Pat’s Pen Co. manufacturers and sells an inexpensive ball-point pen. Salley’s Stationery
purchases the pens for $.25 each in quantities of 1,000. Salley’s discovered that a
national chain, a competitor of Salley’s, buys the pen at $.20 for 1,000. If Salley’s
Stationery sues Pat’s Pen Co. for price discrimination
a. Pat’s Pen Co. will win if it can prove that it has been selling to the national chain
continuously at the cheaper rate.
b. Pat’s Pen Co. will win if it can prove that it did not intend to economically harm
Salley’s Stationery.
c. Salley’s Stationery will win if it can prove price discrimination occured and that it
lessened competition.
d. Salley’s Stationery will win since price discrimination is a per se violation with no
real defenses.
Which of the following statements regarding automobile pollution is true?
a. If states do not adopt their own set of automobile pollution standards, they must abide
by those of the federal government.
b. California and New York are the only two states with separate automobile pollution
standards.
c. States have the right to adopt California standards instead of federal rules.
d. Because of federal standards, motor vehicles are no longer a major source of air
pollution.
Neon orders one thousand 25-foot nylon ropes from Hang’em High Co. Upon
inspection of the delivery, Neon learns that Hang’em sent five hundred 25-foot ropes
and five hundred 20-foot ropes. Neon may
a. demand that Hang’em send 500 additional 25-foot ropes and get to keep the 20-foot
ropes as well.
b. accept the 500 conforming ropes and reject the 500 nonconforming ropes.
c. seek an installment contract.
d. immediately “cure” by finding a substitute product.
Floyd offers to sell his 1967 Ford Mustang convertible to Tim. Before they conclude
their negotiations, Floyd dies. Which of the following is true?
a. Floyd’s heirs must sell the car to Tim.
b. Floyd’s heirs must continue to negotiate the offer and sell the car, if a reasonable
price can be determined.
c. The offer terminates automatically upon Floyd’s death.
d. There is a contract if Tim accepts before learning of Floyd’s death.
Mason bought a rotisserie in preparation for a party he was planning. When he put a
chicken on the rotisserie, it would not rotate, but stayed in one position where it burned
the chicken on one side and left it raw on the other. When he returned the rotisserie to
the store, the salesperson disclaimed any responsibility because he had never told
Mason the rotisserie would rotate the food as it cooked. Does Mason have any
recourse?
a. No, the salesperson did not make any express warranties.
b. Yes, the salesperson made an express warranty just by selling the goods.
c. Yes, although the salesperson did not make any express warranties, the UCC imposes
an express warranty on the sale.
d. Yes, although the salesperson did not make any express warranties, the UCC imposes
an implied warranty of merchantability under which the rotisserie is guaranteed to be fit
for the ordinary purposes for which it is used.
A patent is available for an idea as well as a tangible application.
a. True
b. False
An auditor who determines a company is materially misstating certain items on its
financial statements should issue
a. an unqualified opinion.
b. a qualified opinion.
c. an adverse opinion.
d. a disclaimer of opinion.
An official acknowledgement that a debtor is under the jurisdiction of the bankruptcy
court is called
a. a voluntary petition.
b. an involuntary petition.
c. an automatic stay.
d. an order for relief.
Prior to the Industrial Revolution, the primary English law of employment was that, in
the absence of a contract, a worker was hired for a year at a time.
a. True
b. False
Dusty dissociated from a partnership. To protect himself from debts of the partnership
after he leaves, Dusty should
a. secure an indemnity bond.
b. file a statement of dissociation with the Secretary of State.
c. execute a formal written agreement with the remaining partners.
d. demand that the partnership terminate.
You leave your watch with Bryte Jewelers for repair. Bryte could not transfer ownership
interests in the watch to a customer of the jewelry shop without your permission.
a. True
b. False
Under the UCC, a holder in due course is a holder who has given value for the
instrument. Which of the following holders have given value for the instrument?
a. Beth promises to paint the neighbor’s house in exchange for a promissory note as an
advance payment for the job.
b. Steve gives a note and mortgage on his house to his attorney as a retainer to handle
his pending divorce.
c. Todd, a newspaper carrier, accepts a properly indorsed two-party check for the past
two months of deliveries.
d. All of the above are correct.
UCC Section 2-204 provides three important rules that enable parties to make a contract
quickly and informally. Which of the following is NOT one of these rules?
a. The parties may make a contract in any manner sufficient to show that they reached
an agreement.
b. A writing sufficient under the statute of frauds may be a simple memo, a letter, or
informal note, but need not itself be a contract.
c. The UCC will enforce a deal even though it is difficult to say exactly when it was
formed.
d. A court may enforce a bargain even though one or more terms were left open.
