol must have rights to the collateral.
d. The collateral must be tangible.
Muni Investment Company signs a check payable to Enterprise Lenders, Inc., to buy a
promissory note executed by Fallow Corporation. This check
a. does not constitute sufficient consideration for HDC status.
b. does not satisfy the value requirement for HDC status.
c. satisfies the consideration requirement for HDC status.
d. satisfies the value requirement for HDC status.
Eli, a minor, buys an automobile insurance policy from Faithful Insurance Company
and pays a $1,000 premium. If Eli can disaffirm the contract, he can most likely recover
a. $500.
b. $1,000.
c. $1,500.
d. nothing.
Sable and Rex agree while talking on the phone to form a partnership to deal in
transfers of real property. Their partnership agreement is legally binding
a. only if a copy of the agreement is filed in the appropriate state office.
b. only if the agreement is reduced to writing.
c. only if the parties exchange valid consideration.
d. without more.
To adjust debt and institute a repayment plan, Biancawho is not a corporation, a
partnership, or a family farmer or fishermanmay file a petition in bankruptcy for relief
through
a. a liquidation.
b. a reorganization.
c. a repayment plan.
d. a family-farmer bankruptcy plan.
Fresh Vegetables, Inc., a wholesaler, refuses to sell its produce to Good Mart Stores,
Inc., a retailer. This is
a. “an unfair or deceptive act or practice.”
b. a per se violation.
c. not a violation.
d. subject to analysis under the rule of reason.
Phyllis intentionally injures herself while performing her job for Stone Cutters, Inc.
Phyllis will be entitled to
a. full workers’ compensations.
b. half of the normal workers’ compensation.
c. 10 percent of the normal workers’ compensation.
d. no workers’ compensation.
The U.S. Mine Safety Administration conducts searches of certain businesses. This
agency and other administrative agencies can conduct warrantless searches in
a. all industries.
b. highly regulated industries.
c. no industries.
d. newly regulated industries only.
A person must have contractual capacity to be an agent.
Employers who do not accommodate the needs of persons with disabilities must
demonstrate that the accommodations would cause undue hardship.
Implied warranties can arise from a “course of dealing.”
Each state establishes rules that govern the conduct of attorneys
A restraint of trade is an agreement between firms that has the effect of reducing
competition in the marketplace.
An innocent party may never rescind a fraudulent contract.
Disparate-impact discrimination occurs when a protected class of individuals is
adversely affected by an employer’s practices, even though they do not appear to be
discriminatory.
If one party’s performance is substantial, the other party’s duty to perform remains
absolute.
Goods must be of the highest quality possible to be merchantable.
If a director fails to use a reasonable amount of supervision over corporate officers and
employees, then the director can be held liable for negligence.
A transfer of contractual rights to a third party is an assignment.
A holder takes an instrument for value if he or she gives a check as payment for it.
Information that is not or cannot be protected under trademark, patent, or copyright law
may be protected under the law of trade secrets.
The Sarbanes-Oxley Act applies to domestic, but not foreign, public accounting firms
that provide auditing services to “issuers.”
A franchisee normally pays an initial lump sum for a franchise license.
A check, like other negotiable instruments, is a formal contract.
When a customer deposits cash into a checking account, he or she becomes a debtor for
the amount deposited.
In a destination contract, the seller is required to deliver the goods to a particular
destination.
A creditor’s composition agreement may be entirely enforceable.