1) The U.S. Constitution reserves to the federal government all powers not granted to
the states.
2) An insurance company may require an applicant to give the company permission to
access the applicant’s private medical records and credit ratings, for the purpose of
evaluating the risk.
3) If a customer’s debit card is lost or stolen and used without his or her permission, the
customer shall be required to pay no more than $50 in any event.
4) A bilateral contract comes into existence at the moment promises are exchanged.
5) An offer may invite an acceptance to be worded in specific terms but that cannot
make the contract definite.
6) A horizontal restraint is any agreement that in some way restrains competition
between rival firms competing in the same market.
7) A well-known seasoned issuer cannot file a registration statement until after it
announces a new offering.
8) An exclusive-dealing contract is an agreement in which a seller agrees not to sell to a
buyer’s competitors.
9) Pretexting is the process of obtaining information by false means.
10) The Federal Reserve Board of Governors has issued a regulation that governs credit
provisions associated with sales contracts-Regulation Z.
11) Fact Pattern 41-2B
Popular Movies Corporation wants to gain control of Quality Films, Inc. The companies
negotiate for several months, without coming to terms. Popular Movies decides to
pursue a takeover attempt. Quality Films decides to resist.
Refer to Fact Pattern 41-2B. Quality Films issues shares that its shareholders can
exchange for cash if a takeover is successful, intending to make Popular Movies’s
takeover attempt too expensive. This is a
a.crown jewel defense.
b.Pac-Man defense.
c.poison pill defense.
d.white knight defense.
12) Ground-Up Construction Corporation (CCC) has a right of action against
Heavyquip, Inc. Ground-Up Construction merges with Investors Development, Inc.,
with Investors absorbing Ground-Up. After the merger, Ground-Up’s right of action
against Heavyquip can be exercised by
a.Ground-Up.
b.Investors.
c.Heavyquip.
d.no one.
13) EquipLease Company leases a thresher to Farm Harvest, Inc., a firm that contracts
with farm owners to harvest their crops. The machine is seriously damaged through
Farm Harvest’s neglect. Most likely liable for the damage is
a.EquipLease.
b.Farm Harvest.
c.the farm owners.
d.no one.
14) MotorCo Inc. makes and sells auto parts to retail repair services, vehicle sales
outlets, and consumer parts stores. On one MotorCo box is a label that reads “Contains
one gross (144) sparkplugs, assorted sizes.” This statement is
a.an implied warranty of fitness for a particular purpose.
b.an implied warranty of merchantability.
c.an express warranty.
d.none of the choices.
15) Desdemona works for eInnovation, Inc. Her job includes putting ‘spin” on the firm’s
successes and failures. In this context, ethics has to do with how businesspersons, in
making their decisions, apply
a.legal doctrine.
b.moral and ethical principles.
c.corporate guidelines.
d.financial priorities.
16) Eduardo is a debtor. Furniture Mart is Eduardo’s employer. Guaranty Credit, Inc.,
and the government are Eduardo’s creditors. For these parties, a petition in bankruptcy
for relief through an individual’s repayment plan could be filed by
a.Eduardo alone, Furniture Mart alone, or Guaranty Credit and the government jointly.
b.Eduardo only.
c.Guaranty Credit and the government only.
d.the government only.
17) Fact Pattern 29-1B
Michael contracts with Jill to fix the brakes on her Honda Civic. Jill leaves her car with
Michael, but refuses to pay when the work is done.
Refer to Fact Pattern 29-1B. Michael refuses to return the car to Jill until she pays for
the brake work. This is
a.a garnishment order.
b.a mechanic’s lien.
c.an artisan’s lien.
d.a violation of most states’ laws.
18) 9.Eudora is interested in buying a franchise from First Home Realty Company. In
this transaction, the Federal Trade Commission’s Franchise Rule
a.does not apply.
b.enables Eudora to weigh the deal’s risks and benefits.
c.enables First Home to weigh the deal’s risks and benefits.
d.prohibits certain types of anticompetitive agreements.
