An option contract is created when the offeree gives the offeror something of value in
exchange for a promise not to revoke the offer for a stated period of time.
Answer:
Rita cosigned a promissory note for $500 at the Federal Credit Union for her friend
Sue. If Sue defaults on the note, Rita can not only collect $500 from her but also get the
Federal Credit Union’s rights against Sue.
Answer:
Employees in certain types of employment, such as farming, charitable organizations,
and household service are covered by workers’ compensation.
Answer:
A promise to make a gift is usually enforceable.
Answer:
If David sublets his apartment to Annie, he is no longer liable to the landlord for the
commitments he made in the lease.
Answer:
Under the Fair Credit Billing Act, if the credit card holder thinks that the card issuer
has made an error on the statement, he/she has three years to report the error.
Answer:
All employees are covered by workers’ compensation.
Answer:
The promoter’s liability on pre-incorporation contracts terminates when a novation is
signed.
Answer:
In a general partnership, each of the partners is an owner and has a right to share in the
profits of the business.
Answer:
Real property which is detached from the earth can be turned into personal property.
Answer:
An agent may be able to bind the principal on contracts with third persons after
termination of the agency if the third person is unaware that the agency has ended.
Answer:
Market forces serve as a sufficient control on corporate behavior because the market
always reveals social and environmental harm.
Answer:
The Sarbanes-Oxley Act requires CEOs and CFOs of publicly traded corporations to
certify that, to their knowledge, all financial information in quarterly reports is not
false.
Answer:
A negative easement is the legal right to make use of the land of another person.
Answer:
If the agent exceeds his or her authority, liability results’”unless the principal ratifies
the act or the third party has knowledge of the unauthorization.
Answer:
Most states have adopted a comparative negligence system because it distributes the
cost of the accident according to the degree of both plaintiff’s and defendant’s fault.
Answer:
Debtors are considered insolvent if they are unable or fail to pay their debts as they
become due.
Answer:
An officer or director who has acted in bad faith or who is found liable to the
corporation can be indemnified under special circumstances.
Answer:
The basic duty of the seller is to deliver the goods called for by the contract.
Answer:
Under the FLSA, an employer may be liable for pay when an employee works
voluntarily and for short rest periods when the employee cannot use his time
effectively.
Answer:
Which of the following statements is TRUE of the registration requirements of the
1933 Act?
A. It requires the issuer of securities to register the securities with the SEC prior to their
offer or sale to the public.
B. The registration statement becomes effective on its filing by the issuer.
C. It promotes the issuer’s ability to communicate with prospective purchasers of the
securities.
D. The registration statement excludes basic rules regarding the timing, manner, and
content of offers and sales.
Answer:
The Resource Conservation and Recovery Act:
A. establishes a program governing the injection of wastes into wells.
B. has the responsibility for designating disposal sites and for establishing the rules
governing ocean disposal.
C. provides the federal government and the states with the authority to regulate
facilities that generate, treat, store, and dispose of hazardous waste.
D. requires identification and assessment of sites in the United States where hazardous
wastes had been spilled, stored, or abandoned.
Answer:
A motion to dismiss made by the defendant is granted when:
A. the defendant is scared of losing the case.
B. it is clear that the plaintiff does not have a case and it would be wasteful to continue.
C. either party feels that the judge is not impartial.
D. people or groups other than the parties involved are interested in the outcome of a
certain appeal.
Answer:
Charlene, Derwood, and Elwyn form a partnership. They make no express agreement
concerning how profits are to be divided. Of the $30,000 initial capital of the firm,
Charlene and Derwood each contributed $12,000. Elwyn contributed $6,000. The
partnership had a profit of $15,000 during the first year of operation of the business.
What is Derwood’s share of the profit?
A. $5,000
B. $6,000
C. $10,000
D. $12,000
Answer:
A director:
A. cannot be removed from office if he/she voluntarily failed to attend directors’
meetings.
B. can be removed from office if he/she has acted contrary to the interests of the
corporation.
C. cannot be removed from office by shareholders without any cause.
D. can be removed from office without being given notice or a hearing.
The MBCA permits shareholders to remove directors with or without cause. A director
who has failed to or is unable to attend and participate in directors’ meetings or who has
acted contrary to the interests of the corporation can be removed for cause.
Answer:
An involuntary bailee:
A. has the right to destroy the property in any circumstance.
B. has the right to use the property in any circumstance.
C. is obliged to find the owner and return the property under any circumstance.
D. is obliged to assume control of the property in certain circumstances.
Answer:
If Gwen hands Lisa a detailed offer for the purchase of Lisa’s pottery wheel and Lisa
signs the offer without changing any of its terms:
A. the parties have created a bilateral contract.
B. the parties have created a contingent contract.
C. the parties have created a unilateral contract.
D. the parties have created a multilateral contract.
Answer:
The board of directors of Meckes Corporation, at a regular meeting of the board,
entered into a contract with Peter, one of the directors. The agreement called for the sale
to Peter of a retail store the corporation operated. There were 12 board members, 10 of
whom were present at the meeting. One of the directors present was Peter. After a
lengthy discussion in which Peter participated, nine directors, including Peter, voted in
favor of the contract and one voted against it. In view of these facts, which of the
following is correct?
