If a shareholder dissents to a proposed business combination, he is entitled to receive
the fair value of his shares. In order to do so, the shareholder must do which of the
following?
a. Attack the validity of the corporate action that gives rise to his right to obtain
payment or to have the action rescinded
b. Obtain an appraisal of the value of the shares
c. Oppose the proposed corporate action verbally at a special meeting of the
stockholders
d. Make a written demand upon the corporation within the set time period
Anita tells Bob that unless Bob pays her $5,000, she will tell his customers that he was
once arrested for shoplifting as a teenager. If the statement that Bob shoplifted as a
teenager is true:
a. in most jurisdictions Anita has committed the crime of extortion.
b. Anita has committed no crime since Bob actually did shoplift as a teenager.
c. Anita has committed the crime of bribery.
d. in all jurisdictions in the United States, Anita would have to have received the money
from Bob to be charged with a crime.
In an article about a prominent judge, a newspaper indicates the possibility that the
judge had organized crime connections. The judge sues. The judge will have a cause of
action:
a. if the suit is for defamation and the newspaper responsibly checked its sources.
b. if the suit is a suit for intrusion.
c. whether or not the newspaper checked its sources as long as the information printed
is ultimately found to be untrue.
d. if the information is untrue and the newspaper did not check its sources.
Tony is fraudulently induced to issue a check to Rita. Tony has:
a. a claim to ownership of the check.
b. a defense to Rita’s demand for payment.
c. neither a claim nor a defense.
d. both a claim and a defense.
A(n) ____ is a contract between a promisee and a promisor by which the promisee
agrees to accept and the promisor agrees to render a substituted performance in
satisfaction of an existing contractual duty.
a. accord
b. mutual rescission
c. material alteration
d. novation
In which of the following ways is a general partner the same as a limited partner in a
limited partnership?
a. Right of management and control
b. Liability to creditors of the partnership
c. Duty of care to the other partners and to the partnership
d. General partners differ from limited partners in all of the above ways.
Which of the following is NOT true about private placement exemptions that do not
involve any public offering?
a. Registration or disclosure is never required
b. General solicitation of purchasers is not allowed
c. Resale of securities is restricted
d. None of the above
Section 16(b) of the 1934 Securities Exchange Act deals with short-swing profits of
“insiders.” For purposes of the section, which of the following are not “insiders”?
a. Attorneys with access to corporate records
b. Directors
c. Officers
d. 10 percent shareholders
A fiduciary is a:
a. person in a subservient position.
b. person who owes a duty of trust, confidence, and loyalty to another.
c. form of formal conduct.
d. person of equal power and control.
On June 1, Supertread Tire Company entered into a contract to provide 100 tires per
month to ZYX Cycle Company at $30 per tire for the next two years. The October
shipment consisted of 100 badly defective tires. ZYX Cycle Company:
a. can treat the whole contract as breached.
b. can reject the October shipment if it cannot be cured in a timely manner by
Supertread.
c. cannot reject the October shipment since it is part of the installment series.
d. Both (a) and (b) are acceptable under the UCC.
It would NOT be a violation of Title VII of the Civil Rights Act of 1964 if an employer
refuses to hire an applicant for a job because the person is:
a. a Mormon.
b. a woman.
c. sixty-four years old.
d. Hispanic.
Arthur negligently stopped his car on the highway. Betty, who was driving along, saw
Arthur’s car in sufficient time to attempt to stop. However, Betty negligently put her
foot on the accelerator instead of the brake and ran into Arthur’s car. If Arthur sues
Betty for damages:
a. Arthur’s contributory negligence will prevent his recovery from Betty in all
jurisdictions.
b. Betty had the last clear chance to avoid the accident and will bear full legal
responsibility for it.
c. Arthur has assumed the risk of the accident.
d. because both parties were negligent, in a state that follows the modified comparative
negligence doctrine, both parties will share the liability for their injuries in proportion
to their degree of fault unless the court finds Arthur’s contributory negligence was as
great as or greater than Betty’s negligence.
In bringing a warranty action, the buyer must prove:
a. whether the warranty was express or implied.
b. that breach of the warranty proximately caused the loss suffered.
c. reliance on the affirmations, promises, descriptions, samples, or models the seller
made or used.
d. All of the above.
e. None of the above.
Community Hospital in Atlanta entered into a contract to buy delicate lab equipment
from D & D Company in Denver. The contract states shipping terms as FOB, Denver.
While in transit the equipment was damaged beyond repair by the carrier, Fly-by-Nite
Air Lines. The carrier is in weak financial condition and refused to pay for the
equipment. In this case:
a. D & D Company must replace the equipment at no cost to the hospital.
b. Community Hospital has risk of loss.
c. D & D Company and Community Hospital will share the loss equally.
d. risk of loss will depend on which party chose Fly-by-Nite as the carrier.
The right of redemption would require:
a. a court order.
b. assent of all parties.
c. payment of the entire debt with interest.
d. payment of past due installments.
The FTC remedy of “affirmative disclosure” would require:
a. a new ad that admits the first ad was false.
b. providing certain information in a company’s ads.
c. that the advertiser desist from deception in all products it markets.
d. All of the above would be required.
Darla offers to pay Edward $6,000 for Edward’s car, provided that Darla receives that
much from her uncle’s estate, which is currently being probated. She expects to know
for sure how much she will receive within a week or so. In this case:
a. this is an illusory contract, because Darla doesn’t know whether she will receive the
money for sure.
b. the consideration moving from Darla to Edward is the promise of $6,000 subject to a
condition.
c. Darla’s conditional promise is sufficient consideration unless Darla knows she cannot
receive at least $6,000 from her uncle’s estate.
d. Both (b) and (c).
The Fair Debt Collection Practices Act prohibits:
a. communication with a debtor who is represented by an attorney.
b. calls after 6 p.m.
c. contacting third persons to find out the whereabouts of a debtor.
d. a creditor from calling a debtor regarding payment of a bill.
Which of the following is not considered “goods” within the meaning of Article 2?
a. An unborn calf
b. A field of corn still in the field
c. Timber which is still standing
d. All of the above are goods under Article 2.
Bryant, doing business as Fair Realty, employs Chris and Deborah as salespersons.
Tammy contracts with Bryant to sell her house because she is aware of the good
reputation of Fair Realty’s salespersons. In this situation:
a. Chris and Deborah are agents of Tammy and Fair Realty but they have no authority
to show Tammy’s house to prospective purchasers and to make representations about
the house unless Tammy expressly and explicitly grants this authority directly to them.
b. Chris and Deborah are employees/agents of Fair Realty and subagents of Tammy,
and they have authority to show Tammy’s house to prospective purchasers and to make
representations about the house.
c. Bryant cannot appoint subagents because Tammy’s appointment of him reflected her
confidence in and reliance upon his personal skill, integrity, and other qualifications.
d. Chris and Deborah are subagents of Fair Realty and, as such, have a fiduciary duty
only to Fair Realty.
The statute enacted by Congress which makes electronic records and signatures valid
and enforceable for many transactions affecting interstate or foreign commerce is the:
a. UETA.
b. UCC, Article 2E.
c. Electronic Signatures in Global and National Commerce Act.
d. Interstate and Foreign Commerce Electronic Transactions Act.
If a person dies intestate, his property will be:
a. distributed according to the clear intention of the decedent if ascertainable.
b. passed to his living children.
c. kept by the state.
d. Not necessarily any of the above.
Inga runs a Swedish health spa in Connecticut. She orders 100 loofah sponges from a
company in California. They are sent “F.O.B. Hartford, Connecticut,” but they never
arrive at Inga’s. What consequence?
a. Inga has to pay anyway since it was a destination contract.
b. The California company is required to bear the loss since the sponges had not yet
reached the F.O.B. point.
c. The California company and Inga will have to split the loss since they did not specify
in their contract when the risk of loss would pass to Inga.
d. It cannot be determined from the information given who has the risk of loss.
Which of the following does not terminate a trust?
a. Death of the beneficiary
b. The trustee acquires both equitable and legal title to the trust corpus
c. Occurrence of a date established in the trust instrument
d. Fulfillment of the trust purpose
e. Both (a) and (b).
Identify the following trade symbols according to their type.
a. The Underwriter’s Laboratory Mark.
b. The apple used by Apple Computers.
c. The “GM” symbol that appears on General Motors’ automobiles.
d. The “A” symbol used by American Airlines.
e. The Muppets characters Miss Piggy and Kermit the Frog.
f. The Union Made symbol.
A(n) ____ indorsement is an indorsement made by a person that is not the holder of the
instrument. The effect of this indorsement is to make the signer liable on the instrument
as an indorser.
a. anomalous
b. blank
c. unqualified
d. special
Betty likes to shop using her credit cards.
The Consumer Product Safety Commission:
a. only has the authority to educate the public concerning product safety problems.
b. uses data it gathers to set uniform product safety standards for goods such as toys and
lawn mowers.
c. can only make manufacturers voluntarily submit their products for testing if the
product falls below its regulatory standards.
d. has no enforcement powers since compliance with its regulations is left up to the
manufacturer.
The ____ is responsible for enforcing federal anti-discrimination laws.
a. OSHA
b. Social Security Administration
c. EEOC
d. NLRB
A bank robbery has occurred, and the banker’s association has offered a $1,000 reward
for information leading to the arrest and conviction of the robber. Several people are
claiming to be entitled to the money. Which of them is eligible?
a. The employees of the bank
b. An on-duty sheriff’s deputy in the county where the arrest occurred
c. An off-duty deputy sheriff from a county other than the one where the arrest occurred
d. None of the above are eligible.
The agency responsible for enforcing the federal securities laws is the:
a. FTC.
b. SEC.
c. Commerce Department.
d. EEOC.
The customary manner of disclaiming the indorser’s contractual liability is to add which
of the following sets of words before or after his signature?
a. For collection only
b. Without recourse
c. Pay to the order of
d. For deposit only
Since 1981, the Consumer Product Safety Commission has relied primarily on
mandatory safety standards.
Describe how a criminal case is commenced and how it proceeds through the court
system. What are the various stages in the proceeding? Be sure to use the correct
terminology.
Income from some types of business entities is taxed twice.
Kelly has been appointed the manager of a company that has just begun the direct
export of its product. What precautions should he take to assure that the company
would in fact be paid for its products when the company has never dealt with the buyer
before and is new to the international legal environment?
Unlike larceny, embezzlement requires the intent to permanently deprive the owner of
his property.
The doctrine of necessaries applies in the same way to minors and mental incompetents.
The warranty of merchantability is found in Section 402A of the Restatement of the
Law of Torts.
Barbara put her old clothes in a box in the bedroom of her roommate. The roommate
now owns the clothes, because they are presumed to be a gift.
A mental illness or defect of one of the parties to a contract automatically makes a
contract void.
Under Revised Article 3, a check which meets all the requirements of being a
negotiable instrument except that it is not payable to bearer or order is nevertheless a
negotiable instrument.
The UCC is substantially the same as the common law with regard to the doctrine of
material breach of contract.
Subsequent indorsers are always bound by an indorsement in trust.
An accountant must disclose the contents of his working papers under a court order.
Federal statutes prohibit officers and directors from purchasing or selling shares of their
corporation’s stock without adequately disclosing all material facts in their possession
that may affect the stock’s actual or potential value.
A person would be liable to the rightful owner of stolen property for conversion even
though the person bought it in good faith from the thief and without knowledge that it
had been stolen.
A court faced with an unconscionable lease contract may refuse to enforce the entire
contract.
The debtor who grants a mortgage is the mortgagee.