The Model Business Corporation Act states: “All corporate powers shall be exercised
by or under the authority of, and the business and affairs of the corporation managed by
or under the direction of its
a. shareholders.
b. officers.
c. board of directors.
d. executive committee.
Diane, a police officer, stops Tim’s car for a traffic offense. While talking to Tim, she
shines a flashlight into the passenger compartment of Tim’s car and sees evidence of
drug paraphernalia. Which statement is correct?
a. Diane may search the passenger compartment of the car and any place else in the car,
including the trunk, without Tim’s consent.
b. Diane may search the passenger compartment of the car without Tim’s consent;
however, she may not search the trunk of the car without his consent or without a search
warrant.
c. Diane may not search the passenger compartment of the car (nor any place else)
without Tim’s consent or without a search warrant. However, she can require Tim to
remain parked until the search warrant is brought to her.
d. Under the above circumstances, Diane can write Tim a traffic citation but cannot
search the vehicle.
Who operates the business and develops a plan of reorganization in Chapter 11
bankruptcies?
a. The trustee
b. The debtor in possession
c. The state courts
d. The creditors’ committee
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.
Which of the following phrases could be registered as a trademark?
a. Crunchy peanut butter
b. Low-fat peanut butter
c. Green peas
d. yStar peanuts
The series of steps a secured party must take to protect its rights in the collateral against
people other than the debtor is called
a. authentication.
b. recording.
c. obligating.
d. perfection.
A court is much more likely to find a contract unconscionable when one party is a
consumer than if the two parties are businesses.
a. True
b. False
Which of the following can challenge the validity of a de jure corporation?
a. A majority vote of the shareholders
b. The Secretary of State in the state in which the company was incorporated
c. The state in which the company was incorporated as well as any third party
d. No entity can challenge the validity of ade jurecorportaion.
A contract involving the sale of goods from a Texas seller to a French wholesaler must
always use the United Nations Convention on Contracts for the International Sale of
Goods (CISG).
a. True
b. False
As it pertains to consideration, which of the following does NOT constitute value?
a. an illusory promise
b. an act
c. a forbearance
d. a promise to act
The Australian government has opened a for-profit tourist information center in New
York City. If a dispute arises over the lease of the storefront, may the landlord sue the
Australian government in the United States courts?
a. Yes, because the Australian government was engaged in a commercial activity.
b. No, because the Foreign Sovereign Immunities Act forbids U.S. courts from hearing
any case (without exception) that involves a foreign government.
c. No, becasue the only way the Australian government can be sued is if it signed a
written waiver of immunity.
d. Yes, because the Australian government violated international law.
Lawyers originated in Anglo-Saxon courts, where they were used to mediate disputes.
a. True
b. False
James owned real estate. He leased the building to two tenants. An insurance agent
leased the first floor and a law firm leased the second floor. James later sold the land to
Mary, who used the entire building for her business. She discovered that there were
hazardous material storage tanks buried in the land. She had to remove the tanks and
then sued James and the former tenants for the cost of removing the tanks, even though
none of them knew the tanks had been there.
a. James and the two tenants are liable.
b. James is liable to Mary, but the tenants are not.
c. The tenants are liable to Mary, but James is not.
d. Neither James nor the tenants are liable to Mary.
Alex is a director of ABC, Inc. Alex wants to personally make a major purchase from
Bravo Co. If it knew of the opportunity, ABC might be also interested in making that
same purchase. Alex must
a. advise the boards of both corporations of his conflict of interest.
b. first offer the opportunity to make the purchase to the disinterested directors of ABC
or its shareholders.
c. resign from the board of directors.
d. abandon the idea of making the purchase himself.
Pablo, a resident of New Mexico, while driving through Arizona was struck by a SUV
driven by Dick, a resident of California. Dick was speeding when the accident
happened and Pablo suffered severe injuries that ruined a potential acting career. Pablo’s
damages are estimated at $200,000. Discuss the court system(s) in which Pablo may
bring a lawsuit.
Section 16 of the 1934 Act addresses what type of insider trading?
a. Classic insider trading
b. Tipping
c. Short-swing trading
d. Takeovers
Private international law sets out the basic rules of human rights and laws defining the
treatment of refugees, prisoners of war, and international criminals.
a. True
b. False
Two universities located within 30 miles of each other agree to allocate their customers
so as to help them both. The two schools draw a line down a map and each university
agrees to accept students only on their side of the line. What type of horizontal
cooperative strategy does this represent?
a. Market division
b. Refusal to deal
c. Reciprocal dealing
d. Joint venture
If there is a conflict between a state and federal law, generally the federal law will
prevail becauseofthe
a. federalism doctrine.
b. Supremacy Clause.
c. paramount doctrine.
d. Interstate Commerce Clause.
A buyer has an absolute right to reject non-conforming goods as long as the rejection is
timely.
a. True
b. False
The element that distinguishes a contract from a gift is
a. performance of the offeror’s or donor’s promise.
b. the element of consideration which is present in a contract, but not in a gift.
c. whether or not the offeree or donee accepts the offer.
d. whether or not the subject of the gift or contract is illegal.
Charles agrees to store Tuan’s car in Charles’s garage for the winter months while Tuan
visits his grandmother in California. As a bailee, Charles is automatically entitled to use
Tuan’s car while Tuan is away.
a. True
b. False
The largest source of new law comes from court decisions.
a. True
b. False
Dersett Trucking hauls granite for the major granite companies in Minnesota. Dersett
Trucking does not make its trucking services available to the general public. Dersett
Trucking is a contract carrier and does not incur strict liability.
a. True
b. False
Tweeted ads must clearly indicate that they are, in fact, ads by including some
equivalent of “ad” or ‘sponsored.”
a. True
b. False
In a unilateral contract, one party makes a promise that the other party can accept only
by actually doing something.
a. True
b. False
Corporations have a distinct advantage over other forms of business organization in the
area of taxation.
a. True
b. False
In an option contract, the offeror may not revoke an offer during the option period.
a. True
b. False
Which of the following can be negotiable?
a. A promissory note that states, “Pay to Floyd Burchett $3000 on September 1, 2015.”
b. A check written on the standard check form that does not state the date it was issued.
c. A promissory note from Farmer Douglas to Hainey Seeds, Inc. promising to pay for
the seed purchased in the spring with bushels of grain harvested in the fall.
d. An oral promise to pay to the order of Justin $500 on demand.
Lana wrote a check knowing that she did not have sufficient funds in her account. What
is this practice called?
a. check kiting
b. bouncing a check
c. check forgery
d. check covering
When is an assignment valid and enforceable against an obligor?
a. from the moment the assignment it is made
b. from the moment the obligor signs the contract
c. from the moment the assignee gives consideration
d. from the moment the obligor is notified of the assignment
Marty, a 16-year-old, contracts with Cream-of-the-Crop Cycles to buy an $8,000
motorcycle. Marty agrees to make monthly payments until the purchase price plus
interest are paid in full. Which of the following is correct?
a. The contract is voidable by Marty.
b. The contract is void as soon as it is made.
c. The contract is voidable by Cream-of-the-Crop Cycles.
d. The contract is voidable by either Marty or Cream-of-the-Crop Cycles.
In its most basic terms, a fiduciary relationship is one of
a. trust.
b. control.
c. competition.
d. disclosure.
For a security interest to attach, there must be an agreement.
a. True
b. False
The UCC imposes a duty of good faith in the performance of all contracts.
a. True
b. False