A contract is interpreted to give effect to:
a. the intent of the parties.
b. what the court believes is a fair contract.
c. what the defendant thought the contract meant.
d. what will be best for the economic life of the community.
When an accountant negligently prepares a financial statement knowing that the client
intends to use it in obtaining a loan from a bank, the accountant will be liable to
whichever lender actually makes the loan under the __________rule.
a. known user
b. contact
c. foreseeable user.
d. privity
Roberts leased a duplex from Hughes. Later, without Hughes’ knowledge, Roberts
sublet half of the duplex to Carrera. Carrera did not take proper care of the premises and
her part of the duplex was substantially damaged as a result of her negligent use and
abuse. Upon discovering the situation, Hughes notified Roberts that he was holding him
responsible for any and all damages to Carrera’s portion of the duplex, and that Roberts
was to bear the costs of returning the premises to the original state of repair. Roberts
replied that he had sublet to Carrera in good faith, had no further dealings with Carrera
after the sublet agreement, had no knowledge of negligence, and could not be held
liable for damages caused by another. Can Roberts be held liable?
Through which of the following circumstances may a contract be discharged?
a. mutual cancellation
b. mutual rescission
c. accord and satisfaction
d. all of the above
A limited liability company:
a. is the same type of business entity as a “Subchapter S” corporation.
b. has no restriction on the number of owners.
c. is taxed in a manner similar to that of a corporation.
d. has unlimited life regardless of what happens with any individual member.
_________ of a corporation may occur when management is deadlocked and the
deadlock cannot be broken by the shareholders.
a. Bankruptcy
b. Consolidation
c. Reinstatement
d. Judicial dissolution
Which of the following is a correct statement concerning the incorporation process?
a. Each application for incorporation is reviewed by the appropriate state legislature.
b. The incorporation process is essentially a matter of filing the correct papers and fees
with the designated government official.
c. Most applications for incorporation are rejected.
d. Incorporator(s) are never required to give public notice of the intent to form a
corporation.
A summary jury trial is:
a. binding on the parties.
b. a mock trial.
c. a full and complete hearing of all evidence pertaining to the case.
d. a shortcut to establishing judicial precedent.
Judges of the United States:
a. are appointed by the president, with the approval of the Senate.
b. are appointed by the Senate, with the approval of the president.
c. cannot be impeached.
d. are elected by the public.
Which of the following contract defenses cannot be raised as a defense against
suretyship obligations?
a. Lack of capacity
b. Absence of consideration
c. Mistake
d. All of the above defenses may be raised.
An accountant who is being sued by a third person for malpractice based on fraud will
be able to avoid liability if the accountant can show:
a. contributory negligence on the part of the plaintiff.
b. that an exculpatory clause applies.
c. that the plaintiff did not rely on the false statement.
d. the absence of privity of contract.
In some cases the court may require specific performance when there is a breach of
contract.
As a general rule, a hotelkeeper has a lien on the property of boarders or lodgers.
Under SEC Rule 504 of Regulation D, an issuer can offer and sell up to $2 million in
securities within a 12 month period without registration and without most of the
restrictions contained in Rules 505 and 506.
Product disparagement is a form of defamation.
A surety is liable from the moment of default whereas a guarantor is ordinarily only
liable if the creditor cannot collect from the principal debtor.
The fact that harm occurred is sufficient to establish a nuisance.
The warranties made by an unqualified indorser guarantee that payment of the
instrument will be made.