Article 3 of the UCC establishes the rules and principles that regulate bank deposit and
collection procedures.
An unauthorized signature by a purported agent acts as the signature of the purported
principal.
The party to whom the check is written is called the payee.
SM is a symbol that designates an owner’s legal claim to an unregistered mark that is
associated with a product.
Duty of loyalty requires directors to subordinate their personal interests to those of the
corporation and its shareholders.
The Dodd-Frank Wall Street Reform and Consumer Protection Act requires mortgage
lenders to make a reasonable and good-faith determination that a borrower has the
ability to repay the loan.
A personal articles floater provides insurance that cover specific valuable items.
The duty of care applies only to shareholders of an organization, and not directors.
When discharge is granted, the debtor is legally liable to pay a partial amount of the
discharge debts.
An intentional tort requires that the defendant possessed the intent to do the act that
caused the plaintiff’s injuries.
The drawer’s failure to report a forged or altered check to the bank within one year of
receiving the bank statement and canceled checks containing it relieves the bank of any
liability for paying the instrument.
In a manager-managed LLC, both the managers and members have authority to bind the
LLC to contracts.
According to the Equal Pay Act, employers can eliminate unlawful disparity of wages
by lowering the wages of the other employees.
A corporation is liable for the contracts of its subsidiary.
The Celler-Kefauver Act widened the scope of Section 7 of the Clayton Act to include
asset acquisitions.
The Free Exercise Clause guarantees that there will be no state-sponsored religion.
A complaint sets forth the basis of the lawsuit.
In guaranty arrangements, the guarantor is obligated to pay only if the debtor defaults.
Social responsibility requires businesses to act with awareness of the consequences and
impact that their decisions will have on others.
An implied warranty is created when a seller makes an affirmation of fact or promise
about the goods.
An exculpatory clause can relieve a party of liability for ordinary negligence.
Specific performance of personal service contracts is not granted due to the difficulty in
monitoring the performance of such contracts.
Ethics and the law remain unrelated in most of the cases.
An LLC has the power to issue notes and bonds.
Res ipsa loquitur raises a presumption of negligence and switches the burden to the
defendant to prove that he or she was not negligent.
Regulation Z is a regulation that sets forth detailed rules for compliance with the Health
Care Reform Act of 2010.
The nonperformance of an unconditional promise to perform is not considered to be a
breach of contract.
The real owner of goods obtained through fraud can reclaim the goods from a good
faith purchaser for value.
A sales contract that requires the seller to send the goods to the buyer but not to a
specifically named destination is termed as a shipment contract.
The Magnuson-Moss Warranty Act requires a seller or lessor to make an express written
warranty on all products.
Fred has 100 tons of stone in a warehouse. Barney agrees to purchase the stone from
Fred. The contract states that Barney will pick up the stone directly from the warehouse.
Fred delivers a warehouse receipt for the 100 tons of stone to Barney. Before Barney is
able to pick up the stone, a tornado sweeps through and destroys the stone. Who has the
risk of loss?
A) Fred has the risk of loss because Barney did not pick the stone yet.
B) The warehouse has the risk of loss because Barney did not pick the stone yet.
C) The risk of loss was passed to Barney when he received the warehouse receipt.
D) Fred, the warehouse, and Barney are equally responsible for the risk of loss.
According to priority, which of the following claimants is the last to be paid after assets
have been liquidated of a corporation?
A) creditors
B) common stockholders
C) preferred shareholders
D) bond holders
Which of the following is true for an accord?
A) The accord terminates the original contract.
B) The non-breaching party cannot enforce the original contract if the accord is not
satisfied.
C) It is enforceable even though no new consideration is given.
D) An accord is only reached when both parties of the contract fail to meet their
contractual obligations.
Which of the following is an example of an autonomous agency of the United Nations?
A) the North Atlantic Treaty Organization
B) the Security Council
C) the World Trade Organization
D) the International Monetary Fund
The ________ Act gives consumers the right to obtain one free credit report once every
12 months from the 3 nationwide credit reporting agencies.
A) Fair Credit Reporting
B) Fair Credit Billing
C) Consumer Leasing
D) Fair and Accurate Credit Transactions
________ is a set of moral principles or values that governs the conduct of an
individual or a group.
