An association of banks created for the purpose of settling accounts with each other on
a daily basis is a:
a. payor banking group.
b. clearinghouse.
c. provisional reserve.
d. None of these.
Under the RUPA, a partner who does not have actual authority from all of the partners
may still bind the partnership by:
a. executing a contract of suretyship in the partnership name.
b. selling partnership property which is not held for sale in the usual course of business.
c. paying an individual partner’s debts out of partnership assets.
d. None of these.
Workers’ Compensation Acts have been adopted by all states in an effort to provide
speedier and more certain relief to injured workers than was available through
litigation.
a. True
b. False
Able has an allowed claim of $5,000 against the estate of Wallace and has a security
interest in his art collection in the amount of $3,000 of the $5,000 claim. Able:
a. will recover nothing in the bankruptcy proceeding.
b. will recover $5,000 in the bankruptcy proceeding.
c. has a secured claim in the amount of $3,000 and an unsecured claim in the amount of
$2,000.
d. has a secured claim in the amount of $5,000.
A debtor may not receive a discharge under Chapter 7 if he or she received a Chapter 13
discharge within the past six years in most cases.
a. True
b. False
The 1977 amendments to the Clean Water Act divided pollutants into all but which of
the following categories?
a. Toxic
b. Nontoxic
c. Conventional
d. Nonconventional
Export controls or restrictions usually result from:
a. national defense considerations.
b. foreign policy considerations.
c. the desire to protect scarce national resources.
d. All of these.
Alice, a resident of Ohio, has obtained a valid judgment against Bill, a resident of
Kentucky. In this case:
a. Alice can attach Bill’s automobile in Ohio to satisfy her court judgment.
b. Alice must go to Kentucky to satisfy her judgment.
c. Alice has no recourse against Bill because he has left the state.
d. Ohio has no jurisdiction over Bill because he is a resident of Kentucky.
In equal protection cases involving economic regulation, the courts use the rational
relationship test.
a. True
b. False
Larry says to Jeff, “If you will mow my lawn, I will give you fifteen dollars.” Under
these facts, no contract is formed until Jeff finishes mowing the lawn.
a. True
b. False
An “I.O.U.” is not considered a negotiable instrument.
a. True
b. False
An illusory promise has the form of a promise but imposes no real obligation.
a. True
b. False
To a libertarian, it is not unjust for some people to accumulate fortunes while others live
in poverty.
a. True
b. False
Kelly wrote a check to Trish, which Trish immediately changed from $20 to $120. She
negotiated the check to Carl for value, who in turn took it to Kelly’s bank for
certification. Kelly’s bank checked his account and certified the check since there were
sufficient funds to cover the check. Thereafter, Carl gave the check to Central Motors
(CM) as part of the down payment for his car. CM presents the check to Kelly’s bank
for payment and they discover the alteration. What consequence?
a. Bank can sue CM for breach of presentment warranty of no alteration.
b. Bank can charge Carl’s account for $120.
c. Bank can refuse to pay CM more than $20.
d. Bank must pay CM $120 and cannot sue them for breach of warranty.
An accountant who contractually promises to conduct an audit to detect possible
embezzlement is under a contractual obligation to provide for the client an expanded
audit beyond Generally Accepted Auditing Standards.
a. True
b. False
a. What public restrictions can be placed upon the use of land? Explain. b. What private
restrictions can be placed upon the use of land? Explain.
Public restrictions on the use of land occur primarily through the use of zoning and
eminent domain. Zoning is based upon the police power of the government. Regulation
may be for purposes of public health, safety, morals, or welfare. Absent
A patent last for life, while a copyright ends after 50 years.
a. True
b. False
Specific performance is the usual remedy for breach of contract. a. True
b. False
If a partnership is a debtor under the Bankruptcy Code and partnership property is
insufficient to pay all the claims against the partnership, the trustee in bankruptcy must
first seek recovery of the deficiency from the estates of the bankrupt partners, and then
may seek recovery from general partners who are not bankrupt.
a. True
b. False
If an auditor of financial statements required by the 1934 Act becomes aware of an
illegal act, the auditor must:
a. inform the issuer’s management and make sure the audit committee or the board of
directors is adequately
informed.
b. notify the SEC within one day of discovering the illegal act.
c. resign if the issuer does not notify the SEC of the illegality within ten business days.
d. be subject to criminal penalties if the auditor willfully violates the Reform Act by not
resigning or furnishing reports to the SEC.
The purpose of an agency relationship is to:
a. allow the principal to extend his business activities by authorizing agents to enter into
contracts with thirdpersons on the principal’s behalf.
b. encourage business growth by protecting employers from liability for torts or
criminal activity.
c. allow a principal to contract through agents in ways he would not be able to contract
on his own, such as creating valid contracts in situations where the principal could only
create voidable contracts on his own.
d. eliminate the distinction between employees and independent contractors.
The State may appeal a verdict of “not guilty” if there is an error in the trial.
a. True
b. False
Sue, Barb, and Carlotta agree to put in $1,000 each to set up a shelter for lost animals.
They each work two days a week. Donations fund the day-to-day operations. Do they
have a partnership?
a. Yes, since each has control of the operation
b. Yes, because they are all co-equals in ownership of the shelter
c. No, because they have made no formal agreement
d. No, because there is no business for profit
The UCC “risk of loss” rules depend on transfer of title.
a. True
b. False
An accountant who acts in a reasonably competent and professional manner is an
insurer of the accuracy of her report.
a. True
b. False
Restitution is available when:
a. Elizabeth agrees to sell an acre of land to Vanessa, and after Vanessa makes a partial
payment Elizabeth wrongfully refuses to transfer title.
b. Lawrence makes an oral contract to provide physical training for Lee for fourteen
months and Lee discharges
Lawrence after six months.
c. Gilbert uses undue influence to induce Cynthia to sell him an antique chair for $10.
d. Restitution is available in all of these cases.
Millie, a tenant, abandons her apartment after 6 months, even though there are 6 months
left on her lease. If there were no survival clause in the lease, would the landlord be
able to hold Millie liable for rent?
a. Yes, but he must leave the apartment vacant
b. Yes, after he gives notice to the tenant
c. Yes, after he relets the apartment
d. No, the landlord must relet the apartment in order to collect rent for the remaining
lease term.
Mark complied with all formation requirements for incorporating his taxicab business.
He is the sole shareholder in the corporation. The corporation owns two automobiles
that Mark frequently uses for his own personal use. In addition, he sometimes deposits
the money he takes in during the day into his personal checking account. One day, an
employee of the company, while driving one of the company vehicles, accidentally hits
Peter, a pedestrian, in a crosswalk. Peter sues both Mark and the Taxi Company for
$100,000. The corporate assets are only $32,000.
a. Is the corporation liable for the acts of its employee? Explain.
b. Will Mark be personally liable under the facts? Why? Explain.
Drawers of checks may disclaim contractual liability by using the words “without
recourse.”
a. True
b. False
A conditional promise is a promise the performance of which depends upon the
happening or nonhappening of an event not certain to occur.
a. True
b. False
Negotiability is wholly a matter of form.
a. True
b. False
Commencing a voluntary case by filing a petition constitutes an automatic order for
relief.
a. True
b. False
An intentional breach of contract is generally held to be material.
a. True
b. False
Fran negligently drove her truck through Nick’s fence, causing damage. If she promises
to pay Nick $1,500 if he does not bring a lawsuit against her, Nick accepts and forms a
unilateral contract by not filing suit. His forbearance is consideration.
a. True
b. False