1) the toxic substances control act gives the epa the authority to regulate the production
and use of agricultural chemicals such as insecticides.
2) the termination of an agency terminates the agents express authority, but not his
implied authority.
3) under the sarbanes-oxley act of 2002, public accounting firms that audit financial
statements of public companies are required to register with the public company
accounting oversight board and submit to its rules.
4) under section 11 of the securities act of 1933, an auditor may escape liability by
proving he/she had no reason to believe and did not believe that there were any
misstatements or omissions of material fact in the financial statements he/she audited.
5) a corporation with a reasonable debt-to-equity ratio will not have its veil pierced on
the grounds of thin capitalization.
6) a principal can ratify an agents unauthorized contract even if the third party withdrew
from the contract prior to ratification.
7) a minors contract for necessaries makes the minor liable for the reasonable value of
the necessaries furnished to him.
8) the purpose behind the model business corporation act is to exploit the maximum
potential of workers in a corporation.
9) pat promises to install granite countertops in the home at 123 main street that bruce
is purchasing provided that the escrow on the sale of 123 main street closes. the close of
escrow on the sale of 123 main street is a condition precedent to pats promise.
10) in return for services charles performed for richard in the past, richard promises to
pay charles $1000. there is no consideration for richards promise.
11) whatever the type of injury experienced by the plaintiff, the usual rule is that only
punitive damages are recoverable in a negligence case.
12) which of the following is also called judgemade law?
a.common law
b.statutes
c.uniform acts
d.equity
13) the legal remedy of _____ requires the defendant to pay the value of the benefits
that the plaintiff has conferred on him.
a.restitution
b.waiver
c.compensatory damages
d.accord and satisfaction
14) which of the following is true regarding silence as an acceptance?
a.contract law explicitly recognizes silence as constituting acceptance.
b.an offerees silence is considered acceptance when he/she indicates so.
c.an offeror can impose on the offeree a duty to respond to the offer.
d.the code explicitly recognizes silence as constituting acceptance.
15) which of the following characterizes an auction without reserve?
a.bidders must necessarily be merchants
b.sellers must necessarily be merchants
c.goods cannot be withdrawn after a call for bids has been made
d.buyers are treated as having made an offer to sell
16) _____ are general rules of thumb employed in statutory interpretations.
a.idioms
b.phrases
c.quotations
d.maxims
17) amtul and hassan were involved in an automobile accident. amtuls car, worth
$10,000 was destroyed. hassan suffered no personal injuries or property damage. the
case went to the court and a jury determined that amtul was 30% at fault and hassan
was 70% at fault. under what legal theory would amtul be able to recover $7,000 from
hassan?
a.contributory negligence
b.comparative negligence
c.negligence per se
d.res ipsa loquitur
18) jerry owns a parcel of land. nate, one of jerrys closest friends and an attorney, has
persuaded jerry to sell the land to nate at a price substantially below fair market value.
at the time jerry sold the land, he was resting in a nursing home recovering from a
serious illness. if jerry desires to set aside the sale, which of the following causes of
action is most likely to be successful?
a.duress
b.undue influence
c.fraud
d.misrepresentation
19) what is a courts power to hear a case and to issue a decision binding on the parties
called?
a.jurisdiction
b.prerogative
c.venue
d.assignment
20) fun foods fraudulently induces holly to buy a household products franchise by
grossly misstating the average revenues of its franchisees. she discovers the
misrepresentation after she has resold some products that she has received but before
she has paid fun foods for the products. holly wants to cancel the franchise contract on
the basis of the fraud. what is the remedy available to her?
a.promissory estoppel
b.duty of good faith
c.executory contract
d.quasi-contract
21) klingon corporation has only one class of shares, its common shares. klingon has
assets of $200,000 and liabilities of $160,000. it has $40,000 of excess liquidity that it
does not need to pay currently maturing obligations. what is the maximum property
dividend that klingon may pay to its common shareholders?
a.$60,000
b.$10,000
c.$40,000
d.$30,000
22) edna is a leading brain surgeon in the united states. she enters into a contract to
perform a complicated brain surgery on ben. however, since edna is very busy, she
wants to assign this contract to a less experienced surgeon, charles. this would be
charles first operation of this type. ben can object to this assignment and prevent it
because the contract between ben and edna is a(n):
a.contract for services to be performed in the future.
b.contract involving personal skill.
c.services contract.
d.employment contract.
23) one of the elements necessary to hold a cpa liable to a client for conducting an audit
negligently is that the cpa:
a.acted with scienter or guilty knowledge.
b.was a fiduciary of the client.
c.failed to exercise reasonable care.
d.executed a fraudulent engagement letter.
24) if a debtor defaults and the debtors surety satisfies the obligation, the surety
acquires the right of:
a.subrogation.
b.primary lien.
c.indemnification.
d.chattel mortgage.
