In order to satisfy the statute of frauds, the parties’ writing must be:
A. signed by both parties.
B. in legalese.
C. signed by the “party to be charged.”
In which of the following cases will a drawer and any persons who previously indorsed
the check be discharged of their liability on the check?
A. By certification of a check.
B. By drawing a cashier’s check.
C. By drawing a teller’s check.
D. By death or incompetence after signing a check.
MacTech Corporation is a subsidiary of Clickon Corporation, which owns 90 percent
shares of MacTech. The management of Clickon is not happy with the way MacTech is
being managed. They believe that MacTech is losing out a huge chunk of potential
business to rivals due to mismanagement. As a solution, the board of directors of
Clickon approves a merger between Clickon and MacTech and they send a copy of the
merger plan to MacTech’s shareholders. This form of merger is called a(n):
A. semi-merger.
B. short-form merger.
C. incomplete merger.
D. half-merger.
Kin is an agent for a disclosed principal, Tracy. Kin contracts with Phil on Tracy’s
behalf. Kin becomes liable to Phil when:
A. he signs the contract “Kin, by Tracy.”
B. he signs the contract “Kin, on behalf of Tracy.”
C. he signs the contract “Kin, agent.”
D. he signs the contract “Kin, for Tracy.”
The First Amendment limits governmental power to enact and enforce criminal laws by
prohibiting:
A. warrantless searches.
B. arbitrary discrimination among different classes of people.
C. cruel and unusual punishments.
D. laws that restrict freedom of speech.
To retain its status as a corporation in good standing, a corporation must:
A. pay an annual franchise fee or tax.
B. hold an annual shareholders’ meeting.
C. pay an annual dividend to shareholders.
D. hold an annual board of directors’ meeting.
The term for the person who makes an offer as part of a contract formation is called?
A. Offeree
B. Offeror
C. Leasor
D. Incorporator
Jason sold Sally a car manufactured by ABC Corp. After driving the car for a couple
hours, Sally found that the brakes did not function properly making it extremely
difficult for her to control the car. When she finally reached home, she rang up Jason
demanding her money back. Jason claimed that she should ideally talk with ABC Corp.,
who was the manufacturers. According to Jason, he was simply selling the car. Which
of the following defenses is Jason using to save himself?
A. No-privity
B. Assumption of risk
C. Contributory negligence
D. Disclaimer
_____ is the plaintiff’s voluntary consent to a known danger.
A. Contributory negligence
B. Assumption of risk
C. Comparative negligence
D. Negligence per se
Which of the following conditions can prevent additional terms from becoming a part
of a contract formed between parties who are merchants?
A. There is a grumbling acceptance by both parties.
B. The contract is regarding the sale of goods.
C. The offer expressly limits acceptance to its own terms.
D. There additional terms would not materially alter the contract.
Which of the following is not a category of illegal agreements?
A. Agreements that violate statues
B. Agreements that violate public policy developed by the courts
C. Unconscionable agreements and contracts of adhesion
D. Agreements to bring more profit to one party than the other
Assume that an applicable state statute makes it a crime for a private citizen to possess
a machine gun. For approximately three weeks, officer Roy Holt had had probable
cause to believe that Alex Hood, a private citizen, possessed an arsenal of machine guns
in his apartment. Acting on this probable cause but without a warrant, Holt knocked on
the door of Hood’s apartment and asked Hood if he could come in to talk to him. Hood
let Holt in. Then, without Hood’s consent, Holt began searching the entire apartment.
Holt found several machine guns in the bedroom closet. He arrested Hood for an
alleged violation of the statute mentioned above. In a pretrial motion, Hood’s attorney
has asked that the court apply the exclusionary rule and suppress the evidence yielded
by Holt’s search of Hood’s apartment. Should the evidence be suppressed?
A. No, because Holt had probable cause to believe that Hood had the machine guns in
his apartment.
B. Yes, because the unconsented search did not fall within the exceptions to the general
rule that warrantless searches are unreasonable.
C. No, because Hood voluntarily allowed Holt to enter the apartment and because the
machine guns were in plain view in the closet.
D. Yes, because the search, though warrantless, was conducted by an officer who was
acting to further the public’s safety.
Which of the following is an advantage of a sole proprietorship?
A. Owners of sole proprietorships can raise a lot of capital quickly for expansion
purposes.
B. The owner of a sole proprietorship has complete control over the business.
C. The sole proprietorship’s existence does not depend entirely upon the sole proprietor.
D. The owner of a sole proprietorship has no liability.
In order to create an easement by prescription a person must, in addition to fulfilling
other requirements, have:
A. recorded the easement immediately upon its creation.
B. received the express or implied consent of the true owner.
C. used the land of another out of necessity.
D. used the land of another openly, continuously, and adverse to the owner’s rights.
Which section of the UCC governs liquidated damages in a contract dispute?
A. 2-718
B. 1-102
C. 3-103
D. 2-745
Wonder Widget Company manufactures widgets that are sold to the retailers. The
retailers, in turn, sell these widgets to consumers for their own use. These widgets are:
A. inventory in the hands of Wonder.
B. equipment in the hands of the consumers.
C. equipment in the hands of the retailers.
D. consumer goods in the hands of Wonder.
Which of the following ethical theories requires decision makers to maximize utility for
the society as a whole?
A. Profit maximization theory
B. Deontological theory
C. Rights theory
D. Utilitarian theory
Humongous Corp., a conglomerate with interests in various industries, recently
acquired Perfect Petrochemicals Co., a prominent producer of petroleum products that
are used in manufacturing plastic. This acquisition was a complete surprise to Perfect’s
competitors, who never thought that Humongous had any desire to become involved in
the petrochemical production business. Companies A and B owned by Humongous used
plastic as a raw material. None of the companies under the Humongous umbrella made
plastic, therefore A and B bought plastic from outside suppliers who used petrochemical
products as raw material to make plastic. Which of the following theories is the most
appropriate one for challenging the acquisition of Perfect by Humongous under Section
7 of the Clayton Act?
A. Elimination of actual potential competition
B. Potential reciprocity
C. Unfair advantage
D. Elimination of perceived potential competition
What section of the UCC addresses Sale or Return contracts and Sale on Approval
contracts?
A. 2-201
B. 2-305
C. 2-326
D. 2-405
A preincorporation share subscription is:
A. a contract binding the corporation at the time of incorporation.
B. irrevocable by the subscriber for six months after the subscription has been issued.
C. a contract binding the corporation at the time of its issuance.
D. preferred by modern corporate promoters over a post incorporation subscription.
Barchrome Company issued debentures in November 1996 to raise capital to finance a
new manufacturing plant. John was one of the small investors who bought those
debentures. In December 2000, John discovered that Barchrome’s registration statement
contained material misstatements (it had overstated current assets by 11 percent and
sales by 8 percent). John sued Barchrome in January 2001. Is Barchrome liable?
A. Yes, Barchrome is liable under Section 12(a)(2) of the 1933 Act.
B. No, Barchrome is not liable because the statute of limitations under Section 12(a)(2)
has run out.
C. No, Barchrome is not liable because the statute of limitations under Section 11 has
run out.
D. Yes, Barchrome is liable under Section 11 of the 1933 Act.
Alana, who runs a flower shop, sells Jose a shotgun. Jose is unemployed, and Alana has
never before sold a firearm in her life. Which of the following is true?
A. Article 2 of the UCC applies because Alana is a merchant.
B. Article 2 of the UCC applies because a shotgun is a movable thing.
C. Article 2 of the UCC does not apply because Alana is not a merchant with respect to
shotguns.
D. Article 2 of the UCC does not apply because Jose is not a merchant.
Which types of mergers have traditionally been subject to the greatest degree of
scrutiny under the Clayton Act?
A. Horizontal mergers
B. Vertical mergers
C. Conglomerate mergers
D. Product-extension mergers
All signatures on a negotiable instrument are guaranteed to be treated as authentic due
to what type of warranty?
A. Transfer warranty
B. International commerce warranty
C. Principal agent warranty
D. Invoice protection warranty
Under the Model Business Corporation Act (MBCA), a corporation that retains at least
_____ percent of its business activity and either its income or revenue has not disposed
of substantially all its assets.
A. 10
B. 25
C. 50
D. 45
Tracy, aged 12, is named the sole inheritor of her family mansion which is valued to be
worth millions. She has disaffirmed the agreement on the advice of her uncle and
guardian Pete. This automatically transfers the title to the latter. Which of the following
statements is true of the case?
A. Tracy cannot disaffirm until she has reached majority.
B. Tracy’s decision will be allowed by the family courts.
C. Pete has every right to Tracy’s property and can take legal possession of it.
D. Tracy’s decision is valid as long as it is in writing.
Smith Auto Sales has a secured loan on the inventory of the business with Northshore
Credit Union which is filed in February. In March Smith Auto Sales has another secured
loan made on the inventory of the business from GMAC credit. GMAC files their
security interest in May. Who will have priority in the event of a default by Smith Auto
Sales?
A. Neither will have priority and both will share equally revenue from sale of inventory
B. Northshore Credit Union will have priority and they will have their debt satisfied
prior to GMAC receiving funds
C. Since GMAC came last they will have priority and will have their debt satisfied
before Northshore Credit Union
D. Since there is a conflict with the security with the inventory, neither security interest
will be recognized and both creditors will get nothing
What section of the 1933 Securities Act provides for criminal liability for securities
violations under the act?
A. Section 24
B. Section 5
C. Section 7
D. Section 31
The Fair Credit Reporting Act imposes disclosure duties on:
A. users of credit reports.
B. credit receivers.
C. users of debit services.
D. debit and credit receivers.
Which of the following is true regarding the statute of frauds’ writing requirement?
A. The writing must be contained in one document.
B. The writing must be signed by both parties.
C. The writing must be signed by the buyer.
D. The writing must indicate the parties’ identities.
Usually, who may have the power to surrender the instrument if full payment is made?
A. Indorser
B. Accommodation maker
C. Party to whom the holder presents the instrument
D. Drawer
Which of the following is correct concerning the management of close corporations?
A. The MBCA Statutory Close Corporation Supplement grants the shareholders
unlimited power to restrict the discretion of the board of directors.
B. Modern close corporation statutes require close corporations to comply with most
management formalities.
C. The MBCA Statutory Close Corporation Supplement permits a close corporation to
dispense with shareholders and directors.
D. The California General Corporation Law permits a close corporation to be managed
as if it were a sole proprietorship.
To be successful in a civil action under Section 11 of the Securities Act of 1933
concerning liability for a misleading registration statement, the plaintiff must prove
which of the following?
A. Defendant’s intent to deceive: yes; Plaintiff’s reliance on the registration statement:
yes.
B. Defendant’s intent to deceive: yes; Plaintiff’s reliance on the registration statement:
no.
C. Defendant’s intent to deceive: no; Plaintiff’s reliance on the registration statement:
yes.
D. Defendant’s intent to deceive: no; Plaintiff’s reliance on the registration statement:
no.
When would the amount of liquidated damages agreed to by both parties in a contract
be considered unconscionable?
A. If the amount is reasonable.
B. If the amount of losses was easy to estimate while drafting the contract.
C. If the amount were too small compared to the possible losses.
D. If the amount were too big to be considered penal.