19) Ballpark Sportsfield, Inc., files a suit against Concessions & Tailgate Services. The
document that informs Concessions & Tailgate that it must file an answer within a
specified time period is
a.the answer.
b.the complaint.
c.the writ of certiorari.
d.the summons.
20) Ezra, an accountant, intentionally misstates a material fact to mislead Fruit Packing,
Inc., a client. Fruit Packing justifiably relies on the misstatement to its detriment. Ezra
is most likely liable for
a.actual fraud.
b.constructive fraud.
c.destructive fraud.
d.virtual fraud.
21) Fact Pattern 13-B1
Quik Downtown Delivery contracts with Rico’s Tacos to deliver its products. Both
parties change their minds, however, and inform each other that they would like to
cancel the contract. Fact Pattern 13-B1
Quik Downtown Delivery contracts with Rico’s Tacos to deliver its products. Both
parties change their minds, however, and inform each other that they would like to
cancel the contract.
Refer to Fact Pattern 13-B1. Quik and Rico’s
a.may rescind their entire contract.
b.may rescind their contract to the extent that it is executory.
c.must perform their entire contract.
d.must perform the part of their contract that is executory.
22) Gilbert wants to initiate a suit against Healthways Insurance Company by filing a
complaint. The complaint should include
a.an explanation of the proof to be offered at trial.
b.a statement refuting any defense that the defendant might assert.
c.a motion for judgment on the pleadings.
d.a statement alleging the facts showing the court has jurisdiction.
23) A provision in the California state constitution conflicts with a provision in the U.S.
Constitution. If challenged
a.neither provision will be enforced.
b.the provisions will be balanced to reach a compromise.
c.the state provision, not the U.S. Constitution, will be enforced.
d.the U.S. Constitution, not the state provision, will be enforced.
24) Liz offers to sell Max her iPad for $200. Max says, “Okay, but only if you include
the case and other accessories.” Max has
a.accepted the offer.
b.made a counteroffer without rejecting the offer.
c.rejected the offer and made a counteroffer.
d.rejected the offer without making a counteroffer.
25) Shop n’ Pay Convenience Stores, Inc., is a franchisor. Tonya operates a Shop n’ Pay
franchise. Ulysses is one of Tonya’s employees. As a franchisor, if Shop n’ Pay controls
the day-to-day operations of the business to a significant degree, it may be liable for
tortious acts by
a.no one.
b.Shop n’ Pay only.
c.Shop n’ Pay and Tonya, but not Ulysses.
d.Shop n’ Pay, Tonya, or Ulysses.
26) As the beneficiary of a business trust, Kevin’s liability for trust debts and
obligations is
a.limited to his capital investment in the trust.
b.limited to his personal assets.
c.nothing.
d.unlimited.
27) Leslie commits an act via e-mail against Money Investment Company, a business in
New York, where the act is a cyber crime. Leslie resides in Ohio, where the act is not a
crime. Prosecution of Leslie in New York involves questions of
a.jurisdiction.
b.malware.
c.phishing.
d.service-based hacking.
28) An implied warranty or merchantability and an implied warranty of fitness for a
particular purpose cannot exist in a single transaction.
29) A seller is not required to give a written warranty for consumer goods sold.
30) Fitness Workout, Inc., is a small business. Siblings Grady andHeidi, and nine other
members of their family, own all of its stock. Currently, the firm’s income is taxed at the
corporate level and, after being distributed to the family members, at the shareholder
level. Can Fitness Workoutretain its corporate status but otherwise avoid this double
taxation? If so, how?
31) Words or terms in contracts that are subject to more than one reasonable
interpretation can lead to bilateral mistakes.
32) Ralph founds Signify Inc. to make and sell products bearing the names of Tau
Kappa Epsilon (TKE) and other fraternities and sororities. Among other venues, Signify
sells its products online through Web sites that incorporate the fraternities ‘ and
sororities ‘ names and abbreviations into the URLs-for example, “tkestuff.com”-without
their permission. On what basis might the fraternities and sororities maintain a
successful suit against Ralph and Signify? How might this dispute have been avoided?
33) Title and risk of loss can pass to the buyer from the seller before the goods are
identified to the contract.
34) Agency relationships do not permeate the business world.