The common law system is used in most of Europe, Scotland, and Latin America.
Which of the following would be considered to be a misrepresentation of a material fact
for purposes of establishing fraud in the inducement?
a. A statement of value, such as “This is the best car in town for the money.”
b. ‘This style of jacket is going to be the most popular style next year.’
c. ‘This car has a new radiator.’
d. ‘In my opinion, this is the best buy for the money.’
The group responsible for registering public accounting firms that prepare audit reports
for issuers; overseeing the audit of public companies; establishing audit report standards
and rules; and inspecting, investigating, and enforcing compliance on the part of
registered public accounting firms is the:
a. FTC.
b. Public Company Accounting Oversight Board.
c. SEC.
d. American Institute of Certified Public Accountants.
Which of the following is NOT generally required in order to have a valid contract?
a. Mutual assent.
b. A lawful purpose.
c. Fairness of the bargain.
d. Parties who have contractual capacity.
Parties that are usually secondarily liable for an instrument are:
a. indorsers and drawers.
b. makers and indorsers.
c. makers and acceptors.
d. acceptors and drawers.
The All-Power Gas and Electric Company cleared a right of way across Larry’s land
and put up a power line, which it has maintained for the past 20 years. Now the
company wants to replace the old line with a new one, and Larry has decided he doesn’t
want them on his land.
The City of Chicago would best be described as which of the following?
a. A corporation formed pursuant to the Model Business Corporation Act.
b. A close corporation.
c. A public corporation.
d. A domestic corporation.
In bringing a warranty action, the buyer must prove that:
a. a warranty existed.
b. the warranty has been breached.
c. the breach of the warranty proximately caused the loss suffered.
d. All of the above.
Jill owns and operates a donut shop. Under the Code, the flour, sugar, and other goods
used by Jill to make donuts are classified as:
a. farm products.
b. fixtures.
c. consumer goods.
d. inventory.
The UCC provides that a merchant is bound to keep a written offer open for the stated
period, but no longer than:
a. ten days.
b. two months.
c. three months.
d. a reasonable time.
ABC Company sells nursery products. It only hires women as sales representatives
because it thinks that its customers relate better to women. Which of the following is
true?
a. This is a violation of Title VII of the 1964 Civil Rights Act.
b. This is an example of a bona fide occupational qualification.
c. This is a violation of the Equal Pay Act.
d. None of the above.
The provision that private property shall not be taken for public use without just
compensation is found in:
a. the First Amendment.
b. the Ninth Amendment.
c. state constitutions.
d. the Eminent Domain Statute enacted by Congress.
In which of the following situations is the person not a holder?
a. Julie has possession of an instrument ‘Payable to Martin’ that has not been indorsed
by Martin.
b. Sean has possession of a check ‘Payable to the order of Tonya’ which is indorsed with
only Tonya’s name.
c. Olsen stole a check that was indorsed in blank.
d. Wanda found a check ‘Payable to the order of Cash.’
Which of the following is NOT true about a limited liability company?
a. It is a noncorporate business organization.
b. In most states, an LLC must have at least two members.
c. It may elect not to be a separate taxable entity.
d. An ownership interest may be considered a security.
One who is in possession of a piece of commercial paper that is drawn, issued, or
indorsed to him or to his order or that is indorsed in blank is a(n):
a. bearer.
b. holder.
c. transferor.
d. assignee.
A sale of substantially all of the assets of a corporation that is in the ordinary course of
business of the corporation will not require shareholder approval.
If an agency is gratuitous, the principal ordinarily may revoke it without liability to the
agent.
Business ethics, the study and determination of what is right and good in business
settings, has a special set of ethical principles that applies only to the world of business.
Discuss the concept of ratification and the ways in which a minor may ratify a contract.
Give an example.
If Marguarite promises to pay Neal $300 not to defame her, the promise is
unenforceable because tort law imposes a preexisting obligation on Neal to refrain from
such an act.
The rules pertaining to “holder in due course” were instituted in order to encourage easy
negotiability of commercial paper.