The Revised Model Business Corporation Act has been adopted at least in part by more
than half of the states.
a. True
b. False
Insurance protects a business from:
a. tort liability.
b. strict liability.
c. negligence.
d. All of these.
Which of the following would not be a remedy available to the seller on account of
buyer’s breach?
a. Stop delivery of the goods by the carrier
b. Require the financially sound buyer to return the goods
c. Recover the price
d. Cancel the contract
The federal government’s power to tax is subject to the limitation that all custom duties
and excise taxes must be uniform throughout the United States.
a. True
b. False
Substantive due process addresses the fairness of the process by which a legal rule is
applied.
a. True
b. False
A partner’s receipt of notification of a fact relating to the partnership is not effective
against the other partners until
the receiving partner enters the relevant fact on the minutes at the next business meeting
of the partnership.
a. True
b. False
Sources of federal law include all but which of the following?
a. Rules of administrative agencies
b. Decisions of federal courts
c. Executive orders of the President of the United States
d. Hearings before the Senate
In carrying out their enforcement function, agencies traditionally have been accorded
little discretion to compel the disclosure of information.
a. True
b. False
An implied agreement in the contractual relationship is the agreement by the accountant
to act in a competent and professional manner.
a. True
b. False
The Restatement Third, Torts:
a. was approved in its final form by the American Law Institute in
b. addresses the elements of the tort action for liability for accidental personal injury,
including property damage and liability for economic loss.
c. covers emotional harm and landowner liability.
d. All of these.
An author may terminate transfer of copyright ownership, other than that of a work for
hire, during the five-year period beginning 35 years after the transfer was granted.
a. True
b. False
The Foreign Sovereign Immunities Act specifically provides that a foreign state shall be
immune from neither federal nor state court jurisdiction in certain circumstances. The
circumstances include that the suit is based on:
a. a commercial activity conducted in the United States by the foreign state.
b. an act that the foreign state performed in the United States in connection with a
commercial activity it carried on elsewhere.
c. a commercial activity performed outside U.S. borders that directly affects the United
States.
d. All of these.
Since the capacity to be a principal depends upon the capacity of the principal to do the
act himself, a person cannot appoint an agent to act for him in the case that he
subsequently loses mental capacity.
a. True
b. False
Which of the following would have priority in distributing limited partnership assets?
a. Return of a general partner’s capital contribution
b. Repayment of a loan by a limited partner to the partnership
c. Return of a limited partner’s capital contribution
d. Payment of profits of the limited partner
The State of Florida enters into a contract with Treasure Salvors governing the salvage
of a Spanish galleon that sunk in the 1600s. Under the terms of the contract, the
salvagers agree to relinquish 25% of the items recovered to the State of Florida in return
for the right to salvage on state lands. At the time the parties enter into the contract, they
both believe that the seabed where the ship lies is state land. Subsequently, the United
States Supreme Court holds that the continental shelf on which the ship rests has never
been owned by Florida. The salvagers sue to rescind the contract. The contract:
a. cannot be rescinded.
b. should be avoided because the parties made a mutual mistake.
c. should be enforced because, although there is a mutual mistake, it is not material.
d. will be enforceable because the United States government will automatically step
into the shoes of the State of Florida.
If Connie buys the real estate subject to an existing mortgage, she will have to pay the
mortgage if the mortgagor does not.
a. True
b. False
In which of the following situations will the inference of the existence of a partnership
be drawn from the receipt of profits of a business?
a. Where payments of a debt are made to a creditor in installments from the profits of
the partnership
b. Where wages are paid to an employee who is not also an owner
c. Where an annuity is paid to the widow of a deceased partner from partnership profits
d. Neither the creditor, the employee, nor the widow in these situations will be
considered a partner under the guidelines in the RUPA.
The right of a shareholder to examine the books and records of the corporation is a
valuable right. However, it may be denied if the shareholder:
a. seeks information to determine the financial condition of the corporation.
b. desires to know the amount of executive salaries.
c. seeks information to embarrass or cause loss to the corporation.
d. desires the names and addresses of other shareholders.
Give an example of each of the following:
a. Unilateral mistake
b. Mistake in the meaning of a contract term.
In 1976, RCRA was enacted by Congress:
a. to provide a comprehensive scheme of treatment for hazardous solid waste.
b. and it requires the EPA to establish a manifest system to be used by generators of
hazardous waste.
c. Both of these.
d. Neither of these.
