1) Comprehensive general liability insurance can encompass as many risks as the
insurer agrees to cover.
2) Traditionally, a professional owed a duty only to those with whom the professional
had a direct contractual relationship.
3) The franchise agreement is not likely to set out standards such as sales quotas and
record-keeping requirements.
4) Restaurants must post guidelines on the number of calories that an average person
requires daily.
5) A franchisee ordinarily does not pay a fee for a franchise license (the privilege of
being granted a franchise).
6) A target corporation is a corporation being acquired through the purchase of a
substantial number of the voting shares of its stock.
7) Generally, under employment-at-will doctrine, an employer may fire an employee
even if doing so would violate a federal or state statute.
8) On default, a secured party who chooses not to retain the collateral must dispose of it
in a commercially reasonable manner.
9) All transactions involving the delivery of property from one person to another create
a bailment.
10) Simply finding something and holding onto it gives the finder legal rights in the
property.
11) Punitive damages generally are awarded in lawsuits for breach of contract.
12) There is one set of ambient standards-maximum permissible levels of certain
pollutants-and the Environmental Protection Agency formulates plans to achieve them.
13) A price-fixing agreement that is reasonable does not violate antitrust law.
14) The Americans with Disabilities Act of 1990 defines persons with disabilities as
persons with physical or mental impairments that ‘substantially limit” one or more
everyday activities of the affected individuals.
15) Abner tells a representative of Brass & Woodwind Musical Instruments, Inc., that
he will pay for Claudia’s trumpet if she does not. Abner does not secure any personal
benefit for this promise. Abner’s oral promise is enforceable as a contract by
a.Brass & Woodwind Musical Instruments, Inc.
b.Claudia.
c.Abner.
d.none of the choices.
16) Alf rents an apartment. The lease does not specify how long it will last, but it does
specify that Alf must pay rent every month. Alf’s tenancy is
a.a fixed-term tenancy.
b.a periodic tenancy.
c.a tenancy at will.
d.not a tenancy.
17) Portia owes Bon $500 on their roof repair contract, but refuses to pay. To collect,
Bon files a mechanic’s lien. Under a mechanic’s lien, security for the debt is represented
by
a.Portia’s personal property.
b.Portia’s real estate.
c.the $500 owed under the contract.
d.the contract.
18) Community Bank receives a check drawn by Dennis. The check lacks a proper
indorsement. Payment can be postponed without dishonor
a.indefinitely.
b.under no circumstances.
c.for thirty days.
d.until the proper indorsement is obtained.
19) Dollars & Sense, Inc., is incorporated in the state of New Jersey and is doing busi-
ness in the state of New York. In New York, Dollars & Senseis properly referred to as
a. a domestic corporation.
b. a foreign corporation.
c. an alien corporation.
d. a public corporation.
20) Omar and Penn want to discharge their contract by executing a new agreement with
performance different from what they originally promised. They can best accomplish
this by
a.a mutual agreement to rescind.
b.an accord and satisfaction.
c.a novation.
d.an alteration of the original contract.
21) Lyndon owes $10,000 to Metro Bank. As a prejudgment remedy to collect the debt,
Metro could use a writ of
a.contribution.
b.attachment.
c.execution.
d.subrogation.
22) County Water & Sewer operates a public water supply system. County Water must
send to every household that it supplies with water an annual statement describing
a.County Water€s financial situation and material facts that might affect it.
b.other operations, such as irrigation and water conservation, in which County Water is
involved and to what extent.
c.parties who might be held liable if pollution problems arise.
d.the source of the water, and any contaminants and health concerns.
23) County Dentists Clinic offers to buy from Dental & Medical Supplies Company a
certain quantity of floss and other items for a certain price. Dental & Medical can ac-
cept the offer by
a.a material alteration of the terms within a reasonable time.
b.a promise to ship or a prompt shipment of the goods.
c.a prompt shipment of the goods only.
d.a shipment of nonconforming goods with a notice of accommodation.
24) Elinor performs ten hours of house cleaning for Floyd in exchange for a promissory
note for $400. At the time that Elinor accepts the note, she is aware that bankruptcy
proceedings are being filed against Floyd. Elinor can
a.obtain HDC status.
b.not obtain HDC status, because she knows that there are bankruptcy proceedings
against Floyd.
c.not obtain HDC status, because she did not fulfill the value requirement.
d.not obtain HDC status, because she did not fulfill the good faith requirement.
25) Taco Hot Dogs, Inc., regularly advertises its products. Under the First Amendment,
in comparison with noncommercial speech, the protection given these ads is
a.equally extensive.
b.less extensive.
c.more extensive.
d.non-existent.
26) Sheryl files a petition in bankruptcy. Sheryl’s non-dischargeable debts include
a.domestic-support obligations.
b.student loans if payment would impose undue hardship.
c.unpaid loans to finance home repairs.
d.unsecured credit-card debt.
27) The tort of trespass to land is designed to protect the right of an owner to exclusive
possession.
28) All federal agencies must follow specific procedural requirements when fulfilling
their basic functions.
29) A limited liability company can be held liable for any loss or injury caused by the
wrongful acts or omissions of its members.
30) Under the fictitious payee rule, the payee’s indorsement is not treated as a forgery,
and an innocent holder can hold the maker or drawer liable on the instrument.
31) With respect to negotiability, a mere reference to another writing or record makes a
promise conditional.
32) A partner may pursue his or her own interests without automatically violating the
partner’s fiduciary duties to the partnership and the other partners.
33) Frieda is an administrative assistant with Global Dispatch & Shipping Corporation,
but has no authority to sign Global Dispatch checks. Frieda orders merchandise from
Home & Office Furnishings Company delivered to her home and pays with a Global
Dispatch check, signing “Global Dispatch & Shipping Corp. by Frieda, admin. assist.”
Home & Office does not know that Frieda has no authority to sign the check. Who is
liable on the check, and why?
34) Forbearance is a postponement of part or all of the payments on a loan for a limited
time.
35) A person who has been determined by a court to be mentally competent cannot form
a legally binding contract with another party.
36) Even during emergency situations, when the principal cannot be consulted, the
agent may not deviate from the principal’s instructions without violating the duty of
obedience.