Lawsuits based on the commercial activities of a foreign state conducted in the U.S. are
subject to the jurisdiction of state or federal courts in the U.S.
a. True
b. False
The Revised Model Act would permit the directors to avoid a shareholder vote for
which of the following amendments to the articles of incorporation?
a. Changing the name from The Oscar Company to McDuddy Corporation.
b. A change from duration of 99 years to perpetual life.
c. Authorizing a new class of stock.
d. Adding to the number of directors.
Mark is out sailing in his boat one evening when he hears a young girl crying for help
in the middle of the lake. Which of the following is true?
a. Mark must help the girl or he will be liable for negligence.
b. Mark must help the girl only if he knows her.
c. Mark must help the girl if he is the girl’s uncle.
d. Mark must help the girl if he begins to rescue her and increases her danger.
An implied in fact contract is not as enforceable as an express contract.
a. True
b. False
The Sarbanes-Oxley Act passed in 2002 is the first comprehensive federal statute
prohibiting computer crime.
a. True
b. False
a. What is an insurable interest? At what point in a sales transaction does the buyer get
an insurable interest?
b. Is the buyer the only one who has an insurable interest in the goods? Is it possible for
both the buyer and the seller to simultaneously hold an insurable interest? Explain.
An accountant who willfully violates Section 11 of the Securities Act of 1933 is subject
to fines of up to $100,000 or imprisonment of not more than three years, or both.
a. True
b. False
If a bank receives a check on Tuesday, it must take proper action, such as forwarding or
presenting it, by midnight of Wednesday.
a. True
b. False
A lessee under a consumer lease and a buyer under a sale of goods are provided with
the same protections against unconscionability under the UCC.
a. True
b. False
A purchaser of all the assets normally does not assume the liabilities of that company.
a. True
b. False
The constitutional protection extended to commercial speech is based on the
informational function of advertising.
a. True
b. False
If a will was burned in an electrical fire that destroyed the testator’s home, it will be
presumed to be revoked.
a. True
b. False
The EEOC allows discrimination in employment because of bona fide occupational
qualifications.
a. True
b. False
Under the Second Restatement, the bankruptcy of the principal terminates, without
notice, the power of an agent to affect the principal’s property that passes to the
bankruptcy trustee.
a. True
b. False
D drew a $100 check on ABC Bank payable “to the order of P.” P cashed the check at
National Bank. National Bank is an agent of P until the drawee bank pays the check.
a. True
b. False
A transfer to a third party of a contractual obligation is known as a(n):
a. assignment of rights.
b. delegation of duties.
c. revocability of assignment.
d. partial assignment.
Identification may be made by either the seller or the buyer.
a. True
b. False
Ethics can be defined broadly as the study of what is good or right for human beings.
a. True
b. False
Paul grabs Don and threatens to stab him with his knife if Don doesnt help Paul commit
a robbery. If Don helps Paul and is prosecuted, Don would have a valid defense called
self-defense.
a. True
b. False
If goods are sold and delivered to buyer with an option to return them, the risk is on the
buyer until they are returned.
a. True
b. False
The majority of courts hold that the running of the statute of limitations operates to
discharge a contract.
a. True
b. False
Claire opened Claire’s Beauty Parlor in her home. She solicited funds to begin the
business from Jack, who believed that the business was incorporated. Claire had, in
fact, never filed the papers. One day, Claire fell asleep while giving a customer a perm
and the solution caused her customer severe burns. The customer sued the Beauty
Parlor for $500,000, an amount enormously in excess of the business assets. Under the
Revised Model Act, what would be the result?
a. Claire and Jack would not be personally liable.
b. Claire would not be personally liable, but Jack would.
c. Jack would not be personally liable, but Claire would.
d. Both would be personally liable since there was no corporation formed.
The function of appellate courts is to examine the record of a case on appeal and to
determine whether the trial court committed prejudicial error.
a. True
b. False
At common law, an employee can be dismissed at any time but only with cause.
a. True
b. False
Under the MBCA, a quorum of shareholders at an annual meeting may be not less than
what percentage of the shares entitled to vote?
a. 10
b. 33 1/3
c. 66
d. 50
Mark, a college student, agreed to sell his horse to Henry for $1,000. The contract
required Mark to take the horse on that same day to Idlewild Stables where Henry was
going to board the horse. Henry paid Mark the money, patted the horse and said, “I’m
glad you’re mine, you beauty,” and drove off. Mark then led the horse into the trailer
and set off for the two-hour drive to Idlewild. Has there been a sale?
a. No, not until delivery to Idlewild.
b. No, not until Henry sees the horse again.
c. Yes, since Henry already paid for it.
d. Yes, since the contract was made earlier in the day.
Alice makes a material misrepresentation of fact to Betty, and based upon the
misrepresentation, Betty enters into a contract. Alice now thinks that the contract is not
fair to her. This contract is voidable at Alice’s option.
a. True
b. False
Warranties on presentment are the same regardless of who is the payor or acceptor.
a. True
b. False
To resolve a lawsuit, a court must have __________ different types of jurisdiction.
a. one
b. two
c. three
d. four
Under Chapter 11, a class that is not impaired under a plan is deemed to have accepted
the plan.
a. True
b. False
Undue influence is the taking of unfair advantage of a person by reason of a dominant
position based upon a confidential relationship.
a. True
b. False
Able gets a judgment against Baker in state court for $50,000 on July 1. On July 15,
Baker files a bankruptcy petition under Chapter 7. In this case:
a. Able is a lien creditor.
b. unsecured creditors will share proportionately with Able.
c. the judgment is a preferential transfer that will be invalidated by the trustee.
d. Both (a) and (b) are true.
Anna employs Mark to purchase for her a suitable site for a roller rink. Mark owns a
huge site himself and sells it to Anna at fair market value without disclosing to her that
he is the owner of the land. Mark has not breached his fiduciary duty to his principal.
a. True
b. False