Generally, reasonable liquidated damage clauses will be enforced:
a. when actual damages are easily determined.
b. when actual damages are difficult to determine.
c. almost always.
d. only in real estate sales contracts.
Robin and Bellman, both merchants, orally agree to a contract for the sale of $5000 of
accessories. Bellman, the buyer, sends to Robin, the seller, a written confirmation of the
sale, which is sufficient against Bellman under the statute of frauds and which Bellman
signs. Robin does not sign. Robin fails to perform the contract and does not ship out the
goods. Bellman sues. This contract is:
a. unenforceable, because Robin did not sign any contract.
b. unenforceable, because Bellman did not pay for the goods.
c. enforceable, because Bellman sent the written confirmation of the sale, thereby
partially performing the contract.
d. enforceable even without Robin’s signature because both parties are merchants.
Which of the following is a valid defense to a defamation claim?
a. The statement was true.
b. The statement was only an opinion.
c. The person making the statement made it only to the plaintiff, not to any third parties.
d. All of the above.
The remedy of reformation:
a. applies only when money damages are inadequate.
b. can be used to correct mistakes in the original contract
c. is available if fraud is involved.
d. is a commonly used remedy.
Why should ethics be a concern to business?
a. Society as a whole benefits from ethical behavior.
b. People feel better when they behave ethically.
c. Unethical behavior can be very costly.
d. All of the above.
Who establishes executive compensation?
a. The board of directors.
b. The shareholders.
c. The officers themselves.
d. An independent CPA firm.
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.
Jessie is the maker of a $1000 promissory note in favor of Tyler. Tyler subsequently
indorses the note to Ryan by signing just his name. Ryan in turn indorses it to Breanna
by indorsing the back of the note, “Without recourse, Ryan.” Breanna then indorses it to
Liz, the present holder, with a special indorsement.
If the note is dishonored by Jessie after it is properly presented to her for payment by
Liz, then Liz, after giving timely notice to Tyler, Ryan, and Breanna, may collect
payment under signature liability from:
a. Tyler only.
b. Breanna and Tyler only.
c. either Tyler, Ryan, or Breanna.
d. neither Tyler, Ryan, nor Breanna.
What statute prohibits accessing a computer without authorization and obtaining
information from it.?
a. Computer Fraud and Abuse Act
b. Communication Decency Act
c. Electronic Communications Privacy Act.
d. Childrens Online Privacy Protection Act
Veritas, Inc. is planning its annual shareholder meeting on June 15. The company:
a. need not send notices of the meeting to shareholders since it is the regularly
scheduled, annual meeting, which Veritas always holds on the third Thursday of June.
b. must send notices to everyone who owns stock as of January 1.
c. must send notices to everyone who owns stock on the “record date, which can be no
more than 70 days before the meeting.
d. is not required to have an annual shareholders meeting if the company is listed only
on the NYSE.
Jennifer substantially performs her service contract with Gretchen. Due to Jennifer’s
failure to render complete performance, Gretchen:
a. is discharged from any further contractual obligations.
b. is required to pay the full contract price, minus the value of Jennifer’s defective
performance.
c. is required to pay the full contract price.
d. may declare a material breach and pay only for the value received.
Jeannie carelessly packed her grandmother’s antique glassware and had it shipped to her
30-year-old daughter, Abby, via Common Freight Carriers. When the china arrived at
Abby’s house, most of the pieces were broken. As between Jeannie and Common
Freight Carriers, who will bear the loss?
a. Under the Carmack Amendment, Jeannie is liable for the loss if Common Freight
Carriers shows it was not negligent and that the loss was caused by Jeannies failure to
wrap and pack the glassware properly.
b. Under the Carmack Amendment, Common Freight Carriers is liable. A common
carrier is strictly liable.
c. Under the Carmack Amendment, Common Freight Carriers is liable because of its
negligence in not inspecting Jeannie’s packing job.
d. Liability is governed by state statute and will depend on which state law will control.
MagNet, a small United States computer company, started doing business in a foreign
country. The foreign country later decided to take over all computer industry, including
MagNet’s operation. The foreign country paid MagNet adequate compensation in
United States dollars. The foreign countrys action is called:
a. comity.
b. repatriation.
c. expropriation.
d. inflow profit streaming.
Which of the following is an unfair labor practice for a union?
a. To encourage an employer to discriminate against a particular employee because of a
union dispute.
b. To bargain collectively.
c. To engage in a legal strike.
d. All of the above are unfair labor practices by a union.