A) Rationality
B) Evolution
C) Ethics
D) Reason
A(n) ________ contract is defined as a sales contract that requires the seller to deliver
goods to the buyer’s place of business or another specified location.
A) noncarrier
B) option
C) shipment
D) destination
When does a minor breach occur?
A) when a party rescinds the contract before actual work on the contract has
commenced
B) when a party renders substantial performance of his or her contractual duties
C) when the party who is being offered goods or services rescinds the contract
D) when the party who is offering goods or services rescinds the contract
Gregory Aimes, who is being tried for murder, has been appointed Linda Steve as an
attorney for his defense. While questioning Gregory about the case, Linda gets a
confession of murder from Gregory. Linda cannot divulge this information to the proper
authorities due to the attorney-client privilege. Under which one of the following
conditions can Linda lawfully break her attorney-client privilege with Gregory?
A) if Gregory asks that Linda be replaced as his attorney
B) if Linda voluntarily resigns as Gregory’s attorney
C) if Gregory is acquitted in the case
D) if Gregory discloses to Linda about a planned future murder
Which of the following qualifies as termination of an agency by impossibility of
performance?
A) the loss of a required qualification
B) the bankruptcy of the principal
C) the insanity of either the principal or the agent
D) the conviction of either the principal or the agent
What is transfer of an instrument?
A) the issuance of the instrument
B) the presentment for payment of the instrument
C) the passage of the instrument other than issuance and presentment
D) the cancellation of the instrument
According to the parol evidence rule, ________ that alter, contradict, or are in addition
to the terms of the written contract are inadmissible in court regarding a dispute over a
written contract.
A) courses of dealing
B) courses of performance
C) prior oral or written agreements
D) usages of trade
A tenancy created when a landlord and a tenant agree on a specific duration for a lease
is known as a ________.
A) tenancy for years
B) periodic tenancy
C) tenancy by the entirety
D) tenancy at sufferance
Which of the following top-level domain name extensions is most commonly used by
ISPs, Web-hosting companies, and other businesses that are directly involved in the
infrastructure of the Internet?
A) .net
B) .com
C) .biz
D) .org
Which of the following is the difference between maximize profits theory and moral
minimum theory?
A) Maximize profits theory calls for actions to make profits at all cost, while moral
minimum theory calls for actions to make profit without harming others.
B) Maximize profits theory calls for actions with all stakeholder interest, while moral
minimum theory calls for actions to solve other social problems.
C) Maximize profits theory calls for actions to make profit without harming others,
while moral minimum theory calls for actions to solve other social problems.
D) Maximize profits theory calls for actions with all stakeholder interest, while moral
minimum theory calls for actions to make profits at all cost.
Which of the following is true of the Securities and Exchange Commission (SEC)?
A) It is an international commission that has jurisdiction over all countries.
B) It is an agency composed of ten members who are appointed by the president.
C) It can bring a civil action to recover monetary damages from violators of securities
laws.
D) It has no provision for protecting whistleblowers.
Which of the following is true for a corporation’s liability on the promoters’ contracts if
the corporation is never formed?
A) The corporation assumes liability of the promoters’ contract automatically upon its
creation.
B) The promoter’s liabilities are transferred to the board of directors of the corporation
upon its formation.
C) The promoter, corporation, and the third-party enter into a novation whereby liability
is solely transferred to the corporation.
D) The promoters have joint personal liability on the contract unless the third party
specifically exempts them from such liability.
To assert ________ as a defense, the defendant must prove that the plaintiff knew and
appreciated the danger inherent in the product.
A) a supervening event
B) assumption of the risk
C) generally known dangers
D) abnormal misuse
Which of the following is true of operating an LLC?
A) An LLC has to file a form with the IRS to obtain flow-through taxation.
B) An LLC can have any number of member-owners.
C) An LLC cannot have shareholders other than estates, certain trusts, and individuals.
D) An LLC cannot have nonresident alien member-owners.
In which of the following consumer credit transactions does the FTC HDC rule apply?
