1) the insured is not entitled to recover under a property insurance policy if she had an
insurable interest at the time the policy was purchased but did not have an insurable
interest the time the loss occurred.
2) if a note or draft contains a conspicuous statement that the promise or order is not
negotiable, it is not a negotiable instrument even if it meets the test for negotiability.
3) today, social and economic regulations generally receive rational basis review when
they are challenged on the grounds of equal protection.
4) the state statutory law prescribes the place where the financing statement has to be
filed.
5) under the revised article 3 of the ucc, the variable interest rate notes are not
negotiable.
6) the residuary is the remaining property of a persons estate after bequests and devises
have been made.
7) the shareholders of a corporation that has elected s corporation status may report the
income and losses of the business on their individual federal income tax returns.
8) the ultimate purpose of the 1934 act is to keep investors fully informed to allow them
to make investment decisions when securities are sold by an issuer to investors.
9) under the usa patriot act, the foreign intelligence surveillance court may issue
warrants of the sneak and peek variety.
10) indorsements that state a condition to the right of the indorsee to receive payment
do not affect the right of the indorsee to enforce the instrument.
11) no formalities are required in order to establish a partnership.
12) what is recidivism?
a.a special theory of deterrence.
b.a quasi-criminal offense punished by light fines.
c.repeat offenses by previously punished offenders.
d.attempts to change the behavior of convicted offenders.
13) pulse corp. maintained a warehouse where it stored its manufactured goods. pulse
received an order from star. shortly after pulse identified the goods to be shipped to star
and before moving them to the loading dock, a fire destroyed the warehouse and its
contents. with respect to the goods, which of the following statements is correct?
a.pulse has title but no insurable interest.
b.star has title and an insurable interest.
c.pulse has title and an insurable interest.
d.star has title but no insurable interest.
14) brian signs a promissory note for $500 payable to harwich. harwich indorses the
note pay to the order of stephen, harwich and negotiates it to stephen. stephen
fraudulently changes the $500 to $5000. under these circumstances, brian is discharged
from his liability as maker of note because:
a.brian has not forged the signature.
b.the instrument is not negotiable.
c.the amount for which he was liable was altered.
d.stephen is insolvent.
15) a fundamental difference between a promissory estoppel and traditional contract
principles is that a promissory estoppel protects:
a.reliance.
b.bargains.
c.agreements.
d.consideration.
16) _____ means that the principals rights and liabilities are what they would have been
if the principal had known what the agent knew.
a.notification
b.authorization
c.ratification
d.imputation
17) in the case of a merchant, _____ means honesty in fact as well as the observance of
reasonable commercial standards of fair dealing in the trade.
a.course of dealing
b.usage of trade
c.good faith
d.caveat emptor
18) jim, the ceo of maple inc., had to sign a few papers that amanda, his secretary,
presented to him. unknown to jim, amanda had carefully slipped in a contract for the
sale of jims home to her in the papers which he signed. if amanda seeks to enforce the
contract, jims best defense to have the contract declared void would be:
a.innocent misrepresentation.
b.fraud in the execution.
c.mistake.
d.duress.
19) the basic governing document of the corporation is the:
a.articles of incorporation.
b.bylaws.
c.shareholder agreement.
d.organizational operating agreement.
20) which of the following is most likely to violate section 5 of the ftc act?
a.puffing statements
b.statements of opinion
c.deceptive omissions
d.sales talk
21) a perfected purchase money security interest in a manufacturers stock has priority
over a conflicting security interest in the same stock if the notification states that the
person expects to acquire a purchase money security interest in stock of the debtor and
describes the stock. which of the following priority rules does this statement correspond
to?
a.pmsi in non-inventory collateral
b.pmsi in inventory collateral
c.buyer in the ordinary course of business
d.artisans and mechanics lien
22) brilliant manufacturing is building a new factory. what kind of air pollution control
technology must brilliant install in its factory according to the clean air act?
a.the best available state-of-the-art technology
b.technology that its competitors in the industry are using
c.the most cost-efficient technology
d.technology in line with the local air quality
23) a pastor of a church (a nonprofit corporation) believes that his salary is too small to
cover his meager expenses. when repeated requests to management and superiors do not
lead to a salary increase, he starts supplementing his salary with church donations. what
risk is he running?
a.none, because the pastor and the church are separate and distinct legal entities.
b.none, because the pastors meager salary justifies this action.
c.the veil between the pastor and the church will be pierced because the pastors act is
immoral.
d.the veil between the pastor and the church will be pierced because the pastors act is
defrauding church members.
24) which of the following is nonnegotiable?
a.a note that does not state any other undertaking by the person promising to do any act
in addition to the payment of money.
b.a draft payable 15 days after sight.
c.a note with a clause permitting the time for payment to be accelerated at the option of
the maker.
d.a note that is payable when the interest rate on 30-year treasury bonds reaches 10
percent.
25) prof. bob deslob writes a check on his big bank checking account for $1 payable to
department of business law coffee club to pay for his weekly membership and gives it
to his colleague carol. bob does not place a decimal point after the 1 nor does he
complete the line ending in dollars. carol, knowing that bob can well afford it, prints in
block letters the words one hundred on the line ending in dollars. carol then gives the
check to dot, the department secretary who is in charge of the coffee club. dot presents
the check to big bank for payment, and big bank charges $100 from bobs account.
which of the following statements is most accurate?
a.bobs account must be recredited $99.
b.bobs account must be recredited $100.
c.bob contributed to the alteration and may be barred from claiming forgery.
d.bob had a duty to place a stop-payment order on the check.
26) which of the following classes of corporation may not distribute surplus revenue
from its operations to its members?
a.an s corporation
b.for-profit corporation
c.not-for-profit corporation
d.publicly held corporation
27) which of the following forms of business always imposes double taxation on the
earnings of the business?
a.a corporation
b.a limited liability company
c.a limited liability partnership
d.a sole proprietorship
28) to prove his/her due diligence defense under securities act section 11 with regard to
audited financial statements, an officer of the issuer must prove which of the following?
a.the officer made a reasonable investigation into the accuracy of the audited financial
statements.
b.the officer believed the financial statements did not omit or misstate a material fact.
c.the officer had no intent to misstate or omit a material fact in the audited financial
statements.
d.the officer had no reason to believe the financial statements omitted or misstated a
material fact.