Under the 1934 Act, an issuer must register with the SEC if
a. it has not completed a public offering under the 1933 Act.
b. its securities are not going to be traded on a national exchange.
c. it will not be providing investors with a prospectus.
d. it has at least 2,000 shareholders and total assets that exceed $10 million.
Janet was employed as a sales representative for Esday, Inc. An appreciative customer
gave her a diamond bracelet for all her hard work on a complicated contract. Can Janet
keep the bracelet?
a. Yes. The bracelet was given to Janet personally and intended for her.
b. Yes, but only if she discloses the gift to Esday and Esday consents to her keeping the
bracelet.
c. No. An agent is not allowed under any circumstances to personally profit as a result
of the agency relationship.
d. No. The bracelet is regarded as an unfair trade practice and violates antitrust law.
It is unethical to use your lawyer as an excuse for a provision of a contract, such as,
“My lawyer insists that I have a liquidated damages clause…
a. True
b. False
The officers of a corporation are
a. chosen by the board of directors.
b. appointed by the president of the company.
c. elected by shareholders.
d. appointed by the Secretary of State.
Shareholder proposals on the company proxy statement
a. will automatically become binding if approved.
b. may only be implemented by the company if they receive support from at least a
simple majority of the shareholders.
c. historically have been rarely approved.
d. may only address corporate-governance issues and cannot not address the
shareholders political agenda, such as saving the environment.
A monopoly is illegal
a. under any circumstances, under Section 2 of the Sherman Act.
b. only if it is gained or maintained by using wrongful tactics.
c. if you have greater than 50 percent of market share.
d. any time there are no interchangeable products.
The traditional formula for determining damages for a violation of the
Robinson-Patman Act was to
a. calculate the estimated amount of lost profits.
b. determine the difference between the two prices and multiply the difference by the
number of units purchased.
c. allow a jury to determine the amount of punitive damages without using any
particular formula.
d. add both prices together and divide by the number of units purchased.
Which of the following is NOT one of the three ways to amend a written contract?
a. by writing and signing an amendment (or rider)
b. by verbally agreeing to the changes and shaking hands on the deal
c. by crossing out the mistakes and writing in the corrections
d. by writing a totally new contract with the correct provisions
President Nixon issued wage-price controls in an effort to stabilize the economy. This
use of executive power was
a. an illegal usurption of legislative powers which belong to the Congress.
b. a valid use of power based on Article II of the Constitution.
c. a valid use of judicial power.
d. an illegal usurption of the regulatory powers of administrative agencies.
Which of the following would be a breach of the implied warranty of merchantability?
a. A knife that cuts its user when slicing a bagel
b. A radio that does not pick up FM signals
c. A match that burns a spot in the carpet when accidentally dropped
d. A watch that does not keep accurate time after getting wet
Meredith, a shareholder in Quarto, Inc., notified Quarto’s board of directors that the
corporation had been wronged and asked the board to bring a lawsuit in the
corporation’s name. In response to Meredith’s demand, the board
a. can file suit on behalf of the corporation.
b. can reject Meredith’s demand or simply fail to respond.
c. can appoint a Special Litigation Committee.
d. can do any of the above.
Mike owns a house in a poor area of a large city. Mike is on disability and his total
monthly income is $700. A sales representative visits his home, selling a water
purification system. Mike signs a contract that calls for monthly payments of $500 for
the next 10 years. The water system is worth no more than $1000. Mike thought he was
signing a permission slip allowing the salesman to conduct a free water test to
determine the toxins in the water. How would a court most likely describe this contract?
a. The contract is fully enforceable as written.
b. The contract is unenforceable because it is unconscionable.
c. The contract is enforceable, but only up to the value of the water system.
d. The contract is unenforceable because it is exculpatory.
Creditor claims are divided into classes and the highest class must be satisfied in full
before going to the next category.
a. True
b. False
The government itself prosecutes the wrongdoer in a case involving behavior so
threatening that society outlaws it altogether. This kind of case involves
a. procedural law.
b. private law.
c. civil law.
d. criminal law.
A contract may violate public policy even if the agreement does not violate a statute.
a. True
b. False
When a party to a contract notifies the other party that it will not perform the contract as
agreed, this conduct is referred to as
a. specific performance.
b. cover.
c. repudiation.
d. assurance.
