A corporate officer, while still employed by his or her firm, may be in breach of the
officer’s fiduciary duty of __________ by recruiting key management employees to join
a competing company.
a. obedience
b. loyalty
c. conflict of interest
d. confidentiality
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
The obligations of the parties to a sales contract include:
a. the seller’s duty to deliver the goods to the buyer’s place of business.
b. the buyer’s duty to always accept the goods.
c. the seller’s duty to arrange for appropriate transport.
d. the buyer’s duty to pay for the goods.
Under the Clayton Act, a divestiture order is:
a. notification from the Department of Justice that a merger is about to occur.
b. notification from the Department of Justice that a merger did not occur.
c. a decision by a court requiring a defendant to sell an enterprise.
d. an order by a court requiring an enterprise to dispose of its inventory.
The United States Supreme Court was created by:
a. Congress.
b. the President.
c. the Uniform State Law Commission.
d. none of the above.
An implied contract is shown by:
a. a writing.
b. the acts and conduct of the parties.
c. statements made in open court.
d. an exchange of oral promises.
In states that have adopted the Revised Model Business Corporation Act, the secretary
of state may commence proceedings to administratively dissolve a corporation under all
but which of the following circumstances?
a. the corporation adopts more than one business purpose.
b. the corporation does not pay franchise taxes within sixty (60) days after they are due
c. the corporation does not file its annual report within sixty (60) days after it is due.
d. the corporation is without a registered agent or registered office for sixty (60) days or
more.
Private lotteries, which generally are held to be illegal, involve three elements:
a. prize, chance, and consideration.
b. return, skill, and wager.
c. prize, skill, and consideration.
d. attractive return, minimal involvement, and skill.
Under recent statutes, the articles of incorporation must contain all of the following
except the:
a. name of the corporation.
b. name and address of each incorporator.
c. purpose for which the corporation is organized.
d. number of shares the corporation is authorized to issue.
Which of the following categories of individuals are exempt from the minimum wage
provisions of Fair Labor Standards Act (FLSA)?
a. executives
b. factory workers
c. full-time babysitters
d. housekeepers
The spread of limited liability corporation statutes resulted from:
a. a United States Supreme Court decision.
b. an Internal Revenue Service ruling.
c. a Wyoming Supreme Court decision.
d. a Securities and Exchange Commission ruling.
When a partner disassociates with a partnership:
a. the partnership is no longer bound by acts of that partner, whether or not a notice is
filed.
b. the disassociated partner is prohibited from competing with the partnership for a
period of one year.
c. the disassociated partner may be liable for damages for breach of contract.
d. none of the above.
If a seller delivers defective goods, the buyer does not lose the right to object to the
breach of contract if the buyer:
a. accepts the goods.
b. accepts the goods with a reservation of right.
c. agrees to a modification of the contract.
d. accepts the performance without protest.
To establish a gift, the party claiming to be the donee must prove:
a. delivery only.
b. intent only.
c. intent and a promise to deliver.
d. intent and delivery.
The rights of a holder of a warehouse receipt depend on whether the receipt is:
a. negotiable.
b. rescissory.
c. notarized as a document of title.
d. notarized as a bill of lading.
Sales tax on Internet sales:
a. is never collected.
b. is always collected.
c. is collected if the seller has a physical presence in the state of sale.
d. follow the same rules for sales tax collected in brick and mortar stores.
Describe the rights of employers to monitor the e-mail of employees who are using
their employers’ email system.
a. Employers may monitor employees’ e-mails, but only if the employees have
consented.
b. Employers may monitor employees’ e-mails, regardless of whether employees have
consented.
c. Employers may monitor employees’ e-mails, but only if notice is given.
d. Employers may not monitor employees’ e-mails.
Under the Sarbanes-Oxley (SOX) obstruction of justice provision, auditors must retain
working papers related to a client’s audit for at least:
a. 3 years.
b. 5 years.
c. 10 years.
d. 20 years.
The main purpose of the International Monetary Fund (IMF) is to:
a. provide easy access to money for multinational corporations.
b. facilitate the expansion and balanced growth of international trade.
c. create a model simplified lending system.
d. facilitate currency exchanges.
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.
Which term is not required in a writing in order to satisfy the statute of frauds?
a. language indicating that a sale or contract to sell has been made
b. the price of the goods
c. the quantity of goods involved in the transaction
d. the signature of the defendant
Regular meetings of shareholders are:
a. held at a time and place set forth in a notice given to all shareholders.
b. held at a time and place prescribed by the articles of incorporation or the bylaws.
c. called by the directors.
d. limited to the election of directors.
Stop payment orders:
a. may be issued if a payee has failed to perform under a contract.
b. do not prevent a holder in due course from demanding payment.
c. are invalid for some forms of checks .
d. all of the above.
