Which of the following contracts is covered by Article 2 of the Uniform Commercial
Code?
a. The sale of a house
b. The sale of a new car
c. An employment agreement
d. A sale of automobile insurance
If a security interest has attached, it is enforceable against the debtor.
a. True
b. False
Chapter 5 involves liquidation, whereas Chapters 7, 11, 12, and 13 involve
reorganization and adjustment of debts.
a. True
b. False
All of the following are true concerning the Occupational Safety and Health Act
EXCEPT:
a. penalties for violations are civil only.
b. OSHA develops standards, conducts inspections, monitors compliance with
standards, and institutes enforcement actions against those not in compliance.
c. a stated purpose of the Act is to encourage state participation in regulating safety and
health.
d. the Act prohibits an employer from discharging an employee who exercises rights
under the Act.
The common law of torts protects employees from all of the following except:
a. an unreasonable intrusion into their private lives by employers.
b. unreasonable disclosure by employers of private information.
c. unreasonable publicity putting them in a false light.
d. monitoring of employer-provided e-mail systems.
The Lanham Act has been amended by the:
a. Federal Trademark Dilution Act and the Trademark Cyberpiracy Prevention Act of
b. Only the Trademark Cyberpiracy Prevention Act of
c. Anti-counterfeiting Amendments Act of 2004 and the Trademark Cyberpiracy
Prevention Act of
d. Only the Federal Trademark Dilution Act.
Al owns a farm that he believes is worth $150,000. Betty knows that there is oil under
the farm and offers Al
$160,000 for it. Al is suspicious and asks her why she wants to buy the place. She says
she would like to live in the country. Al then asks her if she thinks there might be
valuable minerals under the land. Betty laughs and says she doubts that very much, so
Al sells her the farm for $160,000. Al later realizes that the land was worth more than
he was paid. Betty’s statement to Al was a misrepresentation requisite for fraud.
a. True
b. False
Robbery can be “aggravated robbery” under which of the following circumstances?
a. The robber intends to kill if faced with resistance.
b. Serious bodily injury to the victim occurs.
c. The crime is committed by two persons rather than one person.
d. All of these.
Time paper is payable at a definite time.
a. True
b. False
When a breach of contract occurs, the nonbreaching party is required to take reasonable
steps to lessen or mitigate the damages that he may sustain.
a. True
b. False
Where there has been informal rulemaking or informal adjudication by an
administrative agency and the decision by that agency is then appealed to the courts, the
court will generally apply what test in reviewing factual determinations?
a. The unwarranted by the facts standard.
b. The substantial evidence test.
c. The arbitrary and capricious test.
d. The beyond a reasonable doubt standard.
The common law recognizes an accountant-client privilege.
a. True
b. False
Persons who lack mental capacity at the time they enter into a contract may avoid
liability under the agreement.
a. True
b. False
An employer’s interference with the employee’s right to bargain collectively is not an
unfair labor practice.
a. True
b. False
Well-established defenses that were available to the employer for a negligence suit filed
by injured employees at common law included all of the following except:
a. the fellow servant rule.
b. contributory negligence on the part of the employee.
c. the employee’s assumption of the risk.
d. strict liability
Which of the following is correct with respect to finance leases?
a. A finance lease generally involves three parties instead of two.
b. A finance lessor supplies the goods.
c. The finance lessor typically has special expertise as to the goods.
d. All of these are correct.
A carrier or warehouser who receives goods from a thief and later delivers them to a
person to whom the thief ordered them to be delivered is liable to the true owner of the
goods.
a. True
b. False
If Sean, a shareholder, dissents to a corporate merger, his appraisal remedies will be:
a. fair value of his shares as of the day the corporation agrees to purchase the shares.
b. fair value of the shares as of the time immediately before the action to which he
objects is taken.
c. average purchase price for the shares during the preceding 30 days.
d. None of these.
