The Alexo Corporation has been charged in a United States court with violation of
American antitrust laws in its foreign dealings. The firm has raised the defense that its
actions were compelled by the government of its host country. Alexo based its defense
on the__________ doctrine.
a. act-of-state
b. sovereign compliance
c. sovereign immunity
d. Treaty of Rome
For property insurance, an insurable interest must exist:
a. at the time the policy is purchased.
b. at the time of the loss.
c. both at the time the policy is purchased and at the time the loss is sustained.
d. for at least thirty (30) days before the loss is sustained.
If a maintenance employee at a hotel finds a pocketbook with $500 in cash while
cleaning an empty guest room, the employee:
a. is entitled to keep the property, because the employee has the legal status of a
“finder.”
b. must give the property to the manager of the hotel to be kept for the owner.
c. must place an advertisement in a local newspaper, and if the property is not claimed
within seven (7) business days, the employee is entitled to keep it.
d. can retain possession of the property until the owner establishes ownership.
Which of the following is not a necessary element of promissory estoppel?
a. The promisor and the promisee must engage in a bargained-for exchange.
b. The promisor must intend or should reasonably expect that the promisee will rely on
the promise.
c. The promisee must in fact rely on the promise in some definite and substantial
manner.
d. Enforcement of the promise is the only way to avoid injustice.
An exculpatory clause most likely would be held to limit or disclaim liability for
malpractice:
a. in an action based on fraud.
b. in a suit brought by a third person.
c. when the accountant can reasonably be expected to stand behind the information in
question.
d. when the clause is conspicuous, unambiguous, and clear.
Which of the following is true about administrative agencies?
a. Administrative agencies exercise powers guaranteed to them in the U.S. Constitution.
b. Administrative agencies exercise powers allocated to them by the president.
c. Administrative agencies make decisions that are rarely reviewed by the courts.
d. Administrative agencies make decisions that are effectively reviewed by voters.
The subject matter of a contract may relate to:
a. the performance of personal services.
b. the construction of a house.
c. the transfer of ownership of property.
d. all of the above.
An oral contract can be enforced when it relates to:
a. the purchase of a television set for $200.
b. the sale of an interest in land for $400.
c. managing a factory for five years.
d. a promise to answer for the debt of another.
If an offeree accepts an offer before it is effectively revoked:
a. a void contract is formed.
b. a voidable contract is formed.
c. an unenforceable contract is formed.
d. a valid contract is formed.
The Fourth Amendment to the United States Constitution’s protection against
unreasonable searches applies to:
a. personal homes only.
b. businesses only.
c. both homes and businesses.
d. none of the above.
Agreements that are illegal are:
a. enforceable if one party acted in good faith.
b. voidable by one of the parties.
c. void.
d. voidable by either party.
When a person has performed services under an oral contract that cannot be enforced
because of the statute of frauds, such person:
a. can recover the agreed payment for the services because a refusal to make payment
would be a breach of the contract.
b. can recover the reasonable value of the services because there is a quasi-contractual
duty to pay for the benefit received from such services.
c. cannot recover the value of the services because they were rendered under a
unilateral mistake of law.
d. can have the party receiving the services arrested for obtaining property by false
pretenses.
Which statement is true concerning administrative hearings?
a. The findings are turned over to a court of law for the final decision.
b. Denial of a jury trial is a denial of due process.
c. It is generally necessary to give notice of an administrative hearing and to allow
affected persons to be present.
d. Traditional courtroom rules of evidence must be applied.
An employee has the same status as:
a. an agent.
b. an independent contractor.
c. an employer.
d. none of the above.
A qualified indorsement is given by using the phrase __________.
a. “as is”
b. “without recourse”
c. “with all faults”
d. “buyer beware”
A principal is liable for crimes of an agent:
a. if committed at the principal’s direction.
b. if the agent is an employee and sells liquor to a minor without permission.
c. if the agent in the course of employment violates environmental protection laws.
d. all of the above.
When a zoning ordinance is adopted, any existing property used for a purpose that does
not conform to the zoning ordinance:
a. must be demolished.
b. must no longer be used for a nonconforming use or purpose.
c. may be used for any use that does not conform to the zoning regulation.
d. may continue to be used for the same nonconforming use.
A landlord who continuously accepts late rental payments without collecting the late fee
provided in the lease:
a. waives the late fee.
b. will collect the late fee at a later date.
c. is ignorant of the late fee.
d. allows the tenant to repudiate the lease.
An assignment:
a. is a contract.
b. requires consideration.
c. is a transfer of rights.
d. is not enforceable.
The Telephone Consumer Protection Act prohibits:
a. automated marking calls without prior express consent.
b. calls to patients’ room in hospitals.
c. calls after 9:00 PM.
d. all of the above.
