Notice of dishonor of an instrument:
a. may be given orally.
b. must be given by returning the unpaid instrument with an attached stamp, ticket, or
memorandum stating that the item was not paid.
c. must meet formal requirements to be effective.
d. Both (b) and (c).
Which of the following are basic objectives of the 1933 Securities Act?
a. To provide investors with material information concerning securities offered for sale
to the public.
b. To prohibit misrepresentation, deceit, and other fraudulent acts and unfair practices in
the sale of securities generally, whether or not they are required to be registered.
c. Both (a) and (b).
d. None of the above.
Sally, while walking in a park, got hit on the head with a baseball. The ball was thrown
at her by Aaron who intended to hit her to show off in front of his friends. She may
recover damages for:
a. bodily harm.
b. emotional distress.
c. reasonable medical expenses.
d. All of the above.
A seller has breached his contract by providing unfit seed, which breach was
undetectable until the bean crop was to be harvested. Remedies would include:
a. damages for the lost profits from a contract to sell the bean crop.
b. liquidated damages set by the court to cover such a situation.
c. specific performance of the contract.
d. All of the above.
Which of the following is not true regarding the contracts of intoxicated persons?
a. If an intoxicated person is unable to understand the nature and consequences of his
act, then the contract is voidable.
b. The effect of intoxication is generally the same as that given to contracts that are
voidable because of incompetency.
c. Slight intoxication will destroy one’s contractual capacity.
d. Contracts made while a person is too intoxicated to act in a reasonable manner may
be ratified when the intoxicated person regains his capacity.
For $100 each, Helen agrees with Troy Tech to knit 14 sweaters for the soccer team in
their school colors with their names on the front and “Go Tech” on the back. After
Helen has almost finished the last sweater, Troy Tech decides it should spend the money
on repairs to the locker room instead of on the sweaters. Does Helen’s contract have to
be in writing for her to enforce it?
a. No, because each sweater only cost $100
b. No, because they are specially manufactured sweaters
c. Yes, because the total cost is $1,400
d. Yes, because they are specially manufactured sweaters
The CFPA excludes from the Bureau of Consumer Financial Protection’s authority the
activities of all but which of the following?
a. Auto dealers
b. Check cashing businesses
c. Real estate brokers
d. Employee benefit plans
Under the provisions of the Foreign Sovereign Immunities Act:
a. all foreign governments are immune from suit by U.S. citizens.
b. U.S. citizens in U.S. courts can always sue most foreign governments.
c. a car used by a foreign embassy in Washington can be seized to settle a judgment
against a driver.
d. U.S. courts may take jurisdiction in a suit against a foreign country for commercial
acts by that government that have a direct effect in the United States.
Willingness by the buyer to become the owner of the goods tendered or delivered to
him by the seller is:
a. rejection.
b. acceptance.
c. revocation.
d. tender.
The characteristics of a spendthrift trust include which of the following?
a. Spendthrift provisions are not valid in most states.
b. Spendthrift trusts are created to preserve assets against trust creditors.
c. A settlor may provide, in a spendthrift trust, that the beneficiaries cannot, by
assignment or otherwise, impair their rights to receive principal or income.
d. All of the above.
Kay borrowed $200,000 for her business. First Bank loaned the money but required a
surety and collateral. Kay put up her boat, valued at $110,000, and Anson agreed to
guarantee the entire loan. After Kay had paid $50,000 of the loan, she asked First Bank
to release the collateral since she wanted to sell it to her brother. The bank looked at her
perfect payment record and agreed. Two weeks later, she sold the business, took the
boat to Brazil, and never was heard from again. Can First Bank collect from Anson?
a. No, since they released the collateral
b. Yes, but only $40,000
c. Yes, but only $90,000
d. Yes, and they can get the whole remaining obligation
Theresa is a travel agent at the Fly Away Travel Agency. She has signed an agreement
with her employer which prohibits her from working in any similar business in any
town within a 100-mile radius of where she works. If she wants to quit her job and go to
work for another travel agency, it is likely that:
a. a court would uphold these restrictions.
b. if no trade secrets are involved, and she has no dominion over customers, a court
would rule the restrictions to be invalid.
c. if the period of time of the agreement is under five years, it will be upheld by the
court.
d. Both (a) and (c).
If a landlord furnishes heat in the summer in order to force his tenant to move and the
tenant does in fact move, a court of law will probably decide that:
a. waste has occurred.
b. there has been a wrongful abandonment of the premises.
c. constructive eviction has taken place.
d. vacating of the premises constituted an assignment.
Bonds subject to a redemption provision which permits the corporation to redeem or
pay off all, or a part, of the issue before maturity at a specified redemption price are
known as ____ bonds.
a. secured
b. income
c. callable
d. convertible
If Jana, a minor, transfers property to Scott and Scott sells the property to a good faith
purchaser for value before Jana avoids the transfer:
a. Jana loses the right to recover the property if the transfer involved goods.
b. Jana can recover the property as long as the property was a sale of goods.
c. Jana can recover the property whether it was real or personal property.
d. the good faith purchaser of goods for value receives a voidable title.
A dealer sells goods on credit to a buyer who uses the goods as equipment. The dealer
keeps a purchase money security interest in the goods. The dealer then borrows against
the security agreement of the buyer along with the dealer’s security interest in the
collateral. The collateral provided by the dealer to his lender in this type of transaction
is:
a. investment property.
b. chattel paper.
c. a document of title.
d. negotiable instruments.
e. None of the above.
A condominium differs from a cooperative in that a tenant in the latter:
a. rents his apartment from the cooperative.
b. owns his apartment in cooperation with others.
c. owns all the space except the common areas.
d. owns only the internal space.
Wayne helped Hank study all night for an important exam. After Hank got an “A” on
the exam, he told Wayne, “I will give you $10 for helping me get a good grade.” Wayne
said, “Thanks, I’ll take it.” There is:
a. no contract because there is no mutual assent.
b. no contract because there is no valid consideration.
c. no contract because $10 is reasonably inadequate consideration.
d. a contract with sufficient consideration.
Which of the following would be considered a valid and legally enforceable agreement?
a. An agreement to pay a legislator to vote for a particular bill
b. An agreement under which Arthur agrees to pay Barbara $3,000 to disparage the
product of Arthur’s competitor
c. An agreement by the seller of a service station not to enter the service station
business in Ohio for a period of 30 years after the sale of his business
d. An agreement by a car salesman not to sell automobiles or automobile parts in Marin
County for a period of one year after terminating his employment
Assuming no special provision in the articles of incorporation, special shareholder
meetings may be called by:
a. the president of the company.
b. any individual director.
c. any individual shareholder.
d. holders of at least 10% of shares.
The Reform Act provides a safe harbor eliminating civil liability if a forward-looking
statement is:
a. material.
b. made with the assumption that it was not false or misleading.
c. identified as a forward-looking statement and is accompanied by meaningful
cautionary statements.
d. made in connection with an initial public offering or a tender offer.
Don has an employment contract with Dunkirk Ice Cream. He sells ice cream and
novelty ice cream products. He has nine children and doesn’t make enough money, so
he decides to see if another dairy will hire him, too. “After all,” he reasons, “most stores
carry four or five different brands.” His employment contract prohibits him from
competing. If Don sells for another dairy in addition to Dunkirk, will he be in trouble
under his contract?
a. No, it is unenforceable as against public policy.
b. Yes, it is likely to be enforceable during employment.
c. No, the prohibition against competing is enforceable only after he quits Dunkirk.
d. A court would have to rule on the enforceability of the covenant not to compete since
courts are reluctant to enforce such covenants during a period of employment.
If Margie makes out a check for $27.50 when she has only $10 in her account, her bank
may:
a. refuse to pay the check.
b. pay the check.
c. bill Margie for $17.50 and a service charge.
d. Any of the above.
Invasion of privacy consists of:
a. appropriation.
b. intrusion.
c. public disclosure of private facts.
d. All of the above are invasions of privacy.
According to the Restatement, manifesting an intention to act or an intention to refrain
from acting in a specified manner is considered to be:
a. an implied in fact contract.
b. an express contract.
c. a promise.
d. a quasi contract.
Answer the following:
Once a Chapter 13 plan has been confirmed, it may:
a. be modified at the debtor’s request but only if the trustee agrees.
b. be modified only if all unsecured creditors agree.
c. not be modified.
d. be modified at the debtor’s request.
A securities issuer that has reported continuously under the 1934 Act for at least three
years is a(n):
a. well-known seasoned issuer.
b. seasoned issuer.
c. unseasoned issuer.
d. None of the above.
Markell Inc. issued stock options. Which of the following is not true?
a. The shareholders determine the terms upon which the stock options are issued, their
form and content, and the consideration for which the shares are to be issued.
b. A stock warrant is a type of stock option that is freely transferable and that typically
has a longer term than a stock right.
c. Markell Inc. may use stock options or warrants in its incentive compensation plans
for the directors and officers of the company.
d. Markell Inc. may use stock options to help in raising capital for the business by
making one class of securities more attractive by including in it the right to purchase
shares in another class.
What are some of the areas where the board determines corporation policy?
a. Selecting and removing officers
b. Determining the corporation capital structure
c. Initiating fundamental changes and declaring dividends
d. Setting management compensation
e. All of the above
Match the following:
a. A principal’s obligation to compensate an agent for loss whenever the agent makes a
payment or incurs an expense while acting on behalf of the principal.
b. Holding a person liable as a principal in order to protect third parties who justifiably
rely on a reasonable belief that a person is an agent.
c. A consensual relationship authorizing one party to act for and on behalf of another
party.
d. Responsibility of an agent to keep and render to the principal a record of money or
other property received or paid out on the principal’s behalf.
e. The requirement that an agent act with reasonable care and skill in performing the
work for which she is employed.
f. The formal, written appointment of an agent.
g. Person who agrees to do a particular job and who is not subject to the other’s control
over the manner and means of conducting the work.
h. A duty that arises out of a relationship of trust and confidence that is one of utmost
loyalty and good faith.
i. A form of liability without fault in which the principal is held liable for the agent’s
unauthorized tort.
j. Authority that is either express or implied and that depends upon consent manifested
by the principal to the agent.
k. A principal of whom a third party has no knowledge, because he has no reason to
believe the agent is acting for a principal.
l. An irrevocable agency relationship.
m. Power arising from words or conduct of the principal which manifests to a third
person that the agent has actual authority and upon which the third person justifiably
relies.
n. A principal that a third party knows exists but does not know who it is; partially
disclosed.
o. The confirmation or affirmance by one person of a prior unauthorized act that another
has done as his agent.
1) agency
2) indemnification)
3) power of attorney)
4) duty to account)
5) duty of diligence)
6) agency by estoppel
7) independent contractor
8) fiduciary duty
9) agency coupled with an interest
10) actual authority
11) apparent authority
12) respondeat superior
13) ratification
14) undisclosed principal
15) unidentified principal
A pregnant worker:
a. is protected under the Pregnancy Discrimination Act only if she is married.
b. under the Pregnancy Discrimination Act must be granted at least four months’ of
unpaid leave for pregnancy and childbirth.
c. may not be forced to take maternity leave unless the employer can establish a bona
fide occupational qualification defense.
d. Both (b) and (c) are correct.
Under most modern statutes, what three elements must be met for a charge of burglary?
An implied in fact contract is formed by conduct.
In all states, a sixteen-year-old who drives a car will not be held to the same standard of
care as an adult for purposes of determining negligence.
The common law “mirror image” rule has been modified by the Code.
A totten trust is revocable by the creator.
The same act can never be both a tort and a crime.
Fitness for a particular purpose and merchantability are implied warranties that apply
only to sales by merchants.
The term actus reus refers to the mental intent element of a crime.
A gratuitous assignment is generally valid and enforceable.
The bulk sales portion of the Code applies only to transfers in the ordinary course of
business.
Even though contributory negligence is proven by a defendant in a state in which it acts
as a complete bar to recovery, the plaintiff may still recover if the defendant had the last
clear chance to avoid the injury but did not avail himself of the chance.
Parker agrees to sell to Thompson 500 bushels of soybeans at $6 per bushel. Without
the fault of Parker or Thompson, 200 bushels are destroyed. Thompson must take the
remaining 300 bushels and pay Parker $1,800.
Disparagement differs from defamation in that defamation pertains to personal
reputation, whereas disparagement pertains to economic interests.
A straight bill of lading under which goods are deliverable only to a person named in
the bill may be transferred by assignment or negotiation.
Define the statute of frauds and give an example.
The Constitution has recently been held to prevent all employers from subjecting
employees to drug testing without first obtaining a search warrant.
The UCC permits an oral agreement for the sale of goods to be enforced against a party
who admits to the contract in court, even though the statute of frauds requires the
agreement to be in writing.
Unless otherwise agreed, an agent making a contract for an unidentified principal is not
a party to the contract.
Under the rule in Hadley v. Baxendale, only foreseeable damages can be recovered.