1) the primary corporate objective is to make money for the shareholders.
2) a drawee has no liability on a draft unless it certifies or accepts the draft.
3) a tort is civil wrong which is also the same as breach of contract.
4) the losing party usually can appeal a trial courts decision to grant a motion for a
directed verdict against that party.
5) the agents duty not to use or disclose confidential information about the principals
business continues after the agency ends.
6) in the eyes of law, breach of any contract is of equal seriousness.
7) if the seller contracts to deliver goods to a certain destination and the contract says
“ex-ship,” the seller bears the risk of loss until it delivers the goods to a shipper.
8) which of the following statements about the permit system established by congress
through the 1990 amendments to the clean air act is accurate?
a.permits under the permit system are issued by the epa.
b.the permit system was established by congress in 1970.
c.a state permitting program is approved by each concerned state.
d.the permits contain monitoring and reporting requirements.
9) it is important to promptly notify the obligor that an assignment has occurred. why?
a.it is a necessary requirement for a valid assignment.
b.the obligor might perform to the assignor rather than the assignee.
c.the obligors duty to perform is completely discharged.
d.if the obligor neither knew nor had reason to know about the assignment, the obligor
remains liable to the assignee.
10) jane wrote a check for $10. she wrote this check in a careless and negligent manner,
making alteration easy. ben altered this check to read $1,000. his alteration was crude
and obvious to anyone paying attention. ben cashed the check at janes bank. the bank
was negligent in accepting this check, but it deducted $1,000 from janes account. jane
sued the bank, and the jury determined that janes negligence contributes 50 percent to
the loss and the banks negligence contributes 50 percent. how much is jane entitled to
recover from her bank?
a.nothing, because she was negligent.
b.half the loss.
c.the entire loss.
d.the entire loss plus her court costs.
11) which of the following statements is true regarding noncompetition clauses in the
employment contracts?
a.these clauses are illegal.
b.employments contracts with these clauses are voidable.
c.these clauses put postemployment restrictions on the employees.
d.these clause need to be ratified by the employer.
12) on may 2, kurtz co. assigned its entire interest in a $70,000 account receivable due
in 60 days from long to city bank for $65,000. on may 4, city notified long of the
assignment. on may 7, long informed city that kurtz had committed fraud in the
transaction out of which the account receivable arose and that payment would not be
made to city. if city commences an action against long, and long is able to prove that
kurtz acted fraudulently:
a.long will be able to successfully assert fraud as a defense.
b.city will be entitled to collect $65,000, the amount paid for the assignment.
c.city will be entitled to collect $70,000 since fraud in the inducement is a personal
defense which was lost on may 2.
d.city will be entitled to collect $70,000 since longs allegation of fraud arose after
notice of the assignment.
13) consideration can be a(n) _____ in the case of a bilateral contract.
a.act
b.promise
c.exchange
d.gift
14) adams issues license of his land to crowe for planting flower trees only. he makes it
clear to crowe in the deed that he may not take undue advantage of the license by using
it for commercial purposes. however, after a few days, adams realizes that crowe has
made a profit by selling flowers, without his knowledge. can adams recover the amount
which crowe collected from sale?
a.yes because, adams is the owner of the land.
b.yes because, adams restrictions were clear.
c.no because, adams has already licensed crowe to use his land.
d.no because, adams does not possess any rights until the license expires.
15) the federal and state governments are exempted from which of the following acts?
a.the family and medical leave act
b.the fair labor standards act
c.the equal pay act
d.the occupational safety and health act
16) sally has been running a small but popular dance studio in her neighborhood for the
last 15 years. recently, a zoning ordinance mandated her neighborhood as strictly
residential where no commercial activities could be undertaken. what is sallys best
approach to continue running her studio if she is asked to close it?
a.she should request for an amendment to the ordinance.
b.she should get her students to protest.
c.she could argue that the studio was in existence before the ordinance.
d.she does not have a choice and must close or relocate her studio.
17) which of the following is not covered by article 2 of the ucc?
a.vehicles
b.appliances
c.stocks
d.books
18) which of the following is included in the articles of incorporation?
a.the number of shares a corporation is authorized to issue.
b.the standards for declaring dividends.
c.the procedures for calling special meetings of shareholders.
d.the procedures for maintenance of share records.
