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
What is not a correct statement concerning the Fair Debt Collection Practices Act?
a. It prohibits improper practices in the collection of consumer debts.
b. It applies to all persons who are collecting debts for others.
c. It imposes liability on debt collectors who violate the law.
d. Despite the fact that a debtor owed the money that the agency was trying to collect,
the agency may violate the law.
Thelma purchased from Hall a used truck that had been manufactured by International
Harvester. To work on the truck engine, Thelma had to have the cab of the truck raised.
When it was so raised, the cab fell unexpectedly and fatally injured Thelma. Suit was
brought for her wrongful death against Hall and International Harvester. The suit was
based on theories of negligence, strict tort liability, and breach of warranty. The defense
was raised that there was no liability because the sale to Thelma had been made “as is”
and the truck was a used truck. Were these defenses valid?
When a seller sells on credit and is given a security interest in the goods, that interest is
called:
a. a purchase money security interest.
b. a future transaction.
c. a floating lien.
d. none of the above.
Beatrice withdrew from a partnership but failed to notify any of the other partners
except Tom, who did not have an opportunity to notify the other partners. Simultaneous
to Beatrice’s notifying Tom, Susan, another member of the partnership, made an
authorized contract with a third party. Regarding that contract made by Susan, Beatrice
is:
a. not bound because she had withdrawn from the firm.
b. bound because she failed to notify Susan of her withdrawal.
c. not bound because withdrawal from the partnership caused its dissolution.
d. bound because one may not withdraw from a partnership without the consent of one’s
partners.
A minor cannot avoid a contract to purchase a car if the:
a. car has been destroyed.
b. car has been damaged.
c. car is used for non-commercial purposes.
d. minor is able to return the car but does not do so.
Equipment attached to a rented building by a tenant and used in business is:
a. called a trade fixture.
b. not ordinarily removable by the tenant.
c. called a commercial fixture.
d. called a business fixture.
If an offeree dies before the offer has been accepted, the offer:
a. may be rejected by the surviving spouse of the offeree.
b. may be accepted by the surviving spouse of the offeree.
c. is automatically revoked by the death of the offeree.
d. may be accepted by the guardian appointed for any minor children of the offeree.
Which of the following debts is not dischargeable in bankruptcy?
a. judgments based on negligence
b. judgments based on breach of contract
c. judgments for willful and malicious injuries
d. judgments in which the creditors would receive no distribution
Statements or declarations of an agent:
a. will not bind the principal.
b. will bind the principal if the statements were made by an agent while transacting
business within the scope of agency authority.
c. will not bind the principal if made after performance of the transaction concerned.
d. none of the above.
Garnishment applies to the judgment debtor’s:
a. wages.
b. attorney fees.
c. land and home.
d. cars.
When a debtor makes a payment to a creditor specifying how it should be applied, the
creditor must apply the payment:
a. as directed by the debtor.
b. to the oldest outstanding debt.
c. to the most recent outstanding debt.
d. to the largest outstanding debt.
The death or disability of a party to a contract discharges the contract when:
a. personal services requiring peculiar skill are involved.
b. the payment of money is involved.
c. a house is to be painted.
d. none of the above.
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
A shopkeeper may lose the shopkeeper’s privilege if:
a. the customer is kept an unreasonable amount of time.
b. the shopkeeper acted with reasonable suspicion.
c. the shopkeeper acted with -necessary force.
d. all of the above.
In determining whether a partnership exists, which of the following factors is not
evidence of a partnership?
a. shared profits
b. co-ownership of property
c. equal control of the business
d. shared losses
A(n) __________ is a negotiated disposition of a matter before an administrative
agency, generally without public sanctions.
a. formal settlement
b. informal settlement
c. judicial verdict
d. quasi-judicial verdict
A shareholder has:
a. an absolute right to dividends.
b. a right to dividends when declared.
c. a right to insist that dividends be declared.
d. to share equally all dividends with fellow shareholders.
The concept of imposing liability for the fault of another is known as __________
liability.
a. imperious
b. gregarious
c. vicarious
d. virtual
An automatic stay:
a. arises only upon the filing of a voluntary petition.
b. prevents any further interest from accruing on a debtor’s outstanding debts.
c. prevents creditors from taking action outside of the bankruptcy proceeding against a
debtor.
d. ends if a debtor attempts to incur additional debt after a petition has been filed.
