Which of the following is an incorrect statement about directors?
a. Their eligibility requirements may be found in the bylaws.
b. Bylaws may require that directors be shareholders in the corporation.
c. The board of directors has authority to manage the corporation.
d. Courts will interfere with the board’s discretion when they disagree with its actions.
The types of civil cases that can be brought in federal district courts include:
a. the probate of an estate.
b. cases between citizens of different states that involve damages of $75,000 or more.
c. cases brought by the citizen of one state against the state government of the same
state.
d. none of the above.
Insurance designed to protect an insured driver or owner from the claims of others is
called:
a. collision insurance.
b. financial responsibility insurance.
c. liability insurance.
d. comprehensive insurance.
Consequential damages may be recovered if:
a. the damages were not a foreseeable consequence of the breach.
b. the damages reasonably flow from the breach as a result of the injured party’s
particular circumstances.
c. the breach did not cause the damages.
d. the loss exceeds $500.
The federal regulation of express warranties:
a. applies only to limited warranties.
b. applies to a seller who makes a written express warranty for a consumer product
costing more than $10.
c. requires all express warranties to be full warranties.
d. requires an implied warranty to be designated as either full or limited.
An administrative agency:
a. is not empowered to act as a court with regard to its own regulations.
b. acts as a specialized court of limited jurisdiction.
c. can hear complaints only in the presence of a jury.
d. cannot impose penalties for violation of its regulations.
An unconditional written promise made by one person to another, signed by the maker,
that promises to pay on demand a specific sum of money to the bearer is a:
a. negotiable draft.
b. bill of exchange.
c. promissory note.
d. certificate of deposit.
Which is not a correct statement concerning the remedy of specific performance?
a. The subject matter of the contract must generally be unique.
b. An award of monetary damages would be an inadequate remedy.
c. The granting of specific performance is discretionary with the court.
d. It is generally available in all breach of contract cases.
A will may be contested on grounds of:
a. lack of mental capacity of the testator.
b. undue influence, duress, or mistake.
c. forgery.
d. all of the above.
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,
but the bank may in good faith pay the check.
b. A check is stale when dated more than one (1) year before presentation to the bank.
c. A check is stale when dated more than six (6) months before presentation to the bank,
and the bank is legally prohibited from paying the check.
d. Certified checks are stale after three (3) months.
What is not a true statement concerning apparent authority?
a. It is true authority to act for a principal.
b. It is based on appearances created by the principal.
c. It is essential that the third person reasonably believe that the agent has authority.
d. Merely giving possession to another party does not create apparent authority to sell.
A contract that is deemed to be too harsh or oppressive to one of the contracting parties
may be unenforceable under the concept of:
a. unilateral influence.
b. bilateral influence.
c. unconscionability.
d. conscionability.
An obligor may delegate his or her duties to perform under a contract when the:
a. performance of the duty is standardized and nonpersonal.
b. obligor is unable to perform his or her duties.
c. contract is silent as to the right of assignment.
d. obligor is an expert in his or her specialized duties under the contract.
Original jurisdiction courts are generally what type of courts?
a. supreme courts
b. appellate courts
c. trial courts
d. limited courts
The party that breaks a contract may be required to pay damages to the other party to
compensate for:
a. losses that could have been avoided by hiring someone else to perform the contract.
b. emotional disturbance caused by the breach of contract.
c. a heart attack induced by the emotional disturbance caused by the breach of contract.
d. damages resulting necessarily and directly from the breach of contract.
The effectiveness of an exception to coverage is limited by:
a. strictly interpreting the exception to coverage against the insurer.
b. placing on the insurer the burden of proving that the exception applies.
c. both a. and b.
d. neither a. nor b., since exceptions to coverage are not generally permissible.
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.
The debtor will be denied a discharge if:
a. the debtor had been extravagant.
b. the debtor incurred debts because of negligence.
c. the debtor received a discharge ten (10) years previously.
d. the debtor refused to obey a lawful order of the court.
A life insurance contract is a third-party:
a. beneficiary contract.
b. assignment contract.
c. payment contract.
d. performance contract.
Negotiable instruments are:
a. formal contracts.
b. informal contracts.
c. option contracts.
d. first-refusal agreements.
