Most incorporation statutes have adopted an intermediate position regarding the
revocability of preincorporation subscriptions, making them irrevocable for a stated
period without regard to whether they are supported by consideration.
a. True
b. False
Fraud in the execution is a fairly common occurrence and involves defrauding a person
as to the very nature of the contract.
a. True
b. False
Alice was briefly married at the age of 16. She is now 28 years old and plans to marry
Henry. Henry’s sister found out about Alice’s first marriage and then told Henry’s
parents. Alice now wants to sue Henry’s sister for public disclosure of private facts.
Does Alice have a case against Henry’s sister?
a. No, because marriage is a public and not a private fact.
b. No, because telling Henry’s parents is not sufficient publicity for public disclosure of
private facts.
c. No, because the statement is true.
d. No, because marriage is a public and not a private fact, and because telling Henry’s
parents is not sufficient publicity.
Article 4 of the UCC, entitled “Bank Deposits and Collections” provides the principal
rules governing bank collection practices.
a. True
b. False
Which of the following is true about the European Union (EU)?
a. The EU has over 500 million citizens.
b. The EU currently has thirty members.
c. The EU has officially admitted Japan to full membership.
d. The EU is now closed to further membership.
In most states, there is no lower age limit for testators as long as they understand the
extent of their property.
a. True
b. False
When is an agency relationship irrevocable?
a. It is never irrevocable.
b. When the agency is coupled with an interest of the agent in the subject matter.
c. When the principal violates his duties to the agent.
d. When the agent is a fiduciary.
Bernice is withdrawing from a partnership in a state that adopted the UPA. How can she
protect herself against liability on contracts the firm enters after her withdrawal?
In Alzado v. Blinder, Robinson & Company, Inc., Blinder, Robinson & Co. was found
liable to partnership creditors as a general partner because it assumed control of the
business and thus lost its limited partnership status.
a. True
b. False
A promise or order is unconditional unless it states that:
a. there is an express condition to payment.
b. the promise or order is subject to or governed by another writing.
c. rights or obligations concerning the order or promise are stated in another writing.
d. All of these.
A contract is a binding agreement that the courts will enforce.
a. True
b. False
Under the Uniform Commercial Code, when the minor has sold goods and the buyer
has resold them to a good faith purchaser for value:
a. the minor can disaffirm and recover the property.
b. both the purchaser from the minor and the good faith purchaser for value acquire
legal title.
c. the good faith purchaser for value acquires legal title.
d. the good faith purchaser for value receives a voidable title.
An advantage of administrative agencies is that they:
a. relieve legislatures from trying to create legislation that deals with every detail of a
specific problem.
b. can be specialized bodies staffed by individuals with expertise in the regulated field.
c. can be concerned about compliance with constitutional mandates since they perform
powers of all three branches of government.
d. All of these.
Contract damages that put the injured party in as good a position as if the other party
had performed are:
a. compensatory damages.
b. incidental damages.
c. consequential damages.
d. liquidated damages.
Davis Co. and Ruby Creations enter an oral contract providing that Ruby will deliver
three dozen dresses to Davis at $20 per dress. The next day, Davis sent Ruby a letter
signed by Daviss purchasing agent confirming the quantity and item, but not
mentioning the price. Which of the following is true?
a. Davis Co. is not bound by the terms of the letter unless Ruby responds in writing to
verify the agreement.
b. Ruby Creations and Davis Co. were bound in an enforceable contract at the time they
entered the oral agreement.
c. Davis is bound by the contract when its authorized agent sends the letter, but Ruby
Creations is bound by the oral contract ten days after receiving the letter, unless it
objects in writing within that time.
d. The parties cannot be bound by the contract because the price term was missing from
the written confirmation.
The directors of a corporation are expected to devote their full time to the corporation’s
affairs.
a. True
b. False
General partnerships are used frequently in finance, insurance, accounting, real estate,
law, and other services.
a. True
b. False
Under the common law, in order to be enforceable, a modification of an existing
contract must be supported by mutual consideration.
a. True
b. False
A doctrine allowing a mortgagor to relieve her property from a mortgage lien by paying
the debt that the mortgage secures is known as:
a. rehabilitation.
b. the covenant of quiet title.
c. foreclosure.
d. a right of redemption.
