Gary mails an offer to Brian on June 15. Brian receives the offer on June Gary mails a
revocation of the offer on June 17. Brian mails a letter of acceptance on June 18 and
Gary receives the acceptance on June 20. Brian receives the revocation on June 19. Was
a contract formed?
a. Yes, on June 16
b. Yes, on June 18
c. Yes, on June 20
d. No, the offer was revoked before acceptance
The Labor-Management Relations Act:
a. hampers employer free speech, although it encourages employee free speech.
b. is also known as the Taft-Hartley Act.
c. prohibits union shops.
d. specifies certain employer activities as unfair labor practices.
A certificate of deposit differs from a promissory note in that, with a certificate of
deposit:
a. the maker is always a bank.
b. there are three parties to the transaction.
c. the payee of a CD must be paid on demand.
d. a writing is required.
Which of the following are directors in publicly held corporations?
a. Inside directors
b. Outside directors
c. Affiliated directors
d. Unaffiliated directors
e. Any of the above
Regarding trademark protection:
a. an applicant must have actually used the mark in commerce or demonstrate a bona
fide intent to use the mark in commerce and actually use it within six months, which
period may be extended.
b. an owner may abandon the mark through non-use and lose protection.
c. will be presumed to have abandoned the mark after two years of non-use.
d. All of the above.
e. Both (a) and (b) are true.
Which of the following is untrue regarding professional corporations?
a. State statutes permitting professional corporations all apply only to specified
professions.
b. All states have statutes which permit the practice of professions by duly licensed
individuals in the corporate form.
c. There is a supplement to the MBCA which deals with professional corporations.
d. Professionals may avoid personal liability for corporate debts by incorporating.
Mr. Homayer hired Blake Painters to paint his house. Blake decides it has too many
jobs and delegates the duties to the Andrews Company. Andrews does a poor job, and
drips paint on the Homayers’ flowers and windows. Mr. Homayer:
a. can sue both Blake and Andrews.
b. can sue Blake, but he cannot sue Andrews.
c. can sue Andrews, but he cannot sue Blake.
d. cannot sue, because he has accepted the benefits of the assignment.
The time for conveyance of a deed is called the:
a. zoning meeting.
b. closing.
c. title search.
d. recordation.
The intentional dispossession or unauthorized use of the personal property of another is
known as:
a. conversion.
b. trespass to personal property.
c. fraud.
d. stealing.
A court may confirm a Chapter 11 plan of reorganization that is not accepted by all
classes of creditors if:
a. the court determines the plan does not discriminate unfairly and the plan is fair and
equitable.
b. the plan does not provide for less than the amount the nonaccepting class bargained
for.
c. the court determines that it is the only feasible plan, even if it is not accepted by any
classes of claims.
d. the plan includes the creditors’ rights in a logical manner.
Which of the following is true regarding identification of the goods under Article 2?
a. Only the buyer can identify the goods.
b. Identification of existing goods gives the buyer a special property interest.
c. Fungible goods are identified when the seller separates the contracted units from the
whole.
d. All of the above are correct.
Harry bought preferred noncumulative stock on which there were no dividends declared
for the year. The dividends that were not declared for the year will:
a. be paid the next year.
b. be paid upon the next declaration of dividends.
c. be paid out of the common stock dividend fund.
d. not be paid.
Which of the following would be an indorsement in trust?
a. Pay Donna for Alice
b. Pay Donna for account of Alice
c. Pay Donna as agent of Alice
d. All of the above are indorsements in trust.
Stewart entered into a contract with Will to have Will build a 10-unit apartment
complex on Elm Street in Randolph County. Unknown to both parties, this land had
recently been rezoned and only single-unit dwellings can be constructed.
a. This is a mistake of law.
b. This is a mutual mistake of fact.
c. Stewart is obligated to buy land elsewhere and have the complex constructed on
property zoned for apartments.
d. Will is liable to Stewart since Will is a contractor.
Growingreen, a gourmet fresh food store, orders 100 lbs. of peaches from Western
Fruits “on approval.” Growingreen has never dealt with Western before this transaction.
Since it only sells the highest quality fruits, Growingreen asked for and received these
special terms. The peaches arrived on Saturday, but the owners of Growingreen were
too busy to open the crates. Sunday they are closed. Monday at 4 p.m., they opened the
boxes and inspected the peaches. They did not meet the high standards of Growingreen,
so they nailed the crates shut and ordered a truck to return them the next day. They
arrived at Western on Thursday, totally spoiled, a week after they were sent. This is the
first time Western knew they were not being accepted. Who is responsible for the
damages to the peaches?
a. Growingreen, since it did not, within a reasonable time, notify Western of its election
to return the peaches
b. Growingreen; the risk of loss was on them when the peaches arrived
c. Western, since they retained the risk of loss until approval
d. Western, because they agreed to take the goods back
Dickens Corporation, incorporated in Delaware, opens a warehouse in a western state
from which it ships goods. If Dickens does not have a certificate of authority to do
business within the western state:
a. it will face no sanctions or penalties.
b. the corporation may face a fine.
c. the corporation’s officers and directors may be held personally liable on contracts
made within the state.
d. Both (b) and (c).
The failure by an applicant to disclose material facts that an insurer does not know but
has a right to know is called:
a. misrepresentation.
b. concealment.
c. waiver.
d. fidelity.
Which of the following items would be patentable?
a. A distinctive variety of an asexually reproducing plant
b. A textbook
c. The theory of relativity
d. A computer program
If Terry makes tender offer to the owners of Pizza Village registered stock, he must file
a statement with the SEC if he:
a. owns 1% of Pizza Village stock.
b. will, after the acquisition, own 5% of all Pizza Village stock.
c. will, after the acquisition, own more than 5% of one class of Pizza Village voting
stock.
d. will own more than half the stock in all classes.
