1) A license is a right to go onto land owned by another and take away some part of the
land itself or some product of the land.
2) An injured party may sue a business polluter in tort under the negligence and strict
liability theories.
3) After both sides have rested their cases, only the plaintiff’s attorney makes a closing
argument.
4) A limited liability company can be taxed as a partnership.
5) Only the U.S. Department of Justice can prosecute violations of all of the antitrust
laws.
6) BA buyer in the ordinary course of business takes the goods free from any security
interest created by the seller unless the security interest is perfected.
7) An accountant′s liability under the Securities Act of 1933 requires privity of contract
with the purchaser of a security.
8) A purchase-money security interest in consumer goods is perfected automatically at
the time it is created.
9) In an opinion, an auditor can include a general statement disclaiming any liability for
false or misleading financial statements.
10) A director or officer is liable to the corporation or its shareholders for honest
mistakes of judgment and bad business decisions.
11) A franchisor can suggest retail prices for the goods that a franchisee sells but cannot
mandate them.
12) National effluent (pollution) standards are set by the Environmental Protection
Agency for each industry.
13) The possession of monopoly power is the only element needed to establish the
offense of monopolization.
14) If a bank pays a check in spite of a stop-payment order, the bank is liable only for
amount of the actual loss suffered by the drawer because of the wrongful payment.
15) When dissolution takes place by voluntary action, the members of the board of
directors are responsible for winding up the affairs of the corporation.
16) 19.Mix n’ Match Clothing Corporation gives notice to Neely that Mix n’ Match is
terminating their franchise arrangement. Winding up the business requires
a.a new franchise agreement.
b.nothing more than closing immediately.
c.Neely’s death, disability, or insolvency.
d.the return of Mix n’ Match’s property.
17) Corporate Bank wants to perfect its security interest in inventory owned by Outdoor
Outfitters, Inc. Most likely, a financing statement should be filed with
a.the bank manager.
b.the county clerk.
c.the U.S. Department of the Interior.
d.the secretary of state.
18) Polly agrees to buy Quinn’s Cycle World store business on the express condition
that Ridgeline Credit Union approves the financing. This approval is
a.not a condition.
b.a condition precedent.
c.a concurrent condition.
d.a condition subsequent.
19) Lena is a salesperson for Musical Instruments, Inc. She tells Nayda, a customer, that
an instrument has a certain quality when, as Lena knows, it does not. In reliance, Nayda
buys the instrument. Liable for this misrepresentation is
a.no one.
b.Lena.
c.Musical Instruments.
d.Nayda.
20) Fleet Feet, an online travel company, buys blocks of rooms from Grande Hotel, a
hotel in Harbor City, at a wholesale rate. Fleet Feet resells the rooms to consumers at a
retail rate. One recent effort by cities to collect taxes from e-commerce has focused on
a.hotels that sell blocks of rooms at wholesale rates.
b.non-resident consumers who reserve rooms in in-state hotels.
c.online travel companies.
d.the dire financial straits of the cities during the latest recession.
21) Jewelry & Coin Company hires Kelly Ann to buy gems and precious metals from
various sources on its behalf. In this relationship, Jewelry & Coin is
a.an employee.
b.an independent contractor.
c.a principal.
d.an agent.
22) When possible, Taye pays recurring monthly bills through automatic bank transfers
and person-to-person payments to e-mail addresses or cell phone numbers. Compared
to the use of paper checks, Taye’s payment methods
a.aid sustainability.
b.hurt sustainability.
c.will never affect sustainability.
d.are poised to take a step toward sustainability.
23) Isabel owns a house, which she advertises for sale for $300,000. On April 1,
Jon-Pierre offers Isabel $280,000 for the house. On April 5, Isabel has delivered to
Jon-Pierre at his office a form that includes additional terms but does not state a price.
At 9 A.M. on April 6, Jon-Pierre signs the form and gives it to Karla, his administrative
assistant, with instructions to mail it. At 10 A.M., Isabel calls to tell Jon-Pierre that the
deal is off. The next day, Karla mails the signed form to Isabel. When Isabel refuses to
sell the house to Jon-Pierre, he files a suit against her, alleging breach of contract. Isabel
claims that there was no contract. What are arguments supporting each party’s position?
What is the court likely to rule? Explain.
24) Finnegan dies without a will, with no surviving spouse or child. Finnegan’s
survivors include his grandson Gallagher, his niece Hailey, and his cousin Innis. In most
states, his estate would pass to
a.Gallagher.
b.Hailey.
c.Innis.
d.the state.
25) Jasmine receives an unsolicited credit card in the mail and tosses it on her desk.
Without Jasmine’s permission, her roommate Ilene uses the card to buy a new tablet for
$500. Jasmine is
a. liable for $500.
b.liable for $250.
c.liable for $50.
d.not liable for any amount.
26) A surety can be required to pay an obligation only after the principal debtor defaults
and usually only after the creditor has made an attempt to collect from the debtor.
27) On drafts and checks, a drawer’s secondary liability does not arise until the drawer
fails to pay or to accept the instrument.
28) Surety ship and guaranty provide debtors with the right to seek payment from a
third party if the debtor, or principal, desires to default on his or her obligations.
29) Dixie, a driver for Express Delivery Company, leaves the truck’s motor running in
neutral and carelessly forgets to set the parking brake while she makes a delivery. The
truck rolls and crashes into a nearby gas station pump, igniting a fire that spreads
quickly to a construction site a block away. A burned wall collapses onto a crane, which
falls on Fazio, a bystander, and injures him. What must Fazio show to recover damages
from Express Delivery?
30) An “offer” to sell an item on an online auction site generally is treated an invitation
to negotiate.
31) The Convention on Contracts for the International Sale of Goods incorporates the
UCC’s Statute of Frauds provision.
32) Without exception, any duty can be delegated.