Which of the following may influence a promoter to choose to incorporate in a
particular state?
a. Its restrictions on dividend payments
b. Its tax on corporate earnings
c. The rights granted to shareholders
d. All of these
Which of the following remedies are available to either a buyer or seller following a
breach by the other party?
a. Canceling the contract and recovering incidental damages
b. Covering and suing for incidental damages
c. Obtaining specific performance and stopping delivery of the goods
d. Canceling the contract and suing to recover the price
Which of the following is not considered “goods” within the meaning of Article 2?
a. An unborn calf
b. A field of corn still in the field
c. Timber which is still standing
d. All of these are goods under Article
The Truth-in-Lending Act:
a. applies only to such lenders as banks and savings and loans.
b. protects individuals who receive loans for more than $25,000, except for home
mortgage loans.
c. is regulated by the FTC and the Federal Reserve Board under Regulation Z.
d. allows a buyer who is financing his home with a first mortgage to rescind that
transaction within three days.
If no special words are used when real property is conveyed to two or more persons, it
will create a:
a. tenancy by the entireties.
b. tenancy in partnership.
c. tenancy in common.
d. joint tenancy.
Mary employs Tony to purchase for her a suitable site for an office complex. Tony owns
a suitable site himself and sells it to Mary for the fair market value without disclosing to
her that he is the owner of the land. Tony has fulfilled his duties to Mary, because he
sold the property for the fair market value, even if he failed to disclose his ownership of
the property.
a. True
b. False
Consequential damages include lost profits and injury to person or property resulting
from defective performance.
a. True
b. False
A corporation has no constitutional protection against unreasonable searches and
seizures.
a. True
b. False
Which of the following gratuitous promises is/are enforceable by
statute?
a. A good-faith contract modification in a contract for the sale of goods
b. A written offer signed by a merchant to buy or sell goods that assures it will be kept
open for one month
c. A renunciation of a claim in a written waiver that is signed and delivered by the
aggrieved party when thecontractinvolvesasaleof goods
d. All of these are enforceable by statute.
For a misrepresentation to be actionable as fraud in the inducement, it must be a
misrepresentation of an opinion.
a. True
b. False
An undertaking by a surety to protect an employer against the dishonesty of an
employee is a(n) bond.
a. performance
b. fidelity
c. judicial
d. official
Theresa is a travel agent at the Fly Away Travel Agency. She has signed an agreement
with her employer which prohibits her from working in any similar business in any
town within a 100-mile radius of where she works. If she wants to quit her job and go to
work for another travel agency, it is likely that:
a. a court would uphold these restrictions.
b. if no trade secrets are involved, and she has no dominion over customers, a court
would rule the restrictions to be invalid.
c. if the period of time of the agreement is under five years, it will be upheld by the
court.
d. a court would rule the restrictions invalid unless her work is done predominantly
online.
Under the RMBCA, a pre-incorporation subscription may be revoked at any time
without the consent of the subscribers.
a. True
b. False
Miller does the payroll for XYZ Company. In between Adams and Bates, he inserts the
name Appleton and makes out a weekly paycheck in that name. He keeps the check for
himself, signing “Appleton” and cashing it at a local bank. Auditors discovered the fake
payee many months later. May XYZ require the bank to recredit?
a. No, because of the holder rule
b. No, because Miller is an XYZ employee and the fictitious payee rule applies
c. Yes, because the indorsement is forged
d. Yes, because the check was, in effect, stolen
Which of the following is NOT true about the equity courts?
a. They were originally presided over by a chancellor.
b. They provided remedies not available in courts of law.
c. They provided for trials by jury.
d. They followed maxims.
In rescinding an executory, bilateral contract, no consideration is furnished.
a. True
b. False
One criticism of utilitarianism is that it ignores justice in some important instances.
a. True
b. False
The president of Hi-Glow Cosmetics sends his top chemist to Hi-Glow’s competitor’s
labs to steal its formula for shiny lipstick. The chemist gets caught and is sent to jail.
Can Hi-Glow be found to be criminally liable?
a. Yes, under the theory of ultravires
b. Yes, since the president authorized the crime
c. No, because a corporation acts through the board of directors
d. No, because a corporation can’t go to jail
A written stop payment order is effective until revoked in writing.
a. True
b. False
In applying the reasonable person standard, the court takes into account a person’s
physical, but not mental, handicaps.
a. True
b. False
The Sherman Act contains both civil and criminal penalties.
a. True
b. False
If no definite time for delivery is fixed by the terms of the contract, delivery:
a. will not take place.
b. must begin within 10 days of the contract.
c. must be immediate.
d. and acceptance must happen within a reasonable amount of time.
The UCC requires that all contracts for the sale of goods must be in writing.
a. True
b. False
Which of the following is true with regard to an exculpatory clause?
a. An exculpatory clause excuses one party from liability for her own tortious conduct.
b. Where one party has a superior bargaining position that has enabled him to impose an
exculpatory clause upon the other, the courts are inclined to nullify the provision.
c. An exculpatory clause may be unenforceable for unconscionability.
d. All of these are true.
Torts are civil cases, not criminal cases.
a. True
b. False
Under the UPA, upon dissolution of a partnership, apparent authority terminates
although actual authority generally continues.
a. True
b. False
A power of avoidance held by a party may be lost if:
a. the contract is affirmed.
b. there are unreasonable delays in exercising the power.
c. the rights of third parties intervene.
d. All of these.
The Sarbanes-Oxley Act was enacted in response to:
a. accountants’ requests for definitive guidelines for their profession.
b. business scandals involving companies such as Enron, WorldCom, and the Arthur
Andersen accounting firm.
c. the need to lighten the oversight and enforcement responsibilities of the SEC.
d. the UltramaresCorporationv.Touchecase.
Which of the following is NOT a major duty which the agent owes to his principal?
a. Duty to obey instructions.
b. Duty to act in good faith and with loyalty.
c. Duty to indemnify.
d. Duty to exercise care.
Midway Corporation is incorporated in Delaware, but it has its principal place of
business in Minnesota. It does much of its business in California. For purposes of
diversity of citizenship, Midway is a resident of:
a. Delaware.
b. Minnesota.
c. both Delaware and Minnesota.
d. Delaware, Minnesota, and California.
The EPA may impose criminal fines and seek incarceration or imprisonment for persons
who are convicted of violations of some environmental laws.
a. True
b. False
An auctioneer is the offeror and each bid is a counteroffer until a final bid is accepted.
a. True
b. False