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An oral promise by a limited partner to contribute to the limited partnership is
enforceable.
a. True
b. False
Alice offers to sell her computer, monitor, and printer to Bradley for $300. Bradley says
he will accept provided thatAlice includes her word processing software. What is the
status of their discussions?
a. There is a valid contract for the computer, the monitor, the printer, and the software.
b. There is no contract, because Bradley has made a counteroffer.
c. There is no contract, because the time for delivery has not been decided.
d. There is no contract, because the offer has been revoked by the offeror.
A payor bank is under an obligation to pay an uncertified check that is nine months old.
a. True
b. False
If Sam writes a check drawn on his account at First Bank to Towers University to pay
his tuition:
a. Sam is the drawer.
b. the university is the drawee.
c. the bank is the payee.
d. Sam is the maker.
Hugh recently purchased a motorcycle for $4,000 but has had extensive problems
starting the motor. In disgust at not being able to start the motorcycle, Hugh shouts to
his friends, "Any of you want to buy this thing for $20?" A contract will be formed if a
friend gives Hugh a twenty-dollar bill.
a. True
b. False
Jack moved from New Hampshire to Florida and decided to have an air conditioner
installed in his car. After it was installed, Jack received a bill for $1,200. Jack called the
dealer and told him he'd never heard of this service costing more than $500. They
argued, but the dealer finally agreed to take $900. Is the agreement enforceable?
a. Yes, there is no way for the dealer to get the extra money anyway.
b. Yes, there is consideration for the modified amount.
c. No, there is no consideration and the dealer can sue for the extra $300.
d. No, there is an implied contract to pay the dealer whatever he billed Jack.
Which of the following would be likely to result in liability to a director of a textile
company? The director:
a. sells stock in the textile company before a merger is announced.
b. buys stock in the textile company using the computer in the office of the company.
c. owns stock in an automobile company.
d. agrees to hire as president a man he has not personally investigated.
A short-form merger:
a. is not a merger at all but a form of consolidation.
b. may be undertaken only with the subsidiary's directors' approval.
c. allows no appraisal rights for the parent's minority shareholders.
d. requires shareholder approval.
A lease for office space is considered to be personal property.
a. True
b. False
Amanda ordered fifty personalized sweatshirts from King Manufacturing Company.
After the shirts were specially imprinted, but before they were mailed, Amanda called
King Manufacturing to disavow the contract. The next day the sweatshirts were stolen.
Who must bear the loss?
a. Amanda must pay the entire purchase price, because she breached the contract.
b. King will have to bear the entire loss, because it had not yet mailed the shirts.
c. Amanda must bear the entire loss, because the shirts were identified to the contract.
d. King must first seek payment from its insurance carrier, and then collect from
Amanda for any amount not covered by insurance.
Giving a deed to an escrow agent may be sufficient delivery of a deed.
a. True
b. False
The Fifth Amendment protects all individuals against unreasonable searches and
seizures.
a. True
b. False
Julie writes a letter to Mitchell authorizing him to sell her boat and sends a copy of the
letter to Jared, a prospective buyer. The next day, Julie writes Mitchell a letter revoking
his authority to sell the boat, but she does not send a copy of the second letter to Jared.
Although Mitchell has no actual authority to sell the boat now, he continues to have
apparent authority with respect to Jared.
a. True
b. False
If no exemption is available, a corporation offering shares of stock for sale is subject to
court injunction and civil liability in damages to persons to whom securities are sold in
violation of the regulatory statute, but there is no potential criminal liability.
a. True
b. False
The owner of a collective mark must produce the goods it seeks to mark.
a. True
b. False
Otherwise illusory promises may be transformed by some courts into actual promises
by implying an obligation of good faith and fair dealing.
a. True
b. False
Matt agrees to perform an audit within 30 days, knowing that time is of the essence.
When the 30 days are up, Matt has only performed 60% of the audit. Matt has
materially breached his contract.
a. True
b. False
When purchasers are willing to pay a premium for a block of shares that conveys
control, almost all courts today
require the controlling shareholders to turn over this control premium to the
corporation's treasury.
a. True
b. False
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 these.
An accountant who substantially performs his contractual duties under a contract with a
client is entitled to compensation at the agreed upon rate less any damages he has
caused the client.
a. True
b. False
Under the RMBCA, a newly formed corporation need not hold an organizational
meeting.
a. True
b. False
Factors in determining whether a person acting for another is an employee or an
independent contractor include the kind of occupation, the skill required, which party
supplies the tools, and whether payment is by the job or by time worked.
a. True
b. False
Losses due to computer crimes are estimated to be:
a. minimal, as the federal government has passed comprehensive legislation prohibiting
computer crime.
b. in the millions of dollars.
c. in the tens of billions of dollars.
d. decreasing, as legislation and enforcement have been increasing.
A nonprofit corporation may make a profit, but it may not be distributed to members,
directors, or officers.
a. True
b. False
Which of the following is not true regarding a partnership name?
a. The name selected may not be the same as or deceptively similar to the name of any
other existing business.
b. It may be a fictitious name.
c. It may not be likely to indicate to the public that it is a corporation.
d. It may not be the name of any one of the partners.
A time draft presented for payment is due on the due date or presentment date,
whichever is later.
a. True
b. False
ABC Company sells nursery products. It hires only women as sales representatives
because it thinks that its customers relate better to women. This is:
a. a violation of Title VII of the 1964 Civil Rights Act.
b. an example of a bonafideoccupational qualification.
c. a violation of the Equal Pay Act.
d. an allowable personal preference.
The court will order the appointment of a trustee in a Chapter 11 proceeding only for
cause or if the appointment is in the interests of creditors or equity security holders.
a. True
b. False
Which of the following will destroy negotiability?
a. Antedating a check
b. Making the right to payment subject to the terms of another agreement
c. Marking a check payable only out of the proceeds of a particular sale
d. Writing a check on notebook paper
By the majority view, a minor need only return any property he has received from the
other party if the minor wishes to disaffirm the contract. He has no duty to return the
property in the same condition in which he received it.
a. True
b. False
Adam Smith, in TheWealthofNations, said the capitalistic system was composed of
institutions which include all but which of the following?
a. Economic motivation
b. Free enterprise
c. Labor
d. Limited government
According to Jack Behrman, a professor of business ethics, free enterprise involves a:
a. combination of properties.
b. capitalistic combination of factors of production.
c. group expression of the use of private property.
d. All of these are true.
There has been an explosion at Johnson's Oil refinery because of a lightning strike.
Fumes from the resulting fires at the plant have sent the nearby townspeople to the
hospital for severe respiratory distress. Johnson's Oil will be liable for the
townspeople's injuries directly resulting from the fumes.
a. True
b. False
According to the Second Restatement, in which of the following situations would an
agency be terminated by operation of law?
a. An outbreak of war places the principal and agent in the position of alien enemies.
b. The death of the individual principal, only upon the agent's notice of the death.
c. The agent gives notice to the principal that she is renouncing the authority given to
her.
d. None of these.
In general, minors have liability for their torts.
a. True
b. False
