If someone signs a person’s name to a negotiable instrument without that person’s
authorization, the signature binds the person whose name appears.
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Generally, businesses start out as publicly traded corporations.
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The Securities Act of 1933 is concerned primarily with private distributions of
securities.
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The Foreign Trade Antitrust Improvement Act provides that the Sherman Act shall
never apply to nonimport trade.
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Many courts have now extended the implied warranty of habitability made by
builder-vendors to include subsequent purchasers.
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A wash sale is a legal practice that is designed to stimulate substantial trading activity.
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Trademark dilution laws focus on protecting the investment of trademark owners,
while traditional trademark laws were intended to protect consumers.
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As a general rule, assignments that do not involve personal relationships or increase the
promisor’s burden are enforceable.
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The Foreign Corrupt Practices Act makes it a crime for any American firm to offer a
gift to a foreign official.
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Minitrial is also known as a summary jury trial.
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The Sarbanes-Oxley Act requires that:
A. public corporations disclose whether they have adopted a code of ethics for senior
financial officers.
B. private corporations report any change in their code of ethics.
C. privately traded corporations have board audit committees comprising only of
dependent directors.
D. special committees of the board be assigned to special areas of concern.
Answer:
Oleta makes a contract with Jim to sell her a 1965 lava lamp once owned by a famous
artist. Jim later decides that he does not want to sell the lamp. Oleta:
A. can do nothing; she has no remedy.
B. cannot compel specific performance.
C. can make Jim deliver the lamp because it is one of a kind.
D. can sue Jim and make him pay a fine for misconduct.
Answer:
Which of the following is an advantage of licensing?
A. It permits quicker foreign market penetration than direct investment.
B. It maximizes the physical and financial presence of a business overseas.
C. It allows the licensee to directly benefit by receiving royalty payments.
D. It allows the first person to register a trademark to become its legal owner.
Answer:
Which of these laws prohibit charging more than a stated amount of interest for the use
of money?
A. Rent control law
B. Antitrust law
C. Usury law
D. Blue law
Answer:
Identify the correct statement about sole proprietorship.
A. The owner shares responsibility with the agents and employees.
B. It may be operated under an assumed or trade name.
C. Employees of the business are not the personal employees of the owner.
D. The salaries paid to the employees are not deductible in determining taxable income.
Answer:
If the drawer is negligent and contributes to the forgery or alteration of a check:
A. the bank can charge the drawer for the amount as the drawer’s negligence
contributed to the forgery.
B. the bank is liable to the drawer for the amount.
C. the check is not payable from the customer’s account because the bank is not
following the instructions of the depositor.
D. the bank must pay the instrument out of its own funds.
Answer:
Which of the following is a TRUE statement about the Clean Water Act?
A. It was the 1970 amendment to the Federal Water Pollution Control Act (FWPCA).
B. The act provides that a discharge permit has to be obtained from the Army Corps of
Engineers in order to deposit or discharge “refuse” into a navigable waterway.
C. One of the goals of the Act was to have no discharges of pollutants into the nation’s
waters by 1985.
D. Under the Clean Water Act, the federal government has the primary responsibility
for preventing, reducing, and eliminating water pollution.
Answer:
Mary parked her car in a municipal parking lot. She locked her car, and kept her keys.
When she returned, she discovered that someone had deliberately scratched “I love
Reggie” into her car door, causing $150 in damage. Mary wants to sue the city for
failing to protect her car from vandals. In this situation:
A. a bailment was not created and, therefore, the city was under no duty to protect
Mary’s automobile from vandals.
B. a bailment for the benefit of the bailor was created and, therefore, the city owed
Mary only the duty to exercise minimal care in protecting the automobile.
C. a bailment for the benefit of the bailee was created and, therefore, the city owed
Mary a duty to exercise more than ordinary care in protecting her automobile.
D. a bailment for mutual benefit was created and both parties owe a duty of reasonable
care in protecting the automobile from the acts of third parties.
Answer:
In the will, Lydia’s mother has named Lydia as the owner of her farm and named her as
a beneficiary in her insurance policy. Lydia is:
A. a donee beneficiary.
B. an incidental beneficiary.
C. the assignee by novation.
D. a creditor beneficiary.
Answer:
The transfer of possession (whether voluntary or involuntary) of a negotiable
instrument by a person (other than the issuer) to another person who becomes its holder
is known as __.
A. recoupment
B. negotiation
C. indorsement
D. ratification
Answer:
Ratification of a contract which is voidable for lack of capacity:
A. must be in writing.
B. can occur at any time after the contract is made.
C. cuts off the right to disaffirm.
D. must always have at least two witnesses present at the time of contracting.
Answer:
Jay, the owner of a cosmetic store, orders 20 bottles of face cream and 30 bottles of
face cleansing cream. After the consignment is delivered, he discovers that he has
received 10 bottles of face wash and 10 bottles of face cleansing cream. Jay:
A. can accept and avoid payment for the face cleansing cream.
B. cannot accept nonconforming goods.
C. can reject or accept the entire consignment.
D. can avoid payment for the face wash which he had not ordered but has accepted.
Answer:
Emmie worked late nights at a convenience store. The store had been robbed several
times. One night Emmie discovered that the “emergency alert” security system was not
working. The owner of the store told her that he would have the system repaired
promptly. Nevertheless, a month went by before the system was repaired. In the
meantime, the store was robbed while Emmie was working and, in the course of the
robbery, the perpetrator broke Emmie’s leg. Under these circumstances, Emmie may:
A. recover from the store owner because the harm was foreseeable.
B. recover from the robber as her injury was the proximate result of his actions.
C. recover under the doctrine of strict liability.
D. recover only a limited amount on the grounds of emotional distress.
Answer:
What is a white-collar crime?
A. It is a nonviolent crime committed against the federal investigative agencies.
B. It is a terrorism-related crime that poses significant threat to the general public.
C. It is a nonviolent crime committed by businesspersons and organizations.
D. It is a violent crime committed against businesspeople and organizations.
Answer:
Which of the following is TRUE of a consignment agreement?
A. If a manufacturer delivers all goods to its dealers on a consignment basis, the goods
become the property of the dealer.
B. The owner of goods delivers them to another who is to act as the owner’s agent in
selling the goods.
C. If a manufacturer delivers all goods to its dealers on a consignment basis, the dealer
can lawfully fix the price of those goods.
D. Consignments have been held to be joint action.
Answer:
Which of the following steps governing the incorporation process is included in the
MBCA?
A. Preparation, signing, and authenticating the articles of incorporation.
B. Filing the articles with the attorney general.
C. Filing the articles with the secretary of state and paying part of the required fees.
D. Contributing a minimum of $5,000 to receive a certificate of incorporation.
Answer:
Law may not be up to the task of forcing corporations to engage in ethical behavior for
a number of reasons, including that:
A. it is not clear that all corporations will respond to the threat of financial penalties
imposed by law.
B. judges are likely to be sympathetic to corporations.
C. Sarbanes-Oxley decreases the likelihood that illegal behavior will be detected.
D. corporations voluntarily elect to pursue ethical ends.
Answer: