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Tom and Cindy received a $2,000 income tax return check from the IRS payable to
"Tom and Cindy." Cindy indorsed the check to Friendly Motors as a down payment on
a car. Which of the following is true of this situation?
A. Friendly Motors is the holder of the check.
B. Friendly Motors is a holder in due course.
C. Friendly Motors is the holder and the indorser.
D. Friendly Motors is not the holder of the check.
In a _____ a qualified debtor creates a plan that alters the repayment schedule.
A. firm offer
B. requirements contract
C. reorganization
D. contract for sale
Which of the following theories intends to make management more responsive to
shareholders by giving shareholders greater voting control and making it easier for
them to take managers to court?
A. Governmental control
B. Special interest group control
C. Independent director control
D. Corporate democracy
Gerald orders 1,000 cupcakes from Haddock Bakers for a Christmas Eve party.
However, Haddock fails to deliver the cupcakes as per the schedule mentioned in the
contract, and does not send any notification to Gerald. Gerald orders the cupcakes from
Marlene's Cakes that evening. This is an example of which of the following?
A. Writ of replevin
B. Sue for specific performance
C. Cover of a sales contract
D. Seek adjustment
In effect, a _____ states that, regardless of policies in the employee handbook and
regardless of any oral promises to the contrary, an employment-at-will situation still
exists between the employer and its employees.
A. quasi-contract
B. disclaimer
C. relinquishment
D. waiver
According to the standard construction rule:
A. whenever an ambiguous term, clause, or line is found in a prewritten contract, that
ambiguity is interpreted against the party who wrote the contract.
B. evidenceof oral statements made before signing a written agreement is usually not
admissible in court to contradict the terms of a written agreement.
C. the courts generally accept as evidence only the original document not a copy.
D. when a party appoints an agent to negotiate an agreement that must be in writing,
the appointment of the agent must also be in writing.
To make a case based on a(n) ____, the employee must demonstrate that the employer
or a representative of the employer promised the employee job security despite the
apparent at-will nature of the employment relationship.
A. promissory estoppel
B. implied-in-fact contract
C. quasi-contract
D. in pari delicto
Liz, a promoter, hired an office support staff for a corporation that had not yet been
incorporated. If there is a novation clause in a subsequent contract with the corporation
and the staff, then:
A. the corporation will not be bound by any of Liz's contracts.
B. the office support staff will work without pay until the corporation becomes
incorporated.
C. Liz will escape potential liability under the novation contract entered into.
D. Liz and the corporation will be held equally liable under all contracts entered into.
In which of the following cases can reversion of title to the seller occur?
A. When a buyer rejects the goods, which a seller has sent as per terms of contract.
B. When buyer accepts the goods and returns them after some time due to a defect.
C. When a buyer's rejection of goods in not justified.
D. When a buyer rejects the goods due to a defect discovered after inspection.
Which of the following is an advantage of a sole proprietorship?
A. The owner of a sole proprietorship has no liability.
B. The owner of a sole proprietorship has complete control over the business.
C. The sole proprietorship's existence does not depend entirely upon the sole
proprietor.
D. Owners of sole proprietorships can raise a lot of cash quickly for expansion
purposes.
A _____ is one that has been formed properly by incorporators who followed all of the
steps outlined by the state incorporation statute.
A. corporation by estoppel
B. de facto corporation
C. de jure corporation
D. partnership
The _____ emerges from the Constitution of the United States.
A. state power
B. national power
C. people power
D. international power
Arian is a sole proprietor and owes a number of business creditors. The business
creditors may:
A. only take Arian's business assets.
B. only take Arian's personal assets.
C. take both Arian's business and personal assets.
D. not take any assets but only the profits of the business.
_____ is analogous to forgery because it also involves the alteration or falsification of
an object or a document with intent to defraud.
A. Embezzlement
B. Criminal simulation
C. Passing bad checks
D. Defrauding creditors
Jason has observed an old car parked in the alley behind his apartment for three months.
It has no license plates on it and the tires are flat. Jason concludes that the car has been
abandoned and takes possession of the car, gets it running, and decides to use it in a
demolition derby. At this point Alex claims that the car is his. What must Jason prove to
obtain title of the car?
