Participating stock will:
a. share with common stock any additional dividends after preferred and common
stockholders receive their normal dividends.
b. accumulate dividends that will be paid later.
c. participate in earnings only to the extent that all other classes do.
d. participate in earnings to the same extent as common stock.
Which of the following involves an invalid assignment that a court would not enforce?
a. An assignment of a savings account accompanied by the delivery of the passbook
b. An assignment lacking consideration
c. An assignment of an automobile liability insurance policy accompanied by the
delivery of the policy
d. An assignment in writing signed by the assignor and delivered to the assignee
Words of negotiability are:
a. “To the order of.”
b. “To bearer.”
c. “Pay to assignees of.”
d. Both (a) and (b).
All but which one of the following would be exempt from bankruptcy under the federal
law?
a. $500 received in child support
b. A $300 cocktail ring
c. A $200 cashmere sweater
d. A $10,000 car
If Class A preferred shares provide only for a cumulative dividend of $3 per share, upon
liquidation Class A Preferred will:
a. receive $3 per share more than common shares.
b. receive 103% of common shares.
c. share equally with common shares.
d. be subordinated to the rights of common shares.
Under Article 2 of the UCC, which of the following would be considered a sale?
a. Bill trades his car for a motorcycle.
b. Bill lends his car to his friend.
c. Bill puts up his car as security for a $500 loan.
d. Bill gives his car to his sister.
O’Houlihan and seven of his associates decide to form a limited partnership to operate
an office complex. This business must be formed in accordance with the:
a. common law of partnerships.
b. Uniform Commercial Code.
c. Federal Partnership Act.
d. None of the above.
James threatens to hit Kenneth on the head with a baseball bat unless Kenneth signs a
contract agreeing to pay James $900 for a motor. If, because of the threat, Kenneth
signs the contract:
a. the contract is voidable at Kenneth’s option.
b. James has committed physical duress against Kenneth.
c. this is an example of economic duress.
d. All of the above.
Joe intentionally pushed Bill into a fence negligently erected by Sam around Sam’s
swimming pool. The fence caved in and Bill nearly drowned. Under the Second
Restatement, who is liable?
a. Sam, because of his negligent conduct.
b. Sam, because Joe’s conduct would be foreseeable.
c. Joe, because of his intentional intervening conduct.
d. Sam and Joe, because they both contributed to the harm.
Most states have statutes requiring which of the following contracts to be evidenced by
a writing to be enforceable?
a. Contracts to make wills.
b. Contracts for the sale of securities.
c. Contracts for the sale of personal property for more than $5,000.
d. Contracts creating certain types of security interests.
e. All of the above.
Geoff’s fiancée, Susan, comes to meet his parents for the weekend. On Saturday
morning, while using Geoff’s mother’s hair dryer, the blower short-circuits sending
sparks across the guest room. Susan’s angora sweater and her hands are covered with
tiny burns. Susan’s mother is a lawyer and wants her to sue the seller of the dryer for
breach of warranty. Can she?
a. No, because horizontal privity would extend only to members of the family.
b. No, because privity would require that Geoff’s mother sue.
c. Yes, since she is a guest in the home of the buyer, the warranties would extend to her
in most states.
d. Yes, since under the Code all reasonable users are protected from injury.
The 2002 amendments to the Revised Act provide for procedures permitting:
a. a corporation to change its state of incorporation.
b. a domestic business corporation to become a domestic or foreign partnership or LLC.
c. Both (a) and (b).
d. Neither (a) nor (b).
Export controls or restrictions usually result from:
a. national defense considerations.
b. foreign policy considerations.
c. the desire to protect scarce national resources.
d. All of the above.
The Economic Espionage Act of 1996:
a. defines trade secrets to include information only in tangible form.
b. protects the owner of trade secrets regardless of the measures used to keep the
information secret.
c. provides for punishment of organizations that violate the act by subjecting them to
fines of up to $5 million.
d. narrowly defines theft of trade secrets.
e. All of the above.
Employee privacy:
a. is protected by the common law “invasion of privacy” torts.
b. relates to drug and alcohol testing.
c. relates to polygraph testing.
d. All of the above are true.
If Mark owns shares in General Custard Co., he may bring his proposal for a new
subdivision, branching out into ice cream, before the shareholders if he:
a. owns at least 5% of the GC Co. stock.
b. owns at least 10% of the GC Co. stock.
c. limits it to 5,000 words.
d. has not made a proposal yet this year.
A “closed shop” is:
a. the same as a “runaway” shop.
b. one in which a union once existed but has since been voted out.
c. one in which a union is barred.
d. outlawed by the Taft-Hartley Act.
Which of the following remedies are available to either a buyer or seller following a
breach by the other party?
a. Canceling the contract and recovering incidental damages
b. Covering and suing for incidental damages
c. Obtaining specific performance and stopping delivery of the goods
d. Canceling the contract and suing to recover the price
In ____ the goods are sold and delivered to the buyer with an option to return them to
the seller.
a. a bailment
b. a sale on approval
c. a sale or return
d. entrusting to a merchant
Kera rented a lawn mower from Scott Rentals. The mower wheel was loose when she
picked it up. When she began to use the mower, the wheel fell off, causing the mower to
tip over onto her foot. Under what theory can Kera hold Scott liable for her injuries?
a. Breach of warranty of merchantability
b. Breach of warranty of title
c. Strict liability in tort for a defective design
d. All of the above
An action through which the mortgage holder takes the property from the mortgagor,
ends the mortgagor’s rights in the property, and sells the property to satisfy the debt is
known as:
a. foreclosure.
b. equity of redemption.
c. adverse possession.
d. an executed deed of trust.
