Employee e-mail is:
a. spontaneous.
b. candid.
c. discoverable.
d. all of the above.
If a man names his wife as beneficiary of his life insurance and the two are thereafter
divorced, the insurance policy:
a. is canceled automatically.
b. is not affected.
c. is divided into two policies on the life of each for one-half the amount of the original
policy.
d. becomes the property of the former wife.
When parties intend to negotiate an order instrument but the holder fails to indorse it:
a. there is no negotiation.
b. the transfer has the effect of a contract assignment .
c. the transferee has the right to require the transferor’s indorsement if consideration
was given.
d. all of the above.
A landlord is most likely liable to a tenant who is injured by:
a. a defective condition of the leased premises that is under the control of the tenant.
b. an obvious condition of the leased premises known to the tenant at the time the lease
was made.
c. an unforeseeable criminal act of a third person.
d. the criminal act of a third person, when such conduct was reasonably foreseeable.
In applying the “front-page-of-the-newspaper” test to a contemplated course of conduct
one should ask:
a. Would I be found criminally liable if this winds up on the front page of the
newspaper?
b. Would I be liable for monetary damages if this winds up on the front page of the
newspaper?
c. Would I be willing to have my spouse, friends, and children read about this if it winds
up on the front page of the newspaper?
d. Would I be able to explain this to the authorities if it winds up on the front page of
the newspaper?
A codicil:
a. must be executed with the same formalities as a will.
b. is treated the same as a will.
c. does not invalidate the entire will.
d. all of the above.
A customer requested a price from a carpenter on a teak cabinet to be built according to
the buyer’s specifications. Because teak wood is difficult to obtain, the customer agreed
to pay the cost of the wood plus $175 and the carpenter agreed to build it. Which of the
following is correct?
a. Although the price is somewhat unclear, the parties have entered into a contract.
b. This is an agreement to agree, and is not binding.
c. This agreement fails for indefiniteness.
d. The carpenter is bound by the agreement, but not the customer.
Racketeering is defined as:
a. using money to influence public officials.
b. using money to influence employees of competitors.
c. using money derived from illegal activities to invest in legitimate businesses.
d. using money to influence foreign officials.
The buyer may cancel the contract if the:
a. seller fails to deliver the goods.
b. seller has repudiated the contract.
c. goods have been rightfully rejected.
d. all of the above.
_________ of a corporation may occur when management is deadlocked and the
deadlock cannot be broken by the shareholders.
a. Bankruptcy
b. Consolidation
c. Reinstatement
d. Judicial dissolution
If the collateral is in the possession of the creditor:
a. a financing statement must be filed to perfect the interest.
b. the security interest is perfected.
c. only a security interest has been obtained.
d. the type of goods will determine the method of perfection.
The defense of noncompliance may be raised:
a. by the parties to the oral contract.
b. by third parties such as an insurance company or the IRS.
c. both a. and b.
d. neither a. nor b.
The liability of a shareholder in a professional corporation for the malpractice of an
associate:
a. varies from state to state.
b. is sometimes determined in court.
c. both a. and b.
d. neither a. not b.
A seller may cancel a sales contract if the buyer:
a. wrongfully rejects the goods.
b. repudiates the contract.
c. fails to make a payment due on or before delivery.
d. all of the above.
What is the principal law regulating equal employment opportunity in the United
States?
a. Title VII of the Civil Rights Act of 1964
b. The United States Constitution
c. The Fair Labor Standards Act
d. The Equal Pay Act
In which of the following situations would a third party acquire greater rights than the
original lessee?
a. an assignment
b. a sublease
c. a. and b.
d. neither a. nor b.
Professionals who fail to exercise normal care and skill in the performance of a contract
for their services may be sued for a special type of breach described as:
a. sub par performance.
b. illegal practice.
c. malpractice.
d. competence reservation.
Which of the following is an incorrect statement about officers?
a. Their duties are generally set forth in the corporation’s bylaws.
b. They have a fiduciary obligation to the corporation.
c. They are agents of the corporation.
d. Their authority as agents is increased if they are shareholders.
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 goal of the North American Free Trade Agreement (NAFTA) is to eliminate all
tariffs between the United States and Europe.
