A major disadvantage of the sole proprietorship is:
a. no organizational fees.
b. the sole proprietor obtains all of the profits.
c. the sole proprietor is personally liable for the debts of the sole proprietorship.
d. the sole proprietor is free to make all business decisions concerning operation of the
sole proprietorship.
The ethical category of integrity and truthfulness is best expressed as maintaining one’s
values and principles:
a. so long as profits can be maintained.
b. so long as the costs are not great.
c. unless deviating will go unnoticed.
d. despite the consequences or costs.
A term of a lease required that the landlord provide exterminating services monthly to
control rats and other pests. The landlord failed to do this despite numerous requests
placed by the tenant, and the premises became overrun by rats. This may be considered:
a. a breach of the covenant of quiet enjoyment.
b. a physical eviction.
c. active waste.
d. a constructive eviction.
Which of the following statements is true?
a. Auditors are always eligible for whistleblower awards.
b. Auditors are only eligible for whistleblower awards if they report information to the
board of
directors and the board fails to take action.
c. Auditors are only eligible for whistleblower awards if they report conduct by a
company that is
intended to inhibit an SEC investigation.
d. Auditors are never eligible for whistleblower awards.
In a Chapter 11 rehabilitation plan, the debtor:
a. keeps all of the assets (both exempt and nonexempt).
b. remains in business.
c. makes a settlement that is acceptable to the majority of the creditors.
d. all of the above.
Which of the following is an example of a legal restriction that may be imposed on a
tenant’s deposit?
a. A statutory limitation on the amount of the deposit.
b. A requirement that the landlord hold the deposit in a trust fund.
c. A requirement that the landlord pay interest for the period the deposit is held.
d. All of the above.
The EFTA is concerned with the:
a. elimination of foreign terrorists
b. eradication of foreign tribunals
c. electronic transfers of funds
d. eleemosynary, or charitable, transfers of funds
To establish a gift, the party claiming to be the donee must prove:
a. delivery only.
b. intent only.
c. intent and a promise to deliver.
d. intent and delivery.
The Fair Credit Reporting Act applies to:
a. consumer credit.
b. commercial credit.
c. business credit.
d. all of the above.
Roberts leased a duplex from Hughes. Later, without Hughes’ knowledge, Roberts
sublet half of the duplex to Carrera. Carrera did not take proper care of the premises and
her part of the duplex was substantially damaged as a result of her negligent use and
abuse. Upon discovering the situation, Hughes notified Roberts that he was holding him
responsible for any and all damages to Carrera’s portion of the duplex, and that Roberts
was to bear the costs of returning the premises to the original state of repair. Roberts
replied that he had sublet to Carrera in good faith, had no further dealings with Carrera
after the sublet agreement, had no knowledge of negligence, and could not be held
liable for damages caused by another. Can Roberts be held liable?
Our rights flow from:
a. the Constitution.
b. federal statutes.
c. city ordinances.
d. all of the above.
An unsolicited distribution of credit cards to persons who have not applied for them is:
a. always allowed.
b. voidable.
c. illegal.
d. only allowed if the recipient is at least 21 years old .
Which of the following is generally not required for the testator to have testamentary
capacity?
a. The testator knows the exact value of his or her estate.
b. The testator understands the writing to be a will.
c. The testator has a reasonable appreciation of the identity of relatives and friends.
d. The testator has a reasonable appreciation of the extent of the property that may exist
at death.
If a lost instrument is order paper, the finder __________.
a. becomes the assignee of the instrument.
b. becomes the owner of the instrument.
c. becomes the holder of the instrument.
d. does not become the holder of the instrument.
“Primum non nocere” is Latin for:
a. Above all, do no harm.
b. Let the buyer beware.
c. Hear no evil, see no evil, and speak no evil.
d. No news is good news.
Corporations may ________ officers, directors, employees, and agents when they act in
good faith, in a manner not opposed to corporate interests and with no reason to believe
their conduct was unlawful.
a. ratify
b. breach
c. indemnify
d. authorize
A contractual provision which states that a waiver of rights will not constitute a
modification to the contract is:
a. not enforceable as being in bad faith.
b. not enforceable as a violation of law.
c. enforceable by one party only.
d. enforceable.
A contract requires:
a. an offer.
b. an acceptance.
c. both an offer and an acceptance.
d. an agreement manifested by the written or spoken words of the parties.
If shipped goods are damaged or destroyed after risk of loss passes:
a. the contract is avoided
b. the seller has breached the contract
c. the buyer has the option to accept or not accept the goods
d. it is the buyer’s loss
In the case of a breach of warranties, the buyer:
a. should not notify the seller.
b. is required to notify the seller.
c. does not have the option to resell the goods.
d. is not able to recover consequential damages.
Jones issued a check to Smith in return for Smith’s promise to do work. Smith never did
the promised work, but offered to buy goods from Gomez by endorsing the check to
Gomez. Gomez had had no prior dealings with Jones or Smith, but accepted the check
in payment. Gomez:
a. cannot be a holder in due course.
b. is considered an assignee of Smith’s rights.
c. is a holder through a holder in due course.
d. is a holder in due course.
An employment contract of indefinite duration is:
a. terminable at will by the employer.
b. terminable at will by the employee.
c. both a. and b.
d. invalid.
