The concept of imposing liability for the fault of another is known as __________
liability.
a. imperious
b. gregarious
c. vicarious
d. virtual
Whatever is received upon the sale, exchange, collection or other disposition of
collateral is known as:
a. goods.
b. paper.
c. proceeds.
d. security interest.
Only the parties to a sales contract could sue each other under the traditional concept of:
a. exclusivity of contract.
b. privity of contract.
c. privacy of contract.
d. priority of contract.
The right to ___________ is a second chance for a seller to make a proper tender of
conforming goods.
a. rehabilitate
b. repair
c. heal
d. cure
When a plaintiff sues on the basis of strict tort liability, the action is subject to:
a. the UCC statute of limitations.
b. the appropriate state’s tort statute of limitations.
c. no statute of limitations.
d. FTC approval.
A thief stole Art’s checkbook and forged Art’s name as drawer of a check. The drawee
paid the check in good faith and sent it to Art with the monthly statement on January 3,
2013. The thief forged other checks during February and March of 2013, which the
drawee in good faith paid. All paid checks were sent to Art with monthly statements. On
May 25, 2014, Art discovered all of the forgeries and notified the drawee. For which
check(s) is Art entitled to be reimbursed?
a. none of them
b. all of them
c. the first check only
d. the last check only
In order to protect themselves from disclosure of proprietary or confidential
information, businesses may:
a. implement security measures to prevent access by outsiders.
b. enforce contractual nondisclosure agreements against departing employees.
c. limit disclosure of such information to those with a need to know.
d. all of the above.
A court is a tribunal established by:
a. the parties to a lawsuit.
b. the government.
c. the parties to a contract.
d. none of the above.
The federal government may impose regulations on business:
a. by virtue of its police power.
b. to advance the interests of homeland security.
c. to advance the nation’s economic needs.
d. if those regulations do not impose an unreasonable burden on interstate commerce.
Ordinarily, a promise to perform an existing legal obligation is:
a. not consideration.
b. binding if the promisor promises to perform with extra care.
c. binding if the promisor promises to perform to suit the personal satisfaction of the
promisee.
d. binding if the promisee would experience substantial loss due to breach of the
promise.
Which of the following will affect the perpetual life of a corporation?
a. a change in stock ownership
b. the death of a shareholder
c. both a. and b.
d. neither a. nor b.
Workers’ compensation statutes do not typically provide for:
a. immediate medical benefits.
b. prompt periodic wage replacement.
c. a death benefit.
d. punitive damages.
A debtor is presumed to be insolvent on and during what number of days immediately
preceding the date of the filing of a bankruptcy petition?
a. 30
b. 60
c. 90
d. 120
The Public Company Oversight Board:
a. is a governmental body.
b. must have at least three board members that are CPAs.
c. enforces rules to ensure audit quality and auditor independence.
d. all of the above.
Federal environmental laws can be enforced through:
a. penalties.
b. criminal sanctions.
c. suits by private citizens.
d. all of the above.
Chapter 7 is:
a. a liquidation proceeding.
b. a reorganization proceeding.
c. an extended time payment plan.
d. always an involuntary proceeding.
Which of the following is an example of an improper payment?
a. A payment made after a letter of credit has expired.
b. A payment made in excess of the amount authorized by the letter of credit.
c. Both a. and b. are improper payments.
d. Neither a. nor b. are improper payments.
In most states, __________ provides that a security interest in a non-inventory motor
vehicle must be noted on the vehicle title registration.
a. a non-Code statute
b. UCC Article 2
c. UCC Article 9
d. judicial precedent
If a wire manufacturing company owned a mill to produce the metal used in making the
wire, this relationship between the companies would be best be described as:
a. a conglomerate.
b. a holding company.
c. an integrated industry.
d. a merger.
The frustration of purpose doctrine:
a. is based on common law.
b. requires that both parties were aware of the purpose.
c. temporarily suspends contract performance.
d. all of the above.
Which of the following implied warranties is created when the buyer relies on the seller
to pick out the goods that the buyer requires to meet a stated need?
a. conformity to description
b. Merchantability
c. fitness for a particular purpose
d. conformity to a sample or model
An express promise by a landlord to not disturb the tenant’s possession of the land is
known as the covenant of:
a. domesticity.
b. tranquil possession.
c. quiet enjoyment.
d. unfettered use.
The net assets of a corporation may be referred to as:
a. debentures.
b. stock.
c. capital.
d. bonds.
The issuer of a letter of credit:
a. is obligated to honor drafts drawn under the letter if the conditions specified in the
letter have been met.
b. has no duty to verify that the papers are properly supported by facts.
c. has no duty to verify that the underlying transaction has been performed.
d. all of the above.
