Rule 10b-5 applies to:
a. only a buyer of a registered security.
b. only a seller of a registered security.
c. any person who buys or sells only a registered security.
d. any person who buys or sells any security.
Aunt Ellie promises her 21-year-old nephew, Robbie, that she will pay him $100 if he
quits smoking for a month. If Robbie does, is there a binding contract?
a. No, because Robbie gave no benefit to Aunt Ellie.
b. No, because Robbie did not suffer any detriment.
c. Yes, because stopping smoking will benefit Robbie’s health.
d. Yes, because Robbie gave up a legal right.
Which of the following is true of a collecting bank?
a. A collecting bank is an agent of the owner of an item until settlement becomes final.
b. The agency relationship between a collecting bank and the owner of an item, once
settled, changes to a debtor-creditor relationship.
c. A collecting bank may be a sub-agent of the owner until settlement becomes final.
d. All of the above.
The parol evidence rule is:
a. another term for the exclusionary rule.
b. a rule of construction.
c. a rule of interpretation.
d. a rule of substantive law.
If the principal debtor defaults, the surety has rights against the principal debtor, third
parties, and cosureties. These rights would include:
a. exoneration.
b. reimbursement.
c. subrogation.
d. All of the above.
A check is drawn on Jones Bank by Tamara and made payable to the order of Chris.
Chris indorses it “for deposit only, Acct. 2275, Chris” and gives it to Plainer Bank for
deposit. Plainer stamps “pay any bank” on the check along with its indorsement and
negotiates it to Stone Bank. Stone Bank simply stamps “Stone Bank” and negotiates it
to SmallTown Bank. If SmallTown wants to negotiate it to the electric company to pay
its bill, can it?
a. Yes, because the restrictive indorsement only applied to earlier indorsees.
b. Yes, because the bank was not responsible for checking more than one indorsement.
c. No, because an item restrictively indorsed with words such as “pay any bank” is
locked into the bank collection system.
d. No, because the bank must issue its own check for its own bills.
The most important element in determining whether a sales contract has been made is:
a. the language of the contract.
b. the fact that the terms of the offer and acceptance are exactly alike.
c. the number of open terms.
d. the intention of the parties to make a contract.
Growingreen, a gourmet fresh food store that sells only the highest quality fruits, orders
100 lbs. of peaches from Western Fruits “on approval.” Growingreen has never dealt
with Western before this transaction. The peaches arrived on Saturday, but the owners
of Growingreen were too busy to open the crates. Sunday they are closed. Monday at 4
p.m., they opened the boxes and inspected the peaches. They did not meet the high
standards of Growingreen, so they nailed the crates shut and ordered a truck to return
them the next day. They arrived at Western on Thursday, totally spoiled, a week after
they were sent. This is the first time Western knew they were not being accepted. Who
is responsible for the damages to the peaches?
a. Growingreen, since it did not inspect and notify Western within a reasonable time.
b. Growingreen, the risk of loss was on them when the peaches arrived.
c. Western, since they retained the risk of loss until approval.
d. Western, because they agreed to take the goods back.
The directors of Premier Glass Company authorize the issuance of 100 shares of
common stock for $25 per share to Justin for property the directors value at $2,500. The
valuation:
a. is, in all jurisdictions, a matter of opinion on the part of the directors and their
valuation is conclusive.
b. if incorrect, whether or not made in good faith, subjects Justin to liability for the
difference between the valuation and the actual worth of the property.
c. under the Revised Act, depends on the directors’ determination of the consideration’s
‘adequacy.’
d. if fraudulent, subjects the directors to liability to Premier for the difference between
the fraudulent valuation and the actual worth of the property.
The incorporators would typically do which of the following?
a. Purchase the outstanding shares.
b. Assemble the assets.
c. Sign the charter.
d. Prepare the incorporation papers.
Curtis, without authorization and after many unsuccessful attempts to access the
information, downloads a formula used by his employer to make an award-winning
product. He plans to sell the formula to a competitor and make enough money to retire.
Instead, he may face:
a. a fine of up to $500,000.
b. a fine of up to $1 million.
c. imprisonment for up to ten years.
d. Both (a) and (c).
A person can be a holder if:
a. the instrument has been issued to that person.
b. the instrument has been transferred to that person by negotiation.
c. the instrument is ambiguous.
d. Both (a) and (b).
Restrictions on transfer of shares:
a. exist only for closely held corporations to control who may become shareholders.
b. are valid under the common law if they are reasonable and adopted for a lawful
purpose.
c. are valid under the Revised Act if the restriction is conspicuously noted on the stock
certificate.
d. Both (b) and (c).
The tort of __________ is a false communication, which injures a person’s reputation
and good name by disgracing him and diminishing the respect in which he is held.
a. false light
b. intrusion
c. defamation
d. disparagement
With the exception of pledges, a security agreement must:
a. be in an authenticated record.
b. be signed by the debtor with his personal, not business, name.
c. contain at least a generic description of the collateral, such as “all my personal
property.”
d. Both (a) and (b).
Alice makes a material misrepresentation of fact to Betty, and based upon the
misrepresentation, Betty enters into a contract. Betty now realizes she was deceived and
wants to get out of the contract. This contract is voidable at Betty’s option.
Agencies create more legal rules and adjudicate more controversies than all the nation’s
legislatures and courts combined.
An agent may ratify a prior unauthorized act and may later revoke the ratification.
Consideration is the inducement to make a promise enforceable.
A corporation may not be a partner in a partnership.