Al has a tax service and accounting business in Redwood City. He decides to move to
Center City, which is 150 miles away and sells his accounting practice to Able and
Baker, a CPA firm. In the sales contract, he agrees that he will refrain from practicing
accounting anywhere within a 20-mile radius of Redwood City for a period of two
years. However, on weekends he returns to his house in Redwood City, and when
clients call him, he meets with them in his home. The sales agreement:
a. is being violated by Al.
b. is invalid, because it is an illegal restraint of trade.
c. is illegal, because it is a violation of public policy.
d. will be divided into an enforceable, valid portion and an unenforceable, invalid
portion, which is the time provision, because the two-year period is too long.
Which of the following results in a void, rather than voidable, agreement?
a. Duress by improper threat
b. Fraud in the execution
c. Fraud in the inducement
d. Undue influence
Bearer paper is negotiable.
a. True
b. False
Which of the following is true regarding an insolvent partnership under the UPA?
a. The partners must contribute their respective share to the losses in order to pay
creditors.
b. If one of the partners is out of the jurisdiction and refuses to contribute, the other
parties must contribute the additional amount necessary to pay the firm’s liabilities in
the relative proportions in which they share the profits.
c. Any partner who pays an amount in excess of his proper share of the losses has a
right of contribution against the partners who have not paid their share.
d. All of these.
A merger of Parker Corporation with Jones Corporation that results in only Parker
Corporation surviving normally would require approval of:
a. Parker’s and Jones’s boards.
b. Parker’s shareholders.
c. Jones’s shareholders.
d. All of these.
Which of the following best describes the manifest system?
a. It is the best available technology requirement as described in the Clean Air Act.
b. It is the national pollution policy as set forth in NEPA.
c. It is the registration system required by TSCA.
d. The manifest is a form on which a generator certifies that the toxicity of waste has
been reduced to the greatest degree that is economically practicable.
Eminent domain does not grant the government power to take private land for public
use.
a. True
b. False
Which of the following is nota requirement of the statute of frauds provision of Article
2 of the UCC?
a. Some writing or record that indicates a contract has been made
b. Signature of the party against whom enforcement is sought
c. A term specifying quantity
d. A term specifying price
The minimum number of board members necessary to be present at a meeting in order
to transact business is known as:
a. a plurality.
b. the entire board of directors.
c. a quorum.
d. a minority.
A spouse of a beneficiary and the named executor of a will are considered qualified
witnesses by all courts.
a. True
b. False
Which of the following is the effect of the business judgment rule regarding the liability
of officers and directors?
a. Courts will not substitute their judgment for that of the board or an officer acting in
good faith with due care.
b. Officers and directors will never have liability for their decisions relating to the
corporation.
c. Officers and directors may have liability for bad faith decisions, but cannot be liable
for failure to act.
d. Directors and officers will not be held liable for conduct that is only negligent.
In order for an offer to end by lapse of time, the offeror must specify the time within
which the offer is to be accepted.
a. True
b. False
Murder is a malaprohibitatype of crime.
a. True
b. False
Which of the following is correct with respect to the reasonable person standard?
a. It makes considers whether the person has specialized skill or training.
b. It makes allowance for physical disability.
c. It applies an individualized test to children that takes into consideration the child’s
age, background, and experience.
d. All of these.
Personal jurisdiction:
a. may be obtained by personally serving a person within a state if that person is
domiciled in that state.
b. is also known as inremjurisdiction.
c. is obtained by seizing the defendant’s property.
d. may arise only through a party’s consent.
In an article about a prominent judge, a newspaper indicates the possibility that the
judge had organized crime connections. The judge sues. The judge will have a cause of
action:
a. if the suit is for defamation and the newspaper responsibly checked its sources.
b. if the suit is a suit for intrusion.
c. whether or not the newspaper checked its sources as long as the information printed
is ultimately found to be untrue.
d. if the information is untrue and the newspaper did not check its sources.
In some states, minors are liable for contracts involving bank accounts and student
loans and cannot avoid these contracts even though they can avoid other types of
contracts.
a. True
b. False
Ad substantiation, as required by an FTC policy statement, requires a company to have
a reasonable basis for its claims at the time it makes the claims.
a. True
b. False
The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted
the SEC power:
a. to issue cease-and-desist orders.
b. to impose civil penalties up to $1,000,000.
c. to bring civil actions for specified violations of the 1934 Act against aiders and
abettors.
d. All of these.
Acid rain:
a. is precipitation containing high levels of phosphoric acid.
b. is caused primarily by emissions from automobile parts manufacturers and petroleum
refineries.
c. is regulated by 1980 amendments to the Clean Air Act.
d. federal regulation permits companies to bank or sell their emission allowances.
Requirements for a memorandum that satisfies the statute of frauds include that the
writing:
a. must be a single document.
b. must exist at the time of the litigation.
c. needs to be notarized.
d. None of these.
Under the common law, in order to be enforceable, a modification of an existing
contract must be supported by mutual consideration.
a. True
b. False
There is a federal uniform lemon law that applies across the states to protect consumers
in their purchase of new cars.
a. True
b. False
To be protected by federal law, a mark must be distinctive enough to identify clearly the
origin of the goods or services. A trade symbol may satisfy the distinctiveness
requirement by, in certain circumstances:
a. being a descriptive or geographic designation.
b. being inherently distinctive.
c. acquiring distinctiveness through a secondary meaning.
d. All of these.
Humberto writes to Stan asking if Stan will buy his cultivator for $600. Humberto’s
question:
a. if answered in the affirmative by Stan, creates a contract.
b. indicates merely a willingness to enter into negotiation rather than a willingness to
enter into a contract.
c. is a definite and certain offer communicated to an offeree.
d. is subject to the mirror image rule.
Unless the contract specifies otherwise, goods may be tendered in installments.
a. True
b. False
Able, a resident of New York, has a dispute with Baker, a resident of Illinois, involving
a contract signed and performed in New York. His damages amount to $75,000, and he
wants to sue. The case can be brought:
a. only in the New York state courts.
b. only in the New York federal court.
c. only in the Illinois state courts.
d. in either the New York state courts or the New York federal court.
An accountant’s liability under the federal securities laws is basically the same as the
liability at common law.
a. True
b. False
In most states, a trustee’s investment decisions are usually governed by:
a. the prudent person rule.
b. judiciary determination.
c. the beneficiary’s intent.
d. The Uniform Principal and Income Act.
Estoppel means that a person is prevented by his own conduct from asserting a position
inconsistent with such conduct, on which another person justifiably relied.
a. True
b. False