When a severe weather warning has been declared, a delay in notice of dishonor is
excused to the reasonably diligent holder who was prevented from posting the notice.
a. True
b. False
With respect to the board of directors of a corporation, which of the following is NOT
correct?
a. They manage the business and affairs of the corporation.
b. They are the shareholders’ elected representatives.
c. They must always obtain shareholder approval before deciding questions of operating
policy.
d. They have the authority to delegate power to officers and agents.
Karen has agreed to buy Sara’s car, but the two have not agreed on the price. When
there is no agreement as to price in a contract for a sale of goods, what effect does it
have on the contract?
a. The price is whatever the seller decides.
b. The price is a reasonable price at the time of making the contract.
c. The price is a reasonable price at the time of delivery.
d. There is no contract, because the agreement is not definite and certain enough.
Generally, when may a security interest be perfected in collateral?
a. By the secured party’s filing a financing statement in the designated public office.
b. By the secured party’s taking or retaining possession of the collateral.
c. Automatically, on the attachment of the security interest.
d. Temporarily, for a period specified by the Code
e. All of these, depending on the type of collateral.
One of the fiduciary duties of directors is the duty not to compete with the corporation.
They may pursue their own business interest, but they may not:
a. use corporate resources do do so.
b. hire away personnel for their own business.
c. use corporate facilities to do so.
d. All of the answer choices are correct.
A sculptor wishes to protect one of his original works. He may do so by applying for a:
a. copyright.
b. patent.
c. service mark registration
d. trademark registration
Nathan borrows $1,250 to pay his sons medical bills. This is not a consumer credit
transaction subject to the FCCPA since the loan is for a family members services rather
than for Nathans personal purchase of goods.
a. True
b. False
Courts will enforce contracts for the benefit of all but which of the following?
a. Donee beneficiaries.
b. Creditor beneficiaries.
c. Incidental beneficiaries.
d. Intended beneficiaries.
Tender requires that the seller, at a reasonable time:
a. put and hold conforming goods at the buyer’s disposition.
b. give notice to the buyer that the goods are available.
c. keep the goods available for a reasonable period of time.
d. all of these.
The Windows, Inc. v. Jordan Panel Systems Corp. case illustrated the concept that:
a. unless the parties expressly specify that the contract requires the seller to deliver to a
particular destination, the contract is generally considered to be a shipment contract.
b. unless the parties expressly designate the type of contract, it will be interpreted to be
a destination contract.
c. goods in the possession of a bailee which are to be delivered without being moved
will have the risk of loss pass to the buyer when the buyer receives a negotiable
document of title.
d. express, specific provisions in a contract control as long as they are not
unconscionable or grossly unfair to one of the parties.
Martha puts an ad in her company’s newsletter saying she would pay $5,000 for a
first-issue Grace Kelly stamp to the first person who accepted her offer. Martha decides
she would rather go on a European vacation and changes her mind about investing in
the stamp. Martha posts a sign at the executive water fountain saying the offer is no
longer valid. A foreman from a branch plant takes a flight to the Chicago main office to
see Martha and accept her offer. Martha does not owe him any money to pay for a
breach of contract.
a. True
b. False
The Fair Labor Standards Act would concern which of the following?
a. Working hours for children employed picking strawberries.
b. Minimum hourly wage for a factory worker.
c. Overtime pay for managers.
d. Attorney fees.
An ethical relativist looks to a central authority, such as the Bible, to guide her in ethical
decision making.
a. True
b. False
With few exceptions, an issuer must file preliminary proxy statements and forms with
the SEC at least 10 days before they are sent to investors.
a. True
b. False
An agency contract appointing the agent for a period of more than one year must be in
writing.
a. True
b. False
The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted
the SEC power to:
a. issue cease-and-desist orders.
b. impose civil penalties up to $850,000.
c. bring civil actions for specified violations of the 1934 Act against aiders and abettors.
d. All of these.