If oral, a stop payment order is binding on the bank for __________ days unless
confirmed in writing within that time.
a. five (5)
b. seven (7)
c. fourteen (14)
d. thirty (30)
Consumers have the responsibility to examine periodic statements provided by their
financial institutions; accordingly, 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 law to declare war:
a. can be enacted by both state and federal governments.
b. can be enacted only by the U.S. government.
c. can be enacted only by state governments. d. is prohibited by the U.S. Constitution.
The issuer of a letter of credit:
a. is obligated to honor drafts drawn under the letter if the conditions specified in the
letter have been met.
b. has no duty to verify that the papers are properly supported by facts.
c. has no duty to verify that the underlying transaction has been performed.
d. all of the above.
A landlord who continuously accepts late rental payments without collecting the late fee
provided in the lease:
a. waives the late fee.
b. will collect the late fee at a later date.
c. is ignorant of the late fee.
d. allows the tenant to repudiate the lease.
Parol evidence may be admissible to:
a. contradict a complete written contract.
b. prove the modification or termination of a contract.
c. replace the statute of frauds.
d. create a contract.
The party who writes or creates a promissory note is called the:
a. payee.
b. drawee.
c. drawer.
d. maker.
An agent’s implied authority to perform any act reasonably necessary to execute express
authority is called __________ authority.
a. express
b. customary
c. apparent
d. incidental
Valid restrictive covenants will bind future owners of the land if:
a. they are published in the Federal Register.
b. there is a notation in the deed referencing the restrictive covenants.
c. they are published in a newspaper of general circulation.
d. they are filed with the attorney general of the state in which the land is located.
Which of the following powers is not reserved solely to the national government?
a. power to regulate interstate commerce
b. power to tax
c. power to coin money
d. power to borrow money on the credit of the United States
Under the RMBCA, a preincorporation subscription agreement is irrevocable for six (6)
months unless the subscription agreement provides a longer or shorter period, or all of
the subscribers agree to revocation.
In a residential lease, it is commonly held that there is an implied warranty of
habitability.
A security interest may be possessory or nonpossessory.
The Securities Act of 1933 prohibits the offering or sale of securities to the public in
interstate commerce before a registration statement has been filed with the Securities
and Exchange Commission (SEC).
When a buyer wrongfully rejects goods, the seller may cancel the contract.
The Anderson Balloon Company of Detroit entered into a contract with Johnson’s
Novelty Shop of Des Moines to sell 1,000 balloons to Johnson’s. The contract provided
that the balloons were to be manufactured in accordance with Johnson’s specifications.
The contract further provided that the balloons would be shipped to Johnson’s. The
balloons were damaged while in transit from Detroit to Des Moines. Johnson’s has sued
Anderson for damages. Will Johnson’s win?
A shareholder may make an absolute transfer of stock or may transfer it merely as
collateral to secure the payment of a debt.
A trust may be terminated by its own terms.
A written authorization of agency is called a power of attorney.
An employer has a ‘shop right” to use an invention of an employee without payment to
the employee if the invention was made during working hours with the employer’s
material and equipment.
A person who attends a banquet given at a hotel is considered a guest for purposes of
determining the liability of the hotelkeeper.
For a principal to ratify the actions of an agent, all that is necessary is that the principal
express the intention to ratify.
Roberta, an educated person, purchased real estate from Maurice. Roberta did not read
entirely the contract that she signed. As a result, she did not notice the provision in the
contract about the interest imposed on the unpaid portion of the purchase price. She
refused to pay the interest specified in the contract. Maurice sued her. Could he
recover?
The rights of the mortgagor after default include the right to obtain a stay of foreclosure
to prevent undue hardship and a right of redemption.
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?
Robertson and Enrickson prepared an agreement to enter into a partnership. Both of the
partners realized that outside capital was needed for the firm to begin operations;
however, they also realized that their individual and combined credit ratings would not
attract sufficient funds. In order to improve the new partnership’s ability to attract
investment capital, and with the approval of Enrickson, Robertson added his friend
Thompson’s name to the partnership agreement. Thompson, a well-known personality
from a family of means, was not asked to be a partner and knew nothing of Robertson’s
and Enrickson’s actions. Upon seeing Thompson’s name on the partnership agreement, a
local bank readily agreed to advance Robertson and Enrickson the total sum required to
begin operations. The partnership has now failed, and the bank would like to hold
Thompson, Robertson and Enrickson liable for the amount of the loan. Will the bank
recover from Thompson, Robertson and Enrickson?
Licensees are on the premises with the permission of the landowner.
Defamation in cyberspace requires the plaintiff to show the same elements as are
required under traditional defamation law, but the potential for larger damage awards
may be much greater for defamation in cyberspace.