Which of the following is not a function of a bill of lading?
a. It serves as a receipt for goods.
b. It serves as evidence that the goods specified in the bill of lading are stored in the
insured building of the issuer.
c. It is evidence of the contract of carriage.
d. It serves as a document of title.
The 1977 amendments to the Clean Water Act divided pollutants into all but which of
the following categories?
a. Toxic
b. Nontoxic
c. Conventional
d. Nonconventional
Answer the following:
a. What is a quorum of the board of directors for purposes of conducting corporate
business? What do most states and the RMBCA say with regard to what constitutes a
quorum?
b. The directors of Schmalley’s, Inc. can’t decide whether to declare a dividend, so the
board appoints a committee consisting of the president of the corporation, the
vice-president of the corporation, and the treasurer to decide whether to pay a dividend.
If the committee wants to declare a dividend, the directors say the officers can pay it
immediately before the next board meeting. Is this a permissible delegation of corporate
authority? Explain.
Warranty liability applies to persons who:
a. transfer an instrument.
b. obtain payment or acceptance of an instrument.
c. have signed the instrument, but not to those who have not signed.
d. All of the above.
e. Both (a) and (b).
To acquire the preferential rights of a holder in due course, a person must:
a. meet the requirements under UCC Section 3-302.
b. “inherit” these rights under the shelter rule.
c. have a debt arising out of a consumer credit contract.
d. Both (a) and (b) are possible ways to become a holder in due course.
Landlords can evict a tenant if:
a. the tenant fails to pay the rent.
b. the lease expires and the tenant refuses to move out.
c. the tenant keeps a pet in violation of the lease and refuses to get rid of it.
d. All of the above.
Under the RUPA, a partner’s dissociation:
a. terminates the partner’s right to participate in the management and conduct of the
partnership business.
b. eliminates that partner’s right to participate in winding up the partnership.
c. does not terminate the duty not to compete with the partnership until the process of
winding up the partnership has been completed.
d. terminates that partner’s duty to account to the firm for any fees received on behalf of
the partnership.
Which of the following is correct regarding a two-for-one stock split?
a. The purpose of the split may be to increase the number of potential stockholders.
b. The purpose of the split is to make a distribution to the stockholders.
c. After the split, each stockholder will have greater ownership interest in the
corporation.
d. The value of each share of stock will increase as a result of the split.
If Ben Stewart has a checking account at First Bank:
a. the relationship between Ben and his bank is based primarily on their contractual
agreement.
b. First Bank is a creditor and Ben is a debtor.
c. Ben is an agent of First Bank.
d. All of the above.
Which of the following is correct with regard to counteroffers?
a. A counteroffer operates as a rejection of the original offer.
b. A conditional acceptance is a common type of counteroffer.
c. The receipt of a counteroffer terminates the original offer.
d. All of the above are correct.
All of the following are exempt from registration under the 1933 Act EXCEPT:
a. government bonds.
b. securities issued by nonprofit medical facilities.
c. certificates of deposit issued by banks.
d. insurance company annuities.
Sue, Barb, and Carlotta agree to put in $1,000 each to set up a shelter for lost animals.
They each work two days a week. Donations fund the day-to-day operations. Do they
have a partnership?
a. Yes, since each has control of the operation
b. Yes, because they are all co-equals in ownership of the shelter
c. No, because they have made no formal agreement
d. No, because there is no business for profit
A defense to an action based on untrue statements contained in a registration statement
is:
a. innocent mistake.
b. due diligence.
c. constructive disclosure.
d. reasonable diligence.
An agent has breached his fiduciary duty to the principal in which of the following
situations?
a. Where the agent competes with the principal
b. Where the agent makes a secret profit
c. Where the agent uses confidential information obtained in the course of the agency
for his own benefit
d. All of the above.
An indorser is discharged if a check is not presented for payment or given to a
depositary bank for collection within ____ days of the indorsement.
a. ten
b. fourteen
c. thirty
d. ninety
a. Discuss primary liability on a note; on a check.
b. What is secondary liability? What must be done before a person with secondary
liability can be sued? Who has secondary liability on a note? Who has secondary
liability on a check?
c. How does contractual liability on the instrument differ from warranty liability?
A substitute check:
a. is basically a copy of the original check that shows both the front and back of the
original check.
b. is not suitable for automated processing in the same manner as the original but is
used by the banks for storage of the information on an original check after processing.
c. bears a legend stating that it is only a copy of a check and that it is not to be used in
the same way as the original.
d. All of the above.