25) carter sold a $20,000 boat to davis on credit for personal use. as part of the deal,
davis completed an installment note payable to carter and a security agreement giving
carter a security interest in the boat which was attached on july 1. carter never filed a
financing statement. on august 1, davis borrowed $15,000 from bank, by completing a
security agreement giving the bank a security interest in the boat. this interest attached
on the same day and the bank filed a financing statement on august 6. davis defaulted
on both his installment payments to carter and his loan obligation to the bank. each of
these parties wants to satisfy daviss obligation by repossessing and selling the boat.
whose security interest in the boat has priority and why?
a.banks interest has priority because carter never filed a financing statement.
b.carters interest has priority because his security interest was perfected before banks
interest.
c.banks interest has priority because carter failed to attach his security interest.
d.banks interest has priority because the bank perfected the interest within ten days after
davis received the collateral.
26) if there is a conflict between the express terms of the contract and the past course of
dealing between the parties, the:
a.past course of dealing between the parties will prevail.
b.express terms of the contract prevail.
c.contract is voided.
d.seller is excused.
27) sam, a plumber, entered into a contract for $75,000 with orr, inc., to perform certain
plumbing services in a building owned by orr. after sam had satisfactorily performed
the work, orr discovered that sam had violated the state licensing statute by failing to
obtain a plumbing license. as a result, orr denied paying any money to sam. the
licensing statute was enacted merely to raise revenue for the state. an independent
appraisal of sams work indicated that the buildings fair market value increased by
$70,000 as a result of sams work. the cost of the materials which sam supplied was
$35,000. if sam sues orr, sam will be entitled to recover:
a.nothing.
b.$35,000.
c.$70,000.
d.$75,000.
28) your decision will be better for your firm and other stakeholders if you consider
your selfish interest. considering that this statement is true, which of the following
prescribed guidelines for ethical decision making should you focus on?
a.will the shareholders offer support?
b.how can i increase the number of shareholders?
c.how do the alternatives impact me, the decision maker?
d.who are the stakeholders?
29) mayker, inc. and oylco contracted to have oylco be the exclusive provider of
mayker’s fuel oil for three months. the stated price was subject to increases of up to a
total of 10% if the market price increased. the market price rose 25% and mayker
tripled its normal order. oylco seeks to avoid performance. oylco’s best argument in
support of its position is that
a.there was no meeting of the minds.
b.the contract was unconscionable.
c.the quantity was not definite and certain enough.
d.mayker ordered amounts of oil unreasonably greater than its normal requirements.
30) when is a persons duty to perform discharged on grounds of impossibility?
a.when a substitute is available
b.when there is a delay in the delivery of goods
c.in the presence of supervening illegality
d.a promisees dissatisfaction with the performance
31) average corp. recently paid for an advertisement that appeared in newspapers across
the country. the advertisement consisted of the expression of averages views on what
the federal government should be doing in order to help combat the aids crisis. in the
expression of these views, the average advertisement made erroneous statements about
how aids may be acquired. assume that the ftc, concerned about the erroneous
statements, has begun a deceptive advertising proceeding against average. what is the
strongest legal argument for average to use in an attempt to have the proceeding
dismissed? explain your reasoning.
32) to be negotiable, an instrument must be payable on demand or at a definite time.
under this test, how does the law treat instruments that do not state any time for
payment?
33) kato checked out a book (freeloading for fun and profit) from the library. while he
was reading it, he discovered three $50 bills that had been left in the book. is the money
lost, mislaid, or abandoned property? why is this determination significant?
34) sal conelli is the president and sole stockholder of salco, inc., a corporation engaged
in the wholesale food supply business. conelli has custody of salcos business records. a
grand jury investigating possible criminal violations of health codes applicable to food
products has served a subpoena demanding that certain salco business records be made
available. conelli plans to resist the subpoena by arguing that compelling the production
of the records would violate both his and salcos fifth amendment privileges against
self-incrimination. should conelli succeed with this argument? explain your reasoning.
35) bg corp., a manufacturer of mens polyester leisure suits and other mens clothing
items, held approximately a 70 percent share of the leisure suit market in the united
states. (although most males have publicly spurned this 1970s-era item, bg knows quite
well that millions of men still swear by them–albeit quietly.) bg began refusing to sell
wholesalers and retailers its leisure suits unless they also purchased bgs polyester capes.
as a result, intermediate sellers that wished to buy bg leisure suits for resale effectively
had to agree to purchase the capes as well. bg had begun selling the capes two years
earlier, but the product was a commercial flop. only one other company manufactured
capes for wearing by men, and that company was about to cease doing so because, as it
and bg had discovered, there was virtually no demand among men for capes. an
appropriate plaintiff has now sued bg under section 1 of the sherman act, on the theory
that bg was a party to impermissible tying agreements. what treatment will the court
give the agreements? will bg be held liable? why or why not?