Mary allows the seller, Baymore Co., four weeks to repair the defects in her kitchen set.
They have tried, but have not done a good job. She may revoke her acceptance as long
as she:
a. notifies Baymore of the revocation.
b. does not use the table and chairs.
c. could not discover the defects easily.
d. inspected the goods herself.
Courts will enforce contracts for the benefit of all but which of the following?
a. Donee beneficiaries
b. Creditor beneficiaries
c. Incidental beneficiaries
d. Intended beneficiaries
Who administers the federal unemployment compensation laws?
a. The Social Security Administration
b. The states
c. The federal courts
d. The NLRB
What principle was involved in the Weeks v. United States case?
a. The exclusionary rule
b. Double jeopardy
c. Probable cause
d. Vicarious liability
Agatha, Betty, and Clara are sisters who own 300 acres of land as joint tenants.
a. What interest does each of them have in the parcel of land?
b. If Betty dies, what happens to her share of the 300 acres?
c. If Clara sells one-half of her interest to Diane, what interest does Diane acquire in the
300-acre parcel?
All but which one of the following is a purpose of bankruptcy legislation?
a. To preserve existing business relations
b. To punish recalcitrant debtors
c. To fairly divide the assets among creditors
d. To allow rehabilitation of debtors
Bartow signed a contract to coach baseball for Washington High for a period of three
years. After two years he is offered and accepts an assistant coach position at State
University. Contract law will not allow Washington High to ask for:
a. specific performance.
b. payment of compensatory damages.
c. an injunction.
d. liquidated damages.
Which of the following is correct with respect to the Code’s approach to impossibility
of performance?
a. Ordinarily, a strike by employees of the seller will excuse performance by the seller.
b. Increased production costs alone will excuse performance by the seller.
c. Performance will be excused when it is commercially impractical as a result of one or
more unforeseen supervening events that are more than mere hardship or increased cost
of performance.
d. All of the above are correct.
A promise against public policy:
a. can be contractual.
b. is enforceable if the parties have capacity and mutual assent and they exchange
consideration.
c. has no legal remedy available for breach.
d. Both (a) and (b).
The law governing assignments is found in Articles ____ and ____ of the Uniform
Commercial Code (UCC), as well as the common law.
a. 1 and 2
b. 2 and 4
c. 2 and 9
d. 3 and 4
Old-Age and Survivors Insurance is one of the programs under the Social Security
system.
An objective of the EU is to promote economic and social progress among member
states.
Under the Sarbanes-Oxley Act, the audit committee of every publicly held corporation
has direct responsibility for the appointment, compensation, and oversight of the work
of the public accounting firm employed by the corporation to perform audit services.
A licensee for purposes of tort law is a person invited upon land as a member of the
public or for a business purpose.
A “bench trial” is one in which the decision is made without a jury.
The status of holder in due course was created to encourage the free transferability of
negotiable instruments.
A sole proprietorship is formed without any formality, is not a separate taxable entity, is
dissolved upon death of the owner, and has unlimited liability for the owner.
Marie is the bookkeeper for the Buildco Construction Co. She makes out the payroll,
prepares all of the payroll checks, and reconciles the bank statements for the firm. She
decides to increase her income by padding the payroll; accordingly, she makes out
checks in the names of several of her relatives. She then indorses and cashes the checks
herself at First Bank where the company has its account. Buildco and not the bank will
be liable for these checks.
Marcus has a contract to purchase a new MP3 player. The law governing this contract is
Article 2 of the UCC.
Most types of contracts are valid without being written.
At the marriage of her daughter, Lorna is given papers to sign which the catering
company says are the invoices for the food, service, and decorations. Underneath the
invoices are a carbon and a contract of sale for a portion of the failing catering business.
As Lorna signs the papers, her signature is applied to the sales contract. This is a void
contract because it was entered by fraud in the execution.
In some states, the vesting of a third party’s rights occurs only when the third party
learns of the contract and assents to it.
In general, tort reform has focused on limiting liability by restricting damages or
narrowing claims.
Assignment of rights is the voluntary transfer to a third party of the rights arising from a
contract.
Mark takes his wife’s paycheck to Valley Bank to deposit in their joint account. Valley
Bank may deposit the check without his wife’s indorsement unless the indorsement is
expressly required.
An automatic stay will prevent a creditor from creating a lien against the debtor’s
property.
In a criminal case, the defendant must be tried by jury if he so desires.
Martinez makes a contract with Bowers on behalf of a disclosed principal. If Bowers
breaches the contract, ordinarily Martinez has no right of action against Bowers.
Garnishment is one form of pre-judgment remedy.
If an agent is authorized to execute an instrument on behalf of a principal and signs
“Cornwall, principal, by Lyons, agent,” only the principal is liable on the instrument.