1) Preemptive rights permit a director to veto, or “preempt,” any proposal that the
shareholders have voted to approve or disapprove.
2) The courts, in interpreting statutory law, often rely on the common law as a guide to
what the legislators intended.
3) A Totten trust provides for a beneficiary’s transfer of his or her right to future
payments of trust funds.
4) The rights that accompany a fee simple absolute include the right to use the land for
whatever purpose it is best suited, not necessarily for whatever purpose the owner sees
fit.
5) Constructive delivery is a general term for all of those acts that the law holds to be
equivalent to acts of real delivery.
6) The Foreign Sovereign Immunities Act broadly defines commercial activity.
7) The primary responsibility for implementing air-pollution standards established
under the Clean Air Act rests with state and local governments.
8) Community property it is created when a real property owner or lessor agrees to
convey the right to possess and use the property to a lessee (tenant) for a certain period
of time.
9) Public water systems operators must come as close as possible to meeting the
Environmental Protection Agency€s standards by using any available technology that is
economically and technologically feasible.
10) If a person does not consent, a federal agency normally must obtain a warrant to
access his or her financial records.
11) Any activity that substantially affects interstate commerce falls outside the scope of
antitrust laws.
12) Once immunity is given, a person has an absolute privilege against
self-incrimination and can no longer refuse to testify on Fifth Amendment grounds.
13) Once a registration statement has been filed, a waiting period begins while the
Securities and Exchange Commission reviews the statement.
14) An action may be legal but not ethical.
15) Anna obtains a business liability insurance policy for her Brew & Bagels Coffee
Shop from ChoiceFirst Insurance Company. When an event occurs that gives rise to a
claim, each party has a duty to
a.cooperate in an investigation to determine the facts.
b.file a suit against the other so that a court can settle the claim.
c.find a third party on whom to impose liability.
d.pay any outstanding premium or refund any unearned amount.
16) The Securities and Exchange Commission decides to create a new rule relating to
the dissemination of material nonpublic information through corporate Web sites. This
process begins with
a.an on-site inspection.
b.the filing of a complaint against a charged party.
c.the publication of a notice of proposed rulemaking.
d.the solicitation of public comments.
17) Joan borrows money from Jake under a security agreement. After borrowing the
money, Joan buys a new kayak. The kayak is considered
a.a floating lien.
b.after-acquired property.
c.a future advance.
d.proceeds.
18) Information Security Inc. pays income and other taxes collected by the Internal
Revenue Service (IRS). Like other federal administrative agencies, the IRS was created
by
a.Congress, through enabling legislation.
b.the courts, through the adjudicatory process.
c.the U.S. Constitution, in Article I, Section 8.
d.the president, through an executive order.
19) Quade is an expert in twentieth-century art. Rachel visits Quade’s gallery, seeking to
buy artwork as an investment. Quade shows her a painting that in his opinion is by
Picasso. Quade’s statement is
a.an express warranty.
b.an implied warranty.
c.an opinion.
d.puffery.
20) Guitar Maker, Inc., makes guitars. The Occupational Safety and Health
Administration (OSHA) proposes a safety rule governing the handling of wood and its
dust in the workplace, including the woods that Guitar Maker uses in its operations.
Guitar Maker contends that the rule will involve substantial compliance costs without
significantly increasing workplace safety. The firm sends a letter to OSHA indicating its
objections to the proposed rule and enclosing research reports and other data supporting
those objections. Does OSHA have any obligation to consider these objections? What
procedures must OSHA follow when it makes new rules, such as this one?
21) Fact Pattern 28-2B
Belle draws a check on her account in Capital Credit Bank in New York, payable to
Distribution Marketing, Inc., in San Francisco. Distribution Marketing deposits the
check in its account at Equity Bank. Equity Bank deposits the check in the Federal
Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New
York. That Federal Reserve Bank sends the check to Capital Credit.
Refer to Fact Pattern 28-2B. When Equity Bank received the check, it was required to
pass it on
a.before midnight of the next banking day.
b.before midnight of the next day, whether or not it was a “banking” day.
c.before noon of the next banking day.
d.within five business days.
22) Giuseppe writes a check “payable to bearer” and hands it to Hamilton. Imogene
steals the check and delivers it to Jocelyn, an innocent third person. Hamilton can
recover the proceeds of the check from
a.Imogene.
b.Jocelyn.
c.Giuseppe.
d.no one.
23) Farrahand Grant are shareholders of Hong Kong Restaurants, Inc. As shareholders,
they must approve
a.conducting a merger.
b.deciding to pursue new business opportunities.
c.none of the choices.
d.negotiating a contract between management and labor.
24) Leif files a petition in bankruptcy. Among his debts are unpaid taxes, fines owed to
the government, student loans owed to Metro University, and support owed to his
ex-wife Nadia. Most likely to be discharged are
a.back taxes accrued within the previous three years.
b.fines outstanding less than eight years.
c.student loans whose payment would impose undue hardship.
d.spousal-support debts unpaid for more than eighteen months.
25) Nora enters into a contract with Oceanic Transport, Inc., to insure and ship a
painting from France to the United States for a certain price. But Oceanic makes a
mistake in adding the costs, which results in a contract price that is $1,000 less than the
true cost. Most likely, a court would
a.allow the parties to rescind the contract.
b.award damages to Nora for the mistake.
c.award damages to Oceanic for the mistake.
d.enforce the contract as is.
26) Cowtown Creamery, Inc., needs a certain part for its pasteurizing equipment to
continue its operations and orders one for $3,000 from Dairy Supplies Company.
Cowtown tells Dairy Supplies that it must receive the part by Tuesday or it will lose
$10,000. Dairy Supplies ships the part late. Cowtown can recover
a.$13,000.
b.$10,000.
c.$3,000.
d.$0.
27) Root & Branch is a Registered Public Accounting Firm. Root & Branch performs
auditing services for Sales & Service Company. Under the Sarbanes-Oxley Act of 2002,
at the same time, for the same company, Root & Branch can also provide
a.bookkeeping and other services related to accounting records and financial
statements.
b.none of the choices.
c.appraisal and valuation services.
d.financial systems design and implementation.
28) Nikkiand Orlandoare limited partners in Port City Exports, a limited partnership. To
avoid personal liability for partnership obligations, they must not
a.acquire an interest in the firm.
b.contribute property to the firm.
c.engage in activities independent of the firm’s business.
d.participate in the firm’s management.
29) Fresh Meds, Inc., a U.S. firm, contracts with Gong, Ltd., a Hong Kong firm, al-
lowing Gong to use and profit from Fresh Meds’ patented products. This is
a.a distribution agreement.
b.a joint venture.
c.direct exporting.
d.licensing.
30) The federal courts are superior to the state courts.
31) An agent’s implied authority can be implied by custom.
32) In many states, a release contract must be in a signed writing.
33) Oral evidence of otherwise clear terms in a contract can be introduced at a trial to
contradict those terms.
34) Warrants are required to conduct administrative searches in all highly regulated
industries.