Those creditors who do not take any collateral to secure the debt owed to them are
unsecured creditors.
Answer:
The courts have generally held that ads for the sale of goods at a specified price are
treated as invitations to negotiate or to make an offer.
Answer:
Lack of negligence can be proved by demonstrating that the accountant was in
compliance with GAAP and GAAS.
Answer:
Anti-trust laws aim to maintain domestic and international competition and protect
consumers from anti-trust conduct.
Answer:
The implied warranty of title differs from other warranties in that it protects buyers in
their ownership of the goods bought.
Answer:
When the agent colludes with a third party to withhold knowledge or money from the
principal, the principal will be liable.
Answer:
Ratification does not give the principal full benefit of the contract.
Answer:
Freedom of contract is a notion that has emerged only in the last twenty years.
Answer:
The right of a lienholder to possess goods automatically gives him/her the right to
immediately sell the property if the charges are not paid.
Answer:
Persons who were not originally parties to a contract may claim some interest in it as
assignees, or donee beneficiaries, or creditor beneficiaries.
Answer:
A will proved by an affidavit sworn to and signed by the testator and the witnesses, at
the time the will was executed, is called a self-proving affidavit.
Answer:
In determining whether a bailment was created, one must know whether the person to
whom the property was delivered intended to assume possession and control over the
property.
Answer:
A close relative is not regarded as third party for recovery against emotional distress.
Answer:
What is “ex officio” authority?
A. Authority by virtue of one’s offices.
B. Duty to act within one’s authority.
C. Conducting the affairs of the corporation with due care.
D. Duty to act with loyalty and good faith.
Answer:
Jessica, a minor, rented an apartment in Greenwich Village for $800 a month. She
signed a one-year lease. After living there for three months, Jessica decided to move to
another apartment complex. She is liable for the reasonable value of three months’ rent
at Greenwich Village, but not for the remaining nine months’ rent. This is in accordance
with the _____ provision of capacity to contract by minors.
A. disaffirmation
B. necessaries
C. emancipation
D. adjudication
Answer:
Terry and Melody have an oral contract for the sale of 100 textbooks at $100 per book.
If Terry delivers the books and Melody accepts them, or if Melody pays for the books
and Terry accepts payment, which of the following parties can raise the statute of frauds
defense?
A. Terry can raise the statute of frauds defense.
B. Only the party to be charged may raise the defense.
C. Neither of them, as the agreement has been performed at least partially.
D. Melody can raise the statute of frauds defense.
Answer:
Bill purchased a new car from Friendly Fred’s Autos. Fred indorsed the check to Shirley
for value. Shirley presented the check to the bank, and the bank cashed the check. Later,
Bill attempted to place a stop-payment order on the check because the car he purchased
from Fred was defective. Under these circumstances:
A. the bank is liable to Bill for paying the amount of the check to Shirley.
B. Bill has no remedy against Shirley or the bank.
C. Shirley must return the funds to the bank.
D. Bill can prove that he has sustained a loss.
Answer:
Callie drew a check payable to the order of Janice on American Bank. Janice indorsed
the check and sold it to Ned, who took the check to American Bank and requested that
the bank certify the check. The bank did so. Later, Ned presented the check for
payment, but American Bank refused to pay. Which other parties may Ned sue?
A. American Bank
B. Callie
C. Janice
D. Callie and Janice
Answer:
The promisor who delegates duties is ______ to the promisee if the party to whom the
duties were delegated fails to satisfactorily perform them.
A. liable
B. not liable
C. liable for novation
D. liable to the assignee and not
Answer:
When the principal is negligent in the hiring and/or supervision of the agent, the
principal may be liable under:
A. direct liability.
B. apparent agency.
C. joint liability.
D. vicarious liability.
Answer:
Saxon Inc. entrusted Thomas Simpson, an independent CPA, to prepare an audit report
to apply for a loan from Sharp Lenders. Simpson merely accepted the accuracy of the
client’s books without proper investigation while representing that he had completed
Saxon’s audit. A careful audit, however, would have discovered that an employee of
Saxon’s was regularly embezzling funds from him. Simpson is:
A. liable to any creditor who extended a loan to Saxon Inc. based upon the audited
financial statements.
