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1) according to the magnuson-moss warranty act of 1975, a consumer is a buyer or
transferee who either uses the product himself or sells it to another consumer.
2) under revised article 9, the ucc allows a security agreement to be created by the
consumer online.
3) the principals death automatically terminates an existing agency.
4) an insurance policy is exempt from registration under the 1933 act.
5) the robinson-patman act prohibits sellers from making discriminatory payments to
competing customers for such customer-performed services as advertising and
promotional activities.
6) in some states that have eliminated assumption of risk as a separate defense;
assumption of risk reappears as one of the many kinds of fault that a court must weigh
in applying the states comparative fault defense.
7) an incidental beneficiary of a contract cannot recover under that contract.
8) a partner has the power to dissociate a partnership at will at any time.
9) in order for an assignment to be valid, the assignee must give some consideration to
the assignor.
10) the rules promulgated by the restatement (second) of contracts often resemble the
rules created by article 2 of the ucc.
11) under the securities act of 1933, the definition of a security excludes a promissory
note that matures not more than nine months from the date of issuance.
12) under the american rule governing successive assignments, the first assignee in time
has the superior right.
13) eleanor rigby is an employee of strawberry fields music, inc., a firm that specializes
in the preparation of original music for possible use by advertisers in tv and radio
commercials. in january 2000, rigby wrote a song that is protected by copyright. she
wrote the song as part of her regular duties as a strawberry fields employee. rigby and
strawberry fields did not have a written agreement concerning ownership of the
copyright on the song. in february 2000, rigby and strawberry fields published the song
by making large numbers of copies available to the public. statements a through d deal
with ownership of the copyright on the song and with the duration of the copyright.
which statement is legally accurate?
a.rigby owns the copyright, which will expire 50 years after her death.
b.rigby owns the copyright, which will expire in 2100.
c.strawberry fields owns the copyright, which will expire in 2070.
d.strawberry fields owns the copyright, which will expire 50 years after rigbys death.
14) individuals convicted of a rico (racketeer influenced and corrupt organizations act)
violation may be:
a.fined up to $250,000 without an imprisonment.
b.fined up to $150,000 and imprisoned up to 25 years.
c.fined up to $150,000 without an imprisonment.
d.fined up to $250,000 and imprisoned up to 20 years.
15) which of the following is true regarding the principle of separation of powers?
a.the constitution seeks to ensure that governmental power remains accountable to the
public will.
b.the congressional delegation of legislative power to an agency in its enabling
legislation may never be challenged.
c.congress is allowed to create an administrative agency only if congress, rather than
the president, will appoint the commissioners or board members of the agency.
d.the president can allow the supreme court to overturn very broad delegation of power
to administrative agencies.
16) an offering circular is a disclosure document required under regulation a of the sec
for a(n) _____ offering exemption from the registration provisions of the 1933 act.
a.intrastate
b.interstate
c.private
d.small
17) which of the following is true of a spendthrift trust?
a.the settlor can make himself the beneficiary.
b.it restricts the voluntary transfer of a beneficiarys interest.
c.assignees can claim rights to it.
d.creditors can claim rights to it.
18) jean agrees to lease steven the fourth floor of his house. jean himself resides on the
second floor. the person typing the contract strikes the wrong key, and the contract
reads the leased portion as the second floor. neither jean nor steven notices this error
when they read and sign the contract. what will the courts do in the case of a dispute?
a.avoid the contract
b.rescind the contract
c.enforce the contract
d.reform the contract
19) west & co., a large cpa firm, was engaged by sand corp. to audit its financial
statements. west issued an unqualified opinion on sands financial statements. reed is a
securities investor who relied upon the statements when purchasing sand stocks. after
incurring major losses on sand stocks, reed accused sand of making negligent
misrepresentations in the financial statements. west was not aware of the
misrepresentations nor was it negligent in performing the audit. if reed sues west for
damages, based on section 10(b) and rule 10b-5 of the securities exchange act of 1934,
west will:
a.lose, because reed relied upon the financial statements.
b.lose, because the statements contained negligent misrepresentation.
c.prevail, because some element of scienter must be proved.
d. prevail, because reed was not in privity of contract with west.
20) the defendants intentional exercise of dominion or control over the plaintiffs
personal property without the plaintiffs consent is called:
a.defamation.
b.conversion.
c.interference.
d.libel.
21) on preincorporation share subscriptions:
a.promoters have no liability.
b.promoters have no liability after incorporation.
c.promoters have personal liability till novation.
d.promoters have maximum liability.
22) cyrano hired roxanne to purchase a yacht. cyrano did not want sellers to know that
he was the buyer because he was very rich and he thought that sellers would demand a
higher price if they were aware of this. so he instructed roxanne to inform the sellers
that she was acting for an anonymous buyer. roxanne followed these instructions and
entered into a contract to purchase a yacht from richard. however, cyrano did not like
the yacht that roxanne selected and refused to pay the purchase price. richard insisted
that roxanne herself pay the purchase price. if richard sues roxanne to enforce the
contract against her, what will be the outcome?
a.richard will win because roxanne did not disclose her principals identity.
b.richard will win because roxanne did disclose that she was acting as an agent, and not
for herself.
c.richard will lose because roxanne did disclose that she was acting as an agent, and not
for herself.
d.richard will lose because roxanne was acting as an agent with actual express authority.
23) shawn was a manager and a limited partner in a wall street securities investment
firm limited partnership. he was expelled from the limited partnership after his
conviction in a securities fraud. which of the following is true?
a.shawn will retain his right to receive profits.
b.shawn will retain his right to vote as a limited partner.
c.shawn will lose his limited liability status.
d.shawn will retain his managerial powers.
24) under the expedited funds availability act, customers can draw upon checks
deposited in their checking account within:
a.the second business day following deposit, if the drawee bank is in the same federal
reserve check-processing region as the depositary bank.
b.one week following deposit, if the drawee bank is in a different federal reserve
check-processing region than the depositary bank.
c.three days after the deposit, in the case of checks drawn on the u.s. treasury.
d.five days of deposit in the case of cashiers checks.
25) which of the following contracts are agreements that create no legal obligations and
for which no remedy is given?
a.valid contracts
b.unenforceable contracts
c.void contracts
d.voidable contracts
26) kurt is trying to decide whether or not he should drive to work everyday and has a
number of questions. will it save valuable time? will he be adding to environment
pollution? will it add to the problems of heavy traffic on the roads? would carpooling be
a better idea? which of the following ethical theories does kurt adhere to?
a.utilitarian ethics
b.deontological ethics
c.kants categorical imperative
d.rights theory
27) historically, courts seeking to determine the legality of vertical mergers have first
tended to look at:
a.the increase in market entry barriers for new competitors.
b.the elimination of potential competition in the acquired firms market.
c.the economic efficiency of such vertical integration.
d.the share of the relevant market foreclosed to competition.
28) ______ requires a decision maker to ensure the maximum good for the maximum
number.
a.profit maximization
b.rights theory
c.stakeholder theory
d.utilitarianism
29) sue offers to buy a house from john and they were negotiating the price of the
house. in the meantime, sue confides in johns wife that she is willing to pay an amount
of $50,000 for the house. delighted to hear this, johns wife tells him the good news.
john immediately calls up sue and accepts her offer. is there a binding contract?
a.yes, because there is valid consideration.
b.yes, because a third party has communicated the terms of sues offer to john and that
john had accepted the same.
c.no, because the offeror had not communicated the terms of the offer to the offeree.
d.no, because the contract is still not signed by both the parties.
30) ace computers (ac) is a manufacturer. it entered into a contract with a retailer,
reliable computer (rc) for the sale of 100 new xyz model computers at $1,000 each, for
delivery in 6 months. ac would thus make a profit of $50,000. six months later however,
the xyz model has become almost obsolete; its market price is only $100 at that time. rc
refuses to accept or pay for those computers. if ac sues, how much should it be entitled
to in damages? (ignore any incidental expenses or cost savings to ac.)
a.nothing; when the xyz model became almost obsolete, this excused rc from the
contract.
b.$50,000, the profit ac would have made had rc not breached the contract.
c.$90,000, the difference between market price and contract price.
d.$140,000, the lost profit plus the difference between market price and contract price.
