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1) generally, corporate acceptance of preincorporation subscriptions occurs by action of
the:
a.board of directors after incorporation.
b.promoters during their issuance.
c.board of directors during their issuance.
d.promoters before incorporation.
2) which of the following characterizes procedural due process?
a.the procedures are clearly laid in the constitution.
b.it entitles one to a fair hearing before action is taken.
c.it challenge rules that set standards of behavior for organized social life.
d.it does not require adequate notice to be given before action.
3) which of the following is true of the international standards for the premanufacture
screening of new chemicals?
a.the us regulation requires companies to demonstrate that a chemical is safe before it is
produced and distributed.
b.the eu regulations dealing with premanufacture screening of chemicals follow the
precautionary principle.
c.the eu restrictions on the production of chemicals that have been linked to health
problems will have little or no effect on the us chemical exports to the eu.
d.the european union requires regulators to show that products or their uses present an
unreasonable risk to human health or the environment before they can be regulated or
taken off the market.
4) what is meant by rational basis?
a.a decision has the consent of all board members.
b.a decision has been taken after protracted negotiations.
c.a decision has a logical connection to the facts.
d.a decision has been taken after a long discussion.
5) in general, the material alteration of a completed negotiable instrument:
a.is a complete defense against a holder in due course.
b.is no defense whatsoever against a holder in due course.
c.means that a holder in due course can enforce the instrument against the maker, but
only according to its original tenor.
d.means that a holder in due course can enforce the instrument as modified.
6) _____ is defined to mean a signature (other than that of a maker, drawer or acceptor)
that alone or accompanied by other words, is made on an instrument for purpose of (i)
negotiating the instrument, (ii) restricting payment of the instrument, or (iii) incurring
indorsers liability on the instrument.
a.indemnification
b.recoupment
c.indorsement
d.ratification
7) who, among the following, is not required to be present during administrative
adjudications?
a.respondent
b.jury
c.complainant
d.judge
8) some courts have held that certain shareholders are fiduciaries of each other. these
are shareholders of:
a.close corporations.
b.open corporations.
c.publicly traded corporations.
d.nonprofit corporations.
9) _____ are intended to punish flagrant wrongdoers and to deter them, as well as
others, from engaging in similar conduct in the future.
a.compensatory damages
b.punitive damages
c.liquidated damages
d.tort damages
10) which of the following is a possible example of procedural unconscionability?
a.a clause excluding a sellers liability for consequential damages from a defective good
b.a clause imposing a penalty for failure to deliver the goods on time
c.a high price term in a contract
d.a fine-print price term in a contract
11) an insurers duty to defend the insured requires:
a.paying the insured any compensatory damages incurred.
b.ensuring that there is no breach in bad faith.
c.furnishing the insured with an attorney for a liability case.
d.accepting any punitive damages on behalf of the insured.
12) in case of honoring checks, a bank:
a.is liable to the customer for damages the customer suffers, if a bank fails to honor a
check because of a mistake on its part.
b.has a liability to the holder of the check, whether the check is certified or notified.
c.is not under a duty to honor all checks drawn by its customers in presence of
sufficient funds in the customers accounts.
d.cannot charge the customers account if it creates an overdraft.
13) mike signs a note payable to a bank. the bank indorses and negotiates the note to
fay, who then indorses and negotiates it to sam. sam presents the note to mike, who
dishonors it. then sam decides to pursue fay and the bank on their secondary indorsers
liability. against whom can sam proceed?
a.fay.
b.the bank.
c.both fay and the bank.
d.neither fay nor the bank.
14) in an employment contract, the noncompetition clause might be the only part of the
contract:
a.that the parties put in writing.
b.that would be valid.
c.that would be unenforceable.
d.that would be illegal.
15) while receiving a properly drawn and payable check on a persons account, which of
the following circumstances make it a necessity for the bank to honor the check?
a.when the check is stale.
b.when there are sufficient funds in the account.
c.when there is a stop payment order.
d.when a postdated check is presented before the date of the check.
16) the rate of interest that courts impose on losing parties until they pay the winning
parties is known as a(n):
a.variable rate.
b.order rate.
c.judgment rate.
d.fixed rate.
17) kin is an agent for a disclosed principal, tracy. kin contracts with phil on tracys
behalf. kin becomes liable to phil when:
a.he signs the contract kin, by tracy.
b.he signs the contract kin, on behalf of tracy.
c.he signs the contract kin, agent.
d.he signs the contract kin, for tracy.
18) contracts in which one party to the agreement agrees to buy all of the other partys
production of a particular commodity is called a(n):
a.requirements contract.
b.composition agreement.
c.output contract.
d.nominal consideration.
