Lance indorses a promissory note to Connie in exchange for consideration. Unknown to
Lance, the note is not good because the maker’s signature was forged. Connie later
attempts to present the instrument for payment to the original alleged maker, Lilly, who
is able to deny liability for payment due to the forged signature. Connie may later sue
Lance for breach of a transfer warranty.
a. True
b. False
Upon graduating from college, Kathy announced her plans to enter law school the
following fall and to marry Rick in December. Kathy’s father was afraid that marriage
during her first year in law school might cause her to fall behind in her studies or cause
her to drop out of school. He called Kathy and promised her $10,000 if she postponed
her wedding until after completion of her first year of law school. Kathy agreed and
postponed the wedding for a year. Kathy successfully completed her first year of law
school, but soon thereafter, Kathy’s father died. The administrator of her father’s estate
claimed she was not entitled to the $10,000 because there was no consideration for her
father’s promise. If Kathy sues the estate, she will probably be
a. unsuccessful because her father’s death terminated the contract.
b. successful, as there was consideration.
c. unsuccessful because her father received no benefit.
d. unsuccessful because it was merely fatherly advice not to get married during the first
year of law school.
Those who violate environmental laws
a. may be subject to criminal penalties if they violate certain statutes of the EPA.
b. are liable only for civil damages.
c. rarely receive punishment due to the lack of any strong structure of federal
regulation.
d. may face criminal charges, but not imprisonment.
A tenancy with no fixed duration is a
a. month to month tenancy.
b. tenancy at will.
c. periodic tenancy.
d. tenancy for years.
The 1934 Act requires companies with a class of stock that is publicly traded to make
ongoing, regular disclosure with the SEC.
a. True
b. False
What is a force majeure event?
a. any action that makes the contract unprofitable for either party
b. any finding in a contract that shows a provision was deliberately left unclear
c. a disruptive, unexpected occurrence for which neither party is to blame that prevents
one or both parties from complying with a contract
d. any happening that fulfills one of the conditions in the contract, making it
enforceable
Armand Industries is producing a foul-smelling odor as a by-product of its factorys
operations. However, the emission is not harmful to the health of those exposed to it.
Armand would be subject to a primary national ambient air quality standard established
by the EPA.
a. True
b. False
If the seller has made a substantial beginning in manufacturing customized goods, then
an oral contract may be enforceable regardless of the amount of money involved in the
contract.
a. True
b. False
Which of the following is a valid defense to a defamation claim?
a. The statement was not slanderous only libelous.
b. The statement was only an opinion.
c. The First Amendment guarantees the absolute right to free speech.
d. The statement did not cause any grave injury.
To verify transactions, accountants use two mirror-image processes: vouching and
tracing. Tracing is a process where the accountant begins with an item of original data
and checks out all the activity that has occurred from beginning to end to make sure it
has been properly recorded throughout the bookkeeping process.
a. True
b. False
A partnership is a taxable entity, separate from the partners.
a. True
b. False
An intentional tort involves conduct in which
a. the defendant intended to harm the plaintiff.
b. the defendant intended a certain physical act which ends up injuring someone.
c. injuries are caused to someone because of the defendants neglect or oversight.
d. there is resulting punishment, including prison, for the defendant.
A government action interfering with a fundamental right will be judged using
a. strict scrutiny.
b. intermediate scrutiny.
c. minimal scrutiny.
d. legitimate scrutiny.
Belinda and Franco are partners in a jewelry business. Without Franco’s knowledge,
Belinda buys a ring from Janice for $2,200. Janice has no reason to question the
transaction since she is a regular customer of the store and assumes Belinda has
authority to buy her ring. When Franco finds out he is furious and does not want to
honor the agreement. Which of the following is TRUE?
a. Belinda acted with absolute authority and the partnership must honor the transaction.
b. Belinda acted with actual authority and the partnership must honor the transaction.
c. Belinda acted with implied authority and the partnership must honor the transaction.
d. Belinda acted with apparent authority and the partnership must honor the transaction.
The 1933 Act prohibits fraud only in transactions involving registered securities.
a. True
b. False
Misleading commercial speech may be outlawed altogether without violating the
Constitution.
a. True
b. False
Which term refers to whether an offeree accepts an offer by promising, by making a
down payment or by performing?
a. manner of acceptance
b. methodof acceptance
c. definiteness
d. intent
On Monday, Mick puts an offer in the mail to Sheri to sell his guitar for $50. Monday
night when jamming with his buddies, he decides he will really miss his old guitar and
has second thoughts about selling it. Tuesday morning he puts a revocation in the mail
informing Sheri he has changed his mind and the guitar is no longer for sale. The
revocation is effective on Tuesday morning.
a. True
b. False
Florence borrows $1,500 from Fremont, leaving her gold necklace with Fremont as
collateral. Two weeks earlier, Florence had borrowed $1,000 from Corner Bank.
