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The Federal Trade Commission (FTC) has begun to take positions on Internet issues
that are:
a. tailored to Cyberspace.
b. specific to the type of website that has the issue.
c. identical to its stances of other types of commerce issues.
d. none of the above.
With regard to priority of claims in the payment of unsecured debts, which of the
following has priority over alimony and child support obligations?
a. costs and expenses of the administration of the bankruptcy case.
b. claims arising in the ordinary course of the debtor's business after commencement of
the case
c. claims for wages, salaries or commissions earned within 180 days before the filing of
the petition
d. none of the above
Which of the following is true about administrative agencies?
a. Administrative agencies exercise powers guaranteed to them in the U.S. Constitution.
b. Administrative agencies exercise powers allocated to them by the president.
c. Administrative agencies make decisions that are rarely reviewed by the courts.
d. Administrative agencies make decisions that are effectively reviewed by voters.
Which of the following is correct concerning suretyship and guaranty?
a. A surety is always liable from the moment the principal is in default.
b. A guarantor is always liable from the moment the principal is in default
c. Both a. and b.
d. None of the above.
When employers allow employees to reimburse the employer for private use of text
services, employer monitoring and disclosure of those texts is:
a. always legal.
b. only legal if the employee gives his or her consent.
c. only legal for texts that are sent and received during work hours.
d. a violation of the law.
When a state statute requires a security interest in a motor vehicle to be noted on the
certificate of title, the security interest is perfected:
a. by the certificate notation, when a non-inventory motor vehicle is involved.
b. by filing under the UCC, regardless of how the vehicle is classified.
c. by filing under the UCC, when the motor vehicle is inventory.
d. either by the certificate notation or by a UCC filing, depending on how the state
statute defines the term motor vehicle.
Nonprofit corporations:
a. are also known as a eleemosynary corporations.
b. are organized for charitable or benevolent purposes.
c. include hospitals and universities.
d. all of the above.
The U.S. Constitution:
a. is unwritten.
b. was brought over from England in its entirety.
c. is a written document that specifies the structure of the government.
d. prohibits the states from having their own constitutions.
An agreement arises when one person, the __________, makes an offer and the other
person to whom the offer is made, the __________, accepts.
a. grantor; grantee
b. grantee; grantor
c. offeror; offeree
d. offeree; offeror
A nonconforming use:
a. that is discontinued for a period of less than thirty (30) days may be resumed.
b. has a right to continue for only five (5) years.
c. has a constitutionally-protected right to continue.
d. that continues for more than one (1) year cannot be lost by abandonment.
Costs generally are awarded to the prevailing party in litigation. Those costs usually
include:
a. filing fees.
b. service-of-process fees.
c. deposition transcript costs.
d. all of the above.
Employee e-mail is:
a. spontaneous.
b. candid.
c. discoverable.
d. all of the above.
If a contractually-specified mode of transportation is not available, the:
a. contract is automatically voided.
b. seller must make delivery by a commercially-reasonable substitute.
c. buyer must arrange to pick up the goods.
d. seller must make personal delivery.
An executory contract is:
a. void if neither party has performed.
b. voidable.
c. entered into but not fully performed.
d. always unilateral in nature.
The right to ___________ is a second chance for a seller to make a proper tender of
conforming goods.
a. rehabilitate
b. repair
c. heal
d. cure
The owner of a lost credit card is:
a. liable for all purchases made by its finder if the card was lost through negligence.
b. not liable for any purchases if the card was lost despite the exercise of reasonable
care by the cardholder.
c. liable for all purchases if the card originally had been sent to the cardholder without
any prior request and never was used by such holder.
d. not liable for more than $50 for the unauthorized use of the card.
Consideration is:
a. the concern shown by the other contracting party.
b. what is demanded by the promisor as the price for the promise.
c. a stated number of dollars.
d. the concern of both contracting parties for the protection of the environment.
A letter of credit:
a. cannot last for more than five years.
b. may be in either oral or written form.
c. can only be issued by a bank.
d. must be in writing and signed by the issuer.
Sarbanes-Oxley would prohibit which of the following individuals from serving on an
audit committee of the company's board?
a. a director who accepts consulting fees from the company
b. a director who is affiliated with the company
c. a director who is affiliated with a subsidiary of the company.
d. all of the above.
In a contract in which a tenant borrowed money from a bank for the purpose of adding a
bathroom to her apartment, the landlord is:
a. a direct beneficiary.
b. in privity of contract with the tenant.
c. a third-party beneficiary.
d. an incidental beneficiary.
The implied warranties of an unqualified indorser do not include a guarantee that:
a. payment of the instrument will be made.
b. the account of the drawer in the drawee bank contains funds sufficient to cover the
check.
c. both a. and b.
d. neither a. nor b.
