Which of the following cannot be forced into involuntary bankruptcy under Chapter 7?
A. Farmers
B. Ranchers
C. Nonprofit organizations
D. Farmers, ranchers, and nonprofit organizations
E. Farmers and ranchers, but nonprofit organizations may be forced into involuntary
bankruptcy
Which of the following must the defendant prove in order to rely upon the defense of
contributory negligence?
A. Only that the plaintiff’s conduct fell below the standard of care needed to prevent
unreasonable risk of harm.
B. Only that a failure of the plaintiff was a contributing cause to the plaintiff’s injury.
C. Only that the plaintiff violated the last-clear-chance doctrine.
D. That the plaintiff’s conduct fell below the standard of care needed to prevent
unreasonable risk of harm and also that the plaintiff’s failure was a contributing cause to
the plaintiff’s injuries.
E. That the plaintiff’s conduct fell below the standard of care needed to prevent
unreasonable risk of harm; that the plaintiff’s failure was a contributing cause to the
plaintiff’s injuries; and also that the plaintiff failed to abide by the last-clear-chance
doctrine.
Yolanda agrees to bathe and groom Wendy’s dog, Fluffy, for $20. Yolanda agreed to the
price before seeing Fluffy, a very plump, grouchy Pembroke Welsh Corgi dog with lots
of hair. Yolanda tells Wendy that if she is going to groom Fluffy, the price will be $30.
Wendy agrees although noting that the dog is named “Fluffy.” Yolanda bathes and
grooms Fluffy, but Wendy will only pay $20. Which of the following is correct
regarding Yolanda’s entitlement to the extra $10?
A. Yolanda is entitled to the extra $10 because a valid bilateral contract existed.
B. Yolanda is entitled to the extra $10 because a valid unilateral contract existed.
C. Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled
to the extra $10 because she had a preexisting duty to bathe and groom Fluffy for $20.
D. Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled
to the extra $10 because Wendy’s promise to pay $30 was illusory.
E. Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled
to the extra $10 because past consideration was involved.
If the buyer of goods fails to write the date on the check to the seller, the seller may:
A. return the check to the buyer.
B. write in the date intended by the buyer.
C. demand a new check.
D. charge a penalty if it delays full payment.
E. sue the buyer.
Why must federal legislation that affects business be based on an expressed
constitutional grant of authority?
A. Because the U.S. Congress passed a law to that effect.
B. Because the federal government has only those powers granted to it by the
Constitution.
C. Because the President Lincoln issued an executive order to that effect.
D. Because President Washington issued an executive order to that effect.
E. Because it is a custom.
In Indian Law, duress is referred to as _____.
A. coercion
B. pardanashin
C. forced contractual relation
D. undue bias
E. undue pressurizing
An owner of a ______ has a possessory interest but not an ownership interest.
A. conditional estate
B. life estate
C. leasehold
D. future interest
E. fee simple absolute
If Article 2 of the UCC is silent on an issue of sales contract formation or interpretation
and there is no state statutory law in place on that matter, what law applies?
A. State statutory law or common law.
B. Federal statutory law and the CISG.
C. The U. S. Constitution.
D. The CISG only.
E. Federal statutory law only.
In a _____ contract, the offeror wants a performance to form the contract.
A. trilateral
B. bilateral
C. unilateral
D. complete
E. anticipatory
What was the result on appeal in Steven Klein, Warren Brandwine v. General Nutrition
Companies Inc., the case in the text in which the plaintiffs claimed that defendant GNC
violated several securities regulations by failing to disclose material facts in its
prospectus?
A. That the defendant violated securities regulations by failing to disclose a possible
loss of advertising support based on the advertiser’s decrease in sales.
B. That the defendant violated securities regulations by failing to disclose a worldwide
vitamin E shortage that could affect the defendant’s sales.
C. That the defendant violated securities regulations by failing to disclose that
same-store sales were being adversely affected by the opening by the defendant of new
stores in close proximity to old stores.
D. That the defendant violated securities regulations by failing to disclose a possible
loss of advertising support based on an advertiser’s decrease in sales; by failing to
disclose a worldwide vitamin E shortage that could affect the defendant’s sales; and by
failing to disclose that same-store sales were being adversely affected by the opening by
the defendant of new stores in close proximity to old stores.
E. That there was no violation of securities laws because all alleged omissions were
immaterial as a matter of law.
Which of the following is true regarding liability of an agent acting within his or her
authority on a contract involving an undisclosed principal?
A. The law will likely hold the agent liable for the agreement.
B. The law will hold the agent liable for the agreement unless the contract the agent had
with the principal expressly provided that the agent would not be held liable in such
cases.
