The effectiveness of an exception to coverage is limited by:
a. strictly interpreting the exception to coverage against the insurer.
b. placing on the insurer the burden of proving that the exception applies.
c. both a. and b.
d. neither a. nor b., since exceptions to coverage are not generally permissible.
Computer programs are subject to protection in the U.S. under:
a. copyright laws.
b. patent laws.
c. trade secret laws.
d. all of the above.
Which of the following is NOT a common law crime?
a. Larceny
b. Robbery
c. Blackmail
d. Arson
To ensure that audit partners do not become entrenched, Sarbanes-Oxley requires audit
firms to change audit partners at least once every __________ years.
a. three (3)
b. five (5)
c. seven (7)
d. ten (10)
Under Article 2 of the UCC, in a situation where it is clear that the parties intended a
contract, but a term in the acceptance conflicts with a term in the offer:
a. there is no contract.
b. the acceptance is viewed entirely as a counteroffer.
c. there is a contract for the terms of the offer and acceptance that are consistent, but the
conflicting terms cancel out.
d. there is a contract, and the conflicting term in the offer is part of the contract.
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. all of the above.
When a buyer assigns the right to goods under a contract, the buyer’s liability to make
payment to the seller is:
a. transferred to the third party.
b. terminated.
c. still in effect.
d. shared equally with the third party.
Which method of payment gives the buyer credit by postponing the time for payment?
a. a promissory note
b. a check
c. a draft
d. a certified check
A financing statement must provide:
a. the name of the debtor.
b. the name of the secured party or their representative.
c. the covered collateral.
d. all of the above.
The situation in which an individual impersonates the holder of a savings account and,
by presenting a forged withdrawal slip to the savings bank, receives from the bank a
check payable to the bank’s customer, is covered by the:
a. impostor rule.
b. negotiation rule.
c. assignment rule.
d. bank rule.
Perjury occurs:
a. only in federal court.
b. only in written form.
c. only in state courts.
d. none of the above.
The Telephone Consumer Protection Act prohibits:
a. automated marking calls without prior express consent.
b. calls to patients’ room in hospitals.
c. calls after 9:00 PM.
d. all of the above.
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.
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.
If the trustee breaches the trust, which of the following remedies might be available?
a. a money judgment
b. an injunction
c. a criminal prosecution
d. all of the above
The registration requirement of the Securities Act of 1933 applies to:
a. the issuing of stocks, bonds, and other investment securities.
b. the issuing of certificates of deposit by a national bank.
c. shares issued by nonprofit corporations.
d. issues of $1.5 million or more.
John owed Barney money. Barney called John’s home several times per day for five
weeks asking for repayment, with some of the calls coming after midnight. Barney
might be liable for:
a. defamation.
b. wrongful interference with a contract.
c. intentional infliction of emotional distress.
d. trespass.
When there is no consideration for a promise, the agreement is:
a. a quasi contract.
b. equitable.
c. not binding.
d. unethical.
Real property includes:
a. land.
b. shrubs, grass and tress.
c. rights in the land of another.
d. all of the above.
Once goods have been accepted:
a. the buyer may never revoke that acceptance.
b. the buyer may only revoke acceptance if the defect was known at the time of the
original acceptance.
c. the buyer may revoke acceptance without cause or reason.
d. none of the above.
What type of damages is recoverable when the defendant’s tortious conduct is
accompanied by fraud, malice, or willful or wanton conduct?
a. compensatory
b. consequential
c. nominal
d. punitive
The importance of trust as a fundamental principle underlying business transactions is
illustrated by expectations that:
a. investors will be able to earn a return on their investments.
b. employees may be discharged at any time for any reason without notice.
c. litigation is inevitable because parties to agreements usually break promises.
d. insider trading proves that the economic system underlying business is flawed.
Ordinarily, a promise to perform an existing legal obligation is:
a. not consideration.
b. binding if the promisor promises to perform with extra care.
c. binding if the promisor promises to perform to suit the personal satisfaction of the
promisee.
d. binding if the promisee would experience substantial loss due to breach of the
promise.
Rights guaranteed in the United States Constitution:
a. cannot be taken away by statutes or court decisions.
b. can be taken away by statutes.
c. can be taken away by court decisions.
d. can be taken away by local ordinances.
Certification of a check at the request of a holder:
a. releases all prior secondary parties.
b. releases the drawer but not prior indorsers.
c. releases prior indorsers, but not the drawer.
d. does not release all prior secondary parties.
V3 was a successful singing group that contracted to perform at the “Metalsubstance”
rock concert. V3 was aware that the promoter would sustain a substantial loss if the
group failed to perform. The members of the group were stricken with a virus that
confined them to their beds. The promoter sued for breach of contract. What is the
probable result?
a. V3 is liable for damages for breach of contract.
b. The contract was discharged by impossibility of performance.
c. In order to avoid liability for breach of contract, V3 must arrange for another group
of comparable quality and reputation to perform on the scheduled date.
d. V3 will be deemed to have substantially performed the contract.
What is not a correct statement concerning promoters?
a. Promoters are generally active before the corporation is formed.
b. Two (2) or more promoters are required to form a corporation.
c. Promoters are fiduciaries with respect to the corporation and its shareholders.
d. Promoters are liable for any torts that they commit while promoting the corporation.
Dissolution of a partnership:
a. always means that the business has ended.
b. increases the authority of the partners.
c. both a. and b.
d. neither a. nor b.