A(n) __________ statement is a document, which may be requested by a paid-up
debtor, stating that a security interest is no longer claimed under the specified financing
statement.
a. execution
b. discharge
c. termination
d. hold harmless
The implied warranties of an unqualified indorser do not include a guarantee that:
a. payment of the instrument will be made.
b. the account of the drawer in the drawee bank contains funds sufficient to cover the
check.
c. both a. and b.
d. neither a. nor b.
Isidro issued a negotiable promissory note to his attorney in return for the attorney’s
promise to perform legal services. The attorney never rendered the legal services but
quickly negotiated the note to Anna, a holder in due course. Anna and Mark were
involved in business negotiations and Anna offered to purchase a car from Mark. She
offered as part payment for the car the note issued by Isidro. By coincidence, Mark
knew both Isidro and the attorney and the facts concerning the note and the
unperformed legal services. Despite this, Mark accepted a negotiation of the note from
Anna. Isidro refused to pay the note and Mark eventually sued Isidro to collect. What is
the probable outcome?
Which of the following is a defense to an action against an agent for breach of the
implied warranty of authority?
a. The agent acted in good faith.
b. The agent misunderstood the scope of authority.
c. The third person knew that the agent was acting beyond the authority given by the
principal.
d. All of the above are defenses.
The U.S. Patriot Act and airport security regulations were enacted for the protection of:
a. the person.
b. public, health, safety and morals.
c. the state.
d. personal rights.
A voluntary petition in bankruptcy may be filed by a(n):
a. husband and wife.
b. railroad company.
c. insurance company.
d. all of the above.
Among the guidelines for balancing the interests of various stakeholders to resolve
ethical dilemmas in business are:
a. identify potential parties who could be injured by the proposed action.
b. define the problem from both the decision maker’s and opposing viewpoints.
c. ask whether you would be willing to describe a proposed action to your family, the
board of directors, a congressional hearing, or other public forum.
d. all of the above.
If there are twelve (12) or more creditors, at least __________ of those creditors whose
unsecured and undisputed claims total __________ or more must sign the involuntary
petition.
a. one (1); $14,425
b. three (3); $14,425
c. one (1); $15,575
d. three (3); $15,575
Which of the following is not a condition necessary for ratification?
a. The agent must have purported to act on behalf of or as an agent for the identified
principal.
b. The third party benefiting from the ratification must give consideration for the
ratification.
c. The principal must have been capable of authorizing the act both at the time of the act
and at the time it was ratified.
d. The principal must have full knowledge of all material facts.
__________ of the federal environmental laws carry criminal penalties for violations.
a. All
b. Most
c. Very few
d. None
Which of the following actions is not prohibited by The Foreign Corrupt Practices Act?
a. offers of payments to government officials to influence a decision on behalf of the
firm making the payment
b. payments to government officials to influence a decision on behalf of the firm
making the payment
c. payments to low-level officials for expediting the performance of routine government
services
d. all of the above actions are prohibited by The Foreign Corrupt Practices Act
The bubble concept:
a. refers to dirty areas that do not meet federal standards under the Clear Air Act.
b. controls whether new factories can be built in a nonattainment area.
c. is a method for determining total emissions in one area.
d. all of the above.
Ordinarily, the drawee bank is liable to the drawer when it pays a check on which the
drawer’s signature has been forged.
Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, a
discharge is available only once every ten (10) years.
Before an appeal can be taken to a court concerning a determination of an agency, all
administrative remedies must be exhausted.
Boycotts are always illegal, even when done with good intentions.
Bud is unable to obtain a loan without some form of additional reassurances. Bud
comes to you for assistance. You are willing to help Bud, but you wish to protect
yourself from liability as much as possible. Would you prefer a surety or a guaranty?
The bank issuing the loan also wishes to protect itself as much as possible. Would the
bank prefer a surety or guaranty? If your oral assurances are enough to solidify the loan,
has a surety or guaranty been formed?
Consumer goods are not subject to perfection of a security interest.
An acceptance must be absolute and unconditional.
Both Congress and state legislatures enact statutory law.
In dealing with the corporation, directors act in a fiduciary capacity.
An ambiguity in an insurance policy is generally interpreted in favor of the insured.
When a municipality contracts with a contractor to pave a street, homeowners on that
block are third-party beneficiaries of the contract.
If a merchant sells a lawn mower that will not cut any type of grass, there is a breach of
the warranty of merchantability.
A manufacturer having a restriction on territories in the form of a sole outlet is a per se
violation.
For business crimes, managers cannot be held criminally responsible for the conduct of
their employees.
A bank must be given a reasonable amount of time to put a stop payment order into
effect.
A disclaimer based on lack of knowledge will always protect an accountant from
liability.
Manuel sued Patricia on a promissory note. Patricia admitted signing the note, but
raised the defense that Manuel was not a holder in due course. Can Manuel recover
without proving that he is a holder in due course?
With respect to property expressly entrusted to a hotelkeeper’s care, the hotelkeeper has
a bailee’s liability.