If dividends are not declared for five years, but the company has accumulated earnings
each year, the shareholders may:
a. petition the court of law for redress.
b. override the board with a two-thirds vote.
c. ask for an injunction requiring a dividend to be declared.
d. do nothing but sell their stock.
Todd, a minor, rents an automobile from Rosa, an adult. Todd damages the vehicle
when he negligently backs into a pole. Under the majority view, can Rosa recover
damages from Todd?
a. Yes, Todd breached his duty to exercise reasonable care and diligence to protect the
automobile.
b. Yes, although Todd is a minor, it is well settled that minors are generally liable for
their torts.
c. No, minors generally cannot be held liable for their torts.
d. No, his contractual immunity protects him from legal action by Rosa.
Under the Third Restatement of Torts, a person acts recklessly if the person:
a. has an unconscious disregard of the consequences of the act committed.
b. knows facts that make the risk obvious to another in the person’s situation.
c. exhibits malice or a fraudulent or evil motive.
d. All of these.
Under NEPA, psychological health effects are considered to be environmental effects.
a. True
b. False
The bylaws of the corporation:
a. are adopted as one of the first items of business at the organizational meeting held
promptly after incorporation.
b. may contain any provision for managing the business not inconsistent with law or the
charter.
c. may be repealed by the board of directors.
d. All of these.
Product liability exists if the:
a. consumer misuses the product.
b. consumer alters the product before he or she uses it.
c. product reaches the consumer without substantial change in the condition in which it
is sold.
d. consumer takes the product gratuitously.
An appeal from a small claims court is taken to the state court of appeals, where a trial
denovois begun.
a. True
b. False
What are some of the matters involving fundamental changes in the corporation?
a. Amendments to articles of incorporation
b. Sale or lease of all or substantially all of the corporate assets not in the regular course
of business
c. Mergers, consolidations, compulsory share exchanges
d. All of these
Under a Kantian approach to ethics, a person should not lie to colleagues unless that
person supports the right of all colleagues to lie to one another.
a. True
b. False
An exculpatory clause excusing a party from liability for harm caused by reckless
conduct will generally make a contract unenforceable as a violation of public policy.
a. True
b. False
The first bank to receive a check for collection is the:
a. depositary bank.
b. drawee bank.
c. payor bank.
d. intermediary bank.
Which of the following would most likely be enforceable?
a. An agreement supported by past consideration
b. A substitute agreement to settle an undisputed debt
c. A debt agreed to seven years ago in a state where the statute of limitations is six years
d. A promise following the rendering of emergency services that is not supported by
new consideration
If the lease is silent on the subject, a tenant generally may assign his lease.
a. True
b. False
The use of a sample or model is a means of creating an implied warranty.
a. True
b. False
Bill has a right against Heather and assigns it for $100 to Dan. Later, Bill grants
Heather a release. Bill:
a. is liable to Dan for damages because he breached an implied warranty.
b. has no liability to Dan because he did not expressly warrant that he would not impair
the assignment.
c. has no liability to Dan because the only implied warranty he made was that the
assigned right actually existed at the time of the assignment.
d. was acting contrary to public policy by assigning a contractual right for money.
The general law of contracts is displaced by the Code in all aspects of the sale of goods.
a. True
b. False
The Restatement and Article 2 of the Code provide that, unless circumstances indicate
the contrary, a contract term that prohibits the assignment of a contract bars only the
delegation to the assignee of the assignor’s duty of performance and does not bar the
assignment of contract rights.
a. True
b. False
During the twentieth century it became harder to enter into a contract as well as to get
out of one.
a. True
b. False
An indorsement limiting payment to a particular person is effective.
a. True
b. False
If Thomas seemingly offers to sell to Raquel his Toro lawnmower but he intends to
offer and believes he is offering her his Murray mower, and she accepts the offer,
reasonably believing it was for the Toro, no contract has been formed because there is
no mutual assent.
a. True
b. False
The principal objective of antitrust law governing mergers is to maintain competition.
a. True
b. False
Only records specifically exempted from disclosure by statute are exempt from FOIA.
a. True
b. False
Contractual duties are assignable.
a. True
b. False
“Blue laws” usually apply to activities of necessity and charity.
a. True
b. False
Generally, rights under an option contract are not assignable.
a. True
b. False
Kyle wants to buy a six-passenger car. The salesperson tells him that the two-seat sports
car Kyle sees on the car lot would be just perfect for six people. Kyle test drives the car
and then buys it. In this case:
a. Kyle has a valid cause of action for fraud.
b. Kyle was not justified in relying upon the salesperson’s representation that the car
would seat six people.
c. the element of scienter is missing.
d. the salesperson is a fiduciary.
Which of the following is correct with respect to negotiability?
a. The writing requirement means that a check must be written on paper.
b. An order or promise to pay only out of a particular fund is permissible under Revised
Article
c. Money must be in U.S. dollars.
d. A negotiable instrument must be payable at a definite time.
A trustee has a duty to make proper allocation of income items. Which of the following
statements is true concerning this allocation?
a. Ordinary income is allocated to the remainderman.
b. Ordinary expenses are chargeable to the income beneficiary.
c. Rents and royalties to the remainderman.
d. Extraordinary repairs to the income beneficiary.
A friendly fire is one that is contained in its intended place such as a fireplace, stove, or
barbecue grill.
a. True
b. False
Today most crimes are covered by statutory law rather than by the common law,
although many of the crimes in statutory form had their origins in the common law.
a. True
b. False
Determining how big the corporation is in terms of total assets is the prevalent test of
monopoly power.
a. True
b. False
Because the language of Section 1 of the Sherman Act is so narrow, there is little room
for judicial interpretation in establishing what constitutes a violation.
a. True
b. False