Under the U.S. Constitution:
a. “persons” are expressly protected.
b. particular rights of “persons” are expressly protected.
c. certain rights of “persons” have been implied by the Supreme Court.
d. both b and c.
Which of the following parties has the power to bind an organization to a contract?
a. A soliciting agent for the organization.
b. A contracting agent for the organization.
c. A sales agent for the organization.
d. None of the above.
Maria intentionally attempts to have Patty break a contract with Alfred. Maria will be
liable under which theory of tort?
a. Libel
b. product disparagement
c. contract interference
d. intentional infliction of emotional distress
To bring a tort action for malpractice, a plaintiff must show that the defendant’s breach
was at least:
a. intentional.
b. negligent.
c. reckless.
d. fraudulent.
Under which of the following scenarios would a third person be able to successfully sue
a corporate manager if the manger’s advice to the corporation causes loss to the third
person?
a. The manager’s advice has resulted in the corporation’s successful underselling of the
third person’s product.
b. The manager’s advice has resulted in the corporation’s breach of a contract with the
third person under which the corporation was losing a substantial sum of money.
c. The manager’s advice has resulted in the corporation’s refusal to deal with the third
person because the third person has not maintained the standards and quotas set by the
corporation.
d. none of the above.
The formation of contracts in cyberspace is governed today largely by:
a. international contract law principles.
b. traditional contract law principles.
c. federal contract law principles.
d. uniform state laws.
If not an offer, the first statement made by one of two persons is most properly termed
a(n):
a. option.
b. acceptance.
c. invitation to negotiate.
d. contract.
All bailments are created equally.
Fees charged by a lender for the reasonable expense of making a loan, such as the cost
of appraising property, are treated as interest for purposes of the usury law.
By virtue of an agency, one person can make contracts at numerous places with many
different parties at the same time.
An express warranty can be disclaimed even if it was a critical part of the bargain to the
buyer.
With respect to property expressly entrusted to a hotelkeeper’s care, the hotelkeeper has
a bailee’s liability.
A note or memorandum does not have to contain all the essential terms of the contract
to be valid.
All of the directors of the XYZ Corporation were present at a meeting called on a
Monday evening at 9 p.m. Meetings normally were held on Friday evenings at 6 p.m.
At the Monday meeting, a report was made indicating that an agent of the corporation
was having difficulties formalizing a contract in a foreign country. The report indicated
that if funds were made available to a local political figure, the contract the company
desired would be obtained. The directors unanimously voted to forward the necessary
funds for this operation to the agent. An action was later commenced against the
directors, alleging illegal activities. In response, the directors argue that: (1) no illegal
activity had occurred; (2) if an illegal activity did occur, it was not at a valid meeting of
the corporation and was therefore not an official action of the board; and (3) if they had
to legally defend themselves, they would seek reimbursement from the corporation.
Discuss the directors’ contentions.
It is necessary to the creation of an express warranty that the seller use formal words
such as “warrant” or “guarantee.”
Contribution is the right of a co-obligator to demand that other obligator(s) pay their
fair share of the debt.
Al was a well-respected attorney in a small town. A couple retained Al to represent
them on the purchase of a home. Before closing, Al informed the couple of payments
that they were required to make by check at the closing. Among the required payments
the attorney told the couple to make were a check for $1,500 to Bob Brown and a check
for $610 to Susan Lee. The attorney explained that the check to Brown was for a survey
of the property and the check to Lee was for termite control work that the couple had
authorized.
The checks were issued and taken by Al who promised to deliver them. Al did not,
however, deliver them. Instead, Al forged the indorsements of the respective payees and
cashed the checks. When Al was later arrested on a similar matter, the couple learned
what had happened.
The couple made a claim against its bank for reimbursement, claiming the bank was not
authorized to pay these checks because they had not been effectively negotiated to the
bank. When the facts came to light, no person named Bob Brown had done a survey on
the property, but the termite work had been done by Lee. Decide both cases.
A revocation of an offer is ordinarily effective only when it is communicated to the
offeree.
Tom Creighton hired Destroy, Inc., a demolition company, to level an old building on a
busy downtown lot. Destroy, Inc. was given full rein to decide on the amount of
explosives needed and the placement of the charges. Security for the site on the day of
the explosion was contracted out to a private security firm. When the appointed day
arrived, the building was brought down. However, the building fell in a slightly
different direction than that anticipated by Destroy, Inc. Numerous pieces of adjoining
property, both real and personal, were severely damaged. Creighton claims that the use
of an independent contractor such as Destroy, Inc. has insulated him from liability. How
do you respond to Creighton’s claim?
A majority action of partners is not binding if it contravenes the partnership agreement.
The tort of false imprisonment requires the detention of a person without his or her
consent.
Partnership agreements allow individuals to conduct their business without the
requirement of a formal organizational structure.
A buyer may revoke acceptance because of a seller’s failure to complete promised
repairs.
By operation of law, the trustee automatically becomes the owner of all of the debtor’s
property in excess of the property to which the debtor is entitled under exemption laws.
A holder through a holder in due course is subject to limited defenses.
The SEC has accused the Acme Company of fraud in connection with the sale of its
securities to American citizens. Although the firm is American-owned, it is located in
Switzerland. All of the accounts and business records of the firm are in several Swiss
banks. The SEC has been actively pursuing the case, although it has not been able to
provide a great deal of hope for those victimized by the fraud. What factors are
probably hindering the SEC, and how might this be handled?
Upon acceptance of a subscription after incorporation, the subscriber immediately
attains the rights, privileges, and liabilities of a shareholder, even though the subscriber
has not paid any of the purchase price.