C. The law will hold the agent liable for the agreement unless the contract the agent had
with the principal impliedly or expressly provided that the agent would not be held
liable in such cases.
D. The law will hold the agent liable for the agreement unless a contract for under
$1,000 is involved in which case only the principal would be held liable.
E. The law would not hold the agent liable on the agreement.
A(n) _____ begins the corporation creation and organization process by arranging
capital, financing, and licenses.
A. subscriber
B. incorporator
C. promoter
D. officer
E. shareholder
In most situations, how many principals may an agent represent in any one agreement?
A. One
B. Two
C. Three
D. Four
E. Any number
Which of the following is false regarding termination of agency based on operation of
law?
A. Impossibility of performance terminates the agency relationship.
B. An agency agreement is terminated whenever the agent, unknown to the principal,
acquires an interest against the principal’s interest.
C. The agency agreement is terminated if the agent breaches the duty of loyalty he or
she has to the principal.
D. A change in law passed subsequent to the formation of an agency agreement may not
terminate the agency agreement.
E. If there is an unusual change in circumstances that leads the agent to believe that the
principal’s instructions do not apply, the agency relationship terminates.
Why are punitive damages awarded?
A. To punish the offender only.
B. To deter others from committing similar offenses only.
C. To reimburse a plaintiff for his or her actual losses only.
D. To punish the offender and to deter others from committing similar offenses.
E. To punish the offender, to deter others from committing similar offenses, and to
reimburse a plaintiff for his or her actual losses.
If a computer store dumps waste behind its building in violation of local, state, or
federal environmental regulations, the resulting dispute focuses on __________ law.
A. public
B. preferential
C. consensual
D. private
E. black letter
_________________ paper is a writing that demonstrates a right to payment of money.
A. Chattel
B. Goods
C. Payment
D. Instrument
E. Authorization
Which party must offer consideration for an agreement to be enforceable in the courts?
A. Only the offeror.
B. Only the offeree.
C. Only the acceptee.
D. The offeree and acceptor.
E. The offeror and offeree.
Check Cashing Business. Susan owns and operates a check cashing business. A
customer, Bob, claiming to be Sam, comes in and cashes a $2,000 check issued by ABC
Trucking to Sam. The day after Susan cashed the check, she received a notice from
ABC Trucking that some checks had been stolen. It was later discovered that the
customer had forged Sam’s name on the check issued by ABC Trucking. At the time she
took the ABC Trucking check, Susan was very busy with several customers in line. She
simply glanced at the check and cashed it. A reasonable examination would have
revealed that the check had been materially altered and changed from the amount of
$200 to $2,000. Susan decided that she needed to hire some people to help her because
she also had a problem with another check. On the same day that she took the ABC
Trucking check, she took a check from another customer, Maurice. It was later
discovered that the check from Maurice, which was four months old, was the subject of
a dispute between Maurice and the issuer of the check for whom Maurice had done
some work. The issuer claimed that the work was improperly done. Both ABC Trucking
and the issuer of the check to Maurice stopped payment on the checks. Susan claims
that she was entitled to the status of holder in due course and was entitled to payment
on both checks. What is the effect of the alteration of the check on Susan’s status as a
holder in due course?
A. The alteration has no effect because a holder is not charged with examining an
instrument presented for payment.
B. The alteration will likely prohibit her from being a holder in due course.
C. The alteration will affect her status as a holder in due course only if she had been put
on notice of prior criminal behavior in the past on the part of Bob.
D. The alteration will affect her status as a holder in due course only if the issuer can
establish that it was not negligent in allowing a thief to gain access resulting in the
alteration.
E. The alteration will affect her status as a holder in due course because it involved over
$500; otherwise, based on the purpose of the law to protect holders, the alteration
would have had no effect.
Local legislative laws are called:
A. Codes
B. Ordinances
C. Model laws
D. Executive orders
E. Uniform laws
When parties form an agency relationship by making a written or oral agreement, the
agency is known as a(n) _______.
A. expressed agency
B. implied agency
C. apparent agency
D. ratification
E. endorsement
A plastic card containing magnetic strips with data regarding the value of the card is
typically known as ____________.
A. stored-value cards
B. smart cards
C. intel cards
D. transfer cards
E. electronic cards
A common law rule known as the ______ required that the seller deliver goods in
conformity with the terms of the contract, down to the last detail.
