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When a corporation is incorporated, the secretary of state usually issues a(n) ______, a
document certifying that the corporation is incorporated in the state and is authorized to
conduct business.
A. approval of incorporation
B. certificate of incorporation
C. authorization of incorporation
D. certification of incorporation
E. chronicle of incorporation
______________________ is a partnership agreement in which company members
hold transferable shares while all the goods of the company are held in the names of the
partners.
A. A joint stock company
B. A joint corporation
C. A joint partnership
D. A collusive partnership
E. A collusive corporation
In an origin contract who bears the risk of loss while the goods are in transit?
A. The seller
B. The buyer
C. Both the buyer and seller with the loss being proportioned 50% to the buyer and 50%
to the seller
D. Both the buyer and seller with the loss being proportioned 75% to the buyer and
25% to the seller
E. Both the buyer and seller with the loss being proportioned 25% to the buyer and 75%
to the seller
The term ______ involves the use of past decisions to guide future decisions.
A. commonality
B. precedent
C. restatement
D. uniformity
E. modeling
A worker may be classified as an employee if she _______________________.
A. engages in a distinct occupation
B. works under the employer's supervision
C. receives regular payments according to time
D. supplies her own tools
E. gets paid when the job is completed
Which of the following is some sort of mental or physical defect that prevents a person
from being able to enter into a legally binding contract?
A. Immajority
B. Capacity
C. Chronic illness
D. Incapacity
E. None of these
Not So Rich Uncle. Bruce is attempting to convince Sally to marry him. He promises
her that if she will marry him, he will buy a new Mercedes automobile for her within
six months of the marriage and take her on a world tour within a year of the marriage
date. Sally reluctantly agrees, and they sign an agreement by which Bruce agrees to
provide the Mercedes and world tour. Bruce and Sally marry on January 1.
Unexpectedly, on March 1, Bruce's supposedly rich uncle, Frank, dies. Frank has no
living relatives other than Bruce, and Frank's will leaves everything to Bruce who is
also appointed executor. In attempting to settle the estate, Bruce agrees orally to pay out
of his own pocket debts of Frank totaling $10,000. Sally is concerned about Bruce's
doing so. Bruce tells her not to worry because he will get all the money back when the
estate settles. Bruce admits to a number of friends that he agreed to settle the debts out
of his own pocket because he needed to obtain assets from the estate in a hurry. The
assets were needed in large part to satisfy his obligations to Sally. Surprisingly, it later
came to light that prior to his death Frank had signed away all his assets to his girlfriend
in Argentina. There was nothing left in the estate for Bruce to inherit. Bruce disavowed
his agreement to pay $10,000 to various creditors. Which of the following is true
regarding Bruce's promises to Sally of a Mercedes and a trip?
A. The promises fall within the statute of frauds.
B. The promises do not fall within the statute of frauds because they involve material
matters, not matters involving home and children.
C. The promise regarding the Mercedes falls within the statute of frauds but the promise
regarding the trip does not.
D. The promise regarding the trip falls within the statute of frauds but the promise
regarding the Mercedes does not.
E. The promises would have fallen within the statute of frauds in earlier times in
history, but would not fall within the statute of frauds in this day and time.
Which of the following is the term used to describe the duty agent has to perform
responsibilities of the principal as specified in the agency agreement?
A. Duty of action
B. Duty of contract
C. Express duty of action
D. Duty of performance
E. Duty of obedience
Kite Sales. Wendy is president of a business that manufactures kites. The kites of her
company, ABC Kites, are sold to large toy stores. After Wendy learned a great deal
about kites, she started to make kites at home and to promote them to large toy stores.
She also started selling kites to friends. Some of the directors learned about her kite
sales and accused her of wrongdoing. Wendy denied any wrongdoing. What duty, if
any, did Wendy violate?
A. She did not commit any violation.
B. She violated the duty of loyalty.
C. She violated the duty of care.
D. She violated the duty of understanding.
E. She violated the duty of profit maximization.
Under the Uniform Limited Liability Company Act, unless the operating agreement
specifies otherwise, LLCs are ______ managed.
