All but which of the following is required of a negotiable instrument?
a. It must be payable only out of a particular fund.
b. It must contain an unconditional promise to pay a fixed amount in money.
c. It must be payable on demand or at a fixed future date.
d. It must be in writing and signed by the maker or drawer.
If 100 shares of $50 par value stock were issued at $75 per share, how much would
constitute capital surplus?
a. $750
b. $7,500
c. $2,500
d. $5,000
Martinez makes a contract with Bowers on behalf of a disclosed principal. If Bowers
breaches the contract, ordinarily Martinez has no right of action against Bowers.
a. True
b. False
Before an indorser can be held responsible for payment of a check, the check must be
presented to the drawee bank for payment.
a. True
b. False
The “discovery” stage of a trial includes which one of the following?
a. Production of documents
b. Selection of jury
c. Cross examination of witnesses
d. Arrest of suspect
A bailee is required to return the identical goods bailed, in the same condition as when
the bailee received them.
a. True
b. False
Which of the following remedies is available to the seller or manufacturer of goods
upon a breach by buyer by repudiation of the contract?
a. The manufacturer may resell any unfinished goods.
b. The manufacturer may identify goods to the contract.
c. The seller may sell the unfinished goods for scrap.
d. The seller may do all of these.
Under copyright law, the doctrine of works for hire states that:
a. if an employee prepares a work within the scope of her employment, her employer is
considered the author of the work.
b. if an employee prepares a work within the scope of her work, the employee is
considered the author of the work for copyright purposes.
c. if the work is specially ordered or commissioned, it is always considered, for
copyright purposes, the work of the employer.
d. a person’s original creations, if committed to tangible form, are always considered to
be authored by the actual creator in the law of copyright.
Treasury shares are shares that have been authorized but have not yet been issued.
a. True
b. False
What is the method by which title to new property is acquired when an article of
personal property that belongs to one person has a natural increase?
a. Gift
b. Will or descent
c. Purchase
d. Accession
The courts may grant a petition of involuntary dissolution if shareholders:
a. do not approve of fundamental changes of the board.
b. show that the corporation has not kept adequate records or filed annual reports.
c. did not receive their dividends.
d. show that corporate assets are being squandered.
In 2008, Bill created a trust that would become effective on his death. In the trust
instrument, Bill specified that all of the income from his stocks and bonds be used for
the benefit of St. John’s Hospital and indicated that his brother Chad should administer
the trust.
a. What kind of trust is this?
b. What is Bill in relationship to the trust?
c. What is the corpus of the trust?
d. What is Chad in relationship to the trust?
A covenant not to compete is a type of restraint of trade that courts today will enforce
under certain circumstances.
a. True
b. False
Knecht contracts to sell $20,000 of goods to Morales. Later, Morales hears from
another supplier that Knecht is having financial trouble, and Morales is concerned that
Knecht will not be able to fill his order. If Morales has reasonable grounds for
insecurity about Knecht’s contractual performance:
a. Morales has no recourse except to wait for the contractual delivery date and, if
Knecht fails to deliver, Morales can then sue for breach of contract.
b. Morales may demand written assurance of performance from Knecht before the
contract delivery date, and
Knecht must provide adequate assurance within a reasonable time not exceeding 30
days.
c. Morales may demand assurance of performance from Knecht, and Knecht must
provide adequate assurance within ten days or the contract is repudiated.
d. the statement by the other supplier creates an anticipatory repudiation which allows
Morales to avoid the contract.
The court interpretation of the Sherman Act results in the prohibition of monopolies
only if a firm possesses market power that it attained unfairly or it abused the monopoly
power once attained.
a. True
b. False
In interpreting a contract, terms which have been separately negotiated are given
priority over standardized, pre- printed terms.
a. True
b. False
In determining the duty of care owed by a defendant using the reasonable person
standard, the court will consider all of the following factors except:
a. The existence of emergency conditions
b. A physician’s training and years of experience
c. A person’s severe mental retardation
d. Physical disability
Which of the following is an objective of the North American Free Trade Agreement?
a. Create trade barriers to the movement of goods and services across the borders.
b. Promote conditions of fair competition in the free trade area.
c. Decrease investment opportunities in the area.
d. Immediately eliminate all tariffs between the three countries covered by the
agreement.
Revised Article 9 of the Code greatly complicates the provisions regarding the place(s)
for filing a financing statement.
a. True
b. False
The Government in the Sunshine Act allows for closed meetings if they concern agency
participation in pending or anticipated litigation.
a. True
b. False
The National Tax Accountants Professional Association (TAPA) has recommended that
its members charge a minimum of $25 per hour for completing tax forms. This
recommendation is probably:
a. a perseprice-fixing violation of the Sherman Act.
b. not a violation of the Sherman Act, because it has been made by a professional
association.
c. not a violation of the Sherman Act, because a fee is different from a price.
d. subject to the rule of reason.
Parents are not liable to a storekeeper for the destruction caused by their children if they
permit the children to run wild through the store.
a. True
b. False
A “private placement” involves no public offering and is exempt from registration.
a. True
b. False
The client is generally held to be the owner of the working papers the accountant uses
in performing an audit.
a. True
b. False
A shareholder may not vote without being at the shareholder meeting.
a. True
b. False
Under the United States legal system, you are guilty until proven innocent.
a. True
b. False
William has a contract to build a new office building for Angela. The contract contains
a provision requiring William to furnish a certificate of occupancy from the building
inspector before Angela is required to pay. This provision is:
a. an express condition.
b. an implied-in-fact condition.
c. an implied-in-law condition.
d. a condition subsequent.
Upon the death of a beneficiary who held more than a life estate, his interest in the trust
reverts to the trustee.
a. True
b. False
A debtor may not file a plan at any time in a Chapter 11 reorganization.
a. True
b. False
The LMRA prohibits the closed shop, although it permits the existence of a union shop.
a. True
b. False
In a typical case before a U.S. Court of Appeals, all the judges of the circuit sit
enbancto decide the case.
a. True
b. False
Bankruptcy under Chapter 13 differs from Chapter 11 in that:
a. an individual cannot use Chapter
b. a corporation cannot use Chapter
c. Chapter 11 cannot be instituted by involuntary petition.
d. Chapter 13 requires unsecured debts to be less than $100,000.
Jason may validly authorize Nathan to:
a. obtain title to Max’s car by making materially false representations of an existing
fact.
b. vote in his place since Jason is not feeling well on election day.
c. negotiate a contract for the sale of Jason’s boat.
d. All of these.
Howard stole a computer and then sold it to his friend Ivan for $100. Ivan has:
a. good title to the computerr, because he paid for it.
b. a voidable title to the computer.
c. a void title to the computer.
d. good title to the word computer if he is a good faith purchaser for value.