When can shareholders of a corporation be held personally liable for the liabilities of
the corporation.
a. if corporate shareholders do not comply with the technicalities of corporation law.
b. If they are corporate officers
c. If they are corporate stockholders
d. If they form an S corporation
Longs Department Store contracted to buy 1,000 drop-waist velour dresses in heather
gray from Durham. Subsequently, Durham called and asked to ship mink-colored
dresses instead of heather gray. Long agreed, in writing, to the change. Which statement
is correct?
a. The modification is not enforceable since there was no consideration for the change.
b. The modification is not enforceable since the parties are merchants.
c. The modification is enforceable.
d. Whether the modification is enforceable depends on the gap-filler rule.
Under which of the following does the insured have a right to borrow against his policy.
a. Term life policy.
b. Whole life policy.
c. Disability Insurance
d. Annuity contract.
Adverse possession allows someone to take title to land if she demonstrates possession
that is:
a. Exclusive
b. Adverse to all others
c. Continuous.
d. All of these answers are correct
Which of the following is NOT a type of coverage in automobile insurance?
a. Collision
b. Comparative
c. Liability
d. Uninsured motorist
Nortron Corporation wants to create an ethical environment in its company. Which of
the following has been found to help foster a sense of ethics within an organization?
a. The company may develop a formal, written ethics code.
b. The company may institute a formal ethics training program for the employees.
c. The top executives may provide good examples by behaving ethically themselves.
d. All of the above alternatives have been used by U.S. companies to create an ethical
environment in their organizations.
Under the prevention of significant deterioration (PSD) program:
a. no one may undertake a building project that will cause a major increase in pollution
without first obtaining a permit from the EPA.
b. a successful permit applicant must demonstrate that its emissions will not cause an
overall decline in air quality.
c. a successful permit applicant must demonstrate that it has installed the best available
control technology for every pollutant.
d. All of the above.
When Dudley files his Chapter 7 petition, he lists the following debts:
a. $25,000 in back child support and alimony.
b. $15,000 for liabilities incurred after drinking and driving.
c. $10,000 for past-due student loans.
d. $5,000 for past-due rent to his landlord.
e. $550 for a past-due phone bill.
How will each of these debts be treated by the bankruptcy court.
Property falls into three categories. Which of the following is not considered real
property:
a. Land
b. Oil under the land
c. A garage
d. Refrigerator in the house
The advantage of a corporation over a partnership is:
a. shares are easily transferable to another person.
b. perpetual existence.
c. it is easier to raise funds.
d. All the above.
Employees of Truan went on strike because Truan refused to bargain in good faith.
After the strike, the striking workers are:
a. entitled to get their jobs back.
b. not entitled to get their jobs back.
c. entitled to get their jobs back but only as they become available.
d. fired.
When can a jury award punitive damages?
a. for reprehensible conduct
b. when it involves a hazardous activity
c. when there is pain and suffering
d. when the actual damages do not amount to enough
Real property consists of:
a. buildings.
b. air rights.
c. plant life.
d. All of the above.
In order to travel extensively and not worry about handling her affairs, Lee transfers
most of her assets into a trust, with her bank serving as trustee. She has created:
a. a travel trust.
b. a testamentary trust.
c. a constructive trust.
d. an inter vivos trust.
The element that distinguishes a contract from a gift is:
a. performance of the offeror’s or donor’s promise.
b. the element of consideration which is present in a contract, but not in a gift.
c. whether or not the offeree or donee accepts the offer.
d. whether or not the subject of the gift or contract is illegal.
The Equal Pay Act requires:
a. All employees in the same job title to receive equal pay.
b. All employees to receive the same percentage raise each year.
c. Employees of each gender to receive equal pay for equal experience and equal work.
d. A fair distribution of benefits to all employees.
Zero, Inc. agreed to build Millie a storage building for $8,000. After beginning the
project, Zero realized that it could not complete the job and make a profit. Zero
demanded $9,500 to complete the building. Millie agreed to pay the $9,500. When the
project was complete, Millie tendered $8,000 to Zero for the job. If Zero sues Millie for
the remaining $1,500:
a. Zero will win because there was consideration for the additional $1,500.
b. Zero will win because Millie had a pre-existing duty to pay any additional amounts.
c. Zero will lose because there was no legal consideration to support the additional
$1,500.
d. Zero will lose because the UCC does not require consideration to modify an existing
contract.
