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.
Unemployment compensation benefits probably will be denied:
a. when an employee’s theft of property results in termination.
b. to full-time students.
c. when an employee quits a job without cause.
d. all of the above.
A limited liability company may be classified as a partnership for tax purposes if:
a. such an election is made by “checking the box” for partnership tax treatment on the
appropriate Internal Revenue Service form.
b. such an election is made in the operating agreement.
c. such an election is made in the articles of incorporation.
d. a majority of its members petition the Internal Revenue Service for partnership tax
treatment.
Characteristics of the fee simple estate include all of the following except:
a. it is alienable during life.
b. it is not subject to rights of the owner’s surviving spouse.
c. it is alienable by will.
d. it can be attached or used to satisfy the owner’s debts before or after the owner’s
death.
Once an instrument is negotiable, it can be:
a. paid.
b. cancelled.
c. assigned.
d. transferred by negotiation.
The Lanham Act grants protection for:
a. marks.
b. patents.
c. copyrights.
d. trade secrets.
When a seller breaches a contract for the sale of goods to a buyer, the buyer is entitled
to specific performance of the contract if the:
a. goods are unique.
b. market cost of the goods has increased.
c. goods can be purchased in any major city in the country.
d. buyer’s customers will be disappointed if the buyer does not obtain the goods.
When an anticipatory repudiation of a contract occurs, the aggrieved person’s option(s)
include:
a. doing nothing and waiting for performance per the contract.
b. immediately declaring a breach of contract.
c. considering the contract cancelled.
d. all of the above.
What is not part of the presumptions of the business judgment rule concerning
directors?
a. that the decision they reached was profitable to the corporation
b. that they acted on an informed basis
c. that they acted in good faith
d. that they acted in the honest belief that the action taken was in the best interest of the
corporation
A party working for and under the control of another and authorized to enter into
contracts for that other person or entity is called an:
a. employee.
b. agent.
c. independent contractor.
d. attorney.
If a man names his wife as beneficiary of his life insurance and the two are thereafter
divorced, the insurance policy:
a. is canceled automatically.
b. is not affected.
c. is divided into two policies on the life of each for one-half the amount of the original
policy.
d. becomes the property of the former wife.
A transferor makes certain implied warranties to the transferee when a bill of lading is
transferred. These warranties are:
a. that the bill of lading is genuine, that its transfer is rightful, and that the transferor has
no knowledge of any defects.
b. not applicable if the instrument is nonnegotiable.
c. not applicable to negotiable transfers.
d. none of the above.
A right can exist:
a. by itself.
b. only if created by a court.
c. only if there is a corresponding duty.
d. only under local law.
The Uniform Commercial Code contains a statute of frauds rule relating to sales of
personal property, specifically:
a. goods.
b. chattel paper.
c. real property.
d. none of the above.
The federal court system consists of ____ level(s) of courts.
a. one
b. two
c. three
d. four
The expense and the risk of return in a sale or return situation is on the:
a. seller.
b. buyer.
c. lienholder.
d. secured creditor.
In which of the following situations would a third party acquire greater rights than the
original lessee?
a. an assignment
b. a sublease
c. a. and b.
d. neither a. nor b.
If an agency causes a substantial loss to a business by enforcement of its laws, that
business:
a. always may hold the agency liable for damages.
b. never can hold the agency liable for damages.
c. may seek damages if the agency acted in bad faith.
d. may seek damages if the agency complied with its own guidelines.
Companies with concerns over the possibility of expropriation could lessen the harm or
the likelihood of this occurring by:
a. fully investigating a host government’s stability.
b. establishing treaty commitments.
c. obtaining insurance.
d. all of the above.
An agreement to periodically deliver home-heating oil to a residential customer that
does not indicate the duration of the contract
a. is enforceable for a reasonable period of time.
b. lasts for one delivery only.
c. is not a legally-enforceable contract.
d. constitutes a bulk transfer.
A shareholder has a right to inspect the books of the shareholder’s corporation if:
a. the request is made in good faith.
b. the request is made with proper motives.
c. the inspection takes place at a reasonable time and place.
d. all of the above.
A decedent’s transfer of $10,000 to a trustee, to be held in trust for A, will fail to create
a valid trust if:
a. it was not supported by consideration.
b. it did not place an active duty on the trustee to manage the property in some manner.
c. A is not a family member of the decedent.
d. the trustee had no opportunity to renounce the trust.