Horizontal privity pertains to remote sellers within the chain of distribution.
a. True
b. False
Which of the following is tangible real property?
a. Corn harvested and stored in a grain bin
b. The mortgage on an office building
c. A copyright
d. The freight elevator in an office building
A private citizen may bring a criminal action against an individual for breaking a
criminal law.
a. True
b. False
How does the Due Process Clause of the Fourteenth Amendment differ from the Due
Process Clause of the Fifth
Amendment?
a. The Fourteenth Amendment clause protects individuals from violations of their rights
by state governments.
b. The Fourteenth Amendment clause guarantees both substantive and procedural due
process but the FifthAmendment clause does not.
c. The Fourteenth Amendment clause protects individuals against violation of their
rights by private individuals as well as the government.
d. The Fourteenth Amendment clause requires the application of strict scrutiny in all
cases.
Neal is the young, likable, optimistic, and generous son of a prominent public official.
He has a master’s degree in business and is the business partner of Ken and Bill in an oil
drilling and exploration business. Neal also serves as a director on the board of the
Bonanza Savings and Loan Association. While serving on the Bonanza Board, Neal
votes to approve major loans to Ken and Bill without disclosing to the other directors
that he is a business partner of Ken and Bill. Neal also personally arranges for a
$900,000 line of credit from Bonanza for an oil drilling venture in which he is a partner
with Ken. The drilling venture is unsuccessful and Ken and Bill both default on their
loans to Bonanza, which then causes the S & L to become insolvent. Federal banking
officials, who then liquidate its assetsto pay its creditors and depositors, seize Bonanza.
Because Bonanza is federally insured, a substantial amount of tax money is also used to
pay off depositors whose deposits are insured under federal programs. Bonanza
shareholders lose their investment money. Was Neal’s conduct as a director of Bonanza
ethical? Analyze his conduct in light of the following ethical theories.
a. Intuitionism and the “Television Test.”
b. Milton Friedman’s ideas on corporate governance.
c. Deontological theories.
d. Rule utilitarianism.
e. Ethical relativism.
A corporation is considered to be a person within the Fifth Amendment’s clause that
protects a person against self
incrimination.
a. True
b. False
Members of the board of directors may not determine their own compensation.
a. True
b. False
An estate in fee simple has which of the following characteristics?
a. It may be inherited.
b. It may be sold.
c. Judgment creditors may levy it upon.
d. All of these.
On appeal, neither party may bring new evidence to the court. a. True
b. False
When a debt is secured by property as collateral and the debtor defaults, the creditor
may:
a. take possession of the property and retain it in full satisfaction of the debt or sell it.
b. take possession of the property and use it until the debtor pays the debt.
c. not take possession of the property, but must sue the debtor for the balance due.
d. None of these.
Nancy, who lives in Birdville, wants to open a McHenry Roast Chicken franchise.
Mark, a representative of McHenry, told Nancy, “If you will buy a lot and build a
building in River City, we will give you a franchise.” Nancy bought the lot and built the
building as instructed, only to discover that McHenry had awarded the franchise to a
large corporation. McHenry claims no liability to Nancy since there was no
consideration. Which statement is most accurate?
a. McHenry is not liable to Nancy since there is no consideration.
b. McHenry is not liable to Nancy since there is past consideration.
c. McHenry is liable to Nancy since adequate consideration is given by both parties.
d. McHenry is liable to Nancy based on the concept of promissory estoppel.
Lou and David have an executory contract that is supposed to be performed on June On
May 1, David indicates that he has no intention of performing the contract as agreed.
Lou must wait until June 1 before he can pursue any remedies for breach of contract
against David.
a. True
b. False
Barbara, a wealthy widow, promises the pastor of her church that she will donate
$20,000 to the church to help pay off its mortgage if the stewardship committee can
obtain enough pledges for the balance of the $80,000 mortgage. Other pledges are
obtained to pay off the mortgage, but now Barbara has changed her mind and plans to
take an around-the-world cruise instead. In this case:
a. the doctrine of promissory estoppel can be applied.
b. the promise to pay $20,000 is a promise to give a gift and is therefore not
enforceable.
c. under the Restatement, Barbara’s promise is enforceable only if it is in writing.
d. Barbara’s promise is not enforceable because the church did not give consideration.