Sprock is a holder in due course on an instrument issued by Klingon. Which of the
following defenses could be successfully raised by Klingon?
a. Forgery.
b. Prior payment.
c. Breach of contract.
d. Fraud in the inducement.
Dick offers to sell Jane his 1955 Thunderbird convertible. Before Jane can accept the
offer, lightning strikes the car and it is totally destroyed. Which of the following is true?
a. Jane can still accept the offer and John must find a 1955 Thunderbird to sell.
b. The offer is terminated by law.
c. Dick can still revoke his offer so long as he does so before Jane accepts.
d. Jane can still accept the offer. She will be entitled to the insurance proceeds.
Ron’s Furnace Repair advertised it would inspect any homeowner’s furnace for free.
Janet had Ron’s come to inspect her furnace. The servicewoman dismantled the entire
furnace then refused to put it back together unless Janet paid her $250. The FTC
considers such a practice to be:
a. an unfair practice.
b. a deceptive practice.
c. an act that violates public policy.
d. All the above.
Country Bank, located in Indiana, loaned Chmelik $5,000 and obtained a security
interest in a copyright Chmelik owns. Chmelik lives in Illinois, but works in Indiana. In
order to perfect its interest, Country Bank files a financing statement in Indiana. The
financing statement provides Chmeliks correct name, his business address, and a
reasonable description of the copyright used as collateral. Is the financing statement
sufficient?
a. Yes, it meets the UCC requirements for contents and filing.
b. No, if the debtor is an individual, the secured party must file in the state of the
debtors principal residence, which in this case would be Illinois.
c. No, the contents of the financing statement are incomplete.
d. Both b and c are correct.
What federal agency requires that the seller of a franchise give the potential buyer an
offering circular and audited financial statements?
a. The Securities and Exchange Commission (SEC).
b. The Interstate Commerce Commission (ICC).
c. The Federal Trade Commission (FTC).
d. The Franchise Sales Commission (FSC).
In an international sales contract which terms are negotiable?
a. What language and currency should govern the contract
b. Choice of where to sue.
c. What Countrys laws will govern
d. all of these answers are true
I have an express rule that if any of my sales staff drinks at lunch they are fired on the
spot. Jeff one of my salesmen, after a liquid lunch has a wreck and injures Betty. Which
of the following is true.
a. I have no liability because Jeff violated my expressed rule.
b. Sales people are independent contractor and I have no liability for his acts.
c. I am liable even thought Jeff violated my rules.
d. lunch is his off time and Jeff does not have to follow my rules.
Congress enacted legislation in 1933 to regulate the securities industry and prohibit
various forms of fraud with securities. The Securities Exchange Act of 1934 was passed
a year later. This law created the Securities and Exchange Commission (SEC) as an
independent regulatory entity whose function is to administer the two laws. The SEC
has generated rules and regulations to administer these acts. These rules and regulations
are:
a. statutes.
b. administrative law.
c. executive orders.
d. common law.
Jeff picks up a piece of metal pipe and swings it around, hitting Gary across the back of
the head. What factor would be required for Jeffs employer to be liable to Gary?
a. Jeff was at the factory when it happened.
b. Jeff voluntarily hit Gary.
c. Jeff was moving the pipe as part of his work responsibilities when he hit Gary.
d. Gary cannot be an employee of the same company as Jeff.
The law that protects Jacks secret sauce is:
a. America Invents Act
b. Uniform Trade Secrets Act
c. Anticybersquatting Consumer Protection Act
d. The Lanham Act
What is true about annual shareholders meetings?
a. All shareholders must attend to vote on issues.
b. can be waived by a majority of shareholders in a non publicly held corporation.
c. are required by all states if they are publicly traded companies.
d. all of these answers are true.
Insurance obtained by a limited partnership on the life of the general partner would be:
a. double indemnity insurance, because both the limited partnership and the general
partner are insured.
b. key-person insurance, because the general partner is a key person, contributing a
great deal to making the business successful.
c. a co-insurance policy because both the limited partnership and the general partner are
insured.
d. whole life or straight life insurance which builds a cash value.
In legal terms, the word “issue means:
a. the children of the testator
b. the process of making a will valid
c. all descendents of the testator
d. the process of inheritance
Insurance experts recommend that workers carry disability insurance to replace of their
income.
a. 50%
b. between 60% and 75%
c. 100%
d. between 75% and 95%
Truan, Inc. has decided to market a new pesticide. Truan must register the pesticide
with the EPA.
Shortly after Brian started to work at Trevit, Inc., a co-worker, Ann, began asking him
out. Brian said no. Nevertheless, Ann persisted. One day Ann playfully, but
intentionally touched Brian “below the belt. Which statement is correct?
a. Ann defamed Brian.
b. Ann committed the tort of trespass.
c. Ann committed the tort of interference with a prospective advantage.
d. Ann committed the tort of battery.
Which of the following is an example of an exculpatory clause?
a. Creditor charges 38% interest on a loan.
b. Seller is not responsible for property damage regardless of the cause of the injury.
c. Buyer agrees to pay any costs of litigation.
d. Employee agrees to never work for a competing company.
Which of the following cannot file a bankruptcy petition under the Code?
a. Aztec, a foreign corporation doing business in the United States.
b. Milan, a citizen of Bosnia, who owns property in the United States.
c. Debra, a resident of Michigan, whose liabilities do not exceed assets.
d. Stan, an American citizen, who refuses to undergo credit counseling.
e. All of the above.
