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1) under the mbca, only directors of a corporation are entitled to mandatory
indemnification rights.
2) the tort of malicious prosecution affords a remedy when the defendant mounted a
wrongful and unjustifiable civil suit against the plaintiff.
3) the most important elements for violation of rule 10b-5 are misstatement or omission
of material fact and negligence.
4) the justice department and the federal trade commission (ftc) share responsibility for
enforcing the clayton act.
5) the do-not-call registry is unconstitutional because it discriminates and does not
apply to charitable and political callers.
6) the modified impact rule does not require an element of direct physical contact.
7) generally, the procedure for declaring a forfeiture and recovering property sold on a
land contract is simpler and less time-consuming than foreclosure of a mortgage.
8) a condition subsequent cannot be a valid reason for the discharge of a duty.
9) transfer of corporate assets to shareholders for less than fair market value is called
looting.
10) the legal relations between agent and subagent closely parallel the legal relations
between principal and agent.
11) a bequest in a will is a gift of personal property or money.
12) arthur and brian have entered into a contract with an enforceable liquidated
damages provision that states that brains recovery will be $10,000 in the event of
arthurs breach. arthur breaches the contract. brain loses $50,000 in consequential
damages as a result. brains recovery is limited to $10,000.
13) sometimes, article 2 of the ucc holds merchants to standards different from the
standards it applies to nonmerchants.
14) when there are insufficient funds in a drawers account, and a check is presented to
be honored, the bank can:
a.honor the check, and charge the customer on the next deposit.
b.return the check, and charge a penalty.
c.hold the check and payment, even if the holder suffers a loss against the drawer.
d.charge a fee to the holder in due course and to the drawer.
15) which of the following is true of price terms in a contract?
a.a fixed price term is essential for a binding sales contract.
b.price terms cannot be determined at a future date.
c.no contract is created if price terms are not agreed on.
d.a contract is void if price terms are omitted.
16) which form of damages can have the effect of reducing the liability of the party
guilty of a breach of contract?
a.incidental damages
b.consequential damages
c.liquidated damages
d.mitigated damages
17) under which of the following systems of foreclosure does the creditor have no right
to recover any deficiency between the value of the property and the amount of the debt?
a.strict foreclosure
b.conditional foreclosure
c.accommodative foreclosure
d.compensated foreclosure
18) controlling the assault of non-solicited pornography and marketing act of 2003 was
enacted to regulate:
a.personal unsolicited calls.
b.personal e-mail messages.
c.commercial e-mail messages.
d.commercial unsolicited calls.
19) which of the following is true regarding the approach taken by the ucc toward the
proper means of acceptance and the implications of using it or not using it?
a.if the offer authorizes a certain means of acceptance, the offeree must use that means
or else there is no acceptance.
b.if the offer authorizes a certain means of acceptance and the offeree uses another
means, a contract is formed, but never before the offeror receives the acceptance.
c.where the offer stipulates a certain means of acceptance, any reasonable means of
acceptance will create a contract.
d.the ucc does not change the traditional rule that, where the offer stipulates a certain
means of acceptance, the acceptance must use that means or there is no contract.
20) according to the rupa, a partner:
a.is entitled to a salary or wages.
b.is entitled to compensation based upon his capital contribution.
c.is entitled to an equal share of the profits.
d.is entitled to compensation based on the amount of time he contributes to the
business.
21) an absolute $136,875 homestead cap applies if:
a.the debtors aggregate interest exceeds $1,450 in value in jewelry held primarily for
the personal, family, or household use of the debtor.
b.retirement funds that are in a fund or account are exempt from taxation under the
internal revenue code.
c.the debtors interest exceeds $136,875 in value in real or personal property.
d.the bankruptcy court determines that the debtor has been convicted of a felony.
22) rachels father gave her a check drawn on his checking account marked payable to
the order of rachel stern. this instrument is order paper, because:
a.the instrument uses the word order.
b.the instrument names a specific payee.
c.the instrument was properly negotiated to rachel.
d.the instrument was an order to pay cash.
23) under section 11 of the securities act of 1933, an auditor who issues an opinion
regarding financial statements of a company making a public distribution of securities
can be held liable for errors in the expertised portions of the:
a.registration statement.
b.annual 10-k report.
c.8-k current report.
d.proxy statements.
24) 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
25) which of the following instruments is not considered as security?
a.mortgage notes
b.treasury stock
c.certificate of interest
d.investment contract
26) amber blue owns a small hotel of the bed & breakfast variety. hunter greene, a
tenant at blues bed & breakfast, sustained severe physical injuries when an intruder
broke into greenes room and attacked him with a baseball bat. the intruder neither was
an employee of blues nor otherwise had any connection with the bed & breakfast. green
filed a tort action against blue in an effort to collect damages for the medical expenses,
lost earnings, and pain and suffering he experienced as a result of the intruders attack.
greene argued that owners of commercial property such as a bed & breakfast are liable,
as a matter of law, whenever guests are injured while on the premises. blue argued that
such property owners cannot be held liable when the guests injuries were directly (and
criminally) inflicted by a third-party attacker. evaluate the arguments made,
respectively, by greene and blue. explain your supporting reasoning.
27) landlord has leased the property to the tenant. tenant has to pay $5 as a late charge
for the late payment of rent. tenant pays his rent late for five month, but landlord
accepts it without objection. can landlord afterward recover the late charges?
28) jane and ridge are partners in a computer animation firm. jane retires from the firm,
but tells ridge it is ok to leave his name on the entrance door to the firm and in the
telephone listing. alex, a new client, visits the firm after telephoning the firm. alex has
seen janes name listed in the phone book along with ridges and the firms names. he also
sees janes name on the entrance door to the firm. believing jane is a partner with ridge,
alex contracts to have the firm develop animation for his upcoming film. ridge,
however, never performs the contract. alex sues ridge and jane. is jane liable to alex?
29) davis owes a $5 million debt to the c bank. he also owes $2 million to samuel.
however right now, davis is having trouble paying either loan. c bank is willing to
finance davis debt, but only if samuel co-signs. samuel, who fears that hell get nothing
on his $2 million loan if davis doesnt get some help from the bank, is willing to do so.
thus, c bank, samuel and davis complete a three-party agreement in which the bank
agrees to finance the $5 million debt, davis agrees to pay it back at a certain rate over a
certain term, and samuel agrees to pay the debt in the event that davis first defaults. is
this agreement covered by the statute of frauds? why or why not?
30) under the general incorporation law, the minimum number of owners a business
needs to be incorporated as a for-profit corporation is:
a. 10
b. 5
c. 1
d. 20
31) what is an exculpatory clause?
32) the securities and exchange commission (sec) is investigating bob deslob for
possible violations of federal securities laws. if the violations occurred, deslob could be
subjected to adverse civil consequences. as part of this investigation, the sec has issued
a subpoena duces tecum calling for deslob to produce copies of his federal income tax
returns for the years 2000 through 2002. assume that the investigation is of the sort
authorized by law and is being conducted for a proper purpose. also assume that it is
plausible for the sec to believe that the tax return copies could contain information
relevant to the investigation. deslob wishes to have the subpoena duces tecum quashed
(i.e., invalidated by court order). what would be the strongest argument for deslob to
make to the court?
33) what are the three basic requirements for a security interest to be attached to the
goods of a debtor?