B. not liable to Saxon Inc. to return the audit fee because credit was not extended by
Sharp.
C. liable to Saxon Inc. for any losses he suffered as a result of Simpson’s failure to
discover the embezzlement.
D. not liable to any of the parties as he does not owe them the duty of skill or care.
Answer:
The freedom of speech granted by the U.S. Constitution is an example of:
A. civil law.
B. substantive law.
C. criminal law.
D. procedural law.
Answer:
A _____ is a majority of the number of directors fixed by the articles or bylaws.
A. prudent person standard
B. quorum
C. referendum
D. novation
Answer:
The federal government has the exclusive right to regulate all _____ of the United
States.
A. intrastate commerce
B. domestic commerce
C. private and government action
D. foreign commerce
Answer:
Delegations can be prohibited by:
A. the UCC.
B. the Restatement of Contracts.
C. public policy.
D. involvement of personal rights.
Answer:
The Fourth Amendment safeguards are designed to protect individuals from arbitrary
and unreasonable governmental intrusion on their right to privacy. In assessing whether
a governmental action has infringed on an individual’s rights, the court:
A. will always grant the government the ability to do whatever it deems necessary.
B. must balance the governmental need against the rights of the individual.
C. will always rule in favor of individual rights over that of the government.
D. must balance both, but ultimately grant the government the ability to do whatever it
deems necessary.
Answer:
If the landlord and the tenant agree on a specific duration of the lease and fix the date
on which the tenancy will end, it is a:
A. periodic tenancy.
B. tenancy at will.
C. tenancy for a term.
D. tenancy at sufferance.
Answer:
Scott was a member of the seven-person board of directors of Buffalo Corporation.
Officers of that corporation were considering a large purchase of new equipment to
begin production of a completely new product line. The board of directors had not been
consulted about the new venture, but Scott found out about the plan and objected to it
being implemented. He sought to inspect the corporate books and records to gain
factual information supportive of his position. The officers refused his inspection
request, asserting that Scott had no management function or power. Under these
circumstances, Scott:
A. is barred from examination of the books and records of the corporation under the
business judgment rule.
B. has the right to inspect corporate books and records, as information regarding the
corporation and its affairs is essential to perform his duties.
C. is barred from examination of the books and records of the corporation under the
doctrine of respondeat superior.
D. has no right to inspect the books and records of the corporation unless authorized by
all other members of the board.
Answer:
Flood-related damage to property is an example of a(n) ____.
A. excluded peril
B. covered peril
C. conditional peril
D. open peril
Answer:
Oscar drove his 1963 Rambler automobile to the Park & Run, Inc. parking garage.
Oscar delivered the keys to the attendant and left the premises. The attendant parked the
car. Oscar did not tell the attendant that there was an antique painting valued at $5,000
in the trunk of the car. A thief entered the parking garage, pried open the trunk of
Oscar’s car, and stole the painting. In this regard, identify the correct statement.
A. Park & Run is a bailee only to the automobile, but not to the painting.
B. Park & Run is a bailee as to both the automobile and the painting.
C. A bailment for the painting will be created automatically when Park & Run accepted
delivery and possession of the car.
D. A bailment for the car and the painting will be created only if Park & Run makes an
express warranty.
Answer:
Which of the following statements is TRUE of RICO?
A. It prohibits using income derived from racketeering activity to acquire an interest in
an enterprise.
B. Companies involved in bribery do not face civil liability.
C. Participating in an enterprise through a pattern of racketeering activity is
permissible.
D. To be charged for racketeering, the prosecution must prove, at a minimum, the
commission of a single offense within a 10-year period.