An agreement to modify a contract for the sale of goods:
a. is only binding if supported by consideration.
b. has to be voluntary in order to be enforceable.
c. is only binding if the original contract is invalid.
d. all of the above.
When the corporation has the right to sue its directors, officers, or third persons for
damages caused by them to the corporation or for breach of contract, one (1) or more
shareholders may bring such action if the corporation refuses to do so. This is known as
a __________ action.
a. primary
b. derivative
c. deferential
d. preemptive
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.
It is expected that in the future, the limited liability company will in many instances
replace which of the following forms of business ownership?
a. the general partnership
b. the limited partnership
c. the close corporation
d. all of the above
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 signature requirement, as an element of negotiability, can be met by:
a. the use of initials.
b. a mark.
c. a trade name.
d. all of the above.
If a lease is assigned, who is liable for the rent?
a. the assignor
b. the assignee
c. either the assignor or the assignee, but not both
d. the landlord can collect from both the assignor and the assignee
A buyer who buys goods from a debtor in the ordinary course of business is subject to a
creditor’s security interest but only if the interest was perfected and the buyer had notice
of it.
Sue Thompson received a home “cold-canvas” sales call from a representative of the
Enlightened Encyclopedia Company. The salesperson, after a rather aggressive
presentation, convinced Sue to order a $1,200 Deluxe Encyclopedia set for her two
children. Sue was impressed with the quality of the books, but shortly after signing the
contract, she realized that she could not really afford to make the required monthly
payments. What rights, if any, does Sue have in this situation?
Janet Jones sold the assets and liabilities of her coin-operated laundry to Kevin Katz for
$10,000. The assets of the business included all of the washers and dryers. The
liabilities included the amounts still owing on seven new dryers, which had been
purchased recently from Dryer Company under an installment contract. Katz agreed to
make the installment payments on the new dryers as they came due. After Katz failed to
make an installment payment when it was due, Dryer Company sued Jones. Jones
claimed she no longer was liable. How will the court decide?
A partner is considered an employee of the partnership when doing work that would
ordinarily be done by an employee.
Ordinarily, a seller’s opinion about the good(s) cannot be treated as a warranty.
An administrative agency cannot hold a hearing without a jury.
Truth is not a defense to defamation.
Sid worked as the agent of Rosemary. Rosemary was in the business of buying antique
clocks and selling them to the public. She became so successful at this that people
began to become reluctant to sell to her, feeling that if she was buying the clock, it
probably could be sold for more. Rosemary instructed Sid to purchase several clocks
but not to reveal that the purchases were being made on her behalf. Sid contracted to
buy several clocks and gave his own check as down payment to keep Rosemary’s
identity concealed. Although Rosemary had authorized the contracts, she reneged on the
contracts. Sid thereupon told the seller what had happened and stopped payment on the
down payment check. The seller of the clocks sued Rosemary on the bounced check
and for breach of contract. Sid was sued on the same causes of action. Decide all cases.
A seller’s duty to deliver goods requires the seller to transport the goods to the place
designated by the buyer.
The key to being able to have Internet Service Providers (ISPs) release identities of
those who post statements on the Internet is whether the posters were engaged in illegal
or harmful activities.
A condition precedent must occur before a party to a contract has an obligation to
perform.
An “encryption” warranty is a warranty made by any party who encodes electronic
information on an instrument.
A partnership involves partners’ contributions of capital, services, or a combination of
these.
If the principal is not disclosed, the agent is necessarily the other contracting party and
is bound by the contract.
Bart was a self-made millionaire who had earned his fortune by dedicated hard work.
Bart had worked so hard that he never had developed much of a social life. Bart met
Linda and fell in love with her. When Bart proposed to Linda, she told him that she
needed time before making such an important decision. Pressing her for a favorable
response, Bart telephoned Linda and promised her $100,000 if she would marry him.
Linda then accepted the proposal.
Bart contracted with Quick Builders for the construction of a home Bart intended to
move into with Linda after their marriage. Construction by Quick was not very quick
because Quick was not paying subcontractors the sums that they were owed. They, in
turn, were not completing their work. To expedite matters, Bart called the
subcontractors and assured them that Bart would pay any sums that Quick Builders did
not pay if they would complete the construction.
Bart and Linda married and the subcontractors completed the work. Quick Builders did
not pay the subcontractors in full. Bart failed to pay Linda the $100,000. Both Linda
and the subcontractors sued Bart. Discuss the probable outcome of the lawsuits.
Order paper is negotiated by the indorsement of the holder and delivery.
A shareholder can give a proxy to vote shares only to another shareholder.
If the creditor does not enforce the suretyship agreement within the time limits provided
for such contract enforcement in the surety’s jurisdiction, the obligation is forever
discharged.