All but which one of the following is a purpose of bankruptcy legislation?
a. To preserve existing business relations.
b. To punish recalcitrant debtors.
c. To bring about a quick, equitable distribution of the debtor’s property among
creditors.
d. To allow rehabilitation of debtors.
In Saudi Arabia v. Nelson, the court held:
a. under the Foreign Sovereign Immunities Act, a foreign state is presumptively under
the jurisdiction of the U.S. courts.
b. the Foreign Sovereign Immunities Act provides the sole basis for obtaining
jurisdiction over a foreign state in the courts of this country.
c. whether a state acts in the manner of a private party is a question of motivation.
d. in determining whether a state engages in commercial activity, the question is
whether the foreign government is motivated by profit.
Saul is a sales representative for the Incman Corporation. Saul has a terrible driving
record and has had his driver’s license revoked, but nevertheless he continues to drive
the company car for his job. One day he drives too fast for conditions, goes through a
red light, and strikes a pedestrian. The accident happened despite the fact that Saul’s
supervisor at Incman had repeatedly reprimanded him and advised him to drive more
cautiously. Incman:
a. has no liability, because they did not authorize Saul to drive carelessly.
b. has no liability, because Saul’s actions were not a tort.
c. is liable even though it did not authorize Saul to drive carelessly, because it employed
an improper person as its agent.
d. has no liability, because it has adequately supervised Saul as its agent.
John operates a small repair business and is in desperate need of a certain type of
building material. He obtains the material from a large corporation, but is charged a
grossly unreasonable price and is forced to buy other material he does not need. In view
of the buyer’s unequal bargaining power and unreasonable terms of the contract, this
may be a case of:
a. in para delicto.
b. partial illegality.
c. substantive unconscionability.
d. procedural unconscionability.
The Code has enlarged the common law voidable title doctrine by providing that a good
faith purchaser for value obtains title from one possessing voidable title even if that
person obtained voidable title by:
a. criminal fraud punishable as larceny.
b. fraud as to her identify.
c. exchange for a subsequently dishonored check.
d. All of the above.
Damages for reliance include expenses for:
a. lost profits.
b. injury to the person.
c. preparing to perform.
d. punishment of the breaching party.
Taxes imposed at death include:
a. income tax that the estate must pay on income received during estate administration.
b. federal estate tax on the transfer of property at death.
c. state inheritance tax on the privilege of an heir or beneficiary to receive the property.
d. All of the above.
A manifestation by the buyer of his unwillingness to become the owner of the goods is:
a. acceptance.
b. revocation.
c. rejection.
d. tender.
Stark enters into a contract with a contractor to build a large shopping mall in River
City. Donner will greatly benefit from this contract since his convenience store is
adjacent to the mall. Donner in this instance is:
a. an implied beneficiary.
b. a partial beneficiary.
c. a donee beneficiary.
d. an incidental beneficiary.
Under the UCC, a(n) __________ is a practice or method of dealing regularly observed
and followed in a place or vocation or trade.
a. course of dealing
b. usage of trade
c. course of performance
d. integrated document
On January 21, Cara wrote to Pandora Mfg. asking for shipment of 100 swimsuits on
90-day credit. In the letter, she gave references that indicated that her store was
financially sound. Actually she had bills that she could not pay and hoped to turn the
business around with the summer bathing suit sales. Pandora ships the suits on March 1;
they are received March 15. Cara immediately puts them on display and 27 are sold by
March 30 when Pandora discovers that Cara has lied. Pandora may:
a. recover 73 suits plus incidental damages.
b. recover 10 suits provided that Pandora acts in 10 days.
c. recover no suits since it’s been 10 days since delivery.
d. recover 73 suits.
The court in the Schoenberger v. Chicago Transit Authority case held that:
a. the actual authority of an agent may be founded on the acts or words of the agent.
b. implied authority is such authority as the principal knowingly permits the agent to
assume.
c. actual authority is such authority as a reasonable, prudent person, exercising
diligence and discretion, in view of the principal’s conduct, would naturally suppose the
agent to possess.
d. ZuChristian had neither actual nor apparent authority to make an offer of a specific
salary or to make a promise of additional compensation.
An interest that arises in a third party in the future is called a(n):
a. reversion.
b. remainder.
c. assignment.
d. fee simple absolute.
A seller has breached his contract by providing unfit seed for the planting of beans.
Damages would include:
a. the lost profits from a contract to sell the bean crop.
b. the cost of keeping the defective seed in a storeroom.
c. the cost of replacement seed.
d. All of the above.
Which of the following would NOT be negotiable? Explain.
a. A check with the amount payable omitted.
b. A draft for 3,000 bushels of corn.
c. A check written in pencil on a paper towel.
d. A note stating that it is secured by a mortgage on a specified parcel of land.
e. A note stating “IOU fifty dollars.”
Luke typically spends 50-55 hours per week working in the real estate partnership he
co-owns with Spencer. Spencer only spends about 30 hours a week on partnership
business. Under the RUPA:
a. Luke would be entitled to payment from the partnership for the extra 20-25 hours per
week he spends on partnership business unless a partnership agreement denies this
right.
b. the partners cannot agree to deny extra payment for extra work by a partner.
c. unless the partners have otherwise agreed, Luke is not entitled to payment for his
work for the partnership, even if it is disproportionate to his partner’s work.
d. Luke would be entitled to payment from the partnership only if the amount of time
and effort he expends on partnership business is grossly disproportionate to that spent
by his partner.
The CISG specifically excludes sales of:
a. goods bought for personal, family, or household use.
b. ships or aircraft.
c. electricity.
d. All of the above.
Which of the following is correct regarding the fiduciary duties in a limited
partnership?
a. A general partner has a fiduciary relationship to the limited partners, but not to any
other general partners.
b. Judicial authority seems to suggest that the limited partner has no fiduciary duty to
the partnership.
c. The fiduciary duty of the general partner has little effect upon the interests of the
limited partners, because they have no ability to manage or control the partnership.
d. All of these are correct.
Recovery of damages under Rule 10b-5 requires proof of:
a. reliance on a misstatement or omission.
b. materiality.
c. connection with the purchase or sale of a security.
d. All of the above.
Larry leases his farm to Tom for a period of twenty years. What interest does Larry
have in the land?
a. A vested remainder.
b. A reversion.
c. A private easement.
d. A possibility of reverter.
Which of the following is untrue regarding the relationship of an accountant and the
client?
a. It is based upon mutual agreement.
b. The accountant is under an ethical obligation not to disclose confidential information.
c. The accountant must act in a competent and professional manner.
d. The accountant is under a contractual obligation to follow all of the client’s
instructions and to use the client’s figures without question.
Assume you are the creditor in each of the following situations. Identify the kind of
security agreement that is involved in each transaction and explain how you would
perfect that agreement.
a. You are the creditor (Everby Bank), and you lend Brisco Gaines $5,000 for a sound
system.
b. First Bank loans Doris $10,000 to purchase inventory for her store.
c. First Bank loans Brad $5,000 to purchase a computer for use in his store office.
d. Kevin needs cash for gambling debts. He brings in his CD player to secure a $500
loan.
What are the liabilities of a limited partner in a limited partnership?
Bernice is withdrawing from a partnership. How can she protect herself against liability
on contracts the firm enters after her withdrawal?
The signature of the maker of a note may be typewritten or signed by means of a
signature stamp so long as it represents a present intention to authenticate the
instrument.
Temporary twenty-day automatic perfection of a negotiable instrument would prevent
any future holder of the instrument from taking priority.
Monopoly power is tested by determining how big the corporation is in terms of total
assets.