1) For property insurance, the insurable interest must exist when a policy is purchased.
2) Normally, a corporate board of directors appoints itself as the first board at the time
the corporation is created.
3) Constructive delivery occurs when property is physically transferred.
4) A board of directors’ response to a takeover attempt must be rational in relation to the
threat posed.
5) When one party uses fraud to induce another party to enter into an illegal bargain, the
second party will be allowed to recover for the performance or its value.
6) Title VII of the Civil Rights Act of 1964 prohibits job discrimination against majority
group individuals, such as white males.
7) Businesses that engage in ultrahazardous activities are not liable for any injuries the
activities cause.
8) In most states, an individual cannot hold more than one corporate office and be both
an officer and a director of the corporation.
9) A will can serve no other purpose besides the distribution of property.
10) The purpose of antitrust law is to reduce competition.
11) Attorneys are required to find relevant law that is applicable to a case and can be
discovered through a reasonable amount of research.
12) A merger, a consolidation, or a share exchange changes the rights and liabilities of
shareholders, the corporation, and the corporation’s creditors.
13) The importation of goods that infringe U.S. patents is not prohibited.
14) Dhani, an accountant for Eureka! Inc. learns of undisclosed company plans to
market a new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company
plans to Fay, who tells Geoff. Both Fay and Geoff buy 100 shares. Geoff knows that
Fay got her information from Dhani. When Eureka! publicly announces its new laptop,
Dhani, Fay, and Geoff sell their stock for a profit.
Under the Securities Exchange Act of 1934, Fay is most likely
a.liable for insider trading.
b.not liable because Fay did not prevent others from profiting.
c.not liable because Fay did not misappropriate any information.
d.not liable because Fay does not work for Eureka!
15) Evermore Bank is both the drawer and the drawee with regard to a draft issued to
Fernando. The draft is
a.a certificate of deposit.
b.a cashier’s check.
c.a nonnegotiable instrument.
d.a promissory note.
16) Brendan signs a check “pay to the order of City College Bookstore” drawn on his
account in Delta Bank to pay for his current semester’s textbooks. The bookstore
deposits the check in its account in Eagle Bank. Like most checks, this check is
a.a one-party instrument.
b.a nonnegotiable instrument.
c.a special type of draft.
d.not a substitute for cash.
17) Maura enters a gas station and points a gun at the clerk Nate. She then forces Nate
to open the cash register and give her all the money. Maura can be charged with
a.burglary.
b.robbery.
c.larceny.
d.receiving stolen property.
18) Hadley, an accountant, accumulates working papers while performing an audit for
Ilene. After the audit, these documents belong to
a.Hadley, with Ilene having a right of access to the papers.
b.Ilene, with Hadley having a right of access to the papers.
c.neither Hadley nor Ilene-the papers must be disposed of.
d.the Public Company Accounting Oversight Board.
19) Roderick possesses five hundred acres of forested property. Roderick has the right
to use the land, including cutting its timber, for life. Roderick also has the right to lease
the land for a period not to exceed his life. This ownership interest is
a.a fee simple absolute.
b.a leasehold estate.
c.a life estate.
d.an easement.
20) Selena€s Fajitas, a fast food outfit, files a suit against the state of Texas, claiming
that a Texas state law violates the commerce clause. The court will agree if the statute
imposes a substantial burden on
a.a local government.
b.interstate commerce.
c.noneconomic activity.
d.the state.
21) Fact Pattern 9-B1
Great Looks Clothing Corporation sends daily e-mail ads to its previous customers and
those who have opted to receive the notices. Hot Trends Inc. sends e-mail ads to any
e-mail address that Hot Trends can find on the Web or otherwise generate. Ilene sends
e-mail notes to her friends, relatives, and co-workers, discussing personal issues and
recommending products or services that she likes.
Refer to Fact Pattern 9-B1. One of the senders-Great Looks, Hot Trends, or Ilene-is
acting outside the bounds of federal law. Federal law prohibits the sending of
a.unsolicited commercial e-mail.
b.solicited commercial e-mail.
c.commercial e-mail to randomly generated addresses.
d.non-commercial e-mail that promotes a product or service to a friend, co-worker, or
relative.
22) Ronaldo’s debt to Sofia is past due. Ronaldo obtains a judgment against Sofia to
collect the debt, but Sofia will not pay. Ronaldo requests a writ of execution. The
property that is seized under the writ of execution must be
a.in Ronaldo’s possession.
b.in Sofia’s possession.
c.in the possession of Sofia’s employer or other third party.
d.located within the court’s geographic jurisdiction.
23) Nguyen has her family buy and ship textbooks legally produced in Vietnam to her
for resale in the United States. The U.S. owners of the copyrights on the items file a suit
against Nguyen, alleging infringement. Applying a decision of the United State
Supreme Court in a similar case, the court in this case is most likely to rule in favor of
Nguyen on the basis that
a.U.S. copyright law does not apply to works that are made outside the United States.
b.Nguyen offered “good” prices for the books.
c.Nguyen imported the books “with the authority of the owner” (her family).
d.the first sale doctrine applies in these circumstances.
24) Energy Products Corporation and First Response Preparedness.com enter into a
contract for a sale of portable generators. Under a destination contract, the seller must
a.allow the buyer to reject the goods for any reason.
b.deliver the goods to a particular destination.
c.inspect the goods before tendering their delivery.
d.place the goods into the hands of a carrier.
25) Ada is the maker of a note, on which Bart is secondarily liable. Credit Instruments
Company is the current holder of the note. Bart will be obligated to pay the note if
a.Ada defaults on the note.
b.Credit Instruments breaches a transfer warranty.
c.Credit Instruments negotiates the note to Delta Collection Agency, a third party.
d.Credit Instruments presents the note for payment.
26) A guaranty contract between the guarantor and the creditor need not be in writing or
electronically recorded to be enforceable unless the main purpose exception applies.
27) An e-contract must meet basic requirements that are different from those required of
a paper contract.
28) Courts typically set aside contracts because a party did not volunteer pertinent
information.
29) Nominal damages are designed to punish a wrongdoer and set an example to deter
similar conduct in the future.
30) The most common way to discharge one’s contractual duties is by breach of
contract.
31) Much of the material on the Internet, including software and database information,
is not copyrighted.
32) When an anticipatory repudiation occurs, it is treated as a material breach of a
contract.
33) A bankruptcy court may deny a discharge based on the debtor’s conduct.
34) Originally, the only goal or duty of a corporation was to maximize profits.