An offer is an indefinite proposal made by one person to another.
a. True
b. False
Discuss whether the principal is liable in each of the following situations.
a. Patricia hires Andrew, an attorney, to negotiate a contract to purchase some property.
She agrees to pay him $75 an hour for his services, and he agrees to use his own office
and secretarial staff to negotiate and draft the agreement. One day, Andrew is driving
his own automobile to a meeting with Edward to discuss the purchase of the land that
he owns. Andrew drives too fast for conditions and has a minor traffic accident that
results in $600 damage to the other vehicle.
b. Mel owns a retail store. He hires Sarah to work for him as a clerk in the home
furnishings department. Mel instructs Sarah to make certain representations to
customers regarding a microwave oven. Mel knows these misrepresentations are false,
but Sarah does not. Henrietta buys a microwave from Sarah in reliance on the
misrepresentations.
c. ABC Inc. hires Keith as an outside salesman and instructs him to call on customers in
a specified territory and to solicit orders for its products. One day Keith is driving the
company car a little too fast for conditions on his way to call on a client. He
accidentally drives the wrong way on a one-way street and has an accident with another
vehicle that results in $6,000 in property damage and $30,000 in medical expenses.
d. The A & B Machine Company (ABMC) hires John as an outside salesman for its
computers. It sets high sales quotas for him and instructs him to beat up salesmen from
competing firms in order to keep them away from ABMC customers. In order to meet
his monthly sales quota, John roughs up Ralph, who is a salesman for a competing firm
and then tells Ralph to find his own customers and to stay away from John’s territory.
The main goal of antitrust regulation is to prevent competitive behavior among firms.
a. True
b. False
Preferred stockholders do not have priority over corporate creditors in liquidation.
a. True
b. False
Congress enacted the Norris-LaGuardia Act in 1932 in response to growing criticism of
the use of injunctions in peaceful labor disputes.
a. True
b. False
The Dodd-Frank Wall Street Reform and Consumer Protection Act:
a. was signed into law in 2009.
b. authorizes the SEC to issue rules requiring that a publicly held companys proxy
solicitation include nominations for the board of directors that have been submitted by
shareholders.
c. authorizes the SEC to issue rules directing the national securities exchanges to
require that no member of a listed companys compensation committee be an
independent director.
d. All of these are correct.
Claude is a shareholder in the Tel Ko Corporation. He learns of insider trading by one
of the directors and wants to sue the corporation on behalf of the corporation and its
shareholders. A shareholder cannot sue the corporation to enforce a right belonging to
the corporation.
a. True
b. False
If a bank pays on a check even though it has a ‘stop payment order,” the bank is liable to
the customer only if the customer can prove a loss because of the payment.
a. True
b. False
The MBCA as amended in 1980 and the Revised Act have adopted a net asset test for
the issuance of dividends.
a. True
b. False
RULPA does not distinguish between the duty of care owed by a general partner to a
general partnership and that owed by a general partner to a limited partnership.
a. True
b. False
A deed of trust differs from a mortgage in that the former conditionally conveys the
property to a trustee for the benefit of the creditor.
a. True
b. False
General contract law governs all contracts outside the scope of the UCC.
a. True
b. False
The Dodd-Frank Act reduces the amount of funds authorized for TARP and requires
that TARP funds repaid by financial institutions be used for government deficit
reduction.
a. True
b. False
Which of the following is untrue regarding closely held corporations?
a. Most corporations in the U.S. are closely held.
b. Shareholders frequently restrict the transfer of shares to prevent “outsiders” from
obtaining the stock.
c. Shareholders usually have little voice in the management and control of the business.
d. Some states have enacted special legislation to accommodate the needs of closely
held corporations.
The U.S. Supreme Court has:
a. used the Contract Clause to restrict states from retroactively modifying public
charters and private contracts.
b. held that the Contract Clause precludes states from exercising their police powers.
c. held that the Contract Clause precludes states from exercising eminent domain.
d. All of these.
Steven makes a material misrepresentation of fact regarding his motorcycle to Thelma
who agrees to buy the motorcycle based upon the misrepresentation. This contract is:
a. void.
b. voidable.
c. executed.
d. unenforceable.
Dissolution of a corporation does not terminate its existence, and does not require that it
liquidate its assets.
a. True
b. False
All jurisdictions have enacted laws making it a crime to write a check when there is not
enough money in the account to cover the check.
a. True
b. False
What limits are imposed on administrative agencies by each of the following: (a) the
courts; (b) Congress; and (c) the executive branch?
If Tom and Tim are tenants in common, they each own a specific half of the property.
a. True
b. False
Harold hired Blake Painters to paint his house. Blake decides he has too many jobs and
delegates the duties to the Andrews Company. If Andrews does a poor job, and drips
paint on Harold’s flowers and windows, Harold:
a. can sue both Blake and Andrews.
b. can sue Blake, but he cannot sue Andrews.
c. can sue Andrews, but he cannot sue Blake.
d. cannot sue, because he has accepted the benefits of the assignment.
The RULPA requires that the limited partnership certificate list the capital contribution
of each general and limited partner.
a. True
b. False
A buyer in the ordinary course of business takes collateral (other than farm products)
free of any security interest created by the buyer’s seller, even if the security interest is
perfected and the buyer knows of its existence.
a. True
b. False
Mike inherited some antiques. Pat agrees to buy them. In the contract, Mike and Pat
agree to value the antiques at whatever the Sotheby’s representative says. If the
valuation is much higher than either of them anticipated, Pat:
a. has to buy at the price set by the Sotheby representative.
b. has to buy, but at what Pat and Mike believe was a reasonable price.
c. has no obligation to buy the antiques.
d. can treat the contract as canceled.
A woman claiming sex discrimination because she was passed over for a promotion by
her employer, a local corporation specializing in the manufacture of automobile parts,
would have her case reviewed under the __________ test of the Equal Protection
Clause.
a. rational relationship
b. intermediate
c. strict scrutiny
d. None of these
One of the most appealing features of a limited partnership is the limited personal
liability it offers to all of the partners.
a. True
b. False
Seventeen-year-old Teresa wants to disaffirm her student loan agreements. In most
states, she will not be allowed to do so.
a. True
b. False
In Cohen v. Disner the court found that Disner was not liable on the check because he
had no enforceable obligation to pay, the check was drawn by him in a representative
capacity, and the holder had notice that Disner’s signature was in the capacity of an
agent.
a. True
b. False
Darlene uses her computer 75 percent of its usage time for her business and 25 percent
of its usage time for personal and family purposes. Under Article 9, the computer would
be classified as equipment.
a. True
b. False
Characterizing a type of restraint as per se illegal significantly affects the prosecution of
an antitrust suit.
a. True
b. False
Co-ownership of the means or instrumentality of accomplishing a single business
transaction or a limited series of transactions ordinarily results in a:
a. partnership.
b. joint venture.
c. corporation.
d. R & D partnership.
Assume the state of Minnesota has been negotiating with the Canadian government on
issues involving acid rain and eventually reaches an agreement with Canadian officials.
This is a valid treaty under the United States Constitution.
a. True
b. False
The group responsible for registering public accounting firms that prepare audit reports
for issuers; overseeing the audit of public companies; establishing audit report standards
and rules; and inspecting, investigating, and enforcing compliance on the part of
registered public accounting firms is the:
a. FTC.
b. Public Company Accounting Oversight Board.
c. SEC.
d. American Institute of Certified Public Accountants.
Since the agency relationship is created by agreement, the agency relationship may be
terminated at any time by mutual agreement of the principal and the agent.
a. True
b. False
An indorsement “Pay Alice Adams” is an assignment rather than a negotiation since it
lacks words of negotiability.
a. True
b. False