A. member
B. manager
C. operationally
D. provisionally
E. administratively
Chocolate Chips. Molly makes great chocolate chip cookies and sells them. She calls
them "Molly's Famous Chocolate Chips." Some of her friends are interested in selling
her cookies. They want to use her name and identify the cookies as "Molly's Famous
Chocolate Chips." Molly says, however, that she does not have enough time to bake any
more cookies. She agrees, for a price, to allow her friends to use her recipe and her
name. Suzette, one of Molly's friends who was selling the cookies, was not being
sufficiently careful and negligently put a harmful ingredient into the cookie dough
resulting in a customer, Fred, becoming ill. Fred threatens to sue both Suzette and
Molly. Molly is so exasperated that she cancels all the franchise contracts on the basis
of aggravation although the franchise agreements provided that so long as requirements
were met, the franchise agreements were good for a period of two years, Molly took the
position that the cookies involved a personal service and that she could not be held
liable for discontinuation. What type of arrangement did Molly make with her friends?
A. A franchise that was a production-style business operation
B. A franchise that was a distributorship
C. A franchise that was a manufacturing arrangement
D. A franchise that was a manufacturing distributorship
E. A joint venture
Which of the following is a way in which a gift differs from a purchase as a way of
transferring ownership?
A. Once delivered a gift may be taken back by the person who gave the gift, whereas
that is not true when an item is purchased.
B. No consideration is needed for a gift.
C. No written contract is needed for a gift, whereas it is needed for a purchase.
D. No certificate of title is needed for a gift, whereas it is needed for a purchase.
E. All of these.
What may a buyer do if a seller does not provide goods that were described in the
contract?
A. Accept the nonconforming goods as is
B. Reject the goods subject to the seller's curing the deficiency in the goods
C. Reject the goods if no cure is possible
D. Accept the nonconforming goods as is, reject the goods subject to the seller's curing
the deficiency in the goods, or reject the goods if no cure is possible
E. Nothing for at least 30 days
Refusal to Pay. Business law teacher, Debby needed some yard work done. She told her
class that she would give $50 to the first person who mowed her yard. She also entered
into an agreement with Brenda to trim some shrubbery for $40. Max went to mow
Debby's yard. Unfortunately, just as he finished mowing, a neighborhood dog bit him,
and he had to go to the emergency room for a couple of stitches. Debby refused to pay
Max on the basis that the agreement was not in writing and that Max ended up being
more trouble than he was worth. Max refused to pay the emergency room because he
said that they did not have a binding, bilateral contract. Brenda refused to trim the
shrubbery because she got a better offer and claimed that she was not bound on the
contract until she started to perform. Which of the following is true regarding Max's
statement that he did not have to pay the emergency room charges?
A. He is correct.
B. He is incorrect because there was a bilateral, express contract.
C. He is incorrect because there was a unilateral, express contract.
D. He is incorrect because there was an express, trilateral contract.
E. He is incorrect because there was a binding implied contract.
Creditor beneficiaries can enforce their rights under a contract whenever the contract is
______.
A. fair
B. incidental
C. valid
D. substantial and valid
E. recognizable and fair
When would a plaintiff use the doctrine of res ipsa loquitur?
A. To allow the judge and jury to infer that more likely than not, the defendant's
negligence was the cause of the plaintiff's harm, even though there is no direct evidence
of the defendant's lack of due care.
B. To allow the judge and jury to infer that more likely than not, the defendant's
negligence was not the cause of the plaintiff's harm.
C. To allow the judge and jury to presume the defendant is guilty of contributory
negligence.
D. To allow the judge and jury to presume the defendant destroyed evidence.
E. None of these.
Which of the following determines the obligations of sellers/lessors and buyers/lessees?
A. Terms the parties outline in agreements
B. Custom
C. Rules outlined by the UCC
D. Terms the parties outline in agreements, custom, and rules outlined by the UCC
E. Terms the parties outline in agreements and custom, but not rules outlined by the
UCC
What does the term "parol" in the "parol evidence rule'' mean?
A. Words establishing penalties
B. Speech inside the original writing
C. Words outside the original writing
D. Words excusing breach of contract
E. Untrue speech outside the original writing
Which of the following references the maturing of rights such that a party can legally
act on the rights?
A. Absoluting
B. Gelling
C. Forming
D. Vesting
E. Finishing
Consideration is defined as _____.
A. being cordial in the negotiation of contracts
B. refraining from unethical behavior in the negotiation of contracts
C. being both cordial and refraining from unethical behavior in the negotiation of
contracts
D. a bargained-for exchange
E. a contract negotiated in person as opposed to by telephone or e-mail
In 2007, Dole was sued by a group of its employees for:
A. Low wages
B. Age Discrimination
C. Bribery
D. Sex discrimination
E. Ignoring safety recommendations in their use of pesticides
A ______ is a specific draft, drawn by the owner of a checking account, ordering the
bank to pay the payee from that drawer's account.
A. promissory contract
B. certificates of deposit
C. note
D. check
E. time instrument
Under Article 2(A) of the UCC, a person who transfers the right to possession and use
of goods under a lease is a(n) _____.
A. relater
B. seller
C. lessee
D. lessor
E. acquirer
Which of the following are types of common-carrier delivery contracts?
A. Origin, and transfer contracts
B. Destination and transfer contracts
C. Transfer and simple delivery contracts
D. Origin, destination, and transfer contracts
E. Origin and destination contracts
Accidental Sale. ABC Motors ordinarily deals in used cars and also does some amount
of repair work. Robby entrusted his automobile to ABC Motors to have the oil changed
and get new brakes. The car was parked in the lot along with other cars, some of which
were for sale. The manager of ABC Motors accidentally sold the car to Connie because
she saw it and took it upon herself to offer a good price. The manager was attempting to
increase the shop's profit margin. Connie had no idea that the car did not belong to ABC
Motors. When Robby went to pick up the car, he was very upset that it was gone. The
manager told Robby that he was very sorry, but that he was not negligent and only
made an honest mistake. According to the manager, Robby accepted the risk of this type
of loss; and his only recourse was against Connie. Which of the following is true
regarding Connie's rights to the car?
A. Connie can keep the car only if the repair shop voluntarily agrees to pay Robby the
fair market value of the car.
B. Connie can keep the car without paying any additional amounts only because she
paid cash for it.
C. Connie can keep the car without paying any additional amounts, and whether or not
she paid cash makes no difference.
D. Connie must give the car to Robby.
E. Connie must return the car to the repair shop.
In an express agency relationship, the agent has ______ authority.
A. express
B. implied
C. apparent
D. inherent
E. acknowledged
Which of the following occurs when a person reaches the age of majority and states,
either orally or in writing, that he or she intends to be bound by the contact entered into
as a minor?
A. Implied ratification
B. Express ratification
C. Express novation
D. Implied novation
E. Disaffirmance
______________ is the right of a principal to sue an agent to recover any amount
assessed against the principal for a breach of contract caused by the agent's negligence.
A. Reformation
B. Indemnification
C. Reimbursement
D. Contribution
E. Recoupment
Which is not considered a discharge of contractual obligations by mutual agreement?
A. Mutual rescission
B. Substituted contract
C. Accord and satisfaction
D. Novation
E. Bankruptcy
A promise made by a bank to pay a payee a certain amount of money at a future time is
called a
A. Note
B. Draft
C. Novation
D. Check
E. Certificate of deposit
Which of the following is false under the Federal Unemployment Tax Act?
A. It provides a federal system to provide unemployment compensation to qualified
employees who lose their jobs.
B. Employers must pay taxes to the states that deposit the money into the federal
government's Unemployment Insurance Fund.
C. Each state has an account from which it can access the money in the federal fund.
D. States have different minimum standards for qualifying for unemployment
compensation.
E. Almost all states require that an applicant for unemployment compensation not quit
the former job.
