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1) where covered and non-covered peril join to cause a loss, and the covered peril plays
the dominant role in such loss, then the policy:
a.will provide coverage, because of the dominant role played by the covered peril.
b.will not provide coverage, because of the presence of the excluded peril.
c.will provide coverage, because loss is sustained by the insured.
d.will not provide coverage, because the insurance is voidable.
2) in the event of a breach of a presentment warranty:
a.the drawee is entitled to compensation for expenses and loss of interest resulting from
the breach to compensate for the amount paid by the drawee.
b.the drawees right to recover damages for breach of warranty is annulled by any failure
on the part of the drawee to exercise ordinary care in making payment.
c.the warrantor may defend by showing that the indorsement is effective under the
impostor or fictitious payee rules.
d.the drawee can withdraw an amount equal to the amount paid by the drawee less the
amount the drawee received or is entitled to receive from the drawer.
3) a defendants act must have been prohibited by statute at the time he/she committed it
and the penalty imposed must be the one provided for at the time of his/her offense. this
essentially indicates:
a.encouragement of deterrence laws.
b.the presence of nulla poena sine lege laws.
c.prohibition of ex post facto criminal laws.
d.the presence of retributive justice.
4) arthur borrows a new pair of stereo speakers from jim, his classmate, who stays in
the campus hostel. after about a week, he goes to the hostel and leaves the speakers
with ryan, who lives on the floor adjacent to jims, asking him to give them to jim. ryan
forgets to do so and loses the speakers. in such a situation:
a.ryan is liable to jim; he should have been more careful.
b.arthur is liable to jim; he is the bailee.
c.arthur is not liable to anyone because he returned the speakers.
d.it was jims responsibility to take the speakers back.
5) in which of the following situations will a state make an award of workers
compensation to an injured worker, if the state is using an increased risk test to define
the relationship between an injury and the nature of employment?
a.a secretary is assaulted by a trespasser in an accounting firm.
b.a security guard employed by a software company is assaulted by a trespasser.
c.two employees engage in an arm wrestling match and are injured as a result.
d.an employee attempts to impress his co-worker by placing a lit match close to his
hand and is burned as a result.
6) which of the following statements about the employee retirement income security
act (erisa) is accurate?
a.erisa does not impose fiduciary duties on pension fund managers.
b.erisa does not allow pension plan participants to sue employers.
c.erisa does not require employers to establish or fund pension plans.
d.erisa does not guarantee employee participation in pension funds.
7) svetlana mills gives a check payable to the order of svetlana mills, to a shopkeeper
for some groceries. here, the check would be considered as negotiated only upon the
fulfillment of which of the following conditions?
a.the check should be indorsed by the shopkeeper.
b.the check should bear the name of the shopkeeper.
c.svetlana should indorse the check in the name of the shopkeeper.
d.svetlana should indorse the check in her own name.
8) which of the following can a buyer do if the goods delivered by the seller do not
conform to the contract?
a.accept only part of a commercial unit and reject the rest
b.accept all of them but not make the payment
c.accept a commercial unit and withhold payment for the accepted portion
d.accept any commercial units and reject the rest
9) the term 'superfund" refers to:
a.the resource conservation and recovery act.
b.the pool of money collected to compensate victims of nuclear reactor disasters.
c.the comprehensive environmental response compensation and liability act (cercla).
d.the fund that the automobile industry must maintain to develop alternative-fuel
vehicles.
10) reggie went to the napa valley harvest festival, when he stopped at tracys booth
where she was selling paintings of vineyards. reggie admired a painting of vineyards,
which did not appear to be for sale. reggie said to tracy, i will give you $200 if you give
me that painting right now. tracy said nothing in response, but she gave reggie the
painting, and reggie gave her $200 in cash. this is an example of a contract that is now:
a.bilateral and executed.
b.bilateral and executory.
c.unilateral and executed.
11) a banks right or duty to charge a depositors account for a check can be terminated
when a:
a.stop-payment order from the depositor after the bank has certified a check.
b.depositor files a bankruptcy petition.
c.notice of garnishment of the account by the depositor.
d.creditor of the depositor files a bankruptcy petition after the notified cut-off hour on
the banking day after the check is received.
12) a party to a contract who seeks to rescind the contract because of that partys
reliance on the unintentional but materially false statements of the other party will
assert:
a.reformation.
b.actual fraud.
c.misrepresentation.
d.constructive fraud.
13) paco corp., a building contractor, offered to sell roy several pieces of used
construction equipment. roy, engaged in the business of buying and selling equipment,
accepted the offer. pacos written offer had been prepared by a secretary who typed the
total price as $10,900, rather than $109,000, which was the approximate fair market
value of the equipment. paco learned of the error in the offer and refused delivery of the
equipment unless roy agreed to pay $109,000. roy has sued paco for breach of contract.
which of the following scenarios is the likely outcome?
a.paco will not be liable because there has been a mutual mistake of fact.
b.paco will be able to rescind the contract because roy should have known that the price
was erroneous.
c.roy will prevail because paco is a merchant.
d.the contract is enforceable because roy had accepted it.
14) a preincorporation share subscription is:
a.a contract binding the corporation at the time of incorporation.
b.irrevocable by the subscriber for six months after the subscription has been issued.
c.a contract binding the corporation at the time of its issuance.
d.preferred by modern corporate promoters over a post incorporation subscription.
15) which of the following ethical theories is a deontological theory?
a.utilitarian theory
b.teleological theory
c.rights theory
d.profit maximization theory
16) a(n) _____ can be negotiated or transferred by delivery of possession without
indorsement.
a.order paper
b.bearer paper
c.cashiers check
d.tellers check
17) to retain its status as a corporation in good standing, a corporation must:
a.pay an annual franchise fee or tax.
b.hold an annual shareholders meeting.
c.pay an annual dividend to shareholders.
d.hold an annual board of directors meeting.
18) martha purchases a book from just books on credit and later sells the book to her
friend, christina. christina in turn sells the book to david, who agrees to pay the balance
to just books. who is the creditor beneficiary in this exchange?
a.martha
b.christina
c.david
d.just books
19) a defendant who is negligent is not liable for the unlikely or unforeseeable harm
that results. this rule is called:
a.the proximate cause.
b.the distal cause.
c.the just cause.
d.the but for rule.
20) paul is hired by soprano as a security guard. at the time of hiring, paul signs an
agreement that relieves soprano from workers compensation liability. this agreement is
most likely:
a.enforceable because paul and soprano have equal bargaining power.
b.unenforceable because it includes intentional torts.
c.enforceable so long as the terms of the agreement are conspicuously disclosed.