Which method of payment gives the buyer credit by postponing the time for payment?
a. a promissory note
b. a check
c. a draft
d. a certified check
A surety that has made payment of a claim for which it was liable as a surety is entitled
to which of the following from the principal?
a. indemnity
b. exoneration
c. assignment
d. subrogation
When a minor avoids a contract to purchase a car:
a. the parents of the minor are liable for the purchase price.
b. a relative who cosigned the contract is liable for the purchase price.
c. a friend to whom the minor loaned the car is liable for the purchase price.
d. the automobile insurance company is liable for the purchase price.
What is the principal law regulating equal employment opportunity in the United
States?
a. Title VII of the Civil Rights Act of 1964
b. The United States Constitution
c. The Fair Labor Standards Act
d. The Equal Pay Act
The statute of limitations for breach of a sales contract:
a. may be reduced by the buyer and the seller to one year.
b. may be expanded by the buyer and the seller to six years.
c. begins to run from the signing of the contract.
d. always requires a notice to the seller to activate the statute.
Will the law enforce every promise?
a. Yes.
b. Yes, with or without consideration.
c. Generally yes, if consideration is given for the promise.
d. None of the above.
A __________ is a completed sale with an option for the buyer to return the goods.
a. conditional sale
b. contingency sale
c. sale or return
d. sale on approval
When there is no consideration for a promise, the agreement is:
a. a quasi contract.
b. equitable.
c. not binding.
d. unethical.
Due process rights apply to:
a. individuals only.
b. corporations only.
c. both individuals and corporations.
d. individuals, but only in their official capacity within a business.
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.
If the issuer of a letter of credit dishonors a draft without justification, it is liable to its
customer for:
a. fiduciary default.
b. breach of contract.
c. fiduciary peril.
d. monetary malfeasance.
A major disadvantage of the sole proprietorship is:
a. no organizational fees.
b. the sole proprietor obtains all of the profits.
c. the sole proprietor is personally liable for the debts of the sole proprietorship.
d. the sole proprietor is free to make all business decisions concerning operation of the
sole proprietorship.
Sheriff Jane desires to search your home. What law requires that the sheriff obtain a
search warrant?
a. the Fourth Amendment of the United States Constitution
b. the Equal Protection Clause
c. state statute
d. local uniform police ordinances
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.
In the case of either a check or a draft, the drawer may be held civilly liable if the
instrument is dishonored.
The Uniform Partnership Act, a codification of partnership law, has been adopted by 49
states.
Unwillingness of businesses to voluntarily improve the ethics of their practices has little
practical effect on the regulatory environment.
The Securities and Exchange Commission (SEC) is not limited to litigation when a
securities law enforcement investigation runs into secrecy or blocking laws.
Administrative agencies do not control the area of environmental protection because
such agencies are incapable of dealing with the complicated technical issues typically
involved in such actions.
Sam Student had borrowed $1,000 from his cousin. Sam and the cousin became
involved in a heated disagreement when the cousin began to press Sam for repayment
of the loan. Finally, Sam wrote a check for $190 to the cousin and conspicuously wrote
on the check in big letters that it was full and final payment of the $1,000 loan. In need
of money, the cousin cashed the check and demanded the remaining $810 from Sam.
Sam refused to pay, claiming that they had entered into an accord and satisfaction that
discharged Sam’s obligation to pay anything more. The cousin sued Sam. Discuss the
probable outcome.
Religious societies may not grant hiring preferences to members of their religion.
Officers and directors may be criminally liable for failure to prevent the commission of
a crime if they are found to be the “responsible corporate officers.”
Computer programs are subject to trade secrets protection.
As a rule of contractual construction and interpretation, ordinary words are to be
interpreted according to their ordinary meaning; accordingly, an unambiguous contract
will be interpreted as it is written, not on the basis of the secret intent of one party.
An act that is a felony in one state will necessarily be a felony in another.
A person may be held criminally liable for acts committed by another.
Testamentary intent makes the provisions of the testator effective and binding during
the testator’s life.
The UCC specifies the form that the assurance of performance is to take.
Federal law will bar state action only when there is a federal law regulating the
particular subject.
Title VII applies to the hiring process and to discipline, discharge, promotion, and
benefits.