Ratification has to be expressly made only in written form.
An instrument can be made payable to two or more payees.
The general rule on the duration of a copyright is that it lasts for 50 years from the time
the copyrighted work was created and fixed in tangible form.
The statute of frauds covers all contracts that are for an indefinite period of time.
The obligations imposed on telemarketers by the FTC’s Telemarketing Sales Rule do
not apply to sellers that solicit sales through mailed catalogs and then receive
consumers’ orders by telephone.
Under UCC section 2-712 the buyer is required to seek cover, or buy substitute goods,
during a breach of contract dispute.
A promoter is not an agent of the future corporation.
There are three major defenses to price discrimination under the Robinson-Patman Act.
If a note or draft contains a conspicuous statement that the promise or order is not
negotiable, it is not a negotiable instrument even if it meets the test for negotiability.
A department store sells a TV set to Wilson, who pays with a bad check. Wilson
immediately sells the TV to Davis for $500. Davis knew nothing about how Wilson
acquired the TV from the store. Davis has good title to the TV and will prevail against
the store if it sues Davis for the TV or its value.
In Miranda v. Arizona the United Supreme Court mandated that police officers have to
give suspects a warning about their rights.
The priority claims to a Bankruptcy Estate are pain after the secured claims but before
the unsecured claims.
The new Article 3 recognizes and enforces indorsements that prohibit further
negotiation of the instrument.
Minors have the capacity to enter into contracts.
The ultimate purpose of the 1934 Act is to keep investors fully informed to allow them
to make investment decisions when securities are sold by an issuer to investors.
Today, discrimination on the basis of gender receives more strict scrutiny than
discrimination on the basis of race.
Once firms have attained monopoly power, only then can they be held for violation of
Section 2 of the Sherman Act.
By issuing a qualified opinion, an auditor escapes liability for defects in financial
statements audited by the auditor.
A Totten trust is created to avoid fraud.
Corporate constituency statutes permit the board of directors to consider the interests of
persons other than the corporation’s shareholders when the directors make corporate
decisions.
Emotional loss, pain, and suffering are examples of noneconomic damages.
A foreign corporation must incorporate in each state in which it does intrastate business.
Any notice given to a partner is deemed to be a notice given to the partnership firm.
If a buyer has a basis for rejecting a delivery of goods then the buyer can act whenever
the buyer wishes to reject the goods after the delivery.
There are no criminal penalties for violating the Clayton Act.
Courts generally will not grant reformation of a written insurance policy in order to
make it conform to the coverage assumptions of a unilaterally mistaken insured.
Informal rulemaking consists of publishing notice of a new rule in the Federal Registrar
and allowing interested parties an opportunity to comment on the rule.
A description that gives rise to an express warranty under which the goods must be as
described, amounts to an express warranty regarding quality or duration of the goods’
future performance.
The residuary is the remaining property of a person’s estate after bequests and devises
have been made.
Doing intrastate business without filing with the appropriate state office will likely
subject a business to a fine.
The general duty of professionals requires them to be guarantors of the accuracy of
their work.
To accept an offer for a unilateral contract, the offeree must make the promise requested
by the offer.
A holder in due course of a negotiable instrument always has the same rights as the
individual that transferred the negotiable instrument to the holder.
A drawer can claim alteration as a reason for not charging a particular check to his
account, even if the drawer has contributed to the alteration in some way.
A delegator can be discharged from his/her obligation to perform his/her duty to the
original promisee by a contract of novation.
The decision on what form of business to make a startup business is important because
it will affect how much the business owner is liable and has control over the new
business.
A person who purports to act on behalf of a terminated corporation has the liability of a
person acting for a corporation prior to its incorporation.
Payments made with a credit card and payments made with a debit or ATM card are
subject to:
A. both the federal law and the state law.
B. only federal laws.
C. only state laws.
D. only local laws.
Which of the following statements is true regarding a guarantor?
A. In order to be a guarantor, a person must enter into a deed of trust with the principal
debtor.
B. A guarantor is primarily liable for the debt along with the principal debtor.
C. Generally, a guarantor’s promise must be made in writing to be enforceable under the
statute of frauds.
D. A guarantor joins the principal debtor in making a promise.
Which of the following causes dissociation?