A) when the buyer signs a sales contract that includes a check
B) when the buyer signs a sales contract that includes a promissory note
C) when the buyer signs an installment sales contract that does not contain a waiver of
defenses clause
D) when the buyer arranges financing with a third-party lender
The ________ prescribes comprehensive and integrated rules of religious, political, and
legal life that together form Jewish thought.
A) Bhagavad Gita
B) Torah
C) Principia Discordia
D) Book of the Zodiac
A gift that is made in contemplation of death is known as a(n) ________.
A) profit-à-prendre
B) estate pour autre vie
C) gift inter vicos
D) gift causa mortis
Which of the following types of patents is valid only for a period of fourteen years?
A) utility patent
B) process patent
C) method patent
D) design patent
To be liable for consequential damages, the breaching party must ________.
A) be placed with a duty to make reasonable efforts to mitigate damages
B) have not caused any monetary damages to the nonbreaching party
C) provide a disclaimer of foreseeable consequential damages
D) know that the breach will cause special damages to the other party
A written stop-payment order is valid for ________.
A) twelve days
B) six weeks
C) six months
D) twelve months
In which of the following situations can an employee sue an employer to recover
employment-related injuries?
A) if the employer is self-insured
B) if the employer unintentionally injures a worker covered under workers’
compensation
C) if the employee suffers an injury at work premises that is not related to work
D) if the employer intentionally injures a worker covered under workers’ compensation
A holder of goods who is not a seller or a buyer is referred to as a ________.
A) consignor
B) broker
C) bailee
D) consignee
Which of the following statements is true of the generally accepted auditing standards
(GAASs)?
A) These standards are set by the International Accounting Standards Board (IASB).
B) The International Accounting Standards are replacing GAAS.
C) They set forth rules for how corporations and accounting firms declare accounts on
the corporation’s financial statements.
D) They require sufficient evidence to afford a reasonable basis for issuing an opinion
on the financial statements under audit.
Which of the following statements is true of the Sarbanes-Oxley Act?
A) It requires all audit papers to be retained for at least ten years.
B) It requires the Public Company Accounting Oversight Board to inspect and review
registered accounting firms that audit more than 100 public companies once a year.
C) It created the Securities Exchange Committee.
D) It allows a registered public accounting firm to simultaneously provide audit and
legal services to a public company.
A member’s ownership interest in an LLC is called a ________.
A) certificate of interest
B) distributional interest
C) collateral interest
D) creditor’s interest
Orlando opened a hot dog stand in Brooklyn which unfortunately did not earn him a
profit. He had borrowed $5,000 from the bank to set it up, which had to be repaid to the
bank in two days. However, Orlando’s friend, Bob, agreed to partner with him starting
the subsequent month. From which of the following sources can the bank recover its
$5,000 with interest?
A) Orlando’s secondary financer
B) Orlando’s savings account
C) Orlando’s family
D) Bob, Orlando’s prospective business partner
How does duty of care differ from duty of loyalty in an LLC?
Differentiate statutes and ordinances with an example.
Compare and contrast substantive due process and procedural due process.
Suppose the country of Vietnam outlaws the practice of all religions in that country.
Abraham, a Jew, who is a citizen of, and living in, the United States, disagrees with
Vietnam’s law. Abraham brings a lawsuit against Vietnam in a U.S. district court located
in the state of Colorado, arguing to the court that the Vietnamese law should be declared
illegal. What action would the district court take?
Provide reasons why a majority of American corporations are incorporated in Delaware.
With the help of examples, differentiate between statutory and implied exemptions from
antitrust laws.
Explain how the Delaware courts provide assurance to Delaware corporations in trying
to decide their liability toward sues.
What is the difference between horizontal and vertical price fixing?
Explain with an example the circumstances under which the employment of a younger
person over an older person does not constitute discrimination.
Explain in brief, the Federal Reserve System and its significance.
Explain utilitarianism with an example.
Explain the doctrine of equity with reference to contracts.
How do corporations with statutory close corporation status differ from the formalities
of a corporation? Does the status impact the limited liabilities of shareholders?
While indorsing a check, if an indorser indorses it just by signing the name, what type
of indorsement would that be? How does this type of indorsement differ from a special
indorsement?
Define a short-form merger and provide an example.
List the four ways in which an offer can be terminated by operation of law and explain
them in brief.