When goods are delivered to a common carrier for immediate shipment and while they
are in transit, who is normally liable for any loss or damage to the goods?
a. the shipper
b. the consignee
c. the carrier
d. the individual designated as responsible in the bill of lading
An instrument may be negotiated even though:
a. it has been dishonored.
b. it is overdue.
c. it is demand paper that has been outstanding for more than a reasonable period of
time.
d. all of the above.
A limited liability company:
a. must have at least one member that is subject to unlimited liability.
b. member may actively participate in control of the business without losing limited
liability status.
c. both a. and b.
d. neither a. nor b.
If not an offer, the first statement made by one of two persons is most properly termed
a(n):
a. option.
b. acceptance.
c. invitation to negotiate.
d. contract.
The Sarbanes-Oxley Act prohibits all corporate loans to directors and executive officers
unless:
a. the company is in the consumer credit business.
b. the loan is to relocate as part of an employment contract.
c. the loan is made to purchase securities.
d. none of the above as all loans are prohibited.
If an officer diverts a corporate opportunity, the corporation may recover from the
officer:
a. triple damages for breach of a fiduciary duty.
b. the profits of which the corporation has been deprived.
c. past wages for the time period in question.
d. any and all funds used to divert the corporate opportunity.
Unless otherwise agreed, the proper place for the delivery of goods is:
a. the buyer’s place of business.
b. the seller’s home.
c. a delivery service selected by the seller.
d. the seller’s place of business.
The major purpose of field warehousing is to:
a. create warehouse receipts that the owner can pledge as security for loans.
b. create additional space in the firm’s own warehouse.
c. allow warehousers an opportunity to service common carriers.
d. transfer title to buyers without requiring them to pick up merchandise at the plant’s
location.
Several layers of law are enacted at different levels of government to provide the
framework for business and personal rights and duties. At the base of this framework of
laws is:
a. statutory law.
b. case law.
c. constitutional law.
d. all of the above.
When a foreign government takes over an American business that is being conducted in
the foreign country, this is called:
a. expropriation.
b. dollar credits.
c. suspension agreement.
d. antidumping.
In most bilateral contracts, the performances of the parties are __________.
a. conditions precedent
b. conditions subsequent
c. recurrent conditions
d. concurrent conditions
The delegator of construction duties remains liable if:
a. the delegatee performs the work properly, but the obligee did not approve of the
delegation.
b. the delegatee performs the work improperly.
c. the obligee objects in writing to the delegatee’s performance of the work, even if the
delegatee performs the work properly.
d. the value of the contract is $500 or more and the delegatee performs the work
properly.
Gonzalez Manufacturing negotiated by telephone to purchase approximately $7,000
worth of digital video recorders from Video Imports. The final details were worked out
by telephone calls on April 2nd. On April 4th, Video sent Gonzalez a confirmation of
their telephone agreement, which included pertinent details. Meanwhile, on April 3rd,
Gonzalez was offered a better deal than Video’s and accepted it. Upon arrival of the
confirmation on April 6th, Gonzalez ignored it and did nothing further until May 1st,
the date before Video was to deliver. On May 1st, Gonzalez informed Video that their
contract was an unenforceable oral contract and that delivery would not be accepted.
When attempts to amicably settle the matter failed, Video sued Gonzalez for breach of
contract. Decide.
Newlog, which had developed a new process for making artificial logs, entered into an
oral contract with Specialty Manufacturing. The contract provided that Specialty would
manufacture a special part that Newlog needed to make its artificial log machinery. The
contract provided that Specialty would make the part to Newlog’s specifications.
Newlog orally agreed to pay $5,000 for the part. Specialty made the part to Newlog’s
specifications, but Newlog refused to pay, claiming that the oral contract was
unenforceable because of the statute of frauds. Is Newlog correct?
Billy has a dispute with Sleepdigit Bedspring Company over a number of beds Billy
recently purchased from Sleepdigit for use in his hotel. Billy needs to decide whether to
pursue litigation or employ an alternative means of dispute resolution. What advantages
are most often associated with alternative dispute resolution? Which choice would be
most appropriate in this case?
Consumer protection law prohibits the waiver of defenses in consumer contracts.
Once goods in a contract have been identified the buyer holds an insurable interest in
them.
When a contract is fully performed by one party, it is called a unilateral contract.
An easement may be created only by deed.
An express warranty arises when goods are purchased based on a catalog illustration.
Charitable subscriptions by which individuals make pledges to finance the construction
of a college building, a church or another structure for charitable purposes are binding
to the extent that the donor should have reasonably realized that the charity was relying
on the promise in undertaking the building program.
The relationship between the franchisor and the franchisee is ordinarily an arm’s-length
employment relationship.
The first federal legislation that dealt with air pollution was the Air Pollution Control
Act of 1955, which was simply a statutory recognition of a concern about air quality.
If a trust is created to take effect within the lifetime of the settlor, it is a testamentary
trust.
A quasi-public corporation is one that is organized for charitable or benevolent
purposes.
An agent is authorized to make contracts for, and is under the control of, the principal.
When a person picks out a specific necktie and purchases it, the transaction involves
identified goods.
In addition to state legislatures and the United States Congress, all cities, counties, and
other governmental subdivisions have some power to adopt ordinances within their
sphere of operation.
An injured party who rescinds a contract after having performed services may recover
the reasonable value of the performance rendered under restitutionary or
quasi-contractual damages.
A sale or return is a completed sale with an option for the buyer to return the goods.
The government can regulate not just businesses, but also business competition and
prices.
When a buyer has broken a sales contract, the seller may resell the goods or the balance
of them in the seller’s possession.