A. Alex deserted the car.
B. Alex did not intend to return for the car.
C. Alex deserted the car and did not intend to return for the car.
D. Alex had promised the car to Jason as a gift.
While one person has found the actual intent of the law, the other has missed its true
meaning. This duality in law is the balance between:
A. the spirit and the letter of law.
B. words versus interpretation.
C. the abstract and the concrete.
D. the uncertainty principle and reason.
David went to the store to purchase a $120 CD player, advertised in the paper. The
salesperson said that although the CD player was on sale, it was an undesirable,
bottom-of-the-line product and that David would be much happier with a better CD
player for $250. The salesperson:
A. acted in good faith when he tried to offer a better product.
B. can be sued under the policy of negligence and strict liability.
C. can be held guilty of a bait-and-switch scheme.
D. can be held guilty of fraudulent misrepresentation.
The _____ is an attempt by the federal government to reduce the use of unsolicited
commercial e-mails on the Internet.
A. Can Spam Act
B. Mail and Telephone Order Rule
C. Truth-in-Mailing Act
D. AntiSlammingLaw
A corporate manager who simply looks at the action he/she is about to take and only
asks whether the benefit to the shareholders will outweigh the cost to the corporation, is
using:
A. descriptive theory.
B. concurrent validity.
C. prescriptive theory.
D. utility thinking.
_____ is a system in which funds are electronically transferred from a customer's
checking account, eliminating the need to process a paper check.
A. Electronic fund transfer
B. Electronic check transfer
C. Electronic check conversion
D. Electronic teller system
_____ means a demand made by a holder to pay or accept an instrument.
A. Dishonor
B. Presentment
C. Alteration
D. Real defense
_____ occurs when a party to a contract either expresses or clearly implies an intention
not to perform the contract, even before being required to act.
A. Frustration-of-purpose
B. Abandonment of contractual obligations
C. Commercial impracticability
D. Anticipatory breach
Eva, a Mercy Hospital patient, received medication intended for another patient and as
a result suffered severe complications. In a malpractice case against Mercy, regarding
the administering of the wrong medication to Eva:
A. expert testimony is required.
B. expert testimony is required only if it happened once.
C. expert testimony is not required only if the other patient was in a different area of
the hospital.
D. expert testimony is not required.
The Federal Rules of Civil Procedure now refer to computerized evidence as:
A. electronic lockbox.
B. electronic data interchange.
C. e-commerce.
D. electronically stored information.
Patsy finds a watch on the floor of a cafeteria. The watch is likely to be:
A. lost.
B. abandoned.
C. stolen.
D. misplaced.
Lillian Fey purchases a night table from Aretha Boyner. Aretha wants Lillian to pay her
by check before delivering the night table to Lillian's house. Lillian decides to attach an
indorsement that reads, "Pay to Aretha Boyner if she delivers her night table to me,
Lillian Fey, at 16 Holmes RD." This is an example of ____.
A. an indorsement for deposit
B. a conditional indorsement
C. a qualified indorsement
D. a significant indorsement
Which of the following refers to the body of previously recorded legal decisions made
by the courts in specific cases?
A. Statute
B. Amendment
C. Constitution
D. Common law
A long-term written sales contract between Alder, Inc. and Zenith, Inc. provides for
cash payments to be made by Zenith, Inc., the buyer, on the first of the month. Zenith
has been using a wire transfer payment method, but Alder asserts that Zenith is in
breach of contract since it has not received payment in cash. Which of the following is
true of this case?
A. Zenith cannot introduce oral evidence in court since it violates the parol evidence
rule.
B. Zenith can introduce evidence of the payment under the exception to the parol
evidence rule.
C. Zenith violated the best evidence rule, hence cannot produce evidence in court.
D. Zenith can prove that since wire transfer and cash are identical, the payment is made
to Alder.
Brianna repaid a $600 loan to her friend, Sharkey. She made the check payable jointly
to Sharkey and Sharkey's daughter, Evie, even though she intended Sharkey to have the
entire interest in the repaid debt.
A. Sharkey can legally forge Evie'sindorsement as Brianna did not intend Evie to have
any interest.
B. Sharkey cannot cash the check unless Evie indorses it herself.
C. If Sharkey forges Evie'sindorsement, he can be held liable for the tort of conversion.
D. If Sharkey cashes the check with Evie'sindorsement, he is legally obligated to give
her half of the payment.
If an instrument states, "Pay to the order of Karen Fuji or her assigns," it is ____.
A. payable to order
B. payable to cash
C. payable to bearer
D. payable to holder
Contracts, combinations, and conspiracies in restraint of trade are prohibited by the:
A. Robinson-Patman Act.
B. Federal Trade Commission Act.
C. Sherman Antitrust Act.
D. Clayton Act.
Larry, a minor, bought a moped from the RU-Ready-2-Drive Used Moped lot. The next
day he accidentally ran the moped into a telephone pole and seriously damaged the
vehicle. Larry transported the damaged vehicle to RU-Ready-2-Drive and demanded a
return on his money. Must RU-Ready-2-Drive comply with his request? Explain.
