An employment contract of indefinite duration is:
a. terminable at will.
b. invalid.
c. automatically terminated after five years.
d. terminable only for good cause.
The usual method of creating an agency is by:
a. express authorization.
b. conduct.
c. operation of law.
d. ratification.
Payment over a stop payment order gives rise to liability:
a. when the drawee has had written notice of the stop payment within one year.
b. when the drawee has been notified any time before the check is presented for
payment.
c. when the drawee has been notified orally within fourteen days and the drawer suffers
a loss by payment of the check.
d. when the drawee has been notified in writing within six months, regardless of
whether the drawer suffered a loss.
Probate is the act by which:
a. the court declares an instrument is a valid will.
b. a qualified person may contest the will.
c. the witnesses sign an attestation clause.
d. publication of the will takes place.
Crimes are generally defined and their punishments specified by:
a. trial court judges.
b. appellate judges.
c. codes and statutes.
d. the United States Constitution.
The type of patent that may be granted to developers of new and non-obvious
ornamental features of manufactured articles is called a(n):
a. design patent.
b. functional or utility patent.
c. improvement patent.
d. plant patent.
To which of the following parties does the landowner owe a duty to take reasonable
steps to discover any danger and a corresponding duty to warn the party of or correct
the discovered danger?
a. trespasser
b. licensee
c. invitee
d. all of the above
In order to obtain a court order enjoining a competitor from using your trademark, it is
necessary to show that:
a. you invested a certain level of resources to develop the mark.
b. the competitor is making unfair profits from use of the mark.
c. the competitor’s use of the mark risks confusing the public.
d. all of the above.
The provisions of the CISG have been strongly influenced by Article __________ of
the UCC.
a. A
b. B
c. 1
d. 2
A letter of credit:
a. can be issued only by an insurance company.
b. may be in either oral or written form.
c. can be issued only by a bank.
d. must be in writing and signed by the issuer.
An ombudsman:
a. is usually a government official.
b. is often appointed by a judge.
c. receives a large amount of judicial power.
d. none of the above.
A crime generally consists of:
a. an act.
b. an act or omission.
c. a mental state and an act or omission.
d. a mental state and harm.
The statute of frauds applies to:
a. the lease of an apartment on a month-to-month basis.
b. the cancellation of a written agreement for the sale and purchase of land.
c. an employment agreement.
d. the sale of goods priced at less than $500.
Modern decisions hold the principal liable for which actions of the agent?
a. fraudulent acts
b. misrepresentations
c. both a. and b.
d. none of the above
A homeowner who refinances her home mortgage may cancel the transaction:
a. if the terms of the contract were less favorable than anticipated.
b. before midnight of the third full business day, as allowed by the federal Consumer
Credit Protection Act.
c. only if she was the victim of fraud.
d. upon payment of a $1,000 penalty, as required by a Federal Trade Commission rule.
To help eliminate conflicts of interest, Sarbanes-Oxley prohibits certain activities by
audit firms for their audit clients, including:
a. the design and implementation of financial information systems.
b. actuarial services.
c. management functions and human resources.
d. all of the above.
When an insurance policy is ambiguous, the policy is interpreted:
a. against the insurer.
b. in favor of the insurer.
c. according to the dictionary meaning of the words.
d. according to the meaning of the words in the insurance industry.
To be negotiable, an instrument must:
a. be in writing.
b. be signed by the maker or the drawer.
c. contain a promise or order to pay.
d. all of the above.
When the corporation has the right to sue its directors, officers, or third persons for
damages caused by them to the corporation or for breach of contract, one (1) or more
shareholders may bring such action if the corporation refuses to do so. This is known as
a __________ action.
a. primary
b. derivative
c. deferential
d. preemptive
A zoning restriction:
a. constitutes an eminent domain “taking.”
b. entitles the landowner to compensation.
c. will not lower the value of the land it concerns.
d. can prevent the landowner from making the most profitable use of the land.
A seller’s right to retain possession of goods until the seller has been paid is called a:
a. seller’s lien.
b. buyer’s lien.
c. merchandise estoppel.
d. nonpayment tort.
Arthur was involuntarily petitioned into bankruptcy by three of his creditors. When the
trustee reviewed Arthur’s books and records, the trustee discovered the following
transactions: (a) Three weeks before the filing of the petition, Arthur paid cash for
$17,000 worth of inventory for his store; and (b) Twelve days before the filing of the
petition, Arthur paid $300 in full satisfaction of his store’s most recent electric bill.
The trustee is considering attempting to set aside both of these transfers as preferential
transfers. Discuss the advisability of the trustee’s attempt to set aside these transfers.
Which of the following is a correct statement concerning the incorporation process?
a. Each application for incorporation is reviewed by the appropriate state legislature.
b. The incorporation process is essentially a matter of filing the correct papers and fees
with the designated government official.
c. Most applications for incorporation are rejected.
d. The incorporator(s) must prove to be of good moral character.
Which of the following actions is not prohibited by The Foreign Corrupt Practices Act?
a. offers of payments to government officials to influence a decision on behalf of the
firm making the payment
b. payments to government officials to influence a decision on behalf of the firm
making the payment
c. payments to low-level officials for expediting the performance of routine government
services
d. all of the above actions are prohibited by The Foreign Corrupt Practices Act
A consignment sale is treated as a(n) __________ under UCC Article 2, and the
dealer-consignee has full authority to sell the goods for the consignor and can pass title
to the goods.
a. ordinary sale
b. final sale
c. sale on approval
d. sale or return
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An accountant may be able to raise the defense of lack of privity in a malpractice suit:
a. brought under federal securities statutes.
b. based on negligence.
c. based on fraud.
d. all of the above.