If Sam leases property to Susan without specifying the duration, Sam has created a(n):
a. base fee.
b. condominium.
c. estate (tenancy) at will.
d. estate at sufferance.
The law does not change; it is based on unchanging and universal truths.
a. True
b. False
Stan purchased 400 pairs of gloves from Isaac at a contract price of $800. Fifty of the
gloves were defective, and a dispute arose as to the amount due and owing under the
contract. Stan refuses to pay the $800, and Isaac is threatening to sue. Which of the
following is correct with regard to this transaction?
a. If Isaac agrees to accept $600 to settle the dispute and Stan agrees to pay that amount,
the substitute agreement is enforceable.
b. If Isaac agrees to accept $600 to settle the dispute and Stan pays that amount, Isaac
can still sue for the balance of $200 and will win the lawsuit.
c. Stan is under a pre-existing legal obligation to pay the $800.
d. Stan must return the defective gloves to Isaac, who must replace them. Then, Stan
must pay the $800.
Historically, courts held that representations of law were statements of fact, but the
present trend is to recognize that they have only the effect of statements of opinion.
a. True
b. False
Mary, age 17, sold Mark, age 22, the briefcase she got for graduation. Mark’s father
liked it and bought it from him.
If Mary decides to disaffirm the contract, will Mark’s father have to return the briefcase
to her?
a. Yes, the briefcase is not a necessary.
b. Yes, if Mark’s father still has it.
c. No, her contract was with Mark and he cannot return goods he does not have.
d. No, if Mark’s father bought it without knowing that Mary was a minor.
Janet is called for jury duty and is selected for possible service on a jury. However,
when the defendant’s attorney sees her, he notices that she is wearing a green dress.
Both the defendant and the defendant’s attorney hate green dresses. If the defendant’s
attorney strikes her name from the jury because of the dress color:
a. this is a valid challenge for cause.
b. this is a valid peremptory challenge.
c. this is not a valid challenge.
d. the plaintiff’s attorney can have Janet serve by making an offer of proof to the judge.
Glenn decided to borrow from Jones Bank since it promised that his loan interest rate
would be systematically reduced every year when the board met. The loan rate was
never reduced, but actually increased monthly. Glenn refused to pay the interest
demanded and sued for rescission of the contract; thereupon, the bank attempted to
collect from Lewis, a surety under the loan. Does Lewis have to pay?
a. Yes, because fraud is no defense
b. No, because a fraud perpetrated upon Glenn will be a defense
c. Yes, since the surety obligation is separate from the underlying contract
d. No, because the surety stands in the shoes of the debtor for all purposes
Under the RMBCA, if the charter states that “the corporation elects to have preemptive
rights,” shareholders have
preemptive rights with respect to:
a. shares issued as compensation to directors, officers, and employees.
b. shares issued within six months of incorporation.
c. shares issued for consideration other than money.
d. unissued shares.
In a disparate impact case, the Civil Rights Act of 1991 now provides that even if an
employer can prove the “business necessity” of a challenged employment practice, the
plaintiff can still win if the employer’s interest could be met in a non-discriminatory
manner.
a. True
b. False
Arnold wrote a defamatory letter regarding Bill which he did not show to anyone, but
which he posted on a bulletin board in the laundromat. Arnold has committed:
a. the tort of slander.
b. the tort of libel.
c. neither libel nor slander, because there has been no publication of the letter.
d. the tort of public disclosure of private facts.
The Fifth Amendment would protect a defendant from having to give blood samples to
the prosecution, since that could be a form of self-incrimination as interpreted by the
courts.
a. True
b. False
It remains unclear under the law whether a limited partner has a fiduciary duty to his
general partners or to the limited partnership.
a. True
b. False
A person who purports to act as agent for a principal whom both the agent and the third
party know to be wholly incompetent is personally liable on a contract entered into with
a third person on behalf of such a principal.
a. True
b. False
A common criticism of ethical relativism is that it:
a. promotes open-mindedness and tolerance.
b. assumes that a person’s actions are always correct for that person, but if that is true,
then all behavior is, by definition, moral.
c. is rigid and excessively formal.
d. is too judgmental.
A trustee under a Chapter 11 or 13 proceeding performs the same duties as a Chapter 7
trustee.
a. True
b. False