The United States constitution places the most significant limitations on administrative
investigation in the area of:
a. search and seizure of the person.
b. aerial inspection.
c. search and seizure of papers and records.
d. guarantee against self-incrimination.
When a written contract does not correctly state the agreement already made but the
parties either party make seek a(n):
a. rescission
b. injunction
c. reformation of the contract
d. action for specific performance
The expense and the risk of return in a sale or return situation is on the:
a. seller.
b. buyer.
c. lienholder.
d. secured creditor.
A holder is a party in possession of an instrument that “runs” to him. An instrument runs
to a party if it is:
a. payable to his or her order.
b. bearer paper.
c. indorsed to him or her.
d. all of the above.
A common carrier of goods has the right to:
a. make reasonable and necessary rules for the conduct of its business.
b. charge a rate that enables a fair return.
c. charge demurrage.
d. all of the above.
Which of the following statements is true regarding the World Trade Organization
(WTO)?
a. The WTO has been in place since 1947.
b. The WTO coordinates its activities with GATT.
c. It provides a dispute settlement body to promote the resolution of trade disputes.
d. It has the ability to impose criminal penalties.
The right to performance under a contract can be assigned:
a. if the burden of performance is not materially increased.
b. if the contract requires the performance of personal services.
c. if the contract provides for the extension of credit.
d. all of the above.
If a negotiable order instrument is transferred to another party without an indorsement,
the instrument has been:
a. assigned.
b. negotiated.
c. obtained by fraud, and is therefore invalid.
d. obtained by fraud, but may be ratified.
In reviewing agency action, courts generally apply the:
a. “beyond a reasonable doubt” standard.
b. “preponderance of the evidence” standard.
c. “arbitrary and capricious” standard.
d. “rational relationship” standard.
An incidental beneficiary of a contract:
a. can sue to enforce the contract.
b. cannot sue to enforce the contract.
c. is a beneficiary specifically named in the contract.
d. is an assignee of the direct beneficiary.
The rules and regulations enacted by a corporation to govern the affairs of the
corporation and its shareholders, directors and officers are called:
a. articles of incorporation.
b. corporate management agreements.
c. bylaws.
d. articles of organization.
Mike Reilly suffered the loss of his home as a result of a chimney fire that was caused
by the ignition of soot in the chimney. This fire would be described as:
a. a friendly fire.
b. arson by negligence.
c. a strict liability fire.
d. a hostile fire.
A forged or unauthorized indorsement is by definition:
a. an indorsement of the person by whom it appears to have been made.
b. no indorsement of the person by whom it appears to have been made.
c. binding on the party who refuses to ratify the instrument.
d. incapable of being ratified.
What is not a correct statement concerning the Fair Debt Collection Practices Act?
a. It prohibits improper practices in the collection of consumer debts.
b. It applies to original creditors who are collecting from original debtors.
c. The validity of the debt is not a defense.
d. Violators are liable to debtors for damages.
Which of the following statements regarding the commerce clause is FALSE?
a. If the federal government establishes safety device regulations for interstate carriers,
a state cannot require different devices.
b. States may not use their tax power for the purpose of discriminating against interstate
commerce.
c. The commerce clause empowers Congress to regulate interstate commerce, but not
commerce with foreign nations.
d. A state cannot refuse to allow an interstate waste collector to conduct business within
the state on the grounds that the state already has enough waste collectors.
Companies with 100 years of consistent dividends:
a. use positive laws as a guide for ethical decisions.
b. have a goal of profitability no matter what the cost.
c. have a strong commitment to values.
d. all of the above.
An affirmative action plan:
a. helps ensure a diverse work force.
b. is an effective means to avoid litigation costs.
c. may provide job preferences for minorities and women.
d. all of the above.
Which statement is incorrect concerning mortgages?
a. The mortgagee’s interest terminates upon performance of the obligation secured by
the mortgage.
b. The mortgagee has the right to enforce the mortgage by foreclosure upon default by
the mortgagor.
c. The mortgagor must have complete or absolute ownership in the property.
d. Generally, no particular form of language is required to create a mortgage.
Which of the following is not an element of an accord and satisfaction?
a. a bona fide dispute
b. a proposal to settle the dispute
c. performance of the agreement to settle the dispute
d. reservation of rights under the federal Consumer Credit Protection Act
Criminal laws:
a. define wrongs against society.
b. define the rights of one person against another.
c. carry damage remedies against the wronged individual.
d. all of the above.
Pursuant to the CARD Act of 2009, all credit card companies must have bills in
consumers’ hands not less than __________ before the bill is due.
a. seven (7) days
b. fourteen (14) days
c. twenty-one (21) days
d. thirty (30) days
If a plaintiff seeking damages in a breach of contract action receives $1 in damages, the
damages would most likely be classified as:
a. punitive damages.
b. exemplary damages.
c. nominal damages.
d. compensatory damages.
A valid meeting of the voting shareholders of a corporation requires the presence of a:
a. quorum.
b. forum.
c. majority.
d. voting majority.
Legal restrictions of U.S. firms doing business abroad in regard to payments made to
foreign officials for obtaining business are set forth in the:
a. International Corruption Prohibition Act.
b. Global Anti-bribery Control Act.
c. Foreign Corrupt Practices Act.
d. International Graft Prohibition Act.
The taking of an image off someone’s web site and using it for commercial advantage is
called:
a. appropriation.
b. defamation.
c. gleaning.
d. subordination.
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.
When a U.S. trademark holder licenses a foreign business use of its trademark overseas
and a third party imports these goods into the United States to compete against the U.S.
manufacturer’s goods, the foreign-made goods are called __________ goods.
a. “gray market”
b. counterfeit.
c. specially-licensed.
d. dumped goods.
An involuntary petition in bankruptcy may not be commenced against:
a. a nonprofit corporation.
b. an individual.
c. a for-profit corporation.
d. any of the above.
Under the Computer Software Copyright Act of 1980, a written program:
a. must be written in object code in order to be protected.
b. must be written in source code in order to be protected.
c. is protected as any other copyrighted material, even if it is in written form.
d. is protected but does not receive the same protections as other copyrighted materials.
A contract of record is also referred to as a:
a. recognizance.
b. reconnaissance.
c. recording contract.
d. none of the above.
The one-year performance requirement for an oral contract begins:
a. on the day of the agreement.
b. on the first day of performance.
c. on the day following the agreement.
d. the day on which the agreement was placed in writing.
A noncompetition covenant may be held invalid because of vagueness concerning the
duration and geographic area of the restriction.
If a principal terminates an agency without giving notice of the termination to third
persons, the agent may retain the power to make contracts that will bind the principal
and third persons.
John Harrington operates a business that almost always hires skilled workers who are
college graduates; currently, however, his business does have a part-time opening for an
unskilled worker. Harrington is considering hiring an uneducated welfare recipient
instead of a student from the local university. Apply the “Guidelines for Analyzing a
Contemplated Action” to this problem.
Generally, a secured creditor who has repossessed collateral may retain the collateral
and cancel the debt.
The International Monetary Fund (IMF) was formed to shorten the duration and lessen
the disequilibrium in the international balance of payments of its members.
Product disparagement is a form of defamation.
Depositions are usually taken in the courtroom.
Consumer goods are not subject to perfection of a security interest.
An exclusion of warranties made in the manner specified by the Uniform Commercial
Code is not unconscionable.
It is impossible to form a business in a manner that allows for single taxation and
limited liability.
A deed is not effective to pass title unless it is properly recorded.
Pursuant to the Credit Repair Organization Act of 1996, credit repair organizations must
be “non-profit.”
Generally defenses that could be raised in a breach of contact claim cannot be raised
against a holder in due course.
One advantage of our current legal system is that the growth of technology has not
created many new laws.
A bailee can pass good title to a good-faith purchaser, even when the sale was not
authorized by the owner and the bailee has no title to the goods but is in the business of
selling those particular types of goods.
Rights always stand alone, without any duties.
“Right-to-know” laws in some states guarantee employees the right to know if there are
hazardous substances in their workplaces.
There is no exact standard or test by which to determine whether contractual
performance is substantial.
A corporation may properly exist without a name.