Answer:
Which of the following acts has provisions for combating identity theft?
A. The Fair Credit Billing Act.
B. The Fair Credit and Charge Card Disclosure Act.
C. The Fair and Accurate Credit Transactions Act.
D. The Gramm-Leach-Bliley Act.
Answer:
Generally accepted accounting principles:
A. limit recovery to those with a direct contractual relationship to the accountant.
B. apply to the way business transactions should be recorded.
C. give directions to accountants in auditing the books of an enterprise.
D. protect the investor who is unknown to the accountant when the financial statements
are prepared.
Answer:
Which of the following is worded in a way that allows the promisor to decide whether
or not to perform the promise?
A. Novations
B. Compositions
C. Illusory promises
D. Modifications
Illusory promises are worded in a way that allows the promisor to decide whether or not
to perform the promise.
Answer:
Browse-wrap agreements are:
A. in paper form.
B. viewed by some courts as unenforceable.
C. per se illegal.
D. viewed by all courts as enforceable.
Answer:
Bully Corporation contracted to sell Wimp Corporation materials, that Wimp needed to
fulfill a contract it had with a third party. Knowing that Wimp was in desperate need of
the materials, Bully called Wimp the day before delivery was due and threatened to
withhold delivery unless Wimp agreed to pay a higher price. Because Wimp could not
get the materials elsewhere and would suffer a huge financial loss without them, it
agreed to pay the higher price. Wimp later asserts that its promise to pay the higher
price is unenforceable because it was the product of duress. Which of the following is a
TRUE statement with regards to this situation?
A. If the court agrees that Wimp’s promise to pay the higher price was the product of
undue influence, the contract will be ruled to be void.
B. Under modern contract law, Bully’s threat to cause Wimp economic harm could be
considered duress and the contract may be considered to be voidable.
C. Bully’s threat could not be considered duress because Bully had a legal right to seek
a higher price for its goods.
D. Under modern contract law, Bully’s threat to cause Wimp economic harm may be
undue influence but not fraud.
Answer:
Legislation enacted by governmental units smaller than a state (cities and towns) is
called:
A. common law.
B. an administrative regulation.
C. an ordinance.
D. a treaty.
Answer:
While staying at Fancy Hotel, Marie asked her son to take her two diamond rings to the
hotel clerk for safekeeping. The rings were shown to the clerk and then placed in a
‘safe-deposit envelope” which was sealed. The son received a depositor’s check stub,
which had a number corresponding to the number on the envelope. The envelope was
kept in a safe, located in the hotel’s front desk, which was used to keep the hotel’s cash
as well as the valuables of guests. Though equipped with a combination lock, the safe
was usually kept unlocked as there would always be a clerk on duty at the reception
desk. The following night, the hotel was robbed by two armed men and Marie’s rings
were taken. She sued the hotel for the value of the rings. The hotel claimed that the
robbery was an “act of a public enemy” that relieved the hotel of liability. If the
safe-deposit envelope is analyzed in the way that safety deposit boxes are, was the
hotelkeeper liable for the theft of property left with it for safekeeping?
Answer:
Explain the theory of utilitarianism.
Answer:
Mexico has decided to join the Council of Europe’s “Convention on Cybercrime.”
What does Mexico need to do as a part of this convention?
Answer:
An art dealer sells a painting to Cheryl, telling her that it is an original Van Gogh and
takes Cheryl’s check for $500 in payment. Before making the sale, the art dealer was
aware that the painting is not a genuine one but a forgery. Can Cheryl claim any
defenses against the payment made to the art dealer?
Answer:
Stan read an ad in the newspaper which said that the jackpot for picking the six
winners in the dog race on the last night of the season was $825,000. Stan went that
night and correctly picked the winners. However, it turned out that the newspaper had
made a mistake. The jackpot was $25,000, not $825,000. Therefore the track owners
refused to pay the latter amount. If this ad is treated like offers of reward, can Stan
collect the $825,000?
Answer: