In the case of a nonshipment contract, risk of loss passes to the buyer upon actual
receipt of goods:
a. only if the seller is a merchant
b. only if the seller is a nonmerchant
c. only if the buyer has already paid for them
d. in all nonshipment contracts
A transferor makes certain implied warranties to the transferee when a bill of lading is
transferred. These warranties are:
a. that the bill of lading is genuine.
b. that the transfer is rightful.
c. that the transferor has no knowledge of any defects.
d. all of the above.
Plaintiffs can successfully subpoena Internet Service Providers (ISPs) to obtain the
identify of individuals who make defamatory remarks:
a. in all cases.
b. only when the information posted is false.
c. only when the information posted is true.
d. ISPs are never required to disclose identity.
A third person should recognize that a partner has limited or no authority if:
a. the partner seeks to act for the partnership concerning a matter not within the usual
business of the firm.
b. the third person knows that the partnership has been terminated.
c. the partner seeks to pay a personal obligation by issuing a promissory note in the
name of the firm.
d. all of the above.
An insured person is generally allowed, by policy provision or statute, a grace period of
what length of time in which to make the payment of a premium due on a life insurance
policy?
a. 14 to 15 days
b. 30 to 31 days
c. 60 to 61 days
d. 90 days
A guaranty of payment creates a(n):
a. contract of surety.
b. contract of credit.
c. letter of credit.
d. absolute guaranty.
Your private life is protected from intrusions by other people by:
a. the Fourth Amendment of the United States Constitution.
b. the Equal Protection Clause.
c. court decisions of the United States Supreme Court.
d. local ordinance.
With regard to the law concerning nuisance:
a. the law recognizes legal remedies for a public, but not private, nuisance.
b. the courts do not balance the protection of the plaintiff against the social utility of the
activity.
c. the fact that the plaintiff suffered annoyance or inconvenience is sufficient to
establish a nuisance.
d. a finding that conduct is socially desirable may outweigh harm to a particular
plaintiff.
Which of the following types of contracts might be unenforceable as contrary to public
policy?
a. a contract that is contrary to the protection of the public welfare, health, or safety
b. a contract that is contrary to the protection of the person
c. a contract that is contrary to the protection of recognized social institutions
d. all of the above
Which of the following statements regarding limited partnerships is true?
a. The words limited partnership or simply LP must appear in the firm’s name.
b. General partners cannot avoid personal liability by incorporating.
c. Limited partners can lose their liability limitation if they participate in the control of
the business.
d. All of the statements are true.
A contract is created by which the terms are stated to be for consideration in the amount
of $3,000. If typewritten in the contract is the term “four thousand dollars,” while the
amount of $3,000 is printed within the form:
a. the contract will be interpreted to be for $3,000.
b. the contract will be interpreted to be for $4,000.
c. there is a contract but the courts will not specify the dollar amount, as a conflict
exists.
d. a compromise settlement amount of $3,500 will be used.
Disclaimers of liability are valid when the circumstances are such that it is not
reasonable to expect the accountant to stand behind certain data.
When the name of the payee is spelled incorrectly, the payee:
a. must indorse the instrument with the incorrect spelling of the payee’s name.
b. must indorse the instrument with the correct spelling of the payee’s name .
c. may indorse the instrument with either the correct or incorrect spelling of the payee’s
name.
d. may not indorse the instrument.
Igor immigrated to the United States and sought to rent an apartment. He answered an
advertisement in a newspaper and signed a lease for an apartment without ever seeing
the apartment. Igor found the premises filled with an abundance of debris, rats and
insects. Also, the plumbing in the apartment was inoperable. These conditions:
a. do not affect the lease unless the landlord affirmatively warranted the condition of the
premises.
b. are the responsibility of the tenant to repair.
c. most likely constitute a breach of the implied warranty of habitability.
d. do not entitle Igor to vacate the premises.
Conspiracy means ____ committing a criminal act.
a. thinking about
b. an agreement aimed at
c. thinking with others about
d. all of the above
Generally, which power(s) does (do) an administrative agency possess?
a. all powers necessary to effectively perform the duties entrusted to it
b. legislative only
c. judicial only
d. executive only
If no termination date is specified for an offer, the offer will remain open:
a. for one year.
b. for six months.
c. for a reasonable period of time.
d. until someone accepts the offer.
A security interest that is effective against third persons as well as against the buyer is
called a:
a. universal security interest.
b. prohibitive security interest.
c. perfected security interest.
d. protective security interest.
A gift causa mortis is revoked if:
a. the donor does not die.
b. the donor revokes the gift before dying
c. the donee dies before the donor.
d. all of the above.
The plaintiff in a quasi-contractual action can recover:
a. lost profits.
b. damages for mental distress.
c. the reasonable value of the benefit conferred upon the defendant.
d. for all the damages sustained.
Delivering stock to a creditor as security for a debt owed by the shareholder:
a. transfers ownership rights.
b. gives rise to a perfected security interest.
c. makes the creditor a perfected party after filing.
d. makes the debtor a perfected party after filing.
A contract in which one party agrees to purchase goods from another contingent upon
the purchaser’s ability to locate suitable financing is said to:
a. be illegal.
b. result from undue influence.
c. contain a waiver.
d. contain a conditional promise.
Which of the following is NOT a common law crime?
a. Larceny
b. Robbery
c. Blackmail
d. Arson
The America Invents Act:
a. amended federal patent law.
b. replaced the “first to file system” with a “first to invent” system.
c. speeds up the application process for energy conservation inventions for a $4,800 fee.
d. all of the above.
The parol evidence rule does not prohibit proof that:
a. the contract was thereafter modified.
b. conduct exists that violates the law.
c. the written contract is not a binding agreement.
d. all of the above.
A discharge does not release a person from a consumer debt to a single creditor totaling
more than $5,775 for luxury goods or services if the debt was incurred within how
many days of the order for relief?
a. 90
b. 120
c. 180
d. 365
An administrative agency:
a. is not empowered to act as a court with regard to its own regulations.
b. acts as a specialized court of limited jurisdiction.
c. can hear complaints only in the presence of a jury.
d. cannot impose penalties for violation of its regulations.
The defendant in a defective product suit may be:
a. the seller.
b. the manufacturer.
c. the manufacturer of a component part.
d. all of the above.
If a check is made payable to Paolo, and Paolo signs on the back of the check, Paolo is:
a. the payee and the indorser.
b. the drawee and the indorser.
c. the payee and the endorsee.
d. only the indorser.
A seniority system is unlawful if:
a. workers with longer years of service are laid off last.
b. a union did not agree to the policy.
c. it results from an intention to discriminate.
d. workers with longer years of service are predominantly from one race.
When a seller sells on credit and is given a security interest in the goods, that interest is
called:
a. a purchase money security interest.
b. a future transaction.
c. a floating lien.
d. none of the above.
Defamation of a public figure requires what additional element?
a. Intent
b. Malice
c. Causation
d. none of the above
An agent has implied __________ authority to do any act that usually accompanies the
transaction for which the agent is authorized to act.
a. express
b. apparent
c. customary
d. incidental
A contract made by an incompetent person after a guardian has been appointed is
voidable.
The Constitution prohibits state governments from denying any person the equal
protection of the law.
Rights guaranteed in the United States Constitution are accompanied by duties.
The right to be secure against unreasonable searches and seizures conducted by the
police is guaranteed by state statute.
Under the General Agreement on Tariffs and Trade (GATT), the principle of trade
without discrimination is embodied in the most favored nation clause.
You are asked to provide two friends who are in business together with advice
regarding what they need to do to legally in order to form a limited liability company.
Although your friends like the general notion of limited liability in the operation of
their business, they are totally unfamiliar with the legal processes for forming a LLC, so
you need to provide them with the basic requirements for LLC creation. What specific
advice would you give them?
Only government agencies can sue for violations of an environmental protection
control.
Whether there has been a waiver is a question of fact.
Ordinarily, action by shareholders has legal effect as a corporate act only if such action
is taken at a regular or special meeting of the stockholders.
An injured party that does not suffer an actual loss from the breach of a contract is
entitled to nominal damages.
In older cases, the employer-employee relationship was referred to as the
master-servant relationship.
A promise that in fact does not impose any obligation on the promisor is known as an
elusive promise.
To determine whether the defendant is liable for negligence, a reasonable person
standard is employed.
What constitutes negligence is the same for an accountant who is a full-time employee
as it is for an independent outside auditor.
When arbitration is mandatory under a statute, the losing party generally can appeal
from such arbitration to a court.
In an emergency, an administrative agency can act beyond the scope of the statute that
created it.
Blocking laws prohibit the disclosure, copying, inspection, or removal of documents
located in the enacting country in compliance with orders from foreign authorities.
Exchanges, brokers, and dealers who deal in the securities traded in interstate
commerce or on any national security exchange must register with the SEC unless
exempted by it.