A cease and desist order, issued by the FTC, directs a party to stop a certain practice or
face punishment, such as a fine.
a. True
b. False
No implied warranty exists:
a. if it is disclaimed in any manner.
b. if it applies to hidden defects that are not apparent upon examination.
c. as to defects that an examination ought to have revealed, where the buyer examined
the goods as fully as he desired or where the buyer refused to examine the goods.
d. All of these.
Sharing of gross returns establishes a partnership.
a. True
b. False
Under Alternative A of the Code’s horizontal privity provision, a corporation may bring
a case against the manufacturer of a defective product for breach of the warranty of
merchantability.
a. True
b. False
There is an established rule in the law of torts that even one who has not created a peril
has a duty to take affirmative action to assist an imperiled person, no matter what the
relationship with that person, when the imperiled person can be saved from harm at
little or no personal risk to the rescuer.
a. True
b. False
With respect to liability for improper dividends, a non-breaching director and an
innocent shareholder are both protected from liability due to their good faith.
a. True
b. False
a. How does liability based upon negligence differ from liability based upon strict
liability?
b. How is liability based upon negligence similar to strict liability?
A perfected security interest has priority over:
a. only an unperfected security interest.
b. only a lien creditor who acquires a lien after perfection.
c. a previously filed security interest.
d. both an inperfected security interest and a lien creditor who acquires a lien after
perfection.
When an owner of land subdivides it into lots and records the plat of the subdivision, he
is held by some statutes and by common law to have dedicated to the public all streets,
alleys, parks, playgrounds, and beaches shown on the plat.
a. True
b. False
Automatic perfection would occur in which situation (assuming a written security
agreement)?
a. Mary buys a refrigerator for her apartment on credit.
b. Carl buys a computer for his office on credit.
c. Carl buys a computer for his office by borrowing the money for the purchase.
d. Mary buys inventory for her home-based sewing business.
Claudia sells her highly successful hair salon to Carl. In the sales contract, Claudia
agrees never to open a hair salon in the state. Which of the following best describes this
contract clause?
a. Void as an illegal primary restraint
b. Valid as a reasonable restraint on trade
c. An unenforceable restraint of trade contrary to public policy
d. Binding as fair protection
RULPA requires a lesser duty of care by a general partner to a general partnership than
that owed by a general partner to a limited partnership.
a. True
b. False
A sculptor wishes to protect one of his original works. He may do so by applying for a:
a. copyright.
b. patent.
c. service mark registration.
d. trademark registration.
Upon the surety’s payment of the principal debtor’s entire obligation, the surety obtains
all of the rights the creditor has against or through the principal debtor. The term for the
surety’s ‘stepping into the shoes” of the creditor is known as:
a. contribution.
b. subrogation.
c. reimbursement.
d. exoneration.
An agent can never act for two principals.
a. True
b. False
When there was a contract with a previously undisclosed principal, the Third
Restatement:
a. holds that a third party’s rights against the principal are alternative to the third party’s
rights against the agent
b. rejects the election rule.
c. follows the same rules as the Second Restatement regarding a third person’s rights
against a principal andagent.
d. All of these.
The federal government alone regulates the sale of securities.
a. True
b. False
Some states still recognize common law crimes.
a. True
b. False
The performance of a pre-existing contractual duty which is neither doubtful nor the
subject of an honest dispute is legally sufficient consideration to support a second
contract.
a. True
b. False
All states agree that a minor who has fraudulently misrepresented her age when
entering into a contract has no power to disaffirm the contract.
a. True
b. False
Equitable remedies will not be granted where:
a. the terms of the contract are fair.
b. the consideration is adequate.
c. the terms of the contract are sufficiently certain.
d. the contract is tainted with fraud, duress, undue influence, mistake, or unfair
practices.
TSCA includes provisions that:
a. regulate the manufacture of new chemicals.
b. allow for the registration of pesticides.
c. require that exports be labeled “not registered for use in the United States of
America.”
d. All of these.
Bill is the accountant for Cheatam and Sons Co. For many years he has kept two sets of
books, one with real figures and another with figures he uses when the IRS audits.
When Bill, while working on Cheatam’s books, is arrested for fraud, what will happen
to the books?
a. They are privileged communications and therefore inadmissible as evidence against
Bill.
b. They are protected by the Fifth Amendment and therefore are inadmissible.
c. They may be admitted as evidence since the Fifth Amendment does not protect
business records.
d. They may be admitted as evidence only if Bill consented to a search of his offices.
Warrick makes a $10,000 investment in a debenture issued by F & M Company.
Warrick is now a secured creditor of F & M Company.
a. True
b. False
A(n) is the fundamental law of a particular level of government.
a. Restatement of law
b. executive order
c. constitution
d. code
Betty likes to shop using her credit cards.
a. What provisions of the Truth-in-Lending Act apply to the use of credit cards?
b. If Betty’s account at Trevor’s Department Store suddenly shows a $200 charge that
she did not make and she notifies Trevor’s in writing of the error, what must Trevor’s do
under the FairCredit Billing Act
Which of the following items would be patentable?
a. A distinctive variety of an asexually reproducing plant
b. A textbook
c. The theory of relativity
d. A computer program
An accountant has a duty to comply with court orders, client requests, and Generally
Accepted Auditing Standards with regards to disclosure of a client’s confidential
information.
a. True
b. False
The Environmental Protection Agency (EPA) would like to adopt some new rules
regarding environmental impact statements, but it is afraid that if too many people
know about them ahead of time, the adverse publicity will force the agency to amend
them. To avoid any public comment, the agency seeks to adopt the rules without
publishing them. Which of the following statements is true regarding the agency’s
actions?
a. The agency has a right to act in this way and a duty to be efficient with taxpayer
money.
b. The rules in this instance are procedural in nature and therefore are not required to be
published.
c. The agency is seeking to adopt the rules by a procedure that violates the rulemaking
procedures set forth in the APA.
d. The agency has no rulemaking authority, because only Congress can make legislative
rules.
Arthur negligently stopped his car on the highway. Betty, who was driving along, saw
Arthur’s car in sufficient time to attempt to stop. However, Betty negligently put her
foot on the accelerator instead of the brake and ran into Arthur’s car. If Arthur sues
Betty for damages:
a. Arthur’s contributory negligence will prevent his recovery from Betty in all
jurisdictions.
b. Betty had the last clear chance to avoid the accident and will bear full legal
responsibility for it.
c. Arthur has assumed the risk of the accident.
d. because both parties were negligent, in a state that follows the modified comparative
negligence doctrine, both parties will share the liability for their injuries in proportion
to their degree of fault unless the court finds Arthur’s contributory negligence was as
great as or greater than Betty’s negligence.
Under the Federal Unemployment Tax Act, unemployment benefits are paid to workers
who have lost their jobs, usually through no fault of their own.
a. True
b. False
Statutory provisions do not protect creditors upon the dissolution of a corporation.
a. True
b. False
Article 8 of the UCC contains rules applicable to transfers of investment securities.
a. True
b. False