A. A director cannot enter into a contract with a corporation of which he is a director.
B. The contract between Peter and the corporation is illegal.
C. If the contract is unfair to the corporation, it is voidable at the option of the
corporation.
D. The contract is valid regardless of whether its terms are harsh, because Peter’s
presence was not necessary for a quorum and his vote was not necessary for approval of
the contract.
Answer:
According to the MBCA, all corporate powers shall be exercised by or under the
authority of, and the business and affairs of a corporation shall be managed under the
direction of:
A. the board of directors.
B. the president.
C. the shareholders.
D. the chairman of the board.
Answer:
A contract is voidable due to:
A. lack of capacity because of felony.
B. adjudication of insanity.
C. ratification by minors.
D. lack of capacity because of minority.
Answer:
The Restatement approach to third-party negligence suits against accountants:
A. requires that the accountant be unaware of the third parties.
B. holds that the accountant is liable only to those third parties who are unreasonably
foreseeable.
C. does not protect the typical investor who was unknown to the accountant and his/her
client when the financial statements were prepared.
D. requires that the accountant be unaware of the third parties reliance on the financial
statements.
Answer:
Which of the following is TRUE of vertical price-fixing?
A. It is an attempt by competitors to interfere with the market and control prices.
B. Vertical price fixing is not within the scope of section 1 of the Sherman Act.
C. It is illegal per se for manufacturers to state a ‘suggested retail price” for their
products.
D. It is an attempt by manufacturers to control the resale price of their products.
Answer:
The OECD’s Principles of Corporate Governance insists on:
A. greater immunity power for corporate managers.
B. lesser transparency within corporate structures.
C. greater concealment of corporate governance policies to avoid conflicts of interest.
D. greater protection for whistleblowers.
Answer:
Under the Revised Article 3, a check deposited in a depositary bank without
indorsement:
A. makes the bank a holder of an item delivered to it only if the customer indorses it.
B. makes the bank a holder of an item delivered to it for collection whether or not the
customer indorses it.
C. makes the customer the holder only if the bank indorses it at the time of delivery.
D. makes the customer the holder only if the bank at the time of delivery qualified as a
holder.
Answer:
Which of the following best describes a stale check?
A. A check that has been written by the drawer for a date in the future which a bank can
honor even before the date on the check.
B. An incomplete check of the customer that is presented to the drawee bank for
payment.
C. A check that has been written by the maker dated at some point in the past, which
can be paid and charged to the customer’s account even at the present date.
D. A check that is more than six months old for which a bank does not owe its customer
a duty to pay out of the customer’s account.
Answer:
On October 25, 1989, Mina Loy sent a letter to Carl Van Vechten which said, “I hereby
offer to hire you to paint my house for $4,000 during Thanksgiving break. Your
acceptance of this offer must be by first-class mail and must reach me no later than
noon on November 1, 1989.” Vechten was so excited when he received her letter that he
telephoned Loy on October 26 and said “I accept.” Which of the following is a TRUE
statement?
A. There is a valid acceptance and a binding contract because the telephone call was an
authorized means of acceptance.
B. There is a valid acceptance and a binding contract because the telephone call was a
reasonable means of acceptance.
C. There is a valid acceptance and a binding contract because the telephone call was a
faster means of acceptance than the mail.
D. There is no acceptance and no contract in this situation as it is clearly mentioned by
the offeror that the acceptance must be by mail.
Answer:
Tony contracted to buy wheat from farmer Brown. It was contracted that Tony would
pay farmer Brown, three days after the delivery of the wheat. Brown’s delivery would
be a _____ of Tony’s duty to pay.
A. constructive condition
B. condition subsequent
C. constructive concurrent condition
D. constructive condition precedent
Answer:
For improper execution or failure to execute payment orders, banks can be liable:
A. to the originators, for their expenses in the transaction along with incidental
expenses and interest losses.
B. to the beneficiaries, for their incidental expenses.
C. to the originators, for consequential damages.
D. to both the originators and beneficiaries, for consequential damages even though the
written agreement of the receiving bank does not provide for it.
Answer:
Turnstile Corporation’s meeting of shareholders is being held. Principles of cumulative
voting apply to the election of directors. If 400 shares are being voted and four directors
are to be elected, how many votes are needed to elect one director?
A. 100
B. 101
C. 80
D. 81
Answer:
What kind of writing is required under the statute of frauds?
Answer:
What is an implied guarantee?
Answer:
Drucker Manufacturing’s payroll records revealed that during June, all employees
worked an average of 48 hours. Each worker received $7.20 an hour for the first 40
hours per week and $10.80 for the eight hours overtime. In May, some employees had
been paid as much as $8.00 per hour for the first 40 hours, but the company reduced the
scale when female employees complained that men were being paid more for the same
work. The records also revealed that the plant manager and personnel manager worked
as many as 60 hours per week but did not receive overtime pay. Discuss any legal
problems that may exist.
Answer:
What is the main difference between recklessness and negligence?
Answer:
What is the meaning of ex officio authority?
Answer:
Define crimes, and differentiate between felonies and misdemeanors, mentioning the
penalties by which each is punishable.
Answer:
Explain the tort of battery.
Answer:
What are the most common ways that an obligor on a negotiable instrument is
discharged from his/her liability?
Answer: