1) Beck is an accountant who prepares her clients€ tax returns. Cole is not an
accountant, but he also prepares tax returns for clients. Under the Internal Revenue
Code, liability for preparing a false return may be imposed on
a.Beck and Cole.
b.Beck only.
c.Cole only.
d.none of the choices.
2) 9.Lipstik, Inc. makes cosmetics. Lipstik intentionally mislabels its packaged products
to conceal a defect. Trusting and relying on the mislabeling, Mikayla buys a Lipstik
product and suffers an injury. Lipstik is most likely liable for
a.product misuse.
b.fraud.
c.privity.
d.puffery.
3) Renewable Resources, Inc., files a suit against Sunrich Utility Company and seeks to
examine certain documents in Sunrich’s possession. A legitimate reason for this
examination is that the documents contain
a.information that is relevant to the case.
b.private information about Sunrich’s operations.
c.public information about energy generation.
d.irrelevant data that can be eliminated from consideration.
4) Commerce & Business Insurance, Inc., has a valid reason to cancel a policy issued to
DIY Auto & Truck Parts Company. In most states, Commerce & Business could cancel
the policy
a.on advance oral or written notice.
b.on oral or written notice but only after arbitration.
c.without notice.
d.on advance written€not oral€notice.
5) Odell, an accountant, prepares for Pronto Tacos Corporation a financial statement
that omits a material fact. The financial statement is included in Pronto Tacos′s
registration statement, which Qiana reads. Qiana buys Pronto Tacos stock. Under
Section 11 of the Securities Act of 1933, for Odell to be liable for the omission, Qiana
must show that she
a.relied on the omission.
b.suffered a loss on the stock.
c.knew about the omission before making her purchase.
d.is a sophisticated investor.
6) Curtis is an employee of Deepwater Drilling, Inc., covered by federal overtime
provisions, which apply only after an employee has worked more than
a.eight hours in a day.
b.forty hours in a week.
c.160 hours in a month.
d.one year for the same employer.
7) Lucille files a suit against Murray. They meet, and each party€s attorney argues the
party€s case before a judge and jury. The jury presents an advisory verdict, after which
the judge meets with the parties to encourage them to settle their dispute. This is
a.a mini-trial.
b.a summary jury trial.
c.early neutral case evaluation.
d.not a legitimate form of dispute resolution.
8) As part of a stock offering for Designer Studio Corporation, the firm′s accountant
Evelyn intentionally misrepresents material facts in the prospectus. Flores buys the
stock unaware of the misrepresentation and suffers a loss. Evelyn may be subject to
a.a fine and damages only.
b.a fine and imprisonment only.
c.a fine, imprisonment, and damages.
d.damages only.
9) The Long-haul Truckers Association wants the federal government to spend funds to
build a new highway. Congress can spend revenues
a.only to carry out its enumerated powers.
b.to promote any objective that it deems worthwhile.
c.as long as the funds are spent uniformly among the states.
d.without regard to whether the expense violates the Constitution.
10) Household Products Corporation wants to make an offering of securities to the pub-
lic. This offering is not exempt from registration under the Securities Act of 1933.
Before Household Products sells its securities, it must provide investors with
a.a forward-looking financial forecast.
b.an investment contract.
c.a prospectus.
d.samples of its products.
11) Erin indorses a check, “Pay to Farmers Cooperative, Inc., if they deliver the grain
by May 1, 2015.” This is
a.a blank indorsement.
b.a qualified indorsement.
c.a restrictive indorsement.
d.a special indorsement.
12) When one creditor guarantees a debtor’s debt to another creditor to forestall
litigation, the guaranty does not need to be in writing to be enforceable.
13) Lakeside Resort hires Micheline to act as its agent to buy a 1,000-acre waterfront
tract of land from Nabil for $1,000 per acre. Lakeside does not want Nabil to know that
it is the principal or that Micheline is its agent. Lakeside wants the land for a new
marina, and believes that Nabil may not sell the land for that purpose or may demand a
premium price. Micheline makes the purchase, signing only her name on the contract as
the buyer and not disclosing to Nabil the agency relationship. Lakeside gives Micheline
the amount to pay for the land, but she absconds with the funds. Nabil soon learns of
Lakeside’s identity. Can Nabil enforce the contract against Lakeside? Against
Micheline?
14) Misrepresentation can occur by words or actions, but not by silence.
15) Even if the terms of a contract express such certainty of performance that the
promisor has not definitely promised to do anything, the promise binds the promisor.
16) The United States will not enforce a foreign court€s decision.
17) A special power of attorney permits an agent to transact all business for a principal.
18) The term police powers encompasses just the enforcement of criminal laws.
19) It is frequently the companies rather than courts or legislatures that are defining the
privacy rights of their online users.