Ellen’s driveway is actually on Richard’s land, but in 20 years nobody has ever said
anything to Ellen about it. When Richard sells his house, a survey shows the problem
and the new owner demands that Ellen abandon use of the driveway. Will she have to
move her driveway?
a. Yes, if she does not actually own the land
b. Yes, since it is not in her deed
c. Not if she used it continuously
d. Not if she got permission from Richard
Which of the following would NOT be exempt from registration under the 1933
Securities Act?
a. An offering restricted to the residents of the state in which the issuing company is
organized and doing business
b. An offering of state securities
c. An offering of limited partnership interests
d. A private offering to sophisticated investors who will not redistribute them
What is the effect of a payor bank’s dishonor of a check?
a. It returns the check to each intermediary or collecting bank.
b. The provisional credits must be reversed.
c. The customer who deposited the item for collection must cover the item and seek
recovery from the drawer or indorsers.
d. All of the above will occur.
Which of the following is found in the Fifth Amendment to the U.S. Constitution?
a. A privilege against self-incrimination
b. A right to a speedy, public trial by jury
c. A prohibition against cruel or unusual punishment
d. The right to an attorney
In dealing with unconscionability:
a. most cases have involved low-income consumers.
b. courts have demonstrated an unwillingness to limit freedom of contract.
c. courts have applied the doctrine to the negotiation process, which involves
substantive unconscionability.
d. courts have not considered inequality in the bargaining positions of the parties.
In most states, whether the time within which a minor disaffirms a contract constitutes a
reasonable time is determined by:
a. state statute.
b. the UCC.
c. the facts and circumstances of the case.
d. common law, without regard to the unique facts of the case at hand.
Under what circumstances may the buyer seek the remedy of replevin?
a. Where the buyer has been unable to effect cover
b. Where the goods have been shipped under reservation of a security interest and the
buyer has satisfied that interest
c. Where the goods are specially manufactured but can be purchased from another
source
d. Both (a) and (b) above are correct.
a. Under the common law, when can an injured party seek the remedy of specific
performance?
b. How does the Code change the common law rule?
c. Compare and contrast the remedies of replevin and specific performance.
Which of the following is true of a partner’s fiduciary duty?
a. The RUPA’s provision regarding the fiduciary duty is not exclusive, but leaves further
development of the fiduciary duty of partners to the common law of agency.
b. The RUPA provides that a partner does not violate the duty of loyalty merely because
the partner’s conduct furthers the partner’s own interest.
c. The fiduciary duty extends to the formation of the partnership, even when the parties
are negotiating at arm’s length.
d. The duty not to compete continues for a reasonable time after dissociation.
The original mortgagor and mortgagee can transfer their interests to assignees whose
right and obligations will depend primarily on which of the following?
a. Agreement of the parties to the assignment
b. Legal rules protecting the interest of one who is party to the mortgage but not to the
transfer
c. Both (a) and (b)
d. None of the above
Contractual duties of a principal to an agent include all but the duty to:
a. pay the agent for losses suffered while acting legally as directed by the principal.
b. account for financial benefits.
c. pay for authorized expenses incurred.
d. compensate the agent as specified in the contract.
Which chapter of the Bankruptcy Code allows for the adjustment of debts of an
individual with regular income?
a. Chapter 7
b. Chapter 11
c. Chapter 12
d. Chapter 13
A merger involving firms that are not competitors, customers, or suppliers is termed a:
a. tying arrangement.
b. vertical merger.
c. conglomerate merger.
d. horizontal merger.
Morales, president of Tradewind Industries, Inc., would have actual implied authority
to:
a. issue corporate stock.
b. remove a vice-president of the company from office.
c. bind the company in a sale in the ordinary course of the company business.
d. set the amount for production bonuses of the other officers.
e. All of the above.
Answer the following:
a. What is an illegal wagering contract?
b. Larry takes out a $100,000 life insurance policy on his business partner, because his
partner hasn’t been well lately, and Larry thinks he might die. Is this a wagering
contract? Explain.
c. Shiloh’s Department Store has a special promotion whereby anyone who buys $10 in
merchandise is eligible to register for a trip to Europe. Is this an illegal lottery? Explain.
Income bonds bear a fixed interest rate.
An indorsement may be written on a paper other than the instrument itself as long as the
paper with the indorsement is affixed to the instrument.
Debentures are the same as indentures.
An indorsement “Pay Alice Adams” is an assignment rather than a negotiation since it
lacks words of negotiability.
The McCarran-Ferguson Act, enacted in 1945, left the regulation of insurance to the
states.
“Punitive damages” is a term referring to damages that will merely compensate victims
for the harm they have suffered, but that will cost defendants more money than they
have.
A bailee has the exclusive right to possess the property for the term of the bailment.
“Blue laws” usually apply to activities of necessity and charity.
Under the law of assignments, the assignee stands in the shoes of the assignor.
The parties to a contract may modify the agreement with no additional consideration by
simply substituting a new contract.
Silence can never be an acceptance.
Name the special types of wills.
Under NEPA, psychological health effects are considered to be environmental effects.
Otherwise illusory promises may be transformed by some courts into actual promises
by implying an obligation of good faith and fair dealing.
Directors are elected at the annual meeting of shareholders.