The means by which stockholders may seek to protect themselves against corporate
actions to which they object include all of the following except:
a. voting in new directors.
b. bringing legal action.
c. voiding the charter.
d. calling a special stockholders’ meeting.
A decedent’s transfer of $10,000 to a trustee, to be held in trust for A, will fail to create
a valid trust if:
a. it was not supported by consideration.
b. the trustee lacks capacity.
c. A is not a family member of the decedent.
d. the trustee had no opportunity to renounce the trust.
Which of the following situations reflects a possible conflict of interest?
a. You offer a company contract to a friend without checking competing bids.
b. You hire a relative for a company position although another candidate is more
qualified.
c. You buy a piece of realty that would be suitable for a planned company project.
d. All of the above.
A durable power of attorney may be terminated by:
a. revocation by a competent principal.
b. the death of the principal.
c. revocation by a competent principal or by the death of the principal.
d. none of the above, since a €durable€ power of attorney is designed by law to be
irrevocable under all circumstances.
Courts will consider the adequacy of the consideration when:
a. one party clearly has the better of the deal.
b. one party has more business experience than the other.
c. one party claims to have been defrauded.
d. one party shows a much lower price nationally-advertised on television.
Our rights flow from:
a. the Constitution.
b. federal statutes.
c. city ordinances.
d. all of the above.
Damages in excess of actual loss are called:
a. punitive damages.
b. compensatory damages.
c. restitution.
d. nominal damages.
An oral contract containing a promise by an executor to pay estate debts from estate
funds is:
a. binding.
b. voidable by the executor or administrator.
c. enforceable against the executor only if the executor signs written proof of the
agreement.
d. enforceable against the other contracting party only if that party signs a written
agreement.
The Clayton Act prohibits:
a. all unfair methods of competition.
b. conspiracies in restraint of trade.
c. attempts to monopolize.
d. price discrimination between buyers of like commodities.
Bailments may be:
a. created orally or through a writing.
b. created for either real or personal property.
c. created for nonpossessory personal property.
d. made only after delivery to the bailor is accomplished.
A transferor may be able to set aside a negotiation obtained by fraud or duress unless:
a. a minor is involved.
b. the negotiation was part of an illegal transaction.
c. the negotiation was beyond the powers of the corporation.
d. the instrument has been acquired in the meantime by a holder in due course who did
not know of the misconduct.
Igor immigrated to the United States and sought to rent an apartment. He answered an
advertisement in a newspaper and signed a lease for an apartment without ever seeing
the apartment. Igor found the premises filled with an abundance of debris, rats and
insects. Also, the plumbing in the apartment was inoperable. These conditions:
a. do not affect the lease unless the landlord affirmatively warranted the condition of the
premises.
b. are the responsibility of the tenant to repair.
c. most likely constitute a breach of the implied warranty of habitability.
d. do not entitle Igor to vacate the premises.
It is the duty of an agent to act with the care that:
a. the principal would exercise under the circumstances.
b. a reasonable principal would exercise under the circumstances.
c. a reasonable juror would exercise under the circumstances.
d. a reasonable person would exercise under the circumstances.
Stop payment orders:
a. may be issued if a payee has failed to perform under a contract.
b. do not prevent a holder in due course from demanding payment.
c. are invalid for some forms of checks .
d. all of the above.
An assignee of a partner’s interest does not become a partner without the consent of the
other partners and is only entitled to:
a. participate in the management of the partnership.
b. receive the assignor’s share of the profits during the term of the partnership and the
assignor’s share of capital on dissolution.
c. inspect the books of the partnership.
d. vote on matters concerning the business of the partnership.
Private lotteries, which generally are held to be illegal, involve three elements:
a. prize, chance, and consideration.
b. return, skill, and wager.
c. prize, skill, and consideration.
d. attractive return, minimal involvement, and skill.
An unqualified indorser who receives consideration for the indorsement impliedly
warrants that:
a. the warrantor is a person entitled to enforce the instrument.
b. all signatures on the instrument are authentic and authorized.
c. the instrument has not been altered.
d. all of the above.
In a corporation, a large number of investors may pool their assets to finance a large
business enterprise.
An injured party that does not suffer an actual loss from the breach of a contract is
entitled to nominal damages.
An entity not in privity with an accountant is prohibited from recovering against the
accountant for malpractice when the accountant had no knowledge of any use that could
affect the party.
The sharing of profits and losses is conclusive evidence of partnership.
When a third person makes payment to an authorized agent, such payment is deemed
made to the principal at the time the agent remits the payment to the principal.
Under the “known-user” rule, it is sufficient if a user is a member of a known class,
even if the identity of the particular user is not known to the accountant.