Under the Revised Uniform Limited Partnership Act, a limited partner probably will not
lose the protection of limited liability when the limited partner:
a. becomes a contractor for, or an agent or employee of, the limited partnership or of a
general partner.
b. consults with and advises a general partner regarding the partnership business.
c. votes on partnership matters, such as dissolving and winding up the limited
partnership or removing a general partner.
d. all of the above.
A limited liability partnership must include which of the following terms in its name?
a. LLP
b. limited liability partnership
c. either a. or b.
d. neither a. nor b.
The tort statutes of limitations tend to be __________the UCC statute of limitations.
a. shorter than
b. longer than
c. equal to
d. excluded by
The law could best be described as:
a. only statutory in nature.
b. only the creation of our courts.
c. a collection of rights.
d. none of the above.
The unauthorized use of a computer belonging to someone else is:
a. a crime in all states.
b. a crime in some states.
c. not a crime in any state.
d. a crime under federal law only.
Section __________ of the Sherman Act applies to agreements, conduct, or
conspiracies to restrain trade, which can consist of price-fixing, typing, and
monopolization.
a. A
b. B
c. 1
d. 2
The rules and regulations enacted by a corporation to govern the affairs of the
corporation and its shareholders, directors and officers are called:
a. articles of incorporation.
b. corporate management agreements.
c. bylaws.
d. articles of organization.
When an accountant negligently prepares a financial statement knowing that the client
intends to use it in obtaining a loan from a bank, the accountant will be liable to
whichever lender actually makes the loan under the __________rule.
a. known user
b. contact
c. foreseeable user.
d. privity
The main thrust of the quasi contract is to:
a. encourage the making of written contracts.
b. prevent enrichment.
c. compensate those who voluntarily help others.
d. prevent unjust enrichment.
Jack sells Jim a used car that Jack falsely described as having been driven only 12,000
miles. Fraud has occurred if:
a. Jim bought the car solely because of its color.
b. Jim knew that the mileage was more than 12,000 miles.
c. Jim relied upon Jack’s statement.
d. Jack is a merchant.
The types of civil cases that can be brought in federal district courts include:
a. cases in which any state in the United States is one of the parties .
b. cases between citizens of different states that involve damages of $75,000 or more.
c. cases brought by the citizen of one state against the state government of the same
state.
d. all of the above.
For a bilateral contract to be enforceable there must be:
a. mutuality of obligation.
b. an illusory promise.
c. forbearance.
d. adequacy of consideration.
Pasquale and Paul were sureties on the debt of Rose. Each had a $100,000
responsibility. Upon Rose’s default, Pasquale paid $50,000 to the creditor. How much
may Pasquale recover from Paul under the concept of contribution?
a. Zero
b. $50,000
c. $10,000
d. $25,000
Under Regulation D, Rule 506, sales may be made to:
a. an unlimited number of accredited investors
b. an unlimited number of unaccredited investors
c. no more than 500 accredited investors
d. no more than 35 unaccredited investors
Which of the following is not consideration for a present promise?
a. a good faith adjustment
b. compromise and release of claims
c. the promise to pay one’s child support obligation, consistent with a pre-existing court
order.
d. the performance of a requested act
Odometer fraud laws:
a. impose the same standards on both private sellers and auto dealers.
b. allows the buyer to collect twice the actual loss from the fraud.
c. limits the total loss the buyer can collect to $1,500.
d. all of the above.
When a contract proves to be a bad bargain:
a. the injured party is never bound by the terms of the contract.
b. courts will always imply terms that are necessary to avoid hardship.
c. parties are generally still bound by the terms of the contract.
d. the contract must be rewritten.
_______ occurs when a bank is able to require the debtor account holder to clear all
transactions in that account.
a. Control
b. Perfection.
c. Termination
d. Redemption
Personal property that is attached to the earth or placed in a building in such a way or
under such circumstances that it is deemed part of the real property is called a(n):
a. asset.
b. estate.
c. easement.
d. fixture.
Which of the following is not a suretyship defense?
a. statute of limitations
b. performance of the obligation by the principal debtor
c. creditor substitution of the original debtor with a new one
d. insolvency of bankruptcy of the principal debtor
It is expected that in the future, the limited liability company will in many instances
replace which of the following forms of business ownership?
a. the general partnership
b. the limited partnership
c. the close corporation
d. all of the above
In interpreting an ambiguous contract, one part of the contract:
a. must be viewed in isolation.
b. must be viewed as a condition.
c. must be viewed in connection with the rest of the contract.
d. must be viewed as indicating joint and several liability.
Consumers have the responsibility to examine periodic statements provided by their
financial institutions. If a loss would not have occurred but for the failure of a consumer
to report within __________ of the transmittal of the statement any unauthorized
transfer, the loss is borne by the consumer.
a. fourteen (14) days
b. thirty (30) days
c. sixty (60) days
d. six (6) months
A hotelkeeper’s lien on the baggage of a guest is terminated when:
a. the guest checks out of the hotel.
b. the guest pays the hotel bill in full.
c. the hotelkeeper posts a notice to limit liability.
d. all of the above.
