Sales of securities must occur within five days of registration.
a. True
b. False
Ryder and Sergei are partners in Timberline Gear, which sells mountain- and
rock-climbing equipment. Ryder manages the business. Unless the partnership
agreement states otherwise, Ryder is
a. entitled to compensation in proportion to his effect on the business.
b. entitled to compensation in proportion to his effort.
c. entitled to compensation in proportion to his capital contribution.
d. not entitled to compensation.
A mistake in value will rarely enable a party to a contract to avoid the contract.
a. True
b. False
Niche Stores, Inc., must hold a shareholders meeti
a. once a month.
b. once a year.
c. once every two years.
d. only when it is called by the board of directors.
Consumer Credit, Inc. (CCI), lends $1,000 to Joe. Kay acts as Joes surety. If Kay pays
the loan, she gets
a. any right that CCI had against Joe, but not a right to be reimbursed by Joe.
b. a right to be reimbursed by Joe, but not any right that CCI had against Joe.
c. any right that CCI had against Joe and a right to be reimbursed by Joe.
d. none of the choices.
Generally, contract doctrines apply to a landlord-tenant relationship.
a. True
b. False
Appraisal rights normally extend to regular mergers and consolidations.
a. True
b. False
Remedies of the agent for breach of duty by the principal arise out of contract and tort
law.
a. True
b. False
A patent and a copyright are examples of intellectual property, but a trademark is not an
example of intellectual property.
a. True
b. False
Peter offers to pay Quik Delivery (QD) $50 if it picks up and delivers to him a package
of business documents from Rico within thirty minutes. QD can ac-cept the offer only
by meeting the deadline. If QD performs as directed, these parties will have
a. a bilateral contract.
b. aquasi contract.
c. a unilateral contract.
d. no contract.
Orange Manufacturing Corporation (OMC) orders twelve job-training and on-the-job
safety DVDs from Plum Productions, Inc., which delivers the disks to OMCs plant.
This is most likely
a. a gift.
b. a lease of goods.
c. a sale of goods.
d. a service contract.
A corporation has perpetual existence in most states unless the ar-ti-cles of
incorporation state otherwise.
a. True
b. False
A minor has a reasonable time, after the minor reaches the age of major-ity, to disaffirm
a contract.
a. True
b. False
In most states, a director cannot be removed from a corporate board for a breach of
duty.
a. True
b. False
Iggy hires Joy to act as his agent to purchase Kup-a-Koffee Company. Iggy tells Joy to
reveal only that she is buying the firm on behalf of a third party, without telling
Kup-a-Koffees seller who that third party is. Iggy is
a. a disclosed principal.
b. an implied principal.
c. an undisclosed principal.
d. a partially disclosed principal
The initial board of directors of a corporation is normally elected at the first annual
shareholders meeting by a majority vote of the shareholders.
a. True
b. False
Precision Engineering Inc., like other corporations, is subject to laws that are broad in
their purpose and their scope. Compliance with these laws is not always sufficient to
determine “right behavior because
a. the law does not codify all ethical requirements.
b. company codes are also sources of law.
c. business decisions can have negative impacts.
d. ethical problems occur in business.
Generally, a state courts power is limited to the territorial boundaries of the state in
which it is located and the immediately adjacent states.
a. True
b. False
Restrictions on imports may include prohibitions.
a. True
b. False
Nina is a director of Omega, Inc. Under the standard of due care owed by di-rectors of a
corporation, Ninas decisions must be
a. ambiguous and questionable.
b. arguable and defensible.
c. informed and reasonable.
d. perfect and unassailable.
To rescind a contract, each party essentially advances to the position he or she would
have been in if the contract had been fully executed.
a. True
b. False
An assumption of risk defense does not require that a risk be voluntarily assumed.
a. True
b. False
Much of the material on the Internet, including software and database information, is
not copyrighted.
a. True
b. False
Words or terms in contracts that are subject to more than one reasonable interpretation
can lead to bilateral mistakes.
a. True
b. False
Jon writes a check to LocoMotion, Inc., as payment for a golf cart but soon discov-ers
the cart is broken. He goes to Fairway Bank, the drawee, and orally author-izes Lolly, a
bank officer, to stop payment on the check. This order is valid for
a. fourteen days.
b. fourteen months.
c. fourteen attempts to cash it.
d. fourteen subsequent “on-us items.
Like the bylaws of other corporations, the bylaws of Retail Sales, Inc.,
a. establish the operating name of the corporation.
b. establish the value and classes of corporate stock.
c. were adopted at its first organizational meeting.
d. were submitted for approval to the public official in charge.
Gert, an accountant, contracts to conduct an audit for Hailey. In performing the audit,
Gert fails to detect certain misconduct. Gert is most likely
a. liable if a normal audit would have revealed the misconduct.
b. liable if Gert issues a specifically qualified opinion.
c. not liable if Gert generally disclaims any liability.
d. not liable if the misconduct was due to Haileys negligence.
Dhani, an accountant for Eureka, Inc., learns of undisclosed com-pany plan-s to market
a new laptop. Dhani buys 1,000 shares of Eureka stock. He re-veals the company plans
to Fay, who buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100
shares. They know that Fay got her informa-tion from Dhani. When Eureka publicly
an-nounces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.Refer
to Fact Pattern 26-3. If Dhani is liable under the Securities Ex-change Act of 1934, it
will be because the infor-mation on which he based his purchase of Eureka stock was
a. a forward-looking forecast.
b. not material.
c. not yet public.
d. not yet true.
Mountain Mining Company, a U.S. firm, owns property in Bolivia. The government of
Bolivia seizes the property for an illegal purpose without paying just compensation.
This is
a. confiscation.
b. defalcation.
c. dumping.
d. expropriation.
On January 10, Winchester Pet Supplies orders fifty small dog collars from Quality
Collars, Inc. to be delivered by January 15. On January 13, Quality Collars tenders fifty
large dog collars. Winchester Pet Supplies rejects the shipment. Quality Collars has
a. no right to cure.
b. until January 15 to cure.
c. until the end of the business day on January 13 to cure.
d. unlimited time to cure.
Property used by a government for a public purpose such as a park is community
property
a. True
b. False
Sid rents an apartment from Town Properties, Inc. The lease, which ends on May 31,
does not include an option for re-newal, and Sid and Town do not discuss whether Sid
can stay on at the end of the term. On June 1, Sid has
a. an implied option to renew the term.
b. a right to remain contingent on notice from Town.
c. a right to remain subject to notice to Town.
d. no right to remain.
RayAnn is a corporate officer for Timmys Trees, Inc. As a corporate officer, RayAnn is
a. the head of the board of directors.
b. involved in the day-to-day operations of Timmys Trees.
c. not involved in the day-to-day operations of Timmys Trees.
d. in charge of selecting members of the board of directors.
Muni Investment Company signs a check payable to Enterprise Lenders, Inc., to buy a
promissory note executed by Fallow Corporation. This check
a. does not constitute sufficient consideration for HDC status.
b. does not satisfy the value requirement for HDC status.
c. satisfies the consideration requirement for HDC status.
d. satisfies the value requirement for HDC status.