The main difference between the UCC requirement for a writing for a contract for the
sale of goods and the common law is that the:
a. UCC requires only the signature of both parties.
b. UCC does not require all the terms of the agreement to be in writing.
c. common law requires only an indication that the parties reached an agreement.
d. common law requires only the signature of the defendant and the quantity of goods
being sold.
In January, Alex promised to pay Y-K Inc. $5,000 if it would refrain from filing suit
against him on a breach of contract action. Y-K agreed and accepted a $5,000 check
from Alex. Which of the following statements is correct?
a. Y-K’s promise to refrain from suing Alex was not supported by legal consideration.
b. Y-K’s promise to refrain from suing Alex was supported by legal consideration and is
enforceable.
c. This is an accord and satisfaction, and Y-K cannot sue.
d. The courts would apply promissory estoppel in this situation.
An assignment:
a. is generally revocable if it is gratuitous and is either oral or written.
b. for consideration is irrevocable.
c. becomes valid when the obligor receives notice of the assignment.
d. must follow formalities.
In a closed-end credit transaction:
a. the lender makes a series of loans with a maximum amount set before the first loan is
made.
b. if the lender is offering a “teaser rate, this must be clearly disclosed.
c. the Federal Reserve Board should be consulted before a lender is chosen.
d. there is only one loan, and the borrower knows the amount and payment schedule in
advance.
McDonald’s famous golden arches and other marks used by the company illustrate a:
a. suggestive mark.
b. service mark.
c. certification mark.
d. collective mark.
Specific performance may be available for the breach of a contract to sell:
a. an original painting.
b. 20 shares of WalMart stock.
c. a Nintendo WII video game system.
d. a 2007 Mustang in mint condition.
Tyron purchased a vacant lot and entered into a contract with BZ Inc. to construct a
shopping center on the site. Douglas heard about this contract and built a restaurant on
an adjoining piece of property because of the planned shopping center. Tyron was
unable to raise the necessary capital and was unable to perform the contract with BZ,
Inc. Douglas sued Tyron for breach of contract as a third party beneficiary. Douglas will
probably:
a. win as a third party creditor beneficiary.
b. win as a third party donee beneficiary.
c. lose as a third party incidental beneficiary.
d. lose as a third party creditor beneficiary.
Under the prevention of significant deterioration (PSD) program:
a. no one may undertake a building project that will cause a major increase in pollution
without first obtaining a permit from the EPA.
b. a successful permit applicant must demonstrate that its emissions will not cause an
overall decline in air quality.
c. a successful permit applicant must demonstrate that it has installed the best available
control technology for every pollutant.
d. All of the above.
The EPA brought an administrative action against Boch Industries for violating the
Clean Air Act. The administrative law judge ruled in the EPA’s favor. Boch Industries:
a. can appeal the decision to a U.S. Court of Appeals and then to the U.S. Supreme
Court.
b. can appeal to the U.S. Congress and then to the Chief Justice of the Supreme Court.
c. can appeal to the Chair of the EPA.
d. cannot appeal the decision.
Roxanne was fired from her job when her employer instituted a new policy that
prohibited employees from smoking cigarettes. This requirement applied to off-duty
time as well as job-related time. Roxanne claimed that she could not quit smoking and
that she was wrongfully fired since she did not smoke in the workplace — only when
she was outside the building and during off-duty time.
a. The company has wrongfully fired Roxanne and is liable to her for damages.
b. The company would be liable to Roxanne only if there is a state statute prohibiting
employers from passing such job-related requirements.
c. The company is not liable to Roxanne since the nonsmoking requirement is
reasonable given the high cost of treating smoking-related illness.
d. The company is not liable to Roxanne since the United States Supreme Court has
expressly ruled such a company policy does not violate the worker’s right to privacy.
Farmer Elvin is holding 200 pounds of potatoes in storage for Chef Noble but Chef
Noble has breached the contract by failing to pay for the potatoes. The potatoes are
beginning to rot. If Farmer Elvin sells the potatoes to a local diner to make potato soup
and salad, then this action would be considered:
a. a reasonable mitigation of damages.
b. an attempt to maximize damages.
c. an attempt to realize an unwarranted profit.
d. conversion.
Tracy is an “at will” employee of Zebra Toy Company. One afternoon she has lunch
with a friend who works in marketing for her company’s biggest competitor, Tiger Toys.