19) in the context of commercial speech, the supreme court developed the _____ test
which amounts to intermediate scrutiny.
a.means-ends
b.still-controlling
c.proximate cause
d.rational basis
20) what is the main aim of commercial torts?
a.to enable product creation for commercial purposes
b.to provide immunity in cases of fraud
c.to maintain standards of commercial morality
d.to ensure smoother commercial negotiations
21) generally, _____ have a shorter duration than debentures or bonds.
a.options
b.warrants
c.promissory notes
d.rights
22) which of the following is an inaccurate statement about the insurable interest
requirement?
a.the beneficiary named in a life insurance policy may recover under the policy if she
possessed an insurable interest in the relevant persons life at the time she (the named
beneficiary) procured the policy but no longer possessed the insurable interest at the
time the relevant person died.
b.when an equitable interest in a property translates into a legal interest, it is considered
to be an insurable interest.
c.persons who are business partners are generally held to possess insurable interests in
each others lives.
d.a policy owner may recover under a property insurance policy if he possessed an
insurable interest in the relevant property at the time he procured the policy but no
longer possessed the property.
23) tim contracts with home dairy to deliver a bottle of milk to tims house every day.
home dairy assigns tims contract to mother dairy. tim is notified of the change and
continues to get his daily bottle of milk. his contract is now with the new dairy. mother
dairy is the:
a.assignee.
b.factor.
c.holder in due course.
d.assignor.
24) an order charging all or part of the partners transferable partnership interest with
payment of the unsatisfied amount of the judgment is called a(n) _____.
a.interim charge
b.redeeming order
c.charging order
d.redeeming the charge order
25) which of the following is true of the statute of frauds?
a.it prevents the use of oral evidence to contradict the terms of a written contract.
b.it applies to all contracts having consideration valued at $500 or more.
c.it requires the independent promise to pay the debt of another to be in writing.
d.it applies to all real estate leases.
26) beginning in 1998 and continuing until aug. 1, 2003, aromatic co. promoted the sale
of its essence of terre haute (eth) brand perfume by encouraging eth buyers to save the
proof of purchase seals on eth labels. consumers with at least 25 proofs of purchase
seals could redeem them for fabulous prizes. this promotion had caused the sales of eth
since 1998 to be well in excess of eth sales levels from 1993 through 1998. in nationally
televised announcements on aug. 1, 2003, aromatic stated that it was ceasing the proof
of purchase program and that effective immediately, no more proof of purchase seals
would be accepted for redemption. this left millions of eth buyers with worthless proof
of purchase seals, many of which came from bottles of eth purchased within one week
before aromatics aug. 1 announcement. assume that the federal trade commission has
brought an adjudicative proceeding against aromatic on the theory that the aug. 1
announcements (and the underlying decision to halt the program without giving
consumers a reasonable period of time within which to redeem their seals) constituted
an unfair practice in violation of section 5 of the ftc act. aromatic argues, in defense,
that its aug. 1 announcements were easily understandable and contained no deceptive
statements. it also argues that the elements of unfairness are not present here. analyze
and evaluate aromatics arguments.
27) while eating dinner at a restaurant, elvis placed his backpack on an empty chair
located next to his table. when elvis left the restaurant, he forgot to pick up the
backpack. a few minutes later, priscilla discovered the backpack and took possession of
it. what rights to the backpack do elvis, priscilla, and the restaurant have?
28) shawnequa is a partner of cost hydrohut llp, an accounting limited liability
partnership. one of shawnequas partners negligently audits a client, with the result that a
bank that relied on the clients audited financial statements suffers damages when the
client fails to repay the loan. the bank sues cost hydrohut, but its assets are insufficient
to pay the entire damages. will the bank be able to collect the remaining damages from
shawnequas personal assets?
29) acme co, a widget manufacturer, is acquiring basic, inc., another widget
manufacturer. in view of the nature of the widget industry, a manufacturers sales
territories tend to correspond closely to the states in which it has manufacturing plants.
both acme and basic have plants in north carolina, south carolina, tennessee, and
kentucky. in addition, acme has plants in illinois and indiana, and basic has a plant in
ohio. the postmerger market share of the two firms is likely to be 5 percent in the
combined north carolina, south carolina, tennessee, kentucky, illinois, indiana, and ohio
markets, 10 percent in the combined north carolina, south carolina, tennessee, and
kentucky markets, and 32 percent in the combined north carolina-south carolina market,
where acme and basic have been historically strong competitors. which of the above
markets is likely to be treated as the relevant geographic market for purposes of
determining the legality of the acquisition? why that market?
30) frazier and roz are partners. frazier contributes $30,000 to the partnership, and roz
contributes $10,000. they agree that frazier will assume 70 percent of partnership losses
and that roz will assume 30 percent. they make no agreement about how to share
profits. the partnership has a profit of $60,000 in its first year. how much of the profits
is frazier entitled to receive?