An order for relief in a bankruptcy proceeding amounts to a discharge of the debts of
the party petitioning for bankruptcy protection.
a. True
b. False
Marquis Companys liabilities exceed its assets, but the firms employees falsify its
books to reflect a positive net worth. Marquis hires Nan & Ollie, an accounting firm, to
prepare a balance sheet, which is certified to show a positive net worth. Pure Credit
Corporation relies on the balance sheet to make a loan to Marquis. When the firm
defaults, Pure Credit files a suit against Nan & Ollie. Under the Ultramares rule, the
accounting firm is most likely
a. liable because Nan & Ollie owed a duty of care to all third parties.
b. liable because Nan & Ollie owed a duty of care to Marquis.
c. liable because Nan & Ollie owed a duty to any foreseeable user.
d. not liable because Nan & Ollie and Pure Credit were not in privity.
Undue influence can occur when a named beneficiary is in a position to influence the
making of a will.
a. True
b. False
In most situations, a termination statement must be filed or sent within twenty days
after the debt is paid.
a. True
b. False
Objective impossibility discharges a contract.
a. True
b. False
A qualified opinion must be specific and identify the reason for the qualification.
a. True
b. False
Vieux Carré S.A., a French firm, imports its goods into the United States and offers
those goods for sale at “less than fair value. “Fair value is the price of
a. comparable goods in a select “basket of other countries.
b. Vieux Carrés goods in France.
c. Vieux Carrés goods in the United States.
d. Vieux Carrés goods on the world market.
SuperBumperCars, Inc. requires all customers to sign a release that contains a clause
that releases SuperBumperCars from all liability in the event of an injury occurring
during a bumper car ride, no matter who is at fault. This is an example of
a. a covenant not to compete.
b. an adhesion contract.
c. an exculpatory clause.
d. an illusory promise.
In most states, state law determines the amount of a debtors property that is exempt
from dis-tribution on bankruptcy.
a. True
b. False
Lily is a farmer. When bad weather destroys her crop, her obliga-tion to deliver it
un-der an outstanding contract with Macro Food Corporation is
a. discharged.
b. completely enforceable.
c. enforceable only to the extent of finding an alterna-tive supply.
d. enforceable only to the extent of transferring to the next years crop.
Patent infringement is a tort.
a. True
b. False
A majority shareholder does not owe a fiduciary duty to minority shareholders under
any circumstances.
a. True
b. False
Sherman dies without a will, survived by his granddaughter Roxy and Roxys brother
Pio. Roxy and Pio are Shermans
a. collateral heirs.
b. settlors.
c. trustees.
d. lineal descendants.
Money or property, including land,areremedies at law.
a. True
b. False
Levi, a well-known lumber dealer with a good reputation, buys a load of lumber and
pays for it with a check that is later dishonored. Sam, who is unaware of the bad check,
buys the lumber from Levi. Sam is
a. agood faith purchaser.
b. abad faith purchaser.
c. aninsolvent purchaser.
d. abailee.
Megan, a resident of Ohio, runs a red light in Texas and hits Sarah, a Texas resident.
Sarah files suit against Megan. The statute that allows the Texas court to exercise
jurisdiction over Megan is called
a. a long arm statute.
b. an in personam statute.
c. an in rem statute.
d. an out-of-state jurisdiction statute.
Before a seller can have an insurable interest in goods, the goods must be identified to a
contract.
a. True
b. False
A partnership ends if one partner dissociates from the firm.
a. True
b. False
Mobile Device Company (MDC) discovers that defamatory statements about its
policies and products are being posted in an online forum.NuView Inc., the Internet
service provider whose users are posting the messages, refuses to disclose the identity
of the person or persons responsible. MDC should
a. bring a suit against “John Doe and use the authority of the court to obtain the identity
from NuView.
b. bring a suit against NuView for publishing the statements.
c. counter the statements with its own posts in an effort to enhance the companys
goodwill.
d. post defamatory statements about NuView and its users.
To obtain a business license, Bess writes a check to a certain state agency. Bess is
a. the drawee.
b. the drawer.
c. the indorser.
d. the payee.
The best definition of a precedent is
a. a law developed from custom.
b. a judicial proceeding for the determination of a dispute between parties in which
rights are enforced or protected.
c. a proceeding by one person against another in court.
d. a court decision that furnishes an example or authority for deciding subsequent cases
involving identical or similar facts.
The rights and duties of a bank and its customer are contractual.
a. True
b. False
Under the UETA, a typed name at the end of an email message is not considered an
e-signature.
a. True
b. False
Mitch and Nadine enter into a contract for a sale of seventy-six specially made motion
detectors. When Nadine does not deliver within a reasonable time after the agreed
delivery date, Mitch files a suit for breach. Nadine asserts the doctrine of commercial
impracticability. This doctrine extends only to problems that are
a. foreseen.
b. preventable.
c. unforeseen.
d. ordinarily assumed by a seller or lessor.
Sparkling Gem Corporation agrees to sell Jewel Outlets, Inc. (JOI), fifty new diamonds,
but the contract does not specify a place of delivery. JOI is expected to pick up the
goods. The place of delivery is
a. Sparklings place of business.
b. JOIs place of business.
c. the Annual Gems and Jewels Convention in New York City.
d. the U.S. Postal Service office nearest to JOIs place of business.
A purchase-money security interest in consumer goods is perfected automatically at the
time of a credit sale.
a. True
b. False
Michelle gives out a business card with an e-mail address on it. It is reasonable to infer
that Michelle has consented to
a. transact business electronically.
b. submit to the jurisdiction of any selected forum.
c. accept and respond to any correspondence sent to that address.
d. nothing.
Pricing information is nota trade secret.
a. True
b. False
Jane and Phil enter into a contract, but make a bilateral mistake. For the contract to be
rescinded by either party, the bilateral mistake must be about
a. amaterial fact.
b. value.
c. anopinion.
d. aprediction.
Josh is a director of Sippy Soups, Inc. Josh opposes a tender offer that is in Sippys best
interest because its acceptance would cost him his position as a director. Josh is liable
for a breach of duty of
a. no duty or rule.
b. the business judgment rule.
c. the duty of care.
d. the duty of loyalty.
Using a domain name that is identical or similar to the trademark of another is legal.
a. True
b. False
A customer has sixty days from the date of receipt of a statement of an electronic
transfer to notify the financial institution of any er-rors.
a. True
b. False
Doral, Esteban, and Fiona are general partners in Centreville Dentistry, a dental clinic.
Their agreement states it is a breach of the agreement for any partner to assign his or
her interest to a creditor without the consent of the other partners. Dorals assignment of
his interest in the clinic to Hometown Lenders results in
a. nothing with respect to Doral or the clinic.
b. the automatic termination of the clinics legal existence.
c. Dorals liability for all of the clinics debts.
d. Dorals wrongful dissociation and liability for any damages.