The RMBCA provides that, absent a conflicting provision in the articles of
incorporation, directors may be removed:
a. with or without cause by a majority vote of the shareholders.
b. with cause by a majority vote of the shareholders, and without cause by a unanimous
vote.
c. with or without cause by a unanimous vote of the shareholders.
d. only with cause.
The standard statute of frauds:
a. requires full disclosure in the case of consumer sales on credit.
b. requires a seller of real estate to obtain a broker’s license.
c. specifies the punishment of perjury.
d. requires that a contract for the sale of land be evidenced by a writing.
Fraud in factum:
a. occurs when a person is persuaded to execute an instrument because of fraudulent
statements.
b. occurs when a person signs an instrument as a result of being fraudulently deceived
regarding essential terms.
c. is not a universal defense.
d. cannot be raised against a holder in due course.
Ordinarily, a temporary impossibility __________ the duty to perform.
a. suspends
b. excuses
c. discharges
d. none of the above
Original jurisdiction courts are generally ____________.
a. supreme courts
b. appellate courts
c. trial courts
d. limited courts
A corporation may sue a director owning more than ten (10) percent of any class of
corporate stock who makes a profit by selling any such stock:
a. if the sale is made more than six (6) months after the original purchase of the stock
by the director.
b. only if the stock was originally acquired with fraudulent intent.
c. only if the stock was sold with fraudulent intent.
d. if the sale was made less than six (6) months after the original purchase of the stock
by the director.
If a liquidated damages clause demands an unusually large sum that is not related to
reasonably-anticipated actual damages, the clause will be held to be void as a(n):
a. penalty.
b. unliquidated damages clause.
c. Extortion
d. Blackmail
A __________ insider is someone retained by the corporation for professional services,
such as an attorney, accountant, or investment banker.
a. professional
b. corporate
c. temporary
d. virtual
A holder is a party in possession of an instrument that “runs” to him. An instrument runs
to a party if it is:
a. payable to his or her order.
b. bearer paper.
c. indorsed to him or her.
d. all of the above.
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.
A sales agreement that does not satisfy the statute of frauds is:
a. a quasi contract.
b. criminal.
c. unenforceable.
d. unlawful.
The Fourth Amendment warrant requirement does not apply to businesses.
To be effective, checks must be executed on forms that are printed expressly for that
purpose and issued by a bank or other financial institution.
It is necessary to the creation of an express warranty that the seller use formal words
such as “warrant” or “guarantee.”
A corporation is a separate legal entity capable of owning property, contracting, and
being sued in its own name.
When improper collection methods are used, it is no defense to the creditor that the
improper acts were performed by an agent, an employee, or any other person acting on
behalf of the creditor.
Court decisions and statutes can take away rights created by the United States
Constitution.
In most states, promises made to another based on moral obligation lack consideration
and are not enforceable.
A surety that has made payment of a claim for which it was liable as surety is not
entitled to indemnity from the principal debtor.
When a party expressly declares before the time for performance arrives that the
contract will not be performed, such a declaration is called an anticipatory repudiation.
Because nonprofit corporations have a more restricted range of powers than business
corporations, actions not authorized by the charters of nonprofit corporations are more
likely to be found ultra vires.
Individuals can seek criminal and civil penalties against those who violate consumer
protection statutes.
A unilateral mistake as to a fact does not affect the contract when the mistake is
unknown to the other contracting party.
The United States Supreme Court can never function as a court of original jurisdiction.
John was driving his car in a careless way, failing to drive as a reasonably prudent
person would under the driving conditions. Ramona was crossing the street in a careless
way, failing to cross as a reasonably prudent person would. John struck and injured
Ramona with the car John was driving. At trial, it was determined that John was 80
percent at fault and that Ramona was 20 percent at fault. The injuries sustained
amounted to $100,000. Explain how much, if any, recovery Ramona would receive in a
state that applies the contributory negligence rule. Do the same thing for a state that
applies the comparative negligence rule.
Morris made two purchases. He purchased his neighbor Cordelia’s typewriter and a
computer from Crazy Computers. Regarding the typewriter, Cordelia had bought it on
credit from Jack’s Typewriters. Cordelia had financed the purchase with Jack’s and
signed a promissory note and a security agreement covering the purchase. The creditor,
Jack’s, did not file a financing statement, relying on the concept of automatic perfection
for purchase money security interests in consumer goods. Morris was unaware of the
history of the typewriter. The computer was subject to a security interest in favor of
Country Bank, which had perfected its security interest by filing. Morris, by
coincidence, knew of this security interest when Morris purchased the computer.
Unfortunately, neither Cordelia nor Crazy Computers paid the secured creditors who
now seek to repossess the collateral from Morris. What will be the likely outcome of
this case?
In order for a bailment to be valid, the bailor must be the owner of the subject property.
A written will must be signed by the testator at the bottom or end of the will.
A limited partner may receive a share of the profits.