Laws such as those authorizing tax collection and draft registration exist primarily:
a. because they are morally justified.
b. to protect individual health and welfare.
c. to protect individual property rights.
d. to enable the government to continue to function.
The means by which stockholders may seek to protect themselves against corporate
actions to which they object include all of the following except:
a. voting in new directors.
b. bringing legal action.
c. voiding the charter.
d. calling a special stockholders’ meeting.
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.
An instrument is payable at a definite time if it is payable:
a. on or before a stated date.
b. at a fixed period after a stated date.
c. at a fixed period after sight.
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
A buyer may reject a tender of delivery:
a. unless it is perfect.
b. unless the goods substantially conform to the contract.
c. unless the seller promises to cure the defective tender.
d. unless the goods have been sold on credit.
A contract provision stating that one of the parties shall not be liable for damages in
case of a breach is called a(n) __________ clause.
a. liquidated damages
b. exculpatory
c. waiver.
d. due process
The U.S. Constitution:
a. is unwritten.
b. was brought over from England in its entirety.
c. is a written document that specifies the structures and powers of the federal
government.
d. prohibits the states from having their own constitutions.
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.
An unincorporated association:
a. cannot sue in its own name.
b. cannot be sued in its own name.
c. does not have any legal existence apart from the members who compose it.
d. all of the above.
A taker of a negotiable instrument may be denied the status and protection of a holder
in due course where:
a. one party is a consumer.
b. the close-connection doctrine applies.
c. the instrument is bearer paper.
d. none of the above.
Government grants create:
a. sole proprietorships.
b. corporations.
c. partnerships.
d. unincorporated associations.
Which of the following parties is not liable for torts?
a. the employer of an employee who commits a tort within the scope of the work
b. the principal of an agent who commits a tort within the scope of the work
c. the owner of property when the tort is committed by an independent contractor
d. the principal when the principal commits a tort outside the scope of the agent’s work
Copyright of a “work made for hire” runs for the life of the creator of the work plus 50
years.
Negotiable instruments are examples of formal contracts.
Creditors who hold security for payment, such as a lien or a mortgage on the debtor’s
property, are not affected by the debtor’s bankruptcy.
Agency investigations of possible violations of agency rules are handled through
independent enforcement agencies.
The FTC requires that only descriptive and non-ambiguous terms such as jumbo, giant,
or full be used in product labeling.
Consideration is the bargained-for exchange between the parties to a contract.
When an anticipatory repudiation has occurred, the aggrieved party has been notified
that the contract will never be performed.
Ordinarily, every party to a contract is presumed to have contractual capacity until the
contrary is shown.
James Smith, a health inspector for the state of Missouri, inspected a restaurant owned
by Salley Slick. Smith found numerous health violations in the restaurant and fined
Slick accordingly. When Smith notified Slick of the infractions, Smith strongly
suggested that $5,000 “would sure prove handy in the Spring” when he planned to
purchase a new fishing boat. Slick understood Smith’s obvious hint and offered Smith
$5,000 if he would lose the paperwork concerning the failure of the restaurant to meet
proper inspection guidelines. Smith accepted the $5,000 and lost the paperwork. One
month later, Smith returned to the restaurant and told Slick that he would reappear
every month and find violations unless Slick produced $1,000 each month to go toward
the purchase of a fleet for Smith. Slick agreed to make the $1,000 payments. What
crimes have been committed by Smith and Slick?
Sara Student wished to pay off her $5,000 student loan. If she sends in a check for
$3,000 and the creditor cashes the check, the debt will be fully satisfied provided the
check is marked “paid in full.”
Under the 1990 Remedies Act, the SEC may start administrative proceedings against
any person or entity, whether regulated by the SEC or not.
An option contract gives one of the parties an absolute right to enter into a second
contract at a later date.
Evidence suggests that there may be relationships among ethical customer and
employee relations and long-term ability to pay dividends.
Consideration is not required to establish or modify a letter of credit.
The rights of a transferee of a negotiable bill of lading are defeated if the goods have
been stopped in transit.
An offeror makes an offer to an offeree.
The doctrine of substantial performance is concerned with the issue of whether an
imperfect performance will be considered adequate to discharge one’s responsibilities
under a contract.