A trust that goes into effect during the grantors lifetime is called:
a. a testamentary trust
b. an anos durente trust
c. an irrevocable trust
d. an inter vivos trust
In good faith, Clinton gave Jane $500 for a negotiable promissory note made out to
Jane for $550. She needed some money before the due date on the note, and Clinton
had no notice of outstanding claims or other defects of the note. Clinton:
a. has more rights than Jane.
b. has the same rights as Jane.
c. has only conditional rights because they depend on Janes rights.
d. cannot transfer the note to anyone else.
Which of the following is not an example of a trial court of limited jurisdiction?
a. A probate court.
b. A juvenile court.
c. A small claims court.
d. A general civil division court.
Which of the following types of concurrent ownership does not provide for rights of
survivorship?
a. Joint tenancy.
b. Tenancy in common.
c. Tenancy by the entirety.
d. All of the above provide for rights of survivorship.
What law prohibits mergers that are anti-competitive?
a. Sherman Act.
b. Clayton Act.
c. Robinson-Patman Act.
d. Radmon Act.
Millie ordered clothes from a mail order catalog. No time was specified as to when the
goods would be shipped. In such a case the FTC requires that the company must ship
the goods to Millie:
a. within 3 business days after receiving the order.
b. within 10 business days after receiving the order.
c. within 30 days after receipt of the order.
d. within a reasonable time and within time lines consistent with industry standards.
A monopoly is illegal:
a. under any circumstances, under Section 2 of the Sherman Act.
b. only if it is gained or maintained by using wrongful tactics.
c. if you have greater than 50 percent of market share.
d. any time there are no interchangeable products.
MegaCorp purchased 10,000 shares of its own stock that had previously been owned by
private investors. The stock MegaCorp repurchased is called:
a. authorized and unissued.
b. authorized and issued.
c. treasury stock.
d. repurchased stock.
Which of the following warranties provides that the goods will be useable for the
ordinary purposes for which they are used?
a. Infringement.
b. Fitness for a particular purpose.
c. Merchantability.
d. Title.
The criminal penalties under RICO include all EXCEPT:
a. imprisonment.
b. capital punishment.
c. confiscation of property acquired through the criminal activity.
d. fines.
Zoe, who works as a retail clerk, wishes to talk with her co-workers about organizing a
union. Her employer forbids her from talking with other workers about union activity in
the presence of customers and threatens to fire her if she joins the union. Does the
employer have a legal right to make this threat to Zoe?
a. Yes, the employer may limit time and place of discussions about union organizing.
b. Yes, but only if expressly authorized by state law.
c. No, an employee has the right of free speech at anytime.
d. No. An employee may limit the time and place of conversation, but may not threaten
to fire the employee.
Laurel Speckle received a check from State University. She indorsed the check as
follows: “For Deposit only, /s/ Laurel Speckle.” Laurel’s endorsement is a:
a. blank endorsement.
b. special endorsement.
c. restrictive endorsement.
d. None of the above is correct.
The right of the tenant to the undisturbed possession of the leased property is known as:
a. quiet enjoyment.
b. habitability.
c. lawful possession.
d. peaceful possession.
The Dodd-Frank Wall Street Reform and Consumer Protection Act amended the TILA
which requires:
a. subprime loans be treated differently than regular home mortgages.
b. subprime loans are no longer allowed.
c. subprime loans must have a balloon payment to allow smaller monthly payments for
at risk borrowers.
d. Can charge a penalty for prepayment on adjustable rate mortgages.
When Mohammed was hired by Pomico, Inc., he signed the following agreement,
“Upon termination of my employment with Pomico, I agree not to work for a
competing company within 30 miles of Pomico’s headquarters for one year.” This
agreement, important to protecting secret information developed in the employer’s
business, is:
a. an unenforceable exculpatory agreement.
b. an unenforceable usurious agreement.
c. an enforceable bailment agreement.
d. an enforceable agreement not to compete.
Incorporators are required to sign the charter, deliver it to the proper state officials, and
purchase a certain percentage of the initial stock offering.
Alan, a dentist, and his wife Martha, an attorney, can protect their personal assets with
limited liability from their business dealings by creating and operating a professional
corporation together.
An employer cannot have a valid Title VII defense that it was using a legitimate
seniority system if such a system perpetuates past discrimination.
Jenna works for Mega Corp as a production employee. She is paid an hourly wage. She
wishes to negotiate her own employment contract with management since she does not
agree with the terms of her union’s collective bargaining agreement. Can Jenna
negotiate her own contract? Explain.
An auditor for Ralco Accounting firm was auditing the financial statements of E-prise.
The auditor suspected that E-prise was engaged in conduct that violated FCPA, a
federal law. Under Section 10A of the 1934 Act, the auditor is required to notify
E-prise’s board of directors of the suspicions.
Peggys credit card debts are mounting as her costs of insurance and fuel have
dramatically increased and her income, from sporadic free-lance jobs, has dropped.
Chapter 13 of the Bankruptcy Code will allow her to reorganize her debt while she
keeps most of her assets.
The legal term for a promise in a contract is “provision.
A valid contract can legally be voided by either party.
Tom rented an apartment from Margaret on a month-to-month basis, with rent due on
the first of the month. This type of tenancy is known as a “tenancy at will.”
A patent is available for an idea as well as a tangible application.
If Denise is hired to work as a cashier, she has the implied authority to do acts
reasonably necessary to carry out her job.
The most dominant form of business ownership is the corporation.
The Sarbanes-Oxley Act makes it a crime to retaliate against someone who blows the
whistle on any federal offense.
A bailment was created for the parties’ mutual benefit. This means that the bailee must
use ordinary care with the property.
A color cannot be trademarked since it cannot be kept from use by other businesses.
The Bankruptcy Code uses the term “bankrupt to refer to a person who cannot pay his
debts.
Revised Article 9 of the UCC only applies to goods and does not include intangibles
such as accounts or chattel paper.