Over a period of about three months, Tiger Toy representatives convince Tracy to work
with them. Tiger offers a larger base salary with bigger commissions than she had with
Zebra. When Tracy leaves Zebra, it sues Tiger Toys claiming it intentionally interfered
with a contractual relationship. Will Zebra Toy Company be successful?
The purpose of the Freedom of Information Act (FOIA) is:
a. to give the government access to information concerning citizens, businesses, and
organizations.
b. to limit the amount of information that the government can collect about its citizens,
businesses, and organizations.
c. to permit warrantless searches and seizures of evidence when necessary to ensure
safety.
d. to give citizens, businesses, and organizations access to information that federal
agencies are using.
What is the major distinction between executive and independent agencies?
a. Executive agencies govern business issues while independent agencies regulate
individual matters.
b. The President has greater control over executive agencies.
c. The Administrative Procedure Act regulates independent agencies but not executive
agencies.
d. Subpoenas may be issued by independent agencies; executive agencies do not have
subpoena power.
The CAN-SPAM Act:
a. applies to virtually all promotional e-mails, whether or not the sender has a
pre-existing relationship with the recipient.
b. provides unavoidable requirements for senders of promotional e-mails.
c. requires recipients of unsolicited, pornographic e-mails to notify the Justice
Department.
d. requires senders of promotional e-mails to provide a valid return address, which may
be a post office box or a specific physical location.
Which of the following types of property would be classified as “goods” under Article 2
of the UCC?
a. Cash in hand.
b. A stock certificate.
c. A computer.
d. A membership to a health club.
To simplify, clarify, and modernize the law governing commercial transactions, the
UCC permits the use of “open terms” in sales contracts. In the use of “open terms,”
which of the following is true?
a. The court will use market value and other comparable sales to determine what a
reasonable price would have been at the time of delivery if the parties have not settled
the price in the contract.
b. If time of payment is not mentioned in the contract, payment within a commercially
reasonable time is presumed.
c. If the contract permits the buyer or seller to determine the price during contract
performance, the UCC requires the party to do so in good faith.
d. All of the above are true.
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.
Ned sold his refrigerator to his next door neighbor, Ian. Ned fails to tell Ian he has not
finished paying for the refrigerator and Neighborhood Bank has a lien on it.
a. Ned has breached the warranty against infringement.
b. Ned has breached the warranty of title.
c. Ned has breached the warranty of merchantability.
d. Ned has not breached any warranties because he did not guarantee that the
refrigerator was free and clear of security liens.
If property is mislaid, the finder of the property will have a superior claim to possession
of the property against everyone except the true owner.
Ramon purchased 5,000 pounds of coffee from Quick Jump Coffee. The coffee was to
be delivered on September 1. Since the contract included a date for performance, time
is of the essence and the delivery date is strictly enforceable.
Contracts generally do not require bargaining that leads to an exchange between the
parties.
The UCC requires consideration for agreements modifying contracts for the sale of
goods.
Contract prohibitions against assignments are invalid as a matter of public policy.
If apparent authority is present, the principal is liable for even the unauthorized acts of
the agent.
The Sherman Act was designed to prevent extreme concentrations of economic power.
A speculator plans to acquire control of Kelp Corporation and then resell it at a profit. A
speculator is sometimes known as a corporate raider.
Securities offered and sold entirely within one state by a corporation of that state are
exempt from registration.
If a salesperson says, “This is a great car and its really fun to drive,” but the car turns
out to be a lemon, the salesperson has committed fraud.
In either a derivative lawsuit or a direct shareholder lawsuit, any proceeds awarded by
the court must be paid to the corporation, not the shareholders themselves.
In the Zion Temple First Pentecostal Church of Cincinnati, Ohio, Inc. v. Brighter Day
Bookstore & Gifts case, the court found that, because of an error in the catalog, there
was no right to cure a nonconformity with the sleeves of the robes.
Under a contract, Danielle is required to paint a room with paint chosen by the
homeowners, the Flynns. After Danielle paints the room according to the contract
requirements, her duties under the contract are discharged.
Micky, a mechanic, repaired Daphane’s Dodge. Daphane failed to pay the repair bill of
$595. Since Micky was still storing the car, he could therefore claim a landlords lien on
the car.
Common stock is last stock in line for any corporate payouts, including dividends and
liquidation payments.