In 2006, the SEC abolished the requirement that a registration statement disclose
compensation paid to senior executives and directors.
a. True
b. False
The Weichert Co. Realtors v. Ryan case found that the parties formed an express
contract by mutually manifesting assent to the essential terms.
a. True
b. False
The common law “mirror image” rule applies to an offer and the acceptance of that
offer in a contract for the sale of goods.
a. True
b. False
A preincorporation subscription is an offer to purchase capital stock in a corporation yet
to be formed.
a. True
b. False
A person who represents himself to third persons as being a partner when in fact he is
not, may have the liability of a partner.
a. True
b. False
Emancipated minors have no ability to avoid contracts based upon their minority.
a. True
b. False
Mark, a resident of Illinois, while driving on the freeway, hits Bill, a resident of
Wisconsin, and totally destroys Bill’s brand new vehicle and injures Bill. Bill may bring
suit in federal district court:
a. because of federal question jurisdiction.
b. because there is always federal jurisdiction if there is diversity of citizenship.
c. if the amount in controversy is over $75,000.
d. if the accident occurred outside of Illinois or Wisconsin.
Comprehensive federal legislation now governs drug and alcohol testing by employers.
a. True
b. False
Nonfraudulent representation is made without scienter.
a. True
b. False
The jury’s verdict in a summary jury trial is not binding on the parties.
a. True
b. False
A draft is payable “to the order of Joe Jones or to bearer.” Sally finds it and demands
payment. Should the drawer pay Sally?
a. No, unless Joe Jones’s name is crossed off.
b. No, unless “bearer” is handwritten.
c. Yes, since the word “or” is contained in the instrument, either Joe Jones or the bearer
of the draft may obtain payment.
d. No, the terminology is ambiguous and therefore the draft must be paid only to the
order of Joe Jones.
Only the board of directors may approve fundamental changes in the corporation.
a. True
b. False
In the Philip Morris USA v. Williams case, the Supreme Court stated that punitive
damages may be properly imposed in certain cases but, because of constitutional
limitations, cannot be grossly excessive.
a. True
b. False
The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted
the SEC the power to issue cease and desist orders and to impose civil penalties.
a. True
b. False
The Civil Rights Act of 1964 provides which of the following defenses?
a. A bona fide seniority or merit system.
b. A professionally developed ability test.
c. A bona fide occupational qualification (BFOQ).
d. All of these.
An adhesion contract is offered on a “take-it-or-leave-it” basis.
a. True
b. False
Maxine offered to sell her video camera to Tom for $200 and also stated to Tom, “I will
give you two weeks to accept my offer.” One week later Tom learned that Maxine had
sold the video camera to Cindy. In this case:
a. Maxine has revoked her offer to Tom.
b. Maxine’s offer is a firm offer and she must sell Tom a video camera for $200.
c. Maxine must get the camera back from Cindy if Tom accepts within two weeks.
d. an option contract was created, so Maxine is liable to Tom if she sells the camera to
someone else within the two-week period.
An agent, at his principal’s direction, fixes prices with the principal’s competitors. The
result is:
a. only the agent is criminally liable.
b. only the principal is criminally liable.
c. both the principal and agent are criminally liable.
d. any liability would be civil only.
If 100 shares of $50 par value stock were issued at $75 per share, how much would
constitute capital surplus?
a. $750
b. $7,500
c. $2,500
d. A corporation cannot issue stock for higher than the par value.
There are rigorously enforced restrictions regarding both number and qualification of
investors who purchase securities under Regulation A.
a. True
b. False
For an activity to be treated as a public nuisance there must be some interference with
the health, safety, or comfort of the public.
a. True
b. False
Georgia’s company may lawfully discover Samantha’s company’s trade secrets if
Samantha’s company fails to take reasonable precautions to protect their trade secrets.
a. True
b. False
A trust for the establishment and maintenance of a museum would be a charitable trust.
a. True
b. False
To find a violation of Section 2 of the Sherman Act, if sufficient monopoly power has
been proved, the law must then show that the firm has engaged in unfair conduct.
a. True
b. False
While officers, as agents of a corporation, owe an agent’s duty of obedience, diligence,
and loyalty to the corporation, this is not true of directors.
a. True
b. False
A defense available to the employer in an action for workers’ compensation is that:
a. the employee assumed the risk.
b. the employee’s injury happened before he came to work.
c. the employee was contributorily negligent.
d. a co-worker caused the injury.
The Model Business Corporation Act is a state statute that, like the UCC, has been
adopted by all of the states in the United States to make state incorporation statutes
uniform throughout the United States.
a. True
b. False
Carlos owns a store in Polk County. His trade extends throughout River City, but not
beyond the county limits. He sells his store to Virginia and, as part of the transaction,
agrees not to engage in the same business anywhere in River City for a period of two
years. In this case:
a. the geographic restraint is reasonable.
b. this agreement is unreasonable.
c. the agreement unduly interferes with the interest of the public.
d. Two of these.
According to the Restatement, unless circumstances indicate the contrary, a contract
term prohibiting assignment of the contract bars both the assignment of rights and the
delegation to the assignee of the assignor’s duty of performance.
a. True
b. False
Fyloff, Inc. would like to pay a dividend to its shareholders. It has only been in business
a few years and does not yet have any retained earnings. However, it has a new product,
which is breaking all sales records. This quarter, it anticipates about $3 million in
earned surplus. It should be able to pay all of its bills as they become due. Under which
of the following tests would Fyloff be able to pay a dividend? Explain each test.
a. Earned surplus test
b. Surplus test
c. Net asset test
What constitutional principle requires that similarly situated people be treated similarly
by government?
a. Free speech.
b. Equal protection.
c. Due process.
d. Eminent domain.
Federal agencies may not charge for providing records to a person requesting access to
the agency’s files.
a. True
b. False
Statutory provisions do not protect creditors upon the dissolution of a corporation.
a. True
b. False
Agencies are required to submit most newly adopted agency rules to each house of
Congress before the rules can take effect.
a. True
b. False