The legislative branch of government has the function of:
a. making laws.
b. executing the laws.
c. interpreting the laws.
d. all of the above.
The delegator of construction duties remains liable if:
a. the delegatee performs the work properly, but the obligee did not approve of the
delegation.
b. the delegatee performs the work improperly.
c. the obligee objects in writing to the delegatee's performance of the work, even if the
delegatee performs the work properly.
d. the value of the contract is $500 or more and the delegatee performs the work
properly.
A party to a contract may be:
a. an individual.
b. a partnership.
c. a corporation.
d. all of the above.
John Smyth is an agent for L. T. Adams. To avoid becoming a party to any contract that
Smyth signs for Adams, Smyth should sign in which of the following ways?
a. John Smyth, agent
b. John Smyth, for the principal
c. John Smith, as agent for the principal
d. L. T. Adams, per John Smyth
Which of the following is not a factor that may lead to "piercing the corporate veil" and
imposing liability on corporate owners (shareholders)?
a. grossly inadequate capitalization of the corporation
b. formation of the corporation to avoid personal liability for business obligations
c. formation of the corporation to perpetuate a fraud or conceal illegality
d. shareholder diversion of corporate funds or assets
If a tenant fails to pay rent on time the landlord:
a. has an automatic lien on the tenant's personal property for the money due.
b. has the right to lock the tenant out of the property.
c. may take legal steps to evict the tenant.
d. all of the above.
Unidentified members of a certain class may sue for negligent malpractice in states that
follow the __________ rule.
a. contact
b. known user.
c. unidentified user
d. foreseeable user
Which of the following powers is not available to the SEC pursuant to the Remedies
Act?
a. The SEC may start administrative proceedings against any person or entity regulated
by the SEC.
b. The SEC may start administrative proceedings against any person or entity not
regulated by the SEC.
c. The SEC may order an accounting and disgorgement of ill-gotten gains.
d. All of the above powers are available to the SEC under the Remedies Act.
The party that breaks a contract may be required to pay damages to the other party to
compensate for:
a. losses that could have been avoided by hiring someone else to perform the contract.
b. emotional disturbance caused by the breach of contract.
c. a heart attack induced by the emotional disturbance caused by the breach of contract.
d. damages resulting necessarily and directly from the breach of contract.
A bequest of a pearl necklace is a:
a. general legacy.
b. specific legacy.
c. specific ademption.
d. residuary ademption.
An oral contract containing a promise by an executor to pay estate debts from estate
funds is:
a. binding.
b. voidable by the executor or administrator.
c. enforceable against the executor only if the executor signs written proof of the
agreement.
d. enforceable against the other contracting party only if that party signs a written
agreement.
A bailee's interest in the bailed property can be characterized as:
a. ownership.
b. a fractional proprietary interest.
c. possession.
d. constructive ownership.
Legal issues of Cyberspace include:
a. employment issues.
b. user issues.
c. contract issues.
d. all of the above.
The EPA is the primary federal agency responsible for the enforcement of
environmental laws.
The primary party on a note or certificate of deposit is the drawer.
To have the status of a holder in due course, a person must first be a holder.
An agreement that contemplates the performance of an act prohibited by law is usually
void.
Shares of stock may be acquired through subscription or through a transfer of existing
shares from a shareholder or from the corporation.
When purchasing from a website, the website terms generally become the contract of
the parties and are legally enforceable.
A price reduction to one customer is lawful when it is made because of the deteriorated
condition of the goods sold to that customer.
The rights of partners are determined by the partnership agreement.
The Miller family, who operates a musical instrument manufacturing concern, has
decided to incorporate. The three (3) members of the Miller family, Mary, Mark and
Sue, would like to become a corporation and obtain limited liability; however, taxation
at the corporate level would be very costly for them. If possible, Mary Miller would
rather be taxed as a partnership. Mark Miller is worried about the additional paperwork
and meetings that incorporation would surely bring. Sue Miller does not want a large
board of directors to be formed. Sue fears that the board would somehow detract from
the family goals and orientation the business has always enjoyed. In light of these
concerns, is there a corporate form that would better suit the Miller family?
In a limited partnership, general partners are not responsible for the debts of the firm.
A special agent is authorized by the principal to handle a definite business transaction
or do a specific act.
A common carrier transporting goods under a COD shipment is liable if it takes a check
in payment and the check bounces.
Contractual intention is determined by objective standards.
If a merchant receives and cashes a check for partial payment of a debt and the check
bears the notation that the amount is in full payment of a disputed sum, the total debt is
released.
You are asked to provide two friends who are in business together with advice
regarding what they need to do to legally in order to form a limited liability company.
Although your friends like the general notion of limited liability in the operation of
their business, they are totally unfamiliar with the legal processes for forming a LLC, so
you need to provide them with the basic requirements for LLC creation. What specific
advice would you give them?
