Herb, a computer programmer for Inventory Control Corporation, is arrested in his
employer’s parking lot on suspicion of larceny. Herb must be informed of his right to
a. a trial by jury.
b. punishment.
c. question witnesses.
d. remain silent.
Tiny is an accountant. Tiny’s violation of generally accepted accounting principles and
generally accepted auditing standards
a. does not indicate that Tiny was negligent.
b. is prima facie evidence that Tiny was negligent.
c. precludes Tiny from raising any defense against a negligence claim.
d. will never subject Tiny to liability.
Beachside Pools, Inc., agrees to build a swimming pool for Candy, but fails to build it
according to the contract specifications. Candy hires Do-We Fix-It Company to finish
the project. Candy may recover from Beachside
a. the contract price less costs of materials and labor.
b. the contract price.
c. the costs needed to complete construction.
d. profits plus the costs incurred up to the time of the breach.
Readmore Bookstore Corporation files a registration statement with the Securities and
Exchange Commission and provides a prospectus describing the securities to investors.
These items are intended to provide sufficient information so that the financial risks
involved can be evaluated by
a. market professionals to explain to all investors.
b. government regulators to disclose to the general public.
c. sophisticated investors only.
d. unsophisticated investors.
Karen writes on a piece of paper, “I owe you $600,” signs it, and gives it to Lou. This
instrument is
a. negotiable.
b. nonnegotiable, because it does not include an express promise to pay.
c. nonnegotiable, because it does not recite any consideration.
d. nonnegotiable, because it does not state any conditions to payment.
Jacob writes Phillip an uncertified check for $500 on January 1. Seven months later,
Phillip presents the check at the bank. The bank pays the check in good faith without
consulting Jacob. The bank
a. does not have the right to charge Jacob’s account for $500.
b. only has the right to charge Jacob’s account for $250.
c. has the right to charge Jacob’s account for $500.
d. can be held liable for breach of contract.
Olivia, a minor, signs a contract to buy a bike from Phil, the owner of SuperCycles Bike
Store. Olivia’s right to disaffirm the contract
a. does not change the fact that Phil is bound by the contract.
b. does not yet exist because Olivia is still a minor.
c. gives Phil, an adult, the right to disaffirm the contract.
d. is not valid because a bike is a “necessary.”
In 2012, Online Marketing Corporation registers its trademark as provided by federal
law. After the first renewal, this registration
a. is renewable every ten years.
b. is renewable every twenty years.
c. runs for the life of the corporation plus seventy years.
d. runs forever.
Alf rents an apartment. The lease does not specify how long it will last, but it does
specify that Alf must pay rent every month. Alf’s tenancy is
a. a fixed-term tenancy.
b. a periodic tenancy.
c. a tenancy at will.
d. not a tenancy.
Luminescent Silicon Corporation, which controls 40 percent of the computer-chip mar-
ket in the United States, merges with Micro Processors, Inc., which controls 15 percent
of the same market. This merger is a violation
a. only if the result more clearly concentrates the market.
b. only if the result makes it more difficult for potential competitors to enter the market.
c. if the result more clearly concentrates the market and makes it more difficult for
potential competitors to enter the market.
d. under no circumstances.
Gigi, a twenty-year-old, wants to execute a will before she undertakes a moun-
tain-climbing trip on a peak in the Himalaya Mountains. In most states, the legal age for
executing a will is
a. sixteen years of age.
b. eighteen years of age.
c. twenty-one years of age.
d. twenty-five years of age.
BBQ, Inc., makes and sells grills to Grill Mart, a retailer, which sells one of the grills to
Hope, a consumer. BBQ and Grill Mart include in their contracts a limitation on
consequential damages for personal injuries arising from a breach of warranty. This is
prima facie unconscionable with respect to
a. all of these parties.
b. BBQ and Grill Mart, but not Hope.
c. Hope only.
d. none of these parties.
Precise Device Corporation and Quality Instruments, Inc., decide to merge. This
corporate combination does not require the approval of
a. Precise and Quality’s directors.
b. Precise and Quality’s officers and employees.
c. Precise’s shareholders.
d. Quality’s shareholders.
Screen Perfect, Inc., and TV Stores enter into a contract for a sale of high-definition
television sets. Screen Perfect ships goods that do not exactly conform to the contract in
some details. TV Stores
a. cannot reject the entire shipment.
b. can reject the entire shipment.
c. must accept the entire shipment.
d. must reject the entire shipment.
A court awards a judgment to Alice, who is the creditor, against Ada, who is the debtor.
After the judgment, Alice requests a court order to seize Ada’s property to ensure that
the judgment will be collectible. This is
a. a judicial lien.
b. a writ of attachment.
c. a writ of execution.
d. a violation of most state laws.
Title VII of the Civil Rights Act of 1964 applies to which of the following?
a. An employer with five employees
b. An employer with ten employees
c. A labor union with twenty-five members
d. A labor union with twelve members
Shae’s Café and Tommy’s Grill form a joint venture. Shae can participate in the
venture’s management
a. only to the extent that she assumes liability for the venture’s debts.
b. only to the extent of her investment in the venture.
c. to any extent.
d. to no extent.
Nimble Numbers Accounting Corporation, a private employer, handles bookkeeping for
small employers. In most circumstances, with exceptions, federal law clearly prohibits
Nimble from subjecting its employees to
a. job-skills tests.
b. monitoring of business communications.
c. drug tests.
d. lie-detector tests.
Without a permit from the U.S. Army Corps of Engineers, Holiday Timeshares, Inc.,
fills a wetlands area that it owns before constructing a residential resort. Under the
Clean Water Act, this is most likely
a. a violation.
b. not a violation because a permit is not needed to fill wetlands.
c. not a violation because the area was filled before construction.
d. not a violation because there was no discharge of pollution.
