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A partnership agreement should include all but which one of the following?
a. The duties of the partners.
b. The capital contribution of the partners.
c. The agreement for dividing tax liability of the partnership.
d. The division of profits and losses.
Which of the following is least likely to be classified as a necessary item for which a
minor will be held liable on a contract?
a. A camera.
b. School supplies.
c. Clothing.
d. An automobile.
Bob is the promoter of a new corporation that has not yet been incorporated. On behalf
of the as yet unincorporated business, he enters into a three-year lease agreement for
office space and personally signs the lease in his own name. The corporation is liable on
the contract, because Bob is its agent.
a. True
b. False
The court in the Cohen v. Mirage Resorts, Inc. case stated:
a. a claim brought by a dissenting shareholder that questions the validity of a merger as
a result of wrongful conduct on the part of majority shareholders or directors is properly
a derivative suit.
b. a shareholder who opposes a merger must either accept the terms of the merger and
exchange their shares for new shares or dissent from the merger and forfeit their stock.
c. minority shareholders may challenge the merger process if it is procedurally deficient
or if fraud affected the shareholder vote on the merger.
d. minority shareholders have no right to sue to enjoin or rescind an invalid merger, but
must be satisfied with money damages.
As the shareholders' elected representatives, the board of directors are delegated the
power to direct the business of the corporation.
a. True
b. False
The Investor Protection and Securities Reform Act of 2010 imposes new corporate
governance rules on both publicly held and privately held companies.
a. True
b. False
The U.N. Commission on International Trade Law develops model laws, such as the
CISG and the UNCITRAL Model Law on Electronic Signatures.
a. True
b. False
A person who engages an independent contractor to do a specific job has the right to
control the details of the conduct and activities of the independent contractor as it
applies to the specific job.
a. True
b. False
"Actual malice" in defamation cases against the press requires a showing that a reporter
intentionally lied.
a. True
b. False
On June 1, a civic club made an offer to pay a beer distributor to have ten kegs
delivered to the city park for a July 4th fund-raising event. On June 30, the city passed a
new law prohibiting consumption of alcohol in the city park. The civic club's offer is
terminated on June 30.
a. True
b. False
Which of the following is correct regarding a foreign corporation?
a. A foreign corporation is incorporated in a foreign country.
b. Failure to obtain a certificate of authority to transact business in the state impairs the
validity of a contract entered into by the corporation.
c. A foreign corporation transacting business within a particular state without having
first qualified cannot use the state court to maintain a lawsuit until the corporation
obtains a certificate of authority.
d. All of these are correct.
Which of the following promises in consideration of marriage would be outside the
statute of frauds?
a. In consideration of Joan's promising to marry him, Dwight promises to pay her an
allowance and to give her all of his property upon his death.
b. John and Mary mutually agree that their marriage shall not affect the existing
property rights of the other.
c. John and Joan mutually promise to marry each other in a formal ceremony on June
23.
d. Joan promises to release a money judgment against Steven in consideration of his
marrying her.
Since the end of the nineteenth century, case law developed from court opinions has
been the primary source of new law and ordered social change in the United States.
a. True
b. False
A(n) ___________ is the voluntary transfer to a third party of the rights arising from a
contract.
a. negotiation of bearer paper
b. negotiation of order paper
c. assignment
d. negotiation
In a contract to sell necessaries to a minor, these goods and services are limited to
medical care, food, and shelter.
a. True
b. False
Matthew decides to invest in the stock of a television production company after he
reads Edgar's audit, which includes a known falsity as to the value of numerous
worthless securities held as corporate assets. If Matthew sues Edgar, he will be entitled
to:
a. nothing, in a majority of states, since the class of foreseen users of the audit contract
does not include potential investors and the general public.
b. compensatory damages, in a majority of states, if he is a foreseen user of the audit.
c. nominal damages only.
d. rescission of his purchase contract.
Who among the following is most likely not considered a merchant according to Article
2 of the UCC?
a. Jim who owns a wholesale auto parts business.
b. Tom who, as a hobby, builds and sells birdhouses on the weekends.
c. Kay who sells her 3-year-old fishing boat to her neighbor.
d. Jan, who is not knowledgeable about selling sailboats, but who employs an
experienced expert in the trade.
Opal, a promoter of Victory Corporation, has a fiduciary duty to:
a. any other promoters of Victory Corporation.
b. only Victory Corporation.
c. the initial shareholders of Victory Corporation.
d. Any other promoters of Victory Corporation and alsothe initial shareholders of
Victory Corporation.
Helen deposits a $50 check in her account at First Bank at 4:00 on Friday. The bank is
closed on Saturday and Sunday, but opens again on Monday. The midnight deadline for
First Bank would be:
a. Midnight Saturday.
b. Midnight Sunday.
c. Midnight Monday.
d. Midnight Tuesday.
The case, State of Qatar v. First American Bank of Virginia, held that:
a. the phrase "for deposit only" is not an effective restrictive indorsement.
b. depositary banks are not required to handle checks consistent with the restrictive
indorsement.
c. the phrase "for deposit only" effectively limits the depositary bank to handle the
instrument in a manner consistent with the transaction.
d. a stolen check which is indorsed in blank cannot be freely negotiated by the bearer.
Anna is 88 years old and under the legal guardianship of her daughter. One day Anna
receives a telephone call from a health insurance salesman and purchases a
$400-a-month Medigap insurance policy. This contract is:
a. valid.
b. voidable.
c. void.
d. unenforceable.
Formal rulemaking is the most frequently used rulemaking procedure for administrative
agencies.
a. True
b. False
It remains unclear under the law whether a limited partner has a fiduciary duty to his
general partners or to the limited partnership.
a. True
b. False
Congress enacted the Truth in Savings Act which requires all depositary banks to
disclose in great detail to consumers the terms and conditions of their deposit accounts.
a. True
b. False
The tort of __________ is a false communication, which injures a person's reputation
and good name by disgracing him and diminishing the respect in which he is held.
a. false light
b. intrusion
c. defamation
d. disparagement
An example of private law is:
a. business law.
b. administrative law.
c. criminal law.
d. All of these.
A principal owes to any agent the same duties under tort law that the principal owes to
all parties.
a. True
b. False
An obligor may assert rights of setoff arising out of entirely separate matters that he
might have against the assignor, as long as the matters arose before he had notice of the
assignment.
a. True
b. False
In the Giannetti v. Cornillie case, the court found:
a. the modification of the mortgage amount, unlike the purchase price, was not a
material term of the contract.
b. the modification of the mortgage amount was a material term, a counteroffer which
rejected the original offer.
c. the doctrine of promissory estoppel required the court to grant plaintiffs motion for
specific performance.
d. in order for an acceptance to create a binding contract, it need not strictly comply
with the terms of the offer as long as the parties intended to form a contract.
Give an example of each of the following:
a. Unilateral mistake
b. Mistake in the meaning of a contract term.
A court order requiring that a person do or refrain from doing a particular act is known
as a(n):
a. injunction.
b. maxim.
c. statute.
d. executive order.
Registration under the 1933 Act calls for disclosure of which of the following?
a. A description of the registrant's properties and business.
b. A description of the significant provisions of the security to be offered for sale and its
relationship to the registrant's other capital securities.
c. Compensation paid to directors, the CEO, CFO, and the three other highest paid
executive officers.
d. All of these.