A. A partner’s transfer of his transferable partnership interest
B. A creditor’s obtaining a charging order
C. A partner’s wrongful conduct materially affecting the partnership business
D. The addition of a new partner to a partnership
Which of the following personal traits or conditions will not change the normal
reasonable person standard to which defendants are subject?
A. Blindness.
B. Deafness.
C. Voluntary intoxication.
D. Childhood.
Which of the following is correct concerning the professional-client privilege and
working papers produced by an auditor while auditing the records of a client?
A. Working papers are owned by the client.
B. Working papers may be transferred to another auditor without permission of the
client.
C. The client does not have a right of access to the working papers.
D. The professional-client privilege usually belongs to the client.
Market shares in excess of _____ have historically justified an inference of monopoly
power.
A. 70 percent
B. 60 percent
C. 90 percent
D. 80 percent
Which of the following is NOT a possible order resulting from a successful FTC
adjudicative proceeding attacking deceptive or unfair behavior?
A. Affirmative disclosure
B. All-products order
C. Corrective advertising
D. Imprisonment
Strict liability offenses:
A. dispense with the requirement of proof of any criminal intent on the part of the
defendant.
B. are so classified because the punishments imposed on violators are especially harsh
in comparison to the punishments for other criminal offenses.
C. impose liability on a defendant for the act of another party.
D. are commonly criticized on the ground that a person may not be convicted of such an
offense without being shown to have committed a wrongful act.
Which of the following may contain an affirmative defense?
A. Summons
B. Interrogatory
C. Complaint
D. Answer
_____ affords a remedy for the wrongful institution of criminal proceedings.
A. Abuse of process
B. Malicious prosecution
C. Wrongful use of civil proceedings
D. Deceit
Volatile organic compounds (VOCs) combine with _____ under the influence of
sunlight to become ozone—also known as smog.
A. nitrogen oxides
B. carbon monoxide
C. chlorofluorocarbons
D. sulfur oxides
_____ jurisdiction exists when the case arises under the Constitution, laws, or treaties of
the United States.
A. Original
B. Federal question
C. Diversity
D. Exclusive
Which party to contract negotiations is the master of the offer and can specify what
behavior is necessary to constitute a valid acceptance?
A. The Offeror
B. The Offeree
C. The Secretary of State
D. The court
Selena delegates her rights under a contract. The clause delegating her rights are
termed: “All my rights under the contract are hereby effectively delegated to….” This
language shows that the contract is of:
A. delegation only.
B. assignment only.
C. assignment and delegation.
D. a third-party beneficiary.
Which of the following is an accurate statement about exclusive dealing agreements?
A. The qualitative substantiality test for gauging the legality of exclusive dealing
agreements has prompted much criticism.
B. Exclusive dealing agreements are unlawful even when they have minimal effect on
competition or monopolization.
C. The preventive nature of the Clayton Act does not allow it to cover exclusive dealing
agreements.
D. Historically, exclusive dealing agreements involving a “not insubstantial” amount of
commerce have been declared illegal.
Shareholders of a corporation brought a class action against the president, alleging that
they missed out on dividends and an increase in the value of their shares because the
president misappropriated funds of the corporation. This suit was successful and the
president paid $10 million in damages. This money will go to:
A. the shareholders who brought the class action.
B. the treasury of the corporation.
C. the state, as a fine.
D. the federal government, as a fine.
Ted is the president of Soprano Corporation (SC). Ted decided to have SC manufacture
large, gas-guzzling SUV automobiles just before gasoline prices rose dramatically. As a
result, SC lost billions of dollars. The shareholders of SC want to sue Ted for this bad
decision that cost them billions. However, Ted had made a reasonable investigation
before making this decision, he had a rational basis for it, and he had no conflicts of
interest regarding this decision. What would be the probable outcome if the
shareholders file a suit?
A. Ted is liable under the vicarious liability rule.
B. Ted is liable under the ultra vires rule.
C. Ted is not liable under the business judgment rule.
D. Ted is not liable under the corporate protection rule.
Ted failed to disaffirm a contract during his minority. The contract was automatically:
A. ratified.
B. rescinded.
C. set aside.
D. made voidable at the option of the minor.
Sarah is hiking in the Clearwater National Forest and her wristwatch falls off her wrist.
