Drawers and indorsers are secondarily liable on negotiable instruments.
a. True
b. False
Mid-American Oil had a contract with NSB Company to supply 1,000 gallons of oil by
September 1. The contract contained a provision which required all modifications to be
written and signed by the company presidents. In early August, an executive of
Mid-American talked with the purchasing agent of NSB who orally agreed to two
shipments of oil; one in September and the second one in December. By September 30,
when only 500 gallons had been delivered, NSB sued. The likely outcome of this
lawsuit is:
a. NSB wins because the modification was not supported by new consideration.
b. NSB wins because the modification has to be in writing.
c. Mid-American Oil wins because the UCC governs this case and no new
consideration is required.
d. Mid-American Oil wins because new consideration was present.
Ricardo has agreed to sell his family farm to Walter for a price of $450,000. Even
though both sides agree on the terms, it is still worth the money for Ricardo to hire a
lawyer to write the contract.
a. True
b. False
A corporation is not allowed to issue dividends to shareholders unless it is solvent.
a. True
b. False
James and his band played a very familiar song. However, they made up different
words for the song that were intended to be funny. James’s version of the popular song
with different words is known as
a. a “knock off.”
b. a parody.
c. a “mockarama.”
d. a “link.”
The Australian government has opened a for-profit tourist information center in New
York City. If a dispute arises over the lease of the storefront, may the landlord sue the
Australian government in the United States courts?
a. Yes, because the Australian government was engaged in a commercial activity.
b. No, because the Foreign Sovereign Immunities Act forbids U.S. courts from hearing
any case (without exception) that involves a foreign government.
c. No, because the only way the Australian government can be sued is if it signed a
written waiver of immunity.
d. Yes, because the Australian government violated international law.
Of the following, which is an advantage of trademark registration?
a. Potential damages are lower.
b. After five years the mark becomes almost impossible to challenge.
c. It allows the trademark owner to use the TM symbol to put others on notice of the
protection.
d. It can’t be used as an Internet domain name.
The test of “foreseeability is generally used to determine the existence of which element
of a negligence case?
a. Duty of due care
b. Breach
c. Factual cause
d. negligence per se
By creating three independent and equal branches of the federal government, the U.S.
Constitution prevented the federal governments power from being concentrated in one
person.
a. True
b. False
A+ Modeling Agency signs a contract with Sandi to do a photo shoot for the local used
car dealers advertising. The contract was most likely written by
a. the owner of A+ Modeling Agency.
b. Sandi.
c. A+ Modeling Agencys lawyer.
d. Sandis lawyer.
Annette drove through an intersection without looking and hit Vincent’s car that he had
driven into the intersection without obeying a stop sign. Annette sued Vincent. The jury
found that Annettes fault contributed 20 percent to the collision and determined that her
total loss was $100,000. Under comparative negligence, the jury should award Annette
a. $20,000.
b. $80,000.
c. $100,000.
d. nothing.
Which of the following would suffice for a signature on a writing under the statute of
frauds?
a. A stamped signature
b. A handwritten signature
c. A name keyed at the bottom of an e-mail
d. Any of the above would suffice. Judges define ‘signature very broadly.
The federal government has preempted the field of online privacy, so states may not
pass their own online privacy statutes.
a. True
b. False
Rachel works for the Internal Revenue Service, and keeps some personal information
on her computer at work. There has been suspicion that Rachel has not been keeping tax
return information confidential. The Fourth Amendment to the Constitution, prohibiting
unreasonable searches and seizures, protects Rachel from having the government
review the personal information she has on her computer.
a. True
b. False
On impulse, you purchase a travel trailer and ask your acquaintance, Max, if you can
leave the trailer at the edge of his restaurants parking lot until you can have a concrete
pad built to store the trailer on your property. Max agrees. When you return for the
trailer the next week, it is gone and you find out that Max sold it. You can
a. recover the trailer because Max did not have any ownership interest to pass.
b. recover, but only if Max bought insurance to cover the trailer while it was on his
property.
c. not recover because you “entrusted the trailer to Max, who then had a right to sell it.
d. not recover because Max had only a voidable title to transfer.
The executives of Jornaginn Corporation have decided they need to sell 50,000
additional shares of stock to finance their expansion plans. The executives
a. cannot sell that many shares unless they were authorized initially in the corporate
charter.
b. can sell as many shares as the market will bear.
c. are limited by the number of shares authorized in the corporate charter, but this
number can be increased by amending the charter and paying a fee.
d. can sell the shares only if the shares have a par value which is close to the current
market price.
Mike made the following offer to Mick: “I will pay you $500 if you agree to paint my
house.” Mick replied that he would. At this point, the contract is an
a. executed, bilateral, express contract.
b. executory, bilateral, implied-in-law contract.
c. executed, unilateral, express contract.
d. executory, bilateral, express contract.
A rule that establishes maximum length of work shifts for air traffic controllers
demonstrates an agency imposing a regulation.
a. True
b. False
Paid surrogacy contracts are viewed by the legislative majority in all states as immoral
and illegal.
a. True
b. False
What term identifies stock that has been authorized and sold?
a. authorized and paid stock
b. outstanding stock
c. treasury stock
d. authorized and unissued stock
Which of the following is the most appropriate term to use when describing
management’s duty to its shareholders?
a. Official duty
b. Legal duty
c. Fiduciary duty
d. Statutory duty
Internet auctions are the number one source of consumer complaints about online fraud.
a. True
b. False
In determining liability for errors in a registration statement, the plaintiff must prove
that there was a misstatement or omission that was important enough to affect the
plaintiff’s investing decision. In other words, the misstatement or omission needs to be
a. material.
b. unrefuteable.
c. accredited.
d. firm.
The primary trial court in the federal system is the
a. United States district court.
b. United States Supreme Court
c. United States appellate courts.
d. various appeals courts.
If a court determines that a manager’s corporate decision amounted to self-dealing,
a. the business judgment rule will not apply.
b. the transaction being challenged will be automatically voided.
c. the manager is automatically personally liable to the corporation.
d. the manager will automatically be fired.
Offerings under Regulation A of the Securities Act of 1933, although called private
offerings, are really small public offerings.
a. True
b. False
Which of the following property is NOT affected by a will?
a. life insurance
b. personal property
c. anatomical gifts
d. individual bank accounts
A sports fan, injured by a hockey puck that flew into the stands during an NHL game,
would be subject to the defense of assumption of the risk in a suit to recover for her
injuries.
a. True
b. False
Social enterprises are organizations that pledge to behave in a socially responsible
manner, even as they pursue profits.
a. True
b. False
If a contract is made with a person required by law to hold a license, and the purpose of
the license is protection of the public, the contract made by an unlicensed person will
generally be unenforceable.
a. True
b. False