The United States taxes each barrel of imported oil at a flat rate. This is
a. an antidumping duty.
b. a dumping duty.
c. a quota.
d. a tariff.
RingTone Corporation is a public company whose securities are traded among
investors. Under the Securities Act of 1933, a security is
a. almost any stake in the ownership or debt of a company.
b. an investment that is guaranteed to make a profit.
c. only such common forms of debt and equity as bonds and stocks.
d. whatever a company represents to the public as a security.
George burns an American flag in his backyard. He films his actions and posts the video
on YouTube.com. George’s actions are
a. expressly prohibited by the U.S. Constitution.
b. protected by the First Amendment of the U.S. Constitution.
c. considered to be a form of treason.
d. illegal in some states.
Bret obtains a fire insurance policy on his rental house with Continental Insurance
Company. Like all insurance, this policy is an arrangement for
a. avoiding the assumption of responsibility.
b. predicting a potential loss based on unknown factors.
c. shifting the imposition of liability.
d. transferring and allocating risk.
Toby is an accountant whose clients include U-All Company. If Toby is negligent in his
work for U-All, most courts would hold him liable to U-All and
a. any third party.
b. no third party.
c. third parties who are foreseen users of the work.
d. third parties who are reasonably foreseeable users of the work.
Thorpe buys an HD TV from Viewpoint Electronics store, which agrees to keep the TV
for Thorpe until he picks it up. Before Thorpe gets the TV, a fire destroys the store and
the set. The loss is suffered by
a. neither Thorpe nor Viewpoint
b. Thorpe and Viewpoint.
c. Thorpe only.
d. Viewpoint only.
Rikki signs a check “pay to the order of Scholar University” drawn on Rikki’s account
in Town Bank to pay her tuition. Rikki is
a. the certifier.
b. the drawee.
c. the drawer.
d. the payee.
Hybrid Corporation enters into a contract with Insure Service, Inc. (ISI), to obtain
health insurance for Hybrid employees. If ISI breaches the contract and Hybrid is
awarded compensatory damages, the purpose would be to
a. establish, as a matter of principle, that ISI acted wrongfully.
b. provide Hybrid with funds for a foreseeable loss beyond the contract.
c. provide Hybrid with funds for its loss of the bargain.
d. punish ISI and set an example to deter others from similar acts.
Mike is arrested at a warehouse in North Industrial Park and is charged with the crime
of theft. Mike will be prosecuted by
a. the owner of the warehouse.
b. the owner of the property that Mike is charged with stealing.
c. a public official.
d. any third party unrelated to Mike, the property, or the crime.
Jenilee promises to pay Kyle $500 because “he does not have as much money as other
people.” Jenilee’s promise is
a. enforceable because society wants people to keep their promises.
b. enforceable because the redistribution of wealth is a valid social goal.
c. not enforceable because Jenilee could have paid Kyle more.
d. not enforceable because Kyle has not given consideration in return.
Gail enters into a contract with Hi-Price Appliances, Inc. In a suit between the parties
over payment under the contract, Gail claims that a certain clause is unconscionable. If
the court agrees, it may
a. enforce, limit, or refuse to enforce the contract or the disputed clause.
b. enforce the contract without the disputed clause only.
c. limit the application of the disputed clause only.
d. refuse to enforce the entire contract only.
Ralph signs an instrument promising to pay a total of $10,000 to Martha in $1,000
monthly installments with the final payment being made on August 1. Ralph
unexpectedly inherits $10,000 from his aunt on May Ralph may
a. not complete his $10,000 payment before August 1.
b. complete his $10,000 payment before August 1.
c. increase his monthly payments by five percent, but not more.
d. increase his monthly payments by ten percent, but not more.
Truman applies for a job at Skylight Canopy Corporation for which he is well qualified,
but for which he is rejected. Skylight continues to seek applicants and eventually fills
the position with a person who is not a member of a minority. Truman is most likely to
succeed in a suit against Skylight for discrimination if he is a member of
a. a protected class.
b. a majority group.
c. an employer’ association.
d. a union.
Shareholders own a corporation.
The equal dignity rule requires that a principal and agent treat each other with “equal
dignity.”
Under the Age Discrimination in Employment Act of 1967, the plaintiff must show that
unlawful discrimination was the reason for an adverse employment action.
Federal law does not restrict employer’ use of the results of genetics tests.
A customer must examine a bank statement and report any discovered forged signature
to recover from the bank for the forgery.
A whistleblower is an employee who reveals confidential information about a fellow
employee to an employer.
Section 1 of the Sherman Act condemns monopolization.
Any corporation with less than $10 million in assets and fewer than five hundred
shareholders must register their securities with the Securities and Exchange
Commission.
In a country with a federal form of government, the national government and the states
share sovereign power.
In a fee simple absolute, the owner has the greatest aggregation of rights, privileges,
and power possible.
A limited liability company is operated in compliance with state law.
A corporate name must include the word Corporation, Incorporated, Company, or
Limited, or abbreviations of these terms.
A director does not need to disclose any conflict of interest before voting on a proposal.
A person cannot become an HDC if a defense against payment is apparent on the face
of the instrument.
During a storm on Blue Lake, a boat sinks, but its owner Cappy survives. Cappy plans
to return to the site of wreck to salvage its equipment and his possessions, but he
delays. Meanwhile, Dick, an amateur diver, discovers the wreck and strips it clean of
useful items. Cappy learns of the recovery and files a suit against Dick, claiming that
the items are his. Dick responds that the sunken boat was abandoned and therefore he
has good title to everything to which he took possession. What is the court likely to
rule, and why?