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Larson & Son manufactured welders that frequently malfunctioned, setting clothing on
fire and causing serious burns. Larson & Son sold all of its assets to Swenson Co.,
which continued to manufacture the Larson welder product line. Eighteen months after
Swenson's purchase, one of Larson's customers sued Swenson for injuries caused by a
welder purchased from Larson, one year prior to the purchase by Swenson. Under the
circumstances, Swenson Co.:
a. cannot be held liable, because it is a corporation.
b. cannot be held liable, because it did not manufacture the welder in question.
c. might be held liable in some states under strict liability.
d. could not be liable if Larson & Son still exists as a corporate entity.
Which of the following is correct with regard to treaties in the United States legal
system?
a. They have no legal effect.
b. Under the U.S. Constitution, they must be signed by the President and approved by
the U.S. Senate.
c. They have no effect on business law.
d. They must be approved by the states before they have the force of law.
Which of the following remedies are mutually exclusive and could not be obtained
simultaneously?
a. Cover, incidental and consequential damages.
b. Identification of the goods and withholding delivery.
c. Withholding delivery and suit to recover incidental damages.
d. None of the above. The Code's remedies are cumulative unless under the facts of an
individual case one remedy bars another.
Under the Civil Rights Act of 1991:
a. only victims of racial discrimination can recover compensatory and punitive damages
for intentional discrimination.
b. victims of intentional racial discrimination are still entitled to receive unlimited
compensatory and punitive damages.
c. victims of sex discrimination are no longer subject to ceilings on the amount of
recoverable punitive damages.
d. victims of disability discrimination are not subject to ceilings on the amount of
recoverable compensatory damages.
Wayne Busby contracts to build a house for Mary Ann Connell. Busby finishes
approximately half of the house and quits. Connell files suit against Busby. Which
remedy is NOT available to her?
a. Compensatory damages.
b. Specific performance.
c. Special damages.
d. Nominal damages.
An absolute privilege exists to protect which of the following defendants in defamation
cases?
a. Members of Congress on the floor of Congress.
b. Statements made by the President of the U.S. in the discharge of official duty.
c. Statements about a third party made to one's spouse when the couple is alone.
d. All of the above.
An arm's length transaction is one in which:
a. the parties owe each other a special duty of confidentiality.
b. the parties owe each other a fiduciary duty.
c. the parties are acting in their own self-interest.
d. None of the above.
The Foreign Sovereign Immunities Act specifically provides that a foreign state shall be
immune from neither federal nor state court jurisdiction if the suit is based on which of
the following?
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 U.S.
d. All of the above.
Anna is 88 years old and under the legal guardianship of her daughter. One day Anna
receives a telephone call from a health insurance salesman and purchases a
$400-a-month Medigap insurance policy. The contract is:
a. valid.
b. voidable.
c. void.
d. unenforceable.
"Normal value" is the price that would be charged for the same or a similar product in
the ordinary course of trade for domestic consumption in the exporting country, under
the World Trade Organization's:
a. tariff regulations.
b. nontariff barrier.
c. Antidumping Code.
d. export controls.
The Equal Credit Opportunity Act prohibits discrimination based on what factors in the
extension of credit?
a. Gender, marital status, or race.
b. Religion, national origin, and age.
c. Income, occupation, or apparent stability.
d. Both (a) and (b).
The Civil Rights Act of 1964 provides which of the following defenses?
a. A bona fide seniority or merit system.
b. A professionally developed ability test.
c. A bona fide occupational qualification (BFOQ).
d. All of the above.
A director may make business decisions in reliance on information provided to him by
legal counsel or public accountants without incurring liability for negligence as long as
he:
a. notifies the preparer of the information.
b. reasonably believes that the matters are within the person's professional competence.
c. conducts his own independent investigation.
d. is given a sworn affidavit by the preparer.
A corporation that buys the assets of another corporation does not assume the other's
liability unless:
a. the purchaser expressly or impliedly agrees to assume the seller's liabilities.
b. the transaction amounts to a consolidation or merger of the two corporations.
c. the sale is for the fraudulent purpose of avoiding the liabilities of the seller.
d. All of the above.
Contracts that are implied in law:
a. are obligations imposed by law on grounds of justice and equity.
b. are intended to prevent unjust enrichment.
c. do not rest upon the assent of the contracting parties.
d. All of the above.
The Windows, Inc. v. Jordan Panel Systems Corp. case illustrated the concept that:
a. unless the parties expressly specify that the contract requires the seller to deliver to a
particular destination, the contract is generally considered to be a shipment contract.
b. unless the parties expressly designate the type of contract, it will be interpreted to be
a destination contract.
c. goods in the possession of a bailee which are to be delivered without being moved
will have the risk of loss pass to the buyer when the buyer receives a negotiable
document of title.
d. express, specific provisions in a contract control as long as they are not
unconscionable or grossly unfair to one of the parties.
Under the provisions of the Foreign Sovereign Immunities Act:
a. all foreign governments are immune from suit by U.S. citizens.
b. U.S. citizens in U.S. courts can always sue most foreign governments.
c. a car used by a foreign embassy in Washington can be seized to settle a judgment
against a driver.
d. U.S. courts may take jurisdiction in a suit against a foreign country for commercial
acts by that government that have a direct effect on the United States.
Which of the following is NOT an element of fraud?
a. Material misrepresentation.
b. Competent parties.
c. Knowledge of falsity.
d. Justifiable reliance.
Upon what is an accountant's potential criminal liability in rendering professional
services based?
Harvard philosopher John Rawls stressed liberty as the most important obligation owed
by a society to its members.
Compare and contrast a summary judgment and a directed verdict.
To help sell the product, a book publisher used a well-known commentator's name and
her quote on the back book jacket of a new release without the commentator's
knowledge or permission. No tort was involved since there was no injury to anyone.
Jasmine owns a controlling interest in the Hardwick Company. Explain her
responsibilities if she wants to privately sell her interest.