Social media postings, wikis, customer reviews, and blogs are all examples of
user-generated content.
a. True
b. False
Haley is an accountant for a large hospital network. She knows that she could easily
‘skim” money from the organization to keep for herself and chances are shewould not
get caught. However, she keeps thinking about what would happen to her and her
family if her actions went viral and appeared all over the Internet or in her local
newspaper. What ethics test is Haley considering?
a. the social media test
b. the front page test
c. the public scrutiny test
d. the bystander test
Sweet Plantation, Inc. made a written contract with Candy, Inc. whereby Sweet
Plantation agreed to supply all of Candy’s sugar requirements for the next year at $.25
per pound. A dispute arose as to how much sugar Sweet is to supply. The parol evidence
rule will bar Sweet’s introduction of evidence concerning the intent of the requirements
of Candy.
a. True
b. False
Obscene speech is protected by the First Amendment.
a. True
b. False
Art and Alma made capital contributions of 60% and 40% respectively to their newly
formed partnership, AA & Associates. They did not have a written partnership
agreement. At the end of the first year, the partnership made a profit of which Alma
now claims half. However, Art maintains he should receive 60%. Who is correct?
a. Art, since the UPA presumes that profits and losses are divided in proportion to
capital contribution.
b. Art, since it would only be fair.
c. Alma, because she works in the business.
d. Alma, as the UPA provides that profits are split equally unless the partners agree
otherwise.
Ali and Latosha bought a house through a mortgage they secured from their local bank.
When they failed to make their mortgage payments, the bank used ________ to
foreclose on the property and sell it.
a. a lien
b. adverse possession
c. easement by prescription
d. reversion
Nancy was a partner of a small business. She could see that the business was beginning
to fail and that it was very unlikely it would recover. Not wanting to lose her
investment, she asked that the court require the partnership to dissolve since she did not
have a legal right to withdraw at that time. Does a court have the authority to order a
partnership to dissolve?
a. Yes. A court can dissolve a partnership when it is convinced that the partnership is
unlikely to succeed.
b. Yes. Under the UPA, if a partner can show the court the business suffered a loss the
year before the case was filed, the court can dissolve the partnership.
c. No. A court can only dissolve a partnership at the request of all the partners.
d. No. A court does not have authority to dissolve the partnership.
Which of the following would NOTbe personally liable for the debts of the business?
a. a sole proprietor
b. a partner in a general partnership
c. an S corp shareholder
d. a partner in a joint venture
Brett applies for a $60,000 loan to purchase a tractor for his farm business. This loan is
subject to TILA disclosure requirements.
a. True
b. False
GBH, an accounting firm, was hired to prepare financial statements for E-treme. GBH
a. cannot show the working papers to E-treme unless there is a valid court order.
b. cannot show the working papers to E-treme unless it obtains permission from the
AICPA.
c. can show the working papers to anyone that asks, since the accountant owns them.
d. must allow E-treme access to the working papers.
Thompson raised 80 acres of corn, most of which he used to feed his own cattle. He
locally sold what he did not use. Based on the Supreme Courts ruling in Wickard v.
Filburn,
a. Congress has no authority over Thompsons activity based on the negative aspect of
the Commerce Clause.
b. Congress may regulate Thompsons farming activity because it has a substantial
economic effect on interstate commerce.
c. only Thompsons local government can regulate his farming activity.
d. only Thompsons state and local governments can regulate his farming activity.
Alice works for a large advertising agency where she is hoping to be promoted to a
management position. Alice’s mother and two sisters all died of breast cancer at a young
age. Alices employer knows this, and will not put Alice in a management position
because he fears that she will also develop cancer. This decision is allowed because it is
in the best interest of the company.
a. True
b. False
Under both state and federal law, a shareholder can generally revoke a proxy at any
time.
a. True
b. False
The term “S Corporation” comes from
a. the Internal Revenue Code.
b. the FTC rules.
c. the Securities and Exchange Commission.
d. state corporation law.
Sara decided to incorporate her business under the name Gomo, Inc. Before Gomo was
incorporated, Sara signed a contract in the name of Gomo, Inc. to lease a store front.
Sara did not tell the other party that Gomo was not yet formed. Sara is personally liable
on the lease.
a. True
b. False
What federal agency requires that the seller of a franchise give the potential buyer
Franchise Disclosure Document (FDD) and audited financial statements?
a. The Securities and Exchange Commission (SEC)
b. The Interstate Commerce Commission (ICC)
c. The Federal Trade Commission (FTC)
d. The Franchise Sales Commission (FSC)
A company’s trade secret lasts for
a. 20 years after the application is filed.
b. 70 years after the death of the creator.
c. 10 years, but it can be renewed for an unlimited number of terms as long as it is used.
d. as long as it is kept confidential.