Sarah does not notice this, and the watch falls onto the trail. Later, Hans finds the
watch. How may this watch best be described?
A. Lost property
B. Mislaid property
C. Abandoned property
D. Bailment property
Which of the following activities is classified as doing business for the purpose of
intrastate business qualification?
A. Owning or using real estate for general corporate purposes.
B. Soliciting orders by mail that require acceptance outside the state.
C. Selling products or services through independent contractors.
D. Conducting an isolated transaction that is completed within 30 days.
Amanda is a shareholder of Abec Corporation. She received an illegal dividend from
Abec. Must she return that dividend to Abec?
A. Yes, but only if she was aware that the dividend was illegal.
B. Yes, regardless of whether she was aware that the dividend was illegal.
C. No, once a dividend has been distributed, it may not be recalled.
D. No, a shareholder has no liability regarding distributions from the corporation.
What is the term for planning the transfer of an individual’s assets during later life and
at death?
A. Estate Planning
B. Probate
C. Corporate Giving
D. Intestate
Marion purchased a digital camera, paying with a promissory note. The note stated that
Marion promised to pay $300 (the purchase price of the camera) in 10 monthly
installments of $30 plus interest. Payments are due on the first day of each month,
starting in January 2010. The interest is to be calculated as “three percent over the
Chase Manhattan Prime Rate.” Is this instrument negotiable?
A. No, because the future prime rate is not known at the time of the making of the note.
B. No, because the note does not describe a fixed amount of money to be paid.
C. Yes, because the variable rate of interest is calculated by reference to an index.
D. Yes, because the future prime rate is known at the time of the making of the note.
Ahmed hired Shlomo to act as his sales agent in his jewelry store. Ahmed authorized
Shlomo actual express authority to sell items of jewelry up to $1,000 without checking
with him; however, if the price was over $1,000, Shlomo was to check with Ahmed
before making a sale. One day, a customer wanted to buy a necklace for $1,500 and
Shlomo sold it to her without first checking with Ahmed. When Ahmed learned of this,
he was upset because the price was a mistake; it should have been marked at $3,000.
Ahmed wants the customer to return the necklace. Is the customer required to return the
necklace in this case?
A. Yes, because Shlomo did not have express authority to sell that item.
B. Yes, because Shlomo did not have implied authority to sell that item.
C. No, because Shlomo did have apparent authority to sell that item.
D. No, because Shlomo did have implied authority to sell that item.
A principal is _____ if a third party knows or has a reason to know that the agent is
acting for a principal and the principal’s identity.
A. formalized
B. nonexistent
C. disclosed
D. undisclosed
Which of the following characterizes searches?
A. It is covered by the Fourteenth Amendment.
B. Warrants are not required for a search on private property.
C. Consensual searches without warrants violate the Fourth Amendment.
D. Customs searches are valid without a warrant.
Davidson borrowed a motorcycle from his friend, Harley. Harley did not know that the
motorcycle had a defect that could cause the brakes to malfunction. While Davidson
was riding the motorcycle, the brakes malfunctioned. This caused an accident and
Davidson was injured. What duty of care, if any, did Harley owe to Davidson under the
traditional common law rule?
A. The duty of reasonable care—the same duty a bailor owes to a bailee in a bailment
for mutual benefit.
B. The highest duty of care because this was a bailment for the benefit of the bailor.
C. A duty to tell Davidson of any known defects in the motorcycle because this was a
bailment for the benefit of the bailee.
D. No duty of care, because this was a gratuitous bailment.
Which of the following is an essential responsibility of the EPA under the Marine
Protection, Research, and Sanctuaries Act?
A. Designating sites for disposal into oceans
B. Regulating disposal of dredge spoils
C. Overseeing dumping of sewage sludge
D. Conducting the dredging of harbors
Nina has breached a contract between Milo and her, but not so materially. This means
that Milo can:
A. sue only for damages caused by the breach
B. sue for damages for a total breach of the contract
C. cancel the contract
D. withhold his performance, even if the breach is remedied
Which of the following defeats a federal statute in case of a clash between them?
A. A state statute
B. A state constitution
C. An equitable principle
D. The U.S. Constitution