1) A security interest is enforceable only if the collateral is in the creditor’s possession.
2) Bonds represent the borrowing of funds by firms.
3) Chi-Lan files a petition in bankruptcy for relief through an individual’s repayment
plan. Chi-Lan’s plan must provide for
a.the turnover of her future income to the trustee.
b.her attendance at a credit-counseling briefing.
c.adequate means for the petition’s execution.
da preference for one creditor over another.
4) Freddi buys bike shoes from Get n’ Gear Store, telling the clerk that she wants the
shoes to compete in High Pace Triathlon. The shoes break apart during the competition,
causing Freddi to be injured in a fall. Get n’ Gear most likely breached
a.an express warranty.
b.an implied warranty of fitness for a particular purpose.
c.an implied warranty of merchantability.
d.a warranty of title.
5) Rondi holds herself out as possessing special accounting skills. As an agent, she must
exercise the degree of skill or care expected of
a.a person having those skills.
b.an average, unskilled person.
c.a reasonable person.
d.the principal.
6) Ester sells shares in Fast Food Franchise Company to Gaye. Ester does not hand the
stock certificates to Gaye, but gives her the key to a safety-deposit box in Heartland
Bank in which the certificates are locked. Presenting the key is
a.incomplete delivery.
b.constructive delivery.
c.production.
d.conversion.
7) Wendy works as a weather announcer for a TV station under the character name
Weather Wendy. Wendy can register her character’s name as
a.a certification mark.
b.a trade name.
c.a service mark.
d.none of the choices.
8) Big Deal! Marketing Company, a U.S. firm, signs a contract with Comercio Exterior,
Ltd., a Chilean firm, to give Comercio the right to use Big Deal!’s animation techniques
and characters in product promotions. This is
a.a distribution agreement.
b.a joint venture.
c.direct exporting.
d.licensing.
9) To drive its competitors out of a certain geographic segment of its market, Fryin′
Potatoes, Inc., sets the prices of its products below cost for the buyers in that area. This
is
a.a refusal to deal.
b.none of the choices.
c.predatory bidding.
d.price discrimination.
10) BioChem Corporation, ChemCo Company, and DexLabs Inc. make and distribute
toxic chemicals. In a product-liability suit against all of these parties, the court is most
likely to impose market-share liability if it cannot be proved which of the parties
a.was in privity with the injured plaintiff.
b.exercised the least amount of due care in making the product.
c.supplied the particular product that caused the injury.
d.holds the largest share of the market for the product.
11) Like the bylaws of other corporations, the bylaws of Equipment Leasing, Inc.,
a.establish the operating name of the corporation.
b.establish the value and classes of corporate stock.
c.were adopted at its first organizational meeting.
d.were submitted for approval to the public official in charge.
12) Fletcherbuys a Great Big Burgers, Inc., franchise. Great Big Burgers requires that
its franchisees buy its products exclusively for every phase of their operations. Because
Fletcher wishes to buy less expensive products, he challenges the requirement. His best
argument is probably that the requirement violates
a.the implied covenant of good faith and fair dealing.
b.the Federal Trade Commission’s Franchise Rule.
c.federal antitrust laws.
d.Great Big Burgers’s marketing image.
13) Craig is an accountant whose clients include Deep Excavation Corporation. Elbert
is Craig′s attorney. Under the common law and by statute in many states, working
papers that Craig develops when preparing financial reports for Deep Excavation are
owned by
a.Craig.
b.Deep Excavation.
c.Elbert.
d.no one-the papers must be destroyed immediately after use.
14) Logan borrows Morris’s bike to ride over mountain trails. The bike is damaged
during the ride. Liable for the cost of repairing the bike is
a.Logan and Morris in equal measure.
b.Logan.
c.Morris.
d.all of the choices.
15) 14.Lucas orally agrees to sell his Mountain Spring Beverage Company to Natural
Soft Drinks, Inc. Lucas notes the terms on a sheet of Mountain Spring stationery and
signs it. This agreement is most likely enforceable against
a.no one.
b.Lucas and Natural Soft Drinks.
c.Lucas.
d.Natural Soft Drinks.
16) Dreem Land Corporation and EZ Investments Company transfer their property to
Financial Managers, Inc., which manages the property and distributes the profits to
Dreem and EZ. This form of a business organization is
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
17) Insurance Sales Corporation hires Jeremy to act as its agent. Insurance Sales’s right
not to perform a contract entered into by Jeremy, if he breaches their agency agreement,
is the right of
a.avoidance.
b.indemnification.
c.nullification.
d.termination.
18) Dharma enters into a contract to manage the operations of Esther’s dental office for
one year, renewable for subsequent one-year terms. If this contract is discharged like
most contracts, it will be
a.canceled.
b.breached.
c.altered.
d.performed.
19) Sea Harvest Fish Company and Temp Refrigerated Storage Company enter into a
long-term lease for a warehouse. To be enforceable, the lease must be in writing
a.only if the amount of the rent to be paid is less than $500.
b.only if the amount of the rent to be paid is more than $500.
c.only if the amount of the rent to be paid is more than $5,000.
d.if the amount of the rent to be paid is any amount.
20) Neville files a suit against Olina. If Olina fails to respond,
a.Neville must appeal the case to a different court.
b.Olina’s failure to respond will be considered to be a denial.
c.Neville will not be awarded the remedy sought.
d.Olina will have a default judgment entered against her.
21) Most states apply to a limited liability company (LLC) formed in another state the
law of the state where the LLC was formed.
22) A symbol can serve as a valid signature.
23) In a criminal case, the state must prove its case by a preponderance of the evidence.
24) Only a statement made after a contract is entered into can be an express warranty.
25) A negotiable instrument is a formal contract.
26) The right to petition for bankruptcy relief under federal law is an essential aspect of
our capitalistic society.