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1) if grant promises to sell his regular season football tickets to carson on condition that
indiana university wins the rose bowl, indianas winning the rose bowl is an express
condition of grants duty to sell the tickets.
2) the basic priority rule for competing security interests is that the first secured party to
attach wins.
3) if the buyer and seller have agreed to the manner in which the resale is to be made,
the courts will enforce the agreement unless it is found to be unconscionable.
4) an accountant can be required to bring his/her working papers into court and to
testify as to matters involving the clients tax records and discussions with the client
regarding tax matters.
5) the professionals duty to exercise reasonable care is a subset of the negligence
standard of tort law.
6) in order for a unilateral mistake to make a contract voidable, either the nonmistaken
party must have caused or had reason to know of the mistake, or enforcement of the
contract must be unconscionable.
7) the securities exchange act of 1934 does not impose any criminal liability for
violation of any provision of the 1934 act.
8) gross inadequacy of consideration is by itself a sufficient reason to set aside a
contract.
9) it is always necessary for an agent to disclose the identity of the principal to any third
person with whom he is contracting; else the contract becomes void.
10) an agencys interpretive rules:
a.have the full force and effect of law.
b.specify how the agency will conduct its hearings.
c.are not binding on businesses and the courts.
d.are seldom heeded by business because of their advisory nature.
11) marc and sonia were the only members of the ms limited liability company. marc
then sold all his rights in the llc to gertrude. as a result:
a.gertrude becomes a member of the llc.
b.gertrude gains the right to receive marcs share of distributions.
c.marc ceases to be a member of the llc.
d.the llc becomes a sole proprietorship of sonia.
12) camm corp. has 10,000,000 common shares outstanding. its four directors are
elected by cumulative voting. to elect one director, a shareholder must own at least:
a.5,000,001 shares.
b.2,000,001 shares.
c.2,500,001 shares.
d.5,000,000 shares.
13) in which of the following cases does apparent authority arise?
a.when a principal causes a third party to believe that the agent is authorized to act in a
certain way
b.when a principals manifest consent is communicated directly to the agent
c.when a person falsely represents himself as an agent of a principal to a third party
d.when an agent reasonably believes that the principal wants him to act in a certain way
14) which of the following activities is classified as doing business for the purpose of
intrastate business qualification?
a.owning or using real estate for general corporate purposes.
b.soliciting orders by mail that require acceptance outside the state.
c.selling products or services through independent contractors.
d.conducting an isolated transaction that is completed within 30 days.
15) a surety has a right of _____, which is the right of the surety or guarantor to require
the debtor to make good on his commitment to the creditor when he (1) is able to do so
and (2) does not have a valid defense against payment.
a.reimbursement
b.exoneration
c.contribution
d.subrogation
16) what is substantive law?
a.the laws that govern the rights and duties of people as they act in society.
b.the code of conduct of government bodies.
c.the procedures followed by congress to make statutes.
d.the procedures followed by state legislatures in creating ordinances.
17) which of the following statements characterizes an implied warranty of fitness?
a.it is covered under ucc section 402a.
b.the seller relies on the buyers skill or judgment in making a purchase.
c.any seller, merchant or nonmerchant may make this implied warranty.
d.it has the same tests as those for implied warranty of merchantability.
18) george has signed a promissory note and huber, nick and jeffery are cosureties of
their friend george. when george defaults, jeffery pays the whole obligation. jeffery is
entitled to collect one third from both nick and huber. this is known as the:
a.right of contribution.
b.right of exoneration.
c.right of redemption.
d.right of collection.
19) a share split within the same class of shares generally:
a.increases the net value of the shares following the split.
b.decreases the net value of the shares following the split.
c.has no effect on the net value of the shares following the split.
d.reduces the capital surplus and increases the number of shares authorized.
20) a _____ is a security interest in real property or a deed to real property that is given
by the owner as security for a debt owed to the creditor.
a.bill of sale
b.note of trust
c.mortgage
d.quasi-contract
21) investigative reporter maxine mcraker filed a freedom of information act (foia)
request that the food and drug administration (fda) provide her copies of certain
documents in its possession. a private citizen, al kaseltzer, became concerned when he
learned that the fda was likely to give mcraker the requested copies. kaseltzer was
disturbed because he believed that the documents contained medical information about
him that, if disclosed, would constitute an invasion of his privacy. alleging that the
reason just mentioned made the requested documents exempt from disclosure under the
foia, kaseltzer sued the fda in an effort to obtain a court order barring it from giving
mcraker access to the documents. assuming that kaseltzer proves his allegation about
the documents references to him, should he win the case? why or why not?
22) in a novation:
a.the original obligor is completely discharged from his/her obligations under the
contract.
b.the original obligee is completely discharged from his/her obligations under the
contract.
c.the original obligor remains secondarily obligated.
d.both the original obligee and the original obligor remain obligated.
23) if a negotiable instrument is payable on demand, it is overdue:
a.the day before the demand for payment has been made.
b.30 days after the demand for payment has been made.
c.the day after demand for the payment has been made in a proper manner.
d.the week after payment has been demanded.
24) brown, a cpa, helped cook organize a partnership that was actually an abusive tax
shelter. brown induced clients to participate by making false statements concerning the
eligibility of deductions and tax credits. as a result of these activities, cook derived
$100,000 gross income and brown derived $50,000 gross income. according to federal
tax law, what is browns penalty for promoting this abusive tax shelter?
a.$100,000
b.$10,000
c.$1,000
d.$50,000
25) john was angry because harry is now dating johns former girlfriend. one day, as
john was driving his car, he saw harry walking by the side of the road. john deliberately
swerved and struck harry with the car. john may be successfully sued under:
a.criminal law only.
b.civil law only.
c.either criminal law or civil law but not both.
d.both criminal law and civil law.
26) debra asks alex, her stock broker, if she can trust his advice to purchase the stocks
for acme co. alex replies, of course you can. debra asks, why should i trust you? alex
says, with a smile, because i am a trustworthy person. alex is engaging in:
a.circular reasoning.
b.bandwagon fallacy.
c.argumentum ad baculum.
d.false analogy.
27) a plan is considered to be fair and equitable to a class of impaired claimants with
unsecured claims if the reorganization plan:
a.provides for the sale of any property subject to liens securing such claims free and
clear of such liens with the liens to attach to the proceeds of the sale.
b.provides for the realization by the holders of the indubitable equivalent of such
claims.
c.provides that each holder of a claim will receive or retain on account of the claim
property of a value equal to the allowed amount of such claim.
d.provides the holder of any interest that is junior to the interests of such class will not
receive any property on account of such junior claim.
28) a(n) _____ is a clause attempting to block recovery of certain damages.
a.promissory estoppel
b.condition subsequent
c.implied waranty
d.remedy limitation