A. tender of offer regulation
B. superior delivery rule
C. certain tender rule
D. regulatory rule
E. perfect tender rule
__________________ regulates workplace safety.
A. The Occupational Safety and Health Act
B. The Fair Labor Standards Act
C. The Wagner Act
D. The Taft-Hartley Act
E. The Workplace Enhancement Act
The part of the Uniform Commercial Code that governs contracts for the sale of goods
is Article _____.
A. 2
B. 3
C. 4
D. 5
E. 6
Which of the following is true regarding joint ventures?
A. Generally, joint ventures are taxed like corporations.
B. If one of the members of a joint venture dies, the joint venture is automatically
terminated.
C. Members of a joint venture are agents of the other members.
D. A joint venture may be formed without drawing up a formal agreement.
E. Courts frequently apply sole proprietorship law to joint ventures.
Which of the following are examples of consideration?
A. A benefit to the promisor but not a detriment to the promisee.
B. A detriment to the promisee but not a benefit to the promisor.
C. A promise to do something, a benefit to the promisor, or a detriment to the promisee.
D. An accepted offer.
E. A valid counteroffer.
Under the UCC, _____ is defined as “honesty in fact and the observance of reasonable
commercial standards for fair dealing.”
A. commercial standards
B. subjective reasonableness
C. objective reasonableness
D. good faith
E. reasonable investigation
Peanut Allergy. Kitty, who had a love of baking, decided to open her own bakery. She
decided that she did not need and did not want to pay for a lawyer to advise her on
different forms of ownership. Unfortunately, Kitty had not paid attention in business
law class. She proceeded, with little thought, to simply open her business called Kitty’s
Baking. Bobby came in to order some cookies for his girlfriend, Bitsy, who was allergic
to peanuts. Bobby told Kitty that he needed some cookies for Bitsy but that Bitsy had
allergies to peanuts. Kitty told him not to worry because she would make up a special
batch just for him. Kitty had hired some assistants because she was so busy. She told an
assistant, Cathy, to make up several batches of cookies for different customers including
Bobby and to leave out the peanuts in Bobby’s order. Cathy, however, forgot the
instruction and proceeded to make Bobby’s cookies with crushed peanuts. Bobby
picked up the cookies and gave one to Bitsy in the car while they were on the way to
the movie in Bobby’s new car. Bitsy became violently ill, vomited in Bobby’s car, and
had to have her stomach pumped. Bobby and Bitsy sought recovery from Kitty who
told them that Bitsy’s doctor bill and Bobby’s car cleaning bill were business debts, that
the business was new and not making any money at the moment, and that she had no
personal liability. Following the incident involving Bobby and Bitsy, Kitty discussed
with her parents her problems with the bakery. Kitty’s parents would like to invest in
her business and share in any profits, but they do not want to share in the management
responsibilities. Which of the following would be a form of business organization for
Kitty and her parents such that her parents could invest but not participate in
management?
A. General partnership
B. Limited partnership
C. Managed partnership
D. Combined partnership
E. Family-based partnership
In Trouble. Bruno, an issuer of stock, may be in trouble. He sold stock in a new health
club venture before the effective date of registration. He did so because he was in
financial trouble involving other ventures of his and needed additional funds. Bruno
thought that the health club venture would be such a success that he would never get
caught in regard to the stock sale. Unfortunately, he was wrong. The health club venture
was going very poorly and investors were looking for some way to hold Bruno
responsible. Another problem Bruno has is that he inflated information regarding the
prospects of the health club in the prospectus. Investors bitterly complained. Rick, a
new lawyer, told Bruno that as far as he knew, the SEC could fine Bruno under the
Securities Act of 1933 but could not send him to jail. Bruno told Rick that was good
news and that no one should feel sorry for the investors because none of them made any
effort to check on information contained in the prospectus or to investigate the future
profitability of the health club venture. Bruno says that he plans to rely on the due
diligence defense. Bruno also asks Rick if he is aware of any other defenses. Bruno says
that he has never previously been in trouble with the SEC. Is Rick correct in that the
SEC would have no authority to send Bruno to jail?
A. Rick is correct because there are no criminal penalties for violating the 1933 act.
B. Rick is incorrect because the SEC criminally prosecutes some violators although the
action would only be a misdemeanor.
C. Rick is correct in that the SEC itself would not send Bruno to jail, but the SEC could
recommend criminal action to the Department of Justice resulting in imprisonment for
up to five years for a violation.
D. Rick is incorrect because the SEC criminally prosecutes some violators, and a
violation of the act is considered a felony that could lead to a prison term of 10 years.
E. Rick is correct in that the SEC itself would not send Bruno to jail, but the SEC could
recommend criminal action to the Federal Bureau of Investigation resulting in
imprisonment for up to ten years for a violation.