1) Urban Commerce, Inc., issues bonds, which are also known as
a.cumulative investments.
b.fixed-income securities.
c.equity securities.
d.preferred stock.
2) Animal Feed Corporation and Beneficial Trucking, Inc., enter into a contract for
Beneficial to transport a truckload of hay for which Animal Feed agrees to pay. Due to
schedule conflicts, Beneficial contacts Crop Transport Company, to which Beneficial
“assigns all rights under the contract.” This transfer is
a.an assignment and a delegation.
b.an alienation and a negotiation.
c.an obligation and a cancelation.
d.prohibited.
3) Flossie signs a check payable to Glenn and gives it to him, leaving the amount blank
but authorizing him to fill it in for $1,000. Glenn fills in $1,500 and negotiates the
check to Home Federal Bank, an HDC. Home Federal can enforce the check for
a.$0.
b.$500.
c.$1,000.
d.$1,500.
4) Fine Motor Company buys gas pedals and other parts from General Mechanix, Inc.,
and puts them in its vehicles without changing their composition. If the pedals or other
parts are defective, strictly liable for any damage caused by the defects are
a.Fine Motor only.
b.no one.
c.Fine Motor and General Mechanix.
d.General Mechanix only.
5) Neci and Olwen want to form and do business as a corporation-Pastries & PiesInc. A
corporation is a legal entity created and recognized by
a.a central federal administrative agency.
b.a city or county clerk’s office.
c.an artificial legal person.
d.state law.
6) Jim is shorter than Kevin, and Lonna is less attractive than Merilyn. Research shows
that compared with taller men and more attractive individuals, Jim will likely make less
income and Lonna will receive poorer performance reviews and a lower salary.
Appearance-based discrimination has been barred by
a.Michigan and at least six cities.
b.none of the choices.
c.all of the states.
d.the federal government.
7) Fact Pattern 19-B1
Ambrose enters into a contract to buy 350 acres from Belle Vista Farms to cultivate
grapes and open a winery.
Refer to Fact Pattern 19-B1. If Belle Vista breaches the contract, Ambrose’s remedy
would most likely be
a.a certain ratio of the amount that Ambrose expected to invest in the project.
b.a percentage of Belle Vista’s unrealized profit.
c.the difference between the land’s contract and market prices.
d.specific performance.
8) Global Trade Corporation is a public company that is poised to issue securities that
do not qualify for an exemption from registration. This means that Global Trade must
a.file a registration statement with the SEC.
b.issue the securities through an online registration site.
c.refrain from issuing the securities to unregistered investors.
d.register the securities with a national stock exchange.
9) Fact Pattern 36-1
Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the
Jumbo Juice trade name as a member of a select group of dealers that engage in retail
juice sales.
Refer to Fact Pattern 36-1. To potential investors, Jumbo Juice must provide
a.actual earnings figures.
b.hypothetical earnings figures.
c.projected earnings figures.
d.none of the choices.
10) At age seventeen, Daryl enters into a contract to buy a dozen movies from eHD
Stream, Inc., an online video service. Soon after reaching the age of majority, Daryl
attempts to disaffirm the contract. eHD files a suit against him. The court will most
likely consider the contract ratified if it is
a.executed.
b.exculpatory.
c.express or implied.
d.emancipated.
11) Guitar Factory Corporation files a registration statement and delivers a prospectus
to the appropriate parties. These items are intended to enable the evaluation of certain
financial risks 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.
12) Quest Outdoor Store orders RiverRun-brand kayaks from Sports Merchandise, Inc.
Sports Merchandise mistakenly ships kayaks of the wrong size, which Quest rejects and
returns via Trans-State Shipping Company. During the return, the kayaks are lost. The
loss is suffered by
a.Quest .
b.Trans-State.
c.RiverRun.
d.Sports Merchandise.
13) Orina hires Padget, a real estate broker, to sell her oceanfront house. The house is
destroyed in a hurricane before being sold. Padgetis
a.Orina’s agent until Orina’s insurer pays Padget’s commission.
b.Orina’s agent until the destroyed house is sold.
c.Orina’s agent until the destroyed house is rebuilt and sold.
d.no longer Orina’s agent.
14) Lauren, Marcella, and Norell form a syndicate to buy a professional soccer
franchise. This syndicate could be set up as
a.a joint venture.
b.a corporation.
c.a sole proprietorship.
d.a limited liability company.
15) Lenders Bank files a financing statement regarding a transaction with Metro
Construction Company. To be valid, the financing statement must contain all of the
following except
a.a description of the collateral.
b.a statement of the purpose for the transaction.
c.Lenders’ name.
d.Metro’s name.
16) Mikayla, an agent for Nahir, enters into a contract on Nahir’s behalf with Onora that
must be in writing to be enforceable under the Statute of Frauds. Mikayla’s authority to
enter into this contract is not in writing. Under the equal dignity rule, this contract is
a.enforceable.
b.void.
c.voidable at Nahir’s option.
d.voidable at Onora’s option.
17) Smith & Jones, Accountants, agrees to perform an audit for Brick & Mortar Stores,
Inc. Whether or not this agreement meets all of the requirements of a contract, the
parties are likely to follow the rules of contract law because they
a.want to avoid potential disputes.
b.are conscious of those rules.
c.are not conscious of those rules.
d.have a moral obligation to do so.
18) Orson signs a check “pay to the order of Painless Dental” drawn on Orson’s account
in Quantum Bank. To impose liability on Orson if the bank dishonors the check,
Painless Dental should present it for payment within
a.one year.
b.six months.
c.ten days.
d.thirty days.
19) Lucy, a minor, disaffirms a contract for necessaries without returning the goods. To
Manny’s Food Mart, the seller, Lucy is required to pay
a.nothing.
b.the reasonable value of the goods.
c.the sales price of the goods.
d.the ultimate worth of the goods.
20) To be enforceable as a contract, a writing must have been signed by the party who
seeks to enforce it.
21) A writ of attachment is a court order that directs a sheriff to seize and sell the
debtor’s nonexempt property either at the time a lawsuit is filed or immediately
afterward.
22) Generally, a unilateral mistake affords the mistaken party a right to relief from the
contract.
23) A material fact is a fact that a reasonable person would consider important when
determining his or her course of action.
24) For accord and satisfaction to occur, the amount of the debt cannot be in dispute.
25) A prenuptial agreement must be in writing to be enforceable under the Statute of
Frauds.
26) Limited liability companies are entities apart from their owners.
27) Discovery is the process of obtaining information from an opposing party before
trial.
28) A holder takes an instrument for value by promising to perform or give value in the
future.
29) A signature on a negotiable instrument cannot be made by a device, such as a
rubber stamp or a thumbprint.