Florence signed a security agreement and a financing statement giving Corner Bank a
security interest in the same gold necklace. The financing statement is filed in the
appropriate location. If Florence defaults on both loans, which creditor has the superior
rights to the necklace?
a. Fremont, because his loan was the first to attach.
b. Fremont, because possession takes priority over filing.
c. Corner Bank, because Fremont did not perfect his interest.
d. Corner Bank, because Fremont did not have a written security agreement.
Tender offers are regulated on the federal level by the National Labor Relations Act.
a. True
b. False
Ruppart Manufacturing has a contract for the sale of 100 cases of teaching supplies to
Teachers Co-op, Inc. Payment of the order is to be made in installments over the next
year. Ruppart Manufacturing keeps a security interest in the cases sold to assure
payment by Teachers Co-op, Inc. When the order is completed, Ruppart ships the order.
Legally
a. both Ruppart and Teachers have an insurable interest in the supplies.
b. only Ruppart has an insurable interest in the supplies.
c. only Teachers has an insurable interest in the supplies.
d. neither Ruppart nor Teachers has an insurable interest in the supplies.
The practice of inferring needs and preferences from a consumer’s online behavior and
then targeting related advertisements to them is referred to as
a. data mining.
b. behavioral marketing.
c. Internet tracking.
d. targeted selling.
Rodney was employed by Deluxe Discount Store. Rodney’s manager directed him to
check the prices of dog food at Huge Savings Store. The manager of Huge Savings
Store saw Rodney writing down prices and asked him to leave. Rodney, fearful that he
would be fired by Deluxe, refused to leave. Rodney committed the tort of
a. larceny.
b. trespass.
c. misrepresentation.
d. conversion.
What is an inside director?
a. A shareholder charged with the illegal act of insider trading
b. A member of the board of directors who is also a board member of a competing firm
c. A shareholder who is a board member of a competing firm
d. A member of the board of directors who is also an employee of the corporation
Millie ordered clothes from a mail order catalog. No time was specified as to when the
goods would be shipped. In such a case the FTC requires that the company must ship
the goods to Millie
a. within 3 business days after receiving the order.
b. within 10 business days after receiving the order.
c. within 30 days after receipt of the order.
d. within a reasonable time and within time lines consistent with industry standards.
Anti-takeover tactics include all EXCEPT
a. staggered board of directors.
b. negative tender offers.
c. greenmail.
d. poison pills.
Contracts generally do not require bargaining that leads to an exchange between the
parties.
a. True
b. False
Louie has the right to drive across Bernie’s land, which is adjacent to Louie’s property,
to reach the ocean front. Louie’s right to drive across Bernie’s land is called
a. an easement appurtenant.
b. a profit appurtenant.
c. an easement in gross.
d. a profit in gross.
Johann, a well-known musician, agrees to give ten guitar lessons to Elton for $2,000.
Nothing in the contract itself prohibits a delegation. If Johann delegates his obligation
to Eugene, a second-year musical student and enthusiastic guitar player, then the
delegation will probably be
a. permitted because contracts may be freely delegated.
b. permitted because the contract is just for music lessons.
c. prohibited because the contract is for service from a specific person.
d. prohibited by the UCC because this is a sale of services.
Derek and Abyan were discussing business over lunch when they agreed on the sale of
a five-acre parcel of land. Since neither of them had any paper with them, Derek wrote
the following on a napkin: “Abyan agrees to purchase from Derek a 5-acre parcel
located at the local address of 123 105th Street, St. Joseph, Minnesota, U.S.A. for the
price of $4,500 per acre. Transfer of title, payment, and possession to take place on May
1, 2011.” Abyan signed the napkin. On May 1, 2011, Derek was ready to close the deal
and transfer title but Abyan refused to pay the purchase price. If Derek sues Abyan for
the price of the land, the most likely result will be:
a. Abyan will win because the writing is not sufficient under the statute of frauds.
b. Derek will win because the writing is sufficient under the statute of frauds.
c. Abyan will win because Derek did not sign the writing.
d. Derek will win because the statute of frauds does not apply to this situation.
The most common form of business ownership is the corporation.
a. True
b. False
Estate planning has two primary goals: to ensure property is distributed as the owner
desires and to minimize estate taxes.
a. True
b. False
Which of the following offers are considered to be irrevocable for a given period?
a. Firm offers.
b. Option contracts.
c. A writing signed by a merchant offering to hold open an offer for the sale of goods
for a stated period.
d. All of the above.
Reciprocal dealing is a type of vertical cooperative strategy.
a. True
b. False