Partnership property may consist of:
a. real property only.
b. personal property only.
c. any and all property acquired by the partnership.
d. all property contributed by the partners or acquired for the firm or with its funds.
When a negotiable instrument is negotiated by delivery without indorsement, the
warranty liability of the transferor runs:
a. only to the immediate transferee.
b. not to the immediate transferee, but to all subsequent transferees.
c. to both the immediate transferee and all subsequent transferees.
d. neither to the immediate transferee, nor to any subsequent transferees.
Which is a correct statement about arbitration of contractual disputes regarding
international trade?
a. It is done in court.
b. There is extensive judicial review of the decision.
c. Parties frequently arbitrate in neutral countries.
d. It is not available in disputes of more than $1 million.
Which federal agency has primary responsibility for enforcing environmental laws?
a. the Environmental Protection Agency
b. the Council of Environmental Quality
c. the Superfund Panel
d. none 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.
Contracts in cyberspace:
a. are formed as a result of the desire for speed.
b. are formed using purchase orders and invoices submitted via computer.
c. require both an offer and an acceptance.
d. all of the above.
Which of the following is not characteristic of the “living” Constitution?
a. strong government
b. strong President
c. administrative agencies
d. states’ powers equal to federal powers
A provision stipulating the amount of money damages to be paid in the event of default
or breach of contract is known as a __________ damages clause.
a. nominal
b. contract
c. liquidated
d. breach
If a contract contains a delivery term of __________, the seller’s responsibility is to get
the goods to the buyer.
a. FOB place of shipment
b. FOB place of destination
c. CIF place of shipment
d. CIF place of destination
Morris issued a check to Al in payment of a debt. There were sufficient funds in Morris’
account to cover the check when it was presented for payment. However, due to an
error, the bank dishonored the check. Which of the following parties is/are potentially
liable to the holder?
a. the drawee bank only
b. Morris and the drawee bank
c. Morris only
d. the drawee bank and any collecting bank
Unwillingness of businesses to voluntarily improve the ethics of their practices has little
practical effect on the regulatory environment.
Criminal penalties for corporations are based on a percentage of sales.
The “known user” rule imposes liability on the accountant for negligent malpractice
when he or she can foresee the parties who will rely on his work in the financial
statements.
United States antitrust laws can protect United States exports.
Religious societies may not grant hiring preferences to members of their religion.
Bob Corporation entered into a contract to sell parts to Zeck. The contract provided that
the goods would be shipped “FOB Bob’s warehouse.” Bob shipped parts to Zeck that
were stolen from the carrier. When Zeck checked the invoice, Zeck discovered that Bob
had sent Model #20B instead of Model #20A, which the contract required. Whose loss?
Why?
Consumer protection law often requires those dealing with consumers to make certain
mandated disclosures.
Trademarks and service marks are recorded with the Register of Copyrights.
Any shareholder owning more than five (5) percent of any class of the corporation’s
equity securities is statutorily defined as an insider and must file with the SEC a
disclosure statement regarding such ownership and all related transactions.
A bank always is liable to the depositor on a counterfeit check that the bank has paid.
Decisions made by agencies are more likely to be reversed than to be accepted by the
court on appeal.
The criminal law of all states is the same because all states have adopted a uniform
criminal code.
Another term for par value is book value.
An auto dealer who does not actually know of a roll-back can use lack of knowledge as
a defense against odometer fraud, regardless of the condition of the car.
The FTC requires advertisers to maintain records of the data used as support for
statements made in the ads that deal with the safety, performance, efficacy, quality, or
comparative price of an advertised product.
Kentucky Lumber and Millwork Company contracted to supply Rommell Company
millwork for use in the construction of a school building. While the work was in
progress, the Kentucky Lumber mill was destroyed by fire. For two months thereafter,
Kentucky Lumber and Millwork supplied Rommell with millwork purchased from a
third party. Kentucky Lumber and Millwork did not wish to continue this plan and
declared that the contract was ended. Rommell brought an action against Kentucky
Lumber and Millwork to enforce the contract. How will the court decide?
Order paper is converted into bearer paper by the holder’s blank indorsement.
When a bank certifies a check, the amount involved in the certification will be retained
in the depositor’s account until payment of the certified check.