A+ Modeling Agency signs a contract with Sandi to do a photo shoot for the local used
car dealers advertising. The contract was probably written by:
a. The owner of A+ Modeling Agency.
b. Sandi.
c. A+ Modeling Agencys lawyer.
d. Sandis lawyer.
Factors influencing whether a servant is acting within the scope of employment include
all but which of the following?
a. The act is similar to the one the principal authorized.
b. The act is not seriously criminal.
c. The act took place during hours that the servant is generally employed.
d. All of the answer choices are factors in determining if an act is “within the scope of
employment.
Shirley is an actress under contract with Twentieth Century. Shirley agreed to perform
the lead role in a musical to be filmed in Hollywood by Twentieth Century. At the last
minute, Twentieth Century decided to scrap the musical and assigned its rights in
Shirley to MGM. MGM was planning to film a western in Australia requiring Shirley to
spend six months filming in Australia. Can Shirley successfully prevent this
assignment?
Under the TILA, for subprime mortgage loans, a lender:
a. may charge a prepayment penalty any time the loan is paid off before its due date.
b. must not make loans with balloon payments.
c. may not change the amount of the monthly payment during the period of the loan.
d. may not consider the value of the home in determining the borrowers ability to repay
the loan.
Incorporation protects:
a. shareholders against personal liability for the debts of the company.
b. anyone involved in management of the business against personal liability for
wrongdoing.
c. the public from wrongdoing by either the shareholders or the management of the
corporation.
d. All the above are correct.
Important steps in the criminal process, in the proper order, include:
a. search, arrest, probable cause hearing, indictment, arraignment, plea bargain, and
trial.
b. arraignment, booking, bail hearing, trial, and grand jury indictment.
c. arrest, probable cause hearing, motion to suppress, booking, and trial.
d. indictment, arrest, probable cause hearing, plea bargain, arraignment, trial, and
appeal.
Rob works for a federal governmental agency. No policy statements have been reported
to the employees regarding their privacy rights or regarding their use of workplace
computers for personal business. Rob’s supervisor has reason to suspect that Rob has
used his workplace computer to order an illegal substance. Which of the following is
true?
a. Rob’s employer may search Rob’s computer at any time since it was provided by the
employer.
b. Even if Rob’s employer tries to search Rob’s computer, if Rob has deleted any
incriminating information, the employer will be able to find nothing on his computer to
prove Rob was engaged in illegal activity.
c. The Fourth Amendment prohibits unreasonable searches and seizures by the
government, but this amendment does not apply to computers.
d. Because there was no policy statement by the employer, if Rob has a legitimate
expectation of privacy in the information on his computer, his employer would have to
obtain a search warrant in order to conduct a search of the computer.
If Edmund and Kaylin have a writing mistakenly showing a sale and purchase of goods
for $10,000 when the price should have been $1,000, a court will most likely:
a. enforce the agreement, relying on oral testimony to determine the correct price.
b. only enforce the agreement as written.
c. not hear the case unless both parties are merchants.
d. not enforce the agreement since the writing did not reflect a meeting of the minds of
the parties.
Rhonda is a server in a restaurant. One day she finds a purse while clearing a table. The
purse is most likely:
a. lost property.
b. mislaid property.
c. treasure trove.
d. abandoned property.
Mike is planning on incorporating his business in the state of Delaware. The corporate
name of Mike’s business must be different from:
a. that of any corporation that already exists in Delaware.
b. that of any limited liability company in Delaware.
c. the name of any sole proprietorship in Delaware.
d. all of the above.
Shelly offers to sell Jane goods both parties know are stolen. Jane accepts the offer, and
agrees to pay for the goods. Later, Jane refuses to accept or pay for the goods. If Shelly
sues Jane for breach of contract, what is the probable result?
a. The law would enforce this valid, enforceable contract.
b. Jane would win as this is a voidable contract.
c. Shelly would win as this is a unilateral contract.
d. The law would not enforce Jane’s promise, as it does not have a lawful purpose.
Which of the following would not be considered a fraudulent conveyance or a voidable
preference under the provisions of the Code? Immediately prior to filing bankruptcy:
a. debtor sells assets well below fair market price to Freddie, a friend.
b. debtor sells his car at a public auction, thinking that it would bring a decent price, but
the car brings an amount well below fair market value.
c. debtor’s corporation transfers assets to stockholders in lieu of cash dividends.
d. debtor pays $650 to “Nation on Line” for the past ten months of Internet service.
To prevail under Section 11 of the 1933 Securities Act, the plaintiff must prove:
a. the registration statement contained a material misstatement or omission; and the
plaintiff lost money.
b. the registration statement contained a material misstatement or omission; the auditor
acted knowingly or recklessly; and the plaintiff lost money.
c. the registration statement contained a material misstatement or omission; the auditor
intended to deceive; and the plaintiff lost money.
d. the registration statement contained a material misstatement or omission; the auditor
acted with scienter; and the plaintiff lost money.
Don was driving his truck when a board fell out of the truck bed and onto the road.
Alice, who was driving closely behind Don’s truck, tried to avoid the board, swerved
and struck a telephone pole, causing her severe injuries. Which of the following is
correct?
a. Don is strictly liable to Alice for her injuries.
b. In a comparative negligence state, the actions of Don and Alice will be weighed to
determine liability.
c. Don was not negligent in allowing the board to fall out of his truck.
d. Don is engaging in ultrahazardous activity.
James owned real estate. He leased the building to two tenants. An insurance agent
leased the first floor and a law firm leased the second floor. James later sold the land to
Mary, who used the entire building for her business. She discovered that there were
underground storage tanks buried in the land. She had to remove the tanks and then
sued James and the former tenants for the cost of removing the tanks, even though none
of them knew the tanks had been there.
a. James and the two tenants are liable.
b. James is liable to Mary, but the tenants are not.
c. The tenants are liable to Mary, but James is not.
d. Neither James nor the tenants are liable to Mary.
What are the three tests or elements used by the FTC to determine whether a particular
act is an unfair trade practice?
Discrimination protection under Title VII does not extend to job placement ads or
postemployment references.
Artistic Framing, a business with $120,000 of unsecured debt, needs to file for
bankruptcy, but wants to continue in business. Discuss what chapter of the Bankruptcy
Code should be used, and discuss the effect of the 2005 amendment to the Code on the
proceedings.
Kaiya is a sales representative of TriColor. Kaiya owes a fiduciary duty to TriColor.
Alfred is a migrant farm worker. He and his family travel across the nation to harvest
crops as various crops ripen. Alfred learned that the Fair Labor Standards Act requires
that he and other workers get paid at least $5.15 per hour and overtime pay when they
work over 40 hours per week. One employer, Ranch-One farms refuses to pay them the
minimum wage. If Alfred sues, who will win?
MagNet is a U.S. company based in Utah. It is negotiating to sell $4 million worth of
computer goods to a French company, Legran. MagNet’s attorney suggests that payment
be by a letter of credit. What is a letter of credit and why does MagNet’s attorney
recommend payment by letter of credit?
A later will revokes a prior will only if that revocation is clearly stated.
In purchasing life insurance, Kelsey concealed the fact that she has a muscular disease.
The insurance company can void the policy if the muscular disease is found to be a
material fact.
Universal life insurance is the same thing as whole life insurance.
In order for a federal court to have jurisdiction, there must be a federal question
involved and at least $75,000 in dispute.
Miranda v. Arizona considered the intent requirement in an armed robbery case.
Roger parked his car at a garage that has a large sign at the entrance saying, “This
garage is not liable for items stolen from a car.” This type of notice is referred to as an
exculpatory clause.
There are three parties on a promise instrument: the maker, the drawee, and the payee.
Fast Auditors prepared audited financial statements for Mega Company’s registration
statement in compliance with the 1933 Securities Act. John bought stock in Mega
Company. It was discovered that the financial statements prepared for the registration
statement contained some important omissions. John sued Fast Auditors to recover his
investment when Mega Company turned out to be a bad investment. What must John
prove to recover from Fast Auditors?
Explain the Title VII requirements on affirmative action, and identify three sources of
affirmative action programs.
MegaCorp has five directors. The company has 1,050 shares of voting stock. Jessica
would like to purchase enough stock to elect herself to the board of directors. The
company allows for cumulative voting. Explain the concept of cumulative voting and
also state how many shares of MegaCorp stock Jessica will need to own to assure
herself a place on the board of directors.
The United States of America v. Angevine case held that the professor had no reasonable
expectation of privacy in his office computer.
Oxtron, Inc. is considering establishing a program that actively encourages ethical
behavior. What reasons would support Oxtron’s adoption of an ethics program?
If Gloria threw a rock which hit Merle, she is liable for an intentional tort of battery
only if she intended to injure or harm Merle.