What is not included in a common carrier’s lien on goods that it transports?
a. consequential damages
b. demurrage
c. costs of preserving the goods
d. costs of a sale to enforce the lien
A person becomes a(n) __________ at the moment of taking possession of abandoned
personal property.
a. Bailor
b. Bailee
c. constructive bailee
d. Owner
Payment to an authorized agent is:
a. payment to the principal only if the agent remits the payment.
b. payment to the principal if the third person informs the principal.
c. payment to the principal, provided the agent does not misappropriate the payment.
d. payment to the principal.
When a defendant asserts that even if everything the plaintiff said is true there is no
right to recovery, the defendant is making a:
a. counterclaim.
b. motion to dismiss.
c. motion for summary judgment.
d. deposition.
A legally binding agreement that can be rejected at the option of one of the parties is
called a(n):
a. void agreement.
b. revoked contract.
c. voidable contract.
d. optional agreement.
Rent is automatically increased:
a. if the lessor makes expensive improvements to the property.
b. when the cost of living increases.
c. if the lease contains an escalation clause.
d. if the lessor’s taxes on the rented property are increased.
A shareholder has a right to inspect the books of the shareholder’s corporation if:
a. the request is made in good faith.
b. the request is made with proper motives.
c. the inspection takes place at a reasonable time and place.
d. all of the above.
Customers are precluded from asserting unauthorized signatures or alterations if they do
not report them within __________ from the time the bank statement is received.
a. fourteen (14) days
b. forty (40) days
c. six (6) months
d. one (1) year
When a tenant remains in possession after the termination of the lease without
permission of the landlord, the landlord may treat the tenant as either a trespasser or a
tenant. Until the landlord elects to do one or the other, a tenancy __________ exists.
a. at sufferance
b. at will
c. for years
d. from year to year
An apparently voluntary agreement may in fact not be voluntary if:
a. undue influence is present.
b. physical duress is present.
c. economic duress is present.
d. all of the above.
George was the maker of a written promissory note that stated that $500 would be paid
on the sale of George’s automobile. George initialed the note instead of writing his full
name. The promissory note stated that it would be payable six months from the date.
The promissory note was not dated. You now have come into possession of this note. Is
this note negotiable? Discuss the elements of negotiability and whether each one has
been met.
When property is transferred to a trust, the trustee has legal title and the beneficiary has
equitable title.
In a disparate impact case, proof that the employer did not intend to discriminate is a
complete defense.
Officers and directors may be criminally liable for failure to prevent the commission of
a crime if they are found to be the “responsible corporate officers.”
Most states provide that if a dishonored check is not made good within a stated period
of time, it will be presumed that the check was originally issued with the intent to
defraud.
Peter contracted to purchase five (5) cases of soda and a vacuum cleaner because Peter
was planning a party for his son’s graduation. Both contract forms that Peter signed
contained exclusion of damages clauses; i.e., each contract stated that the buyer had no
right to sue the seller in the event that the goods were defective. Instead, each seller’s
sole obligation was to replace or repair the defective goods within a reasonable time of
being notified of the defect(s). These clauses in the contract were set forth in the
ordinary type of the contract and were not especially conspicuous.
The vacuum cleaner was delivered on Friday, the day before the party, when the rugs in
Peter’s home were quite dirty. The vacuum cleaner did not work properly. Peter notified
the seller, who responded by saying that nothing could be done until the following
week. Frantic because guests were coming, Peter hired a cleaning service to clean the
rugs.
While serving the soda to guests, one of the bottle caps burst from an unopened bottle
with great force. It struck Peter in the eye and he required medical treatment and
hospitalization.
Eventually, Peter sued both sellers for damages. Peter sought the expense of the
cleaning service from one. From the other, Peter sought damages for personal injury,
including his medical and hospitalization expenses. Both defendant-sellers cited the
exclusion of damages clauses as their defense.
It is a crime to post nasty opinions about someone in an Internet chat room.
A bailee’s duty of care for bailed property depends on the type of bailment.
The drawee of a check is always a bank.
If two firms consolidate, the new corporation usually succeeds to the rights, powers and
immunities of its component parts.
Under the “bedrock view,” the purpose of a constitution is to state certain fundamental
principles for all time.
In contrast to contributory negligence principles, comparative negligence principles are
never applied to malpractice situations.
The federal government may regulate any area of business to advance the nation’s
economic needs.
Arbitration procedures occur in a court of law.
When secret information is shared or communicated for a special purpose and the
person receiving the information knows it is not to be made known, it loses the
protection it had while secret.
Agreements not to compete are always void.
When the plaintiff seeks the remedy of specific performance, the plaintiff wants the
other party to carry out the terms of the contract and not pay damages.