Which of the following is INCORRECT regarding zoning?
a. Zoning can be used to regulate private property, but not to “take” it.
b. A variance permits an otherwise impermissible use of the property.
c. A zoning ordinance needs no reasonable relationship to public health, safety, or
morals to be upheld.
d. A nonconforming use may be permitted where property was so used prior to adoption
of the zoning ordinance.
Alice says to Brian, “If I decide to buy a word processor next year, I will buy it from
you.” This is an example of:
a. an illusory promise.
b. past consideration.
c. the pre-existing duty rule.
d. good consideration.
The bankruptcy court may dismiss a:
a. Chapter 7 case, or in a case filed by an individual debtor whose debts are primarily
consumer debts, may with or without the debtor’s consent convert the case to a Chapter
11 or 13 case.
b. Chapter 7 case for cause after notice and a hearing.
c. Chapter 11 case for cause without notice and a hearing.
d. Chapter 13 case under no circumstances.
e. All of the above.
Under the Age Discrimination in Employment Act (ADEA), which of these defenses
are available?
a. A bona fide occupational qualification
b. A bona fide seniority system
c. Any reasonable action
d. All of the above
e. (a) and (b), but not (c)
The City of Chicago would best be described as which of the following?
a. A corporation formed pursuant to the Model Business Corporation Act
b. A close corporation
c. A public corporation
d. A domestic corporation
Another name for an indictment is a(n):
a. true bill.
b. arraignment.
c. information.
d. preliminary hearing.
Edie telephoned the office supply store and agreed to buy a dozen boxes of CDs at $23
each. She then realized what a good buy this was and called the store with a request to
modify the contract to read two dozen boxes. What is the consequence?
a. The modified contract is unenforceable.
b. The modified contract is void.
c. The modified contract is valid and enforceable.
d. There is no consideration, so the contract is void.
A promoter is personally liable on contracts made by him in the name of the unformed
corporation:
a. even if the corporation adopts the contract.
b. only until the corporation is formed.
c. if the promoter, the third party, and the corporation enter into a novation substituting
the corporation for the promoter.
d. only if the corporation is never formed.
In a typical situation in which the FTC discovers a potentially deceptive practice, the
FTC:
a. obtains a cease and desist order immediately, before any more damage is done.
b. investigates, files a complaint, and has a hearing in front of an ALJ.
c. requests a court hearing in the local federal trial court.
d. investigates and, if warranted, brings the matter before the five-member commission
for issuance of a mandatory safety standard.
Mr. and Mrs. Weaver have a duty to:
a. control the behavior of their minor son with regard to foreseeable risks.
b. merely warn their dependent son regarding his activities related to third persons
involving foreseeable risks.
c. Either (a) or (b), depending upon the circumstances.
d. use reasonable care under the circumstances to third persons with regard to
foreseeable risks that arise within the family relationship no matter what their son’s age.
Delivery alone is insufficient to negotiate an instrument when it is payable to:
a. order and the last indorsement is in blank.
b. cash and signed by the drawer.
c. bearer and is not indorsed.
d. the order of John Jones and is not indorsed.
The minimum number of board members necessary to be present at a meeting in order
to transact business is known as:
a. a plurality.
b. the entire board of directors.
c. a quorum.
d. a minority.
Max buys shares of newly issued Z Corp. stock for $10 per share and pays $1,000 cash,
a car worth $2,000, and a promissory note for $5,000. Under traditional corporate law,
followed in about half of the states, how many shares of stock could Max validly buy?
a. 100
b. 300
c. 800
d. 600
What do shares of equity securities confer on their owner in regard to interest in the
corporation?
a. Right to participate in control
b. Right to participate in earnings of the corporation
c. Right to participate in residual assets of the corporation upon dissolution
d. All of the above
Bill is the accountant for Cheatam and Sons Co. For many years he has kept two sets of
books, one with real figures and another with figures he uses when the IRS audits.
When Bill, while working on Cheatam’s books, is arrested for fraud, what will happen
to the books?
a. They are privileged communications and therefore inadmissible as evidence against
Bill.
b. They are protected by the Fifth Amendment and therefore are inadmissible.
c. They may be admitted as evidence since the Fifth Amendment does not protect
business records.
d. They may be admitted as evidence only if Bill consented to a search of his offices.
The doctrine of corporation by estoppel is distinct from that of corporation de facto;
estoppel does not create a corporation.
The spoken threat, “If you don”t give me your billfold and keys, I”ll shoot you,” cannot
be an assault since it only involves words.
A unilateral mistake of fact is ordinarily grounds for avoiding a contract.
Lost profits can never be recovered as damages since they are speculative and cannot be
established with reasonable certainty.
Once a shareholder sells the stock of the corporation, since the ownership of the
corporation changes, a new corporation is formed.
Sally goes away to college at 17, lives on her own, and pays her own rent and electric
bills. If she makes a contract to buy a television set, in most jurisdictions, she may
assert her minority status and set aside the contract.
A corporation has no constitutional protection against unreasonable searches and
seizures.
Consequential damages include lost profits and injury to person or property resulting
from defective performance.
The shelter rule existed at common law.
The surety, as defense to payment, may assert a principal debtor’s defense of minority.
Edna, Elsa, and Ellen are sisters who own 500 acres of land as tenants in common.
Discuss the interest each has in the real estate.
A limited partner has limited access to the books and records of the partnership.
A totten trust may also be referred to as a savings account trust.
A spouse of a beneficiary and the named executor of a will are considered qualified
witnesses by all courts.
A dissenting shareholder can stop a merger or consolidation.