A consignment sale is treated as a(n) __________ under UCC Article 2, and the
dealer-consignee has full authority to sell the goods for the consignor and can pass title
to the goods.
a. ordinary sale
b. final sale
c. sale on approval
d. sale or return
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Which of the following is not the exclusive right of the holder of a copyright?
a. To prepare works that are derived from the original work.
b. To obtain a court order enjoining use of the original work by another.
c. To distribute copies of recordings of the original work.
d. To display or perform the original work in public.
An indorsement “for deposit only” is:
a. restrictive.
b. qualified.
c. special.
d. blank.
Under what type of warranty is the seller obligated to fix or replace a defective product
within a reasonable time at no cost to the buyer?
a. full
b. express
c. limited
d. implied
Which of the following statements regarding the Foreign Corrupt Practices Act is true?
a. It applies only to foreign officials in this country.
b. It applies only to foreign officials outside this country.
c. It applies only to “grease” payments.
d. None of the above statements is true.
A contract is interpreted to give effect to:
a. the intent of the parties.
b. what the court believes is a fair contract.
c. what the defendant thought the contract meant.
d. what will be best for the economic life of the community.
Under the __________approach, consideration is defined as a benefit received by the
promisor or a detriment incurred by the promisee.
a. pro-con
b. I win, you lose
c. gain-loss
d. benefit-detriment
A provision in a residential lease stating that the landlord cutting off heat or water will
not constitute an eviction is:
a. valid.
b. a stipulation.
c. a covenant.
d. unconscionable.
The federal-state system that provides unemployment compensation under the Social
Security Act of 1935 does not cover which of the following categories of workers?
a. Agricultural employees
b. Domestic employees
c. State and local government employees
d. None of these categories of workers are covered by the federal-state system.
Which of the following statements is correct concerning a stale check?
a. A check is stale when dated more than six (6) months before presentation to the bank.
b. Banks are required to pay stale checks unless a stop payment order has been issued.
c. Both a. and b.
d. None of the above.
A(n) __________ instrument’s terms are enforceable, but the instrument is treated
simply as a contract governed by contract law.
a. nonnegotiable
b. negotiable
c. accommodation
d. secondary
The Immigration and Naturalization Act (INA) sets forth criminal and civil penalties
against employers who knowingly hire illegal aliens.
Action taken by one on behalf of another is:
a. agency.
b. negotiability.
c. representative capacity.
d. Identification of principal.
Under the Revised Uniform Limited Partnership Act, a limited partner probably will not
lose the protection of limited liability when the limited partner:
a. becomes a contractor for, or an agent or employee of, the limited partnership or of a
general partner.
b. consults with and advises a general partner regarding the partnership business.
c. votes on partnership matters, such as dissolving and winding up the limited
partnership or removing a general partner.
d. all of the above.
A guaranty of payment creates a(n):
a. contract of surety.
b. contract of credit.
c. letter of credit.
d. absolute guaranty.
The equal protection clause:
a. requires all persons to be treated equally even if reasonable grounds for different
classifications exist.
b. allows laws that discriminate on the basis of moral standards.
c. requires that a statute be sustained unless it is clearly arbitrary or capricious.
d. allows laws that discriminate on the basis of cultural patterns.
Courts will consider the adequacy of the consideration when:
a. one party clearly has the better of the deal.
b. one party has more business experience than the other.
c. one party claims to have been defrauded.
d. one party shows a much lower price nationally-advertised on television.
Garnishment applies to the judgment debtor’s:
a. wages.
b. attorney fees.
c. land and home.
d. cars.
The making of an assignment __________ the assignor of any obligation of the
contract.
a. relieves
b. conditionally relieves
c. does not relieve
d. discharges
It is the duty of an agent to act with the care that:
a. the principal would exercise under the circumstances.
b. a reasonable principal would exercise under the circumstances.
c. a reasonable juror would exercise under the circumstances.
d. a reasonable person would exercise under the circumstances.
Under the known user rule:
a. the accountant is not liable to any third parties who experience a loss as a result of the
accountant’s negligence.
b. the accountant is liable to all third parties who experience a loss as a result of the
accountant’s negligence.
c. the accountant is liable to third parties who experience a loss as a result of the
accountant’s negligence but only if the accountant knew the third party would be using
the work product.
d. the accountant is liable to third parties who experience a loss as a result of the
accountant’s negligence but only if the accountant’s client gave the work to the third
party.
A purchaser of a nonnegotiable warehouse receipt:
a. receives no implied warranties.
b. may acquire rights superior to those of the transferor.
c. acquires only the title and the rights the transferor had authority to transfer.
d. may be considered to have the rights of a holder in due course.
Which of the following powers is not reserved solely to the national government?
a. power to regulate interstate commerce
b. power to tax
c. power to coin money
d. power to borrow money on the credit of the United States
A personal, revocable privilege to perform an act or series of acts upon the land of
another is called a(n):
a. easement.
b. tenement.
c. license.
d. lien.
Rent is automatically increased:
a. if the lessor makes expensive improvements to the property.
b. when the cost of living increases.
c. if the lease contains an escalation clause.
d. if the lessor’s taxes on the rented property are increased.
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.
Which exemption to registration requirements exempts offerings of less than $5 million
to no more than 35 nonaccredited purchasers over a 12-month period?
a. Rule 504 exemption
b. Rule 505 exemption
c. Rule 506 exemption
d. Rule 507 exemption
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.
An agent is under a duty to obey:
a. all instruction given by the third party.
b. all lawful instructions given by the principal.
c. all instructions given by the principal.
d. none of the above, since “obedience” is not an obligation of the agent.
If there are two or more sureties and one pays more than its proportionate share of the
debt, such surety has the right against the co-sureties known as:
a. indemnity.
b. exoneration.
c. subrogation.
d. contribution.
An employer may be justified in discharging an employee because of the employee’s:
a. nonperformance of duties.
b. incompetency.
c. serious misconduct.
d. all of the above.
An employee has the same status as:
a. an agent.
b. an independent contractor.
c. an employer.
d. none of the above.
A shopkeeper may lose the shopkeeper’s privilege if:
a. the customer is kept an unreasonable amount of time.
b. the shopkeeper acted with reasonable suspicion.
c. the shopkeeper acted with necessary force.
d. all of the above.
Sales of goods transactions are subject to a statute of limitations period of:
a. one (1) year.
b. two (2) years.
c. three (3) years.
d. four (4) years.
Where the debtor has fewer than twelve (12) creditors, how many must sign an
involuntary petition?
a. one (1), assuming that the creditor’s unsecured claim is at least $14,425
b. one (1), assuming that the creditor’s secured claim is at least $15,575
c. three (3), assuming that the creditors’ unsecured claims total at least $14,425
d. three (3), assuming that the creditors’ secured claims total at least $15,575
An accountant may be liable for damages if the accountant fails to inform a client of the
tax consequences associated with selling a business.
A buyer has the right to accept some commercial units of a shipment and reject other
commercial units.
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?
When a buyer materially breaches a contract, the seller may cancel it.
Generally, when a person of legal age makes a contract with a minor, the contract is
voidable by either party.
In an action for breach of contract, the statute of limitations runs from the date on which
the harm is discovered.
Commercial exploitation is a form of invasion of privacy.
The Securities Exchange Act of 1934 is concerned with the secondary distribution of
securities in the national securities markets and in the over-the-counter markets.
When a contract is fully performed by one party, it is called a unilateral contract.
Trade dress refers to the packaging look and overall image of a product.
To be patentable, an invention must be new and not obvious to a person of ordinary
knowledge and skill in the art or technology to which the invention is related.
Conduct that unreasonably interferes with the enjoyment of land is a nuisance.
Any shareholder owning more than five (5) percent of any class of the corporation’s
equity securities is statutorily defined as an insider and must file with the SEC a
disclosure statement regarding such ownership and all related transactions.
Planting trees or erecting a fence, although otherwise lawful, constitutes a public
nuisance when it creates a traffic hazard by obscuring an intersection.
When a bank certifies a check, the amount involved in the certification will be retained
in the depositor’s account until payment of the certified check.