Funds transfers made by businesses are governed by __________ regulations.
a. UCC
b. Federal Reserve
c. UCC and Federal Reserve
d. neither UCC nor Federal Reserve
After a proper demand has been made, for assurance of performance to be adequate, it
must:
a. be expressed in money.
b. allow for the additional examination of the goods.
c. be sufficient to assure a reasonable person that the contract will be performed.
d. be written.
In states that have adopted the Revised Model Business Corporation Act, the secretary
of state may commence proceedings to administratively dissolve a corporation under all
but which of the following circumstances?
a. the corporation adopts more than one business purpose.
b. the corporation does not pay franchise taxes within sixty (60) days after they are due
c. the corporation does not file its annual report within sixty (60) days after it is due.
d. the corporation is without a registered agent or registered office for sixty (60) days or
more.
In the case of a check, when the impostor rule applies:
a. the drawer of the check can successfully raise the defense of the forged endorsement.
b. the forged endorsement is effective to negotiate the instrument.
c. the forged endorsement is ineffective to negotiate the instrument.
d. the instrument becomes nonnegotiable.
If the plaintiff has either engaged in or refrained from actions that are at least partially
to blame for the injuries received, what negligence has occurred?
a. criminal
b. contributory
c. personal
d. prejudicial
A court is a tribunal established by:
a. the parties to a lawsuit.
b. the government.
c. the parties to a contract.
d. none of the above.
The privity rule has been:
a. relaxed in its application by some courts.
b. abandoned by all states.
c. retained by all states.
d. none of the above.
For the purposes of fire insurance, all fires that cause damage are considered hostile
fires.
Descriptive terms such as locations and colors are never subject to trademark
protections.
In a simple contract made by an authorized agent on behalf of a disclosed principal, the
third person may sue either the agent or the principal in the event of a breach.
Alice, Betty, and Cathy are interested in forming a business venture. Alice is quite
wealthy and is ready to contribute money to the venture. Betty has a degree in business
from an excellent university, worked for five years as a manager in a major corporation,
and currently is a leadership/management consultant. Cathy is a scientist who has
developed a process that will, according to her, “revolutionize cancer treatment
throughout the world.” Alice, Betty, and Cathy believe it is in their best interest to form
a general partnership. Do you agree? Is there a more appropriate form of business you
might recommend?
Until proven valid, a rule adopted by an administrative agency is invalid.
In a merger, the surviving corporation has all the rights and property of the corporation
with which it merged, but none of the debts and liabilities.
An ordinary contract defense is a limited defense not available against a holder in due
course.
The Federal Trade Commission has taken enforcement steps against refusals to sell,
boycotts, market restrictions, disparagement of competitors’ products, and unlawful
methods of billing and collection.
The limited liability company combines the tax advantage of the partnership with the
limited liability feature of the corporate form of business organization.
“Superfund” is another name for a hazardous waste fund.
An art collector commissioned an artist to create a sculpture for the collector. The artist
wanted a substantial amount of money for the sculpture. This caused the collector some
worry regarding possible dissatisfaction with the artwork once it was completed. To
ensure that payment would be made only if the collector was satisfied with the
sculpture, a condition was written into the commission contract. It required that the
collector would have to be satisfied with the artwork, relying on the collector’s taste and
judgment, before an obligation of payment would be created.
The artist never imagined that a collector could possibly refuse a creation of his and
allowed the condition to be placed within the contract. At the completion of the
sculpture, the collector claimed that she did not care for the artwork and therefore
refused to pay. Can the artist force payment in this situation? Would it help if the artist
could establish that the collector actually approves of the sculpture but has temporarily
run short on funds, and that this is the true motivating factor in refusing to accept the
sculpture?
At common law, a tenancy by entirety or a tenancy by the entireties is created when
property is transferred to both husband and wife.
Mark purchased a very expensive automobile on credit. Within a week, Mark
discovered that a tune-up was necessary, for he was in the habit of driving at an
excessive rate of speed. When the car was repaired, the bill was more than $1,000.
Mark does not have the money to pay for the car repairs or the monthly car payments.
The credit company as well as the repair shop are concerned over who has priority of
repayment. Who has priority and why?
Sue is an employee at an ABC store. One of Sue’s duties is to prepare the bank deposit
at the end of the business day. Sue had a very busy day and made a few mistakes. All of
the checks, except two, were endorsed with the stamp “ABC, Inc.” that ABC had
provided. The bank received the deposit and noticed the lack of endorsement on the two
checks. In addition, three of the checks that Sue was to include with the deposit were
lost in the parking lot after closing. Phil found the checks and deposited them into his
personal account. What is the effect of ABC’s endorsement on the lost checks and the
lack of endorsement on the two deposited checks?
If a seller under a shipment contract sends nonconforming goods, the risk of loss in
transit is on the buyer.
Contract clauses that limit a common carrier’s liability are void as contrary to public
policy.
Jacob just won the state lottery. Discuss his right to privacy.