Working out some frustrations after a bad game, Jessica angrily hits a baseball and then
sees it is flying toward the umpire. She yells, “Watch out! The umpire ducks and the
ball misses him. Since there was no physical contact, no assault or battery occurred.
a. True
b. False
Zero, Inc. agreed to build Millie a storage building for $8,000. After beginning the
project, Zero realized that it could not complete the job and make a profit. Zero
demanded $9,500 to complete the building. Millie agreed to pay the $9,500. When the
project was complete, Millie tendered $8,000 to Zero for the job. If Zero sues Millie for
the remaining $1,500,
a. Zero will win because there was consideration for the additional $1,500.
b. Zero will win because Millie had a pre-existing duty to pay any additional amounts.
c. Zero will lose because there was no legal consideration to support the additional
$1,500.
d. Zero will lose because the UCC does not require consideration to modify an existing
contract.
Does ethical behavior maximize profitability?
a. Yes, there is concrete evidence that ethical behavior will always maximize
profitability.
b. No, there is concrete evidence that unethical companies will always outperform
ethical companies.
c. Although there is no guarantee that ethical behavior pays in the short or long run,
there is evidence that the ethical company is more likely to win financially.
d. There is strong evidence that ethical behavior pays financially in the long run, but not
in the short run.
In order for a federal court to have jurisdiction, there must be a federal question
involved and at least $75,000 in dispute.
a. True
b. False
Angela sued Tom for battery. Angela was awarded $30,000 for future medical expenses.
Five years after the award, Angela realizes that her medical expenses will far exceed
$30,000. Under the single recovery principle,
a. Angela will be able to submit the additional medical bills to the court for payment.
b. Tom will have to pay the additional medical bills.
c. Tom will have a qualified privilege and only have to pay a portion of the additional
medical expenses.
d. Angela will have no recourse against Tom or the court for the medical expenses as
long as the original award was reasonable.
Consumers have a right to
a. exclude as obsolete information about a bankruptcy discharge seven years previously.
b. know the name of anyone to whom credit information has been supplied by a
consumer reporting agency within the last three years.
c. have their own version of a disputed credit situation included in their credit file.
d. have investigative reports become obsolete after 1 year.
Tommie, a six-year-old child, was seriously injured when he stuck a fork into an
electrical outlet at a restaurant. His parents sued the restaurant where the incident
occurred, claiming it should have had child protective guards on the outlets even though
no law required the restaurant to do so. Whether the restaurant is liable will be
dependent upon whether
a. the incident was reasonably foreseeable.
b. the court views Tommie as a licensee or a trespassing child.
c. this is negligence per se.
d. this is an ultrahazardous activity.
The maximum rate of interest for credit transactions is established by
a. state law.
b. federal law.
c. the Federal Reserve Board.
d. the FTC.
Common stock is the last stock in line for any corporate payouts, including dividends
and liquidation payments.
a. True
b. False
If a customer trips and falls over a rip in the carpet in a retail store, who is liable under
common law rules?
a. The customer is liable because he didn’t watch where he was going.
b. The landlord alone is liable for not maintaining the property.
c. The tenant alone is liable for not informing the landlord of the defective carpet and
getting it repaired.
d. The landlord and the tenant are probably both liable.
A copyright is valid for 28 years after it is obtained and can be renewed for another 28
years.
a. True
b. False
Linda assigns to Ben a right to receive rent payments. In terms of Linda’s warranty as
the assignor, the law implies which of the following?
a. that the tenant is solvent
b. that Linda actually has a right to the rental payments
c. that the tenant will actually pay
d. No warranties are implied by law in an assignment.
A party may make either an assignment or a delegation, but cannot make both an
assignment and a delegation simultaneously.
a. True
b. False
Marco Manufacturing contracted to sell Kurtz Industries 3,000 iron clasps. The contract
specified: F.O.B. Kurtz Industries. Upon arrival and inspection, the goods were rejected
by Kurtz Industries because they did not conform to the contract specifications. In
transit back to Marco Manufacturing, the common carrier’s truck overturned and
completely destroyed the clasps. Which statement is correct?
a. Marco may sue Kurtz for the contract price, as risk of loss transferred to Kurtz at the
F.O.B. point.
b. Kurtz will not be liable for the purchase price. The risk of loss had not yet transferred
since the goods were nonconforming.
c. The loss will be split between the parties upon a 50/50 basis.
d. The loss will be assigned to the party who could best bear the loss.
John hired Tim to sell his house. Which statement is correct?
a. John is Tim’s principal.
b. Tim, but not John, can terminate the agency relationship.
c. John, but not Tim, can terminate the agency relationship.
d. Tim is John’s principal.
Spam is illegal per se.
a. True
b. False