1) Some states require that a franchisor submit advertising aimed at prospective
franchisees to the state for approval.
2) On a debtor’s default, he perfection of a security interest will not always protect a
secured party against other third parties having claims to the collateral.
3) A stop-payment order is an order by a customer to his or her bank not to pay a certain
check.
4) The Civil Rights Act of 1964 prohibits job discrimination on the basis of merit.
5) An employee may take up to twenty-six weeks of military caregiver leave within a
twelve-month period to care for a family member with a serious injury or illness
incurred as a result of military duty.
6) Liability can be imposed on those who are negligent in not discovering fraud in
connection with a registration statement or prospectus.
7) In some states, an unsolicited e-mail must include a toll-free phone number that the
recipient can use to ask the sender to send no more unsolicited e-mail.
8) Restrictions on the transfer of shares in a close corporation are usually void.
9) Sweet Selections is a general partnership that sells candy, cards and flowers. Sweet
Selections has ten partners. Jill and Amy each have a 25 percent interest in the
partnership. All the other members have a 10 percent interest. To pass a management
decision
a.a majority of the partners must agree to the decision.
b.both Jill and Amy must agree to the decision.
c.Jill or Amy must agree to the decision.
d.30 percent of the partners must agree to the decision.
10) GetTogether, A Social Media Company encourages its managers to behave
ethically, reasoning that lower-level employees will take their cues from management.
One of the most important ways to create and maintain an ethical workplace is for
GetTogether’s management to
a.demonstrate a commitment to ethical decision making.
b.discreetly engage in unethical or illegal acts.
c.look the other way when an employee engages in an unethical act.
d.direct employees to “do as we say, not as we do.”
11) Porches & Verandas, Inc., agrees to build a screen porch for Quinn, but fails to
complete the job. Quinn hires Ramadas, Inc., to finish the project. Quinn may recover
from Porches & Verandas
a.the contract price less costs of materials and labor.
b.the contract price.
c.the costs needed to complete construction.
d.profits plus the costs incurred up to the time of the breach.
12) Mobile Minutes Company offers Nate an unlimited number of monthly phone
minutes for $4.50 per month. Nate accepts. If a dispute arises, a court would likely
a.enforce the deal after questioning the adequacy of the consideration.
b.not question the adequacy of the consideration.
c.rewrite the deal after questioning the adequacy of the consideration.
d.set aside the deal after questioning the adequacy of the consideration.
13) Owen uses the Internet to defraud Prairie Valley Credit Union. He is found guilty of
wire fraud. He can be punished by
a.imprisonment for not more than one year.
b.imprisonment for up to thirty years and fines of up to $1 million.
c.fines for not more than $50,000.
d.death.
14) Dirk transfers a note by signing it and delivering it to Edwina. Dirk is
a.an indorser.
b.an indorsee.
c.a promisee.
d.a promisor.
15) Quest Holdings, Inc., orally contracts for a lease of its facilities to Ray to use for his
Swamp & Bayou Fishing Camp. Ray pays part of the rent, takes possession, and
improves the property for use by his enterprise. The contract is most likely enforceable
by
a.Quest Holdings and Ray.
b.Quest Holdings but not Ray.
c.any interested third party, such as a Swamp & Bayou client.
d.no one.
16) At 1 A.M., on the sidewalk in front of Ace Credit Corporation, which is closed, Ben
buys a $500 promissory note for $50 from Curt. When presented with Ben’s demand for
payment, Diane, the maker of the note, could successfully claim that Ben
a.acquired the note with notice that it was overdue.
b.did not acquire the instrument in good faith.
c.did not give value for the instrument.
d.none of the choices.
17) Payday Loans, Inc., signs an instrument payable to the order of Qiana that states,
“The maker of this note at the date of maturity, April 1, 2016, can extend the time of
payment, but for no more than a reasonable time.” This instrument is
a.negotiable.
b.nonnegotiable, because it includes an extension clause.
c.nonnegotiable, because it is not payable within a definite time.
d.nonnegotiable, because it is payable to a specific payee.
18) 20.Study Aids Inc. offers to buy the stock of Test Prep Products Corporation. Test
Prep’s directors oppose the offer. Some of the Test Prep shareholders file a suit, alleging
a breach of the directors’ fiduciary duties. Most likely, the court will
a.apply the business judgment rule to analyze the directors’ acts.
b.dismiss the suit as a non-judicial dispute over “fair value.”
c.evaluate the terms of the deal on the basis of antitrust law.
d.order the shareholders to be paid a “premium” for their stock.
19) Almond Farms contracts for the sale of a certain quantity of nuts to Bulk Natural
Foods Stores. Almond Farms delivers nonconforming goods. Acceptance will be
presumed unless Bulk Natural Foods rejects the goods
a.within a reasonable time after delivery.
b.within a reasonable time after ordering the goods.
c.within any time, since hunting rifles are not perishable.
d.before the last day of the current hunting season.
20) When a buyer breaches a contract, the risk of loss remains with the seller.
21) Misrepresentation of a material fact cannot occur through conduct alone.
22) Small claims courts are inferior trial courts.
23) General descriptions take precedence over inconsistent samples.
24) The duty to exercise reasonable care requires storeowners to warn business invitees
of all risks.
25) Employers can avoid certain tax liabilities by hiring independent contractors instead
of employees.
26) A party seeking to recover compensatory damages cannot also recover incidental
damages.
27) A quasi contract is an actual contract.
28) Recording a mortgage perfects the lender’s security interest in the mortgaged
property.