1) Under the Sarbanes-Oxley Act of 2002, chief financial officers must certify the
accuracy of information in corporate financial statements and reports that are filed with
the Securities and Exchange Commission.
2) When deciding which form of business organization to choose, businesspersons
normally consider only one factor.
3) Intangible property has conceptual existence and thus comes under Article 2
4) The United Nations Convention on Contracts for the International Sale of Goods
provides international sellers and buyers with remedies very different to those available
under the UCC.
5) Children under fourteen years of age are not allowed to work.
6) Decisions by higher courts are not binding on lower courts.
7) The Food and Drug Administration does not have the authority to directly recall any
food products that it suspects are tainted but must rely on the producers to recall items.
8) Rita believes that Shady Grove Apartments, Inc., her landlord, has violated the law in
a way that entitles her to withhold the rent. This remedy is generally associated with
a.adverse possession.
b.breach of the implied warranty of habitability.
c.discrimination.
d.failure to provide security against crimes in common areas.
9) Fact Pattern 33-1B
Barney hires Clean Air, Inc., to install a new air conditioning system in his Dental
Clinic, LLP. Barney does not have the right to control the details of Clean Air’s
performance.
Refer to Fact Pattern 33-1B. While working, Elton, a Clean Air worker, drops a tool on
Francine, Barney’s patient, causing an injury. Barney is
a.liable to Francine because she was injured on Barney’s property.
b.liable to Francine unless Elton’s act is intentional.
c.not liable because Clean Air is an independent contractor.
d.not liable because Clean Air, and thus Elton, are Barney’s employees.
10) Karissa’s will states, “I give to my sister Lexy my condominium in Miami, Florida.”
This is
a.a general legacy.
b.a residuary.
c.a specific bequest.
d.a specific devise.
11) Meatpackers, Inc., enters into a contract with Nemiah’s Ranch for the delivery of a
certain number of beef cattle on a set schedule. Nemiah’s delays the first delivery for
five days, aware that Meatpackers loses a certain percentage of profit each day. An
award to Meatpackers of consequential damages would
a.establish, as a matter of principle, that Nemiah’s acted wrongfully.
b.provide Meatpackers with funds for a foreseeable loss beyond the contract.
c.provide Meatpackers with funds for its loss of the bargain.
d.punish Nemiah’s and set an example to deter other suppliers from similar acts.
12) Otto is considering forms of business organization for Pro Tree Service, his
landscaping firm. Like most states, Otto’s state requires that to form a limited liability
company, he must file with a central state agency
a.articles of certification.
b.articles of formation.
c.articles of organization.
d.no specific documents.
13) In making business decisions, Ridgeline Utility Service Company and other
corporations should strive to be “good citizens” by evaluating
a.the legal implications of each decision.
b.the public relations impact.
c.the safety risks for consumers and employees.
d.all of the choices.
14) Transnational Corporation and United Shipping, Inc., agree to a contract that
includes an arbitration clause. If a dispute arises, a court having jurisdiction may
a.monitor any arbitration until it concludes.
b.order an arbitrator to rule in a particular way.
c.order a party to bring the dispute to court.
d.order a party to submit to arbitration.
15) Illya owes Jenny $1,000. In a separate deal, Kasey owes Illya $1,000. Illya
unconditionally assigns his rights in the deal with Kasey to Jenny. Illya’s right to the
$1,000 is then
a.unchanged.
b.extinguished.
c.incidental.
d.assigned to a court.
16) Repo Motors Company uses ‘self-help” repossession when its debtors default on
their loans. This simplifies the process of repossession because
a.it can be done without judicial process.
b.it is less stressful for debtors.
c.it provides an incentive for confrontations with debtors.
d.the UCC clearly defines what constitutes “breach of the peace.”
17) Home Enterprises employs Itzak to buy property for a possible residential
development. Itzak secretly buys some of the property and sells it to Home Enterprises
at a profit. Itzak has breached
a.no duty.
b.the duty of accounting.
c.the duty of loyalty.
d.the duty of notification.
18) Seiko works for Tall Tales Publishing, Inc. The basis for Seiko’s contribution under
the Federal Insurance Contribution Act to help pay for benefits that will partially make
up for her loss of income on retirement is her
a.seniority at Tall Tales.
b.annual wage base.
c.special job skills.
d.county of residence.
19) Kelly transfers shares of stock that she owns in Lone Starz Company to Max. A
shareholders’ meeting takes place before Max’s ownership is entered in Lone Starz’s
stock book. A vote at the meeting can be cast by
a.Kelly and Max.
b.Kelly only.
c.Max only.
d.neither Kelly nor Max.
20) Bernard is an expert on exotic flowers. Custom Floral Arrangements, Inc., hires
Bernard to order exotic flowers for its arrangements. Bernard does not examine the
quality of the flowers he orders on behalf of Custom Floral. Bernard has breached
a.the duty of performance.
b.the duty of loyalty.
c.no duty.
d.the duty of notification.
21) Mona is induced by her guardian Newt to sign a contract to invest her student loan
funds in Overseas Bank through Newt’s investment firm. Unknown to Mona, Newt
realizes ongoing commissions from the investment. Most likely, Mona may
a.not rescind the contract.
b.rescind the contract on the basis of undue influence.
c.rescind the contract on the basis of mistake.
d.rescind the contract on the basis of unconscionability.
22) Qiana writes a check to Payday Loans, Inc., in an amount that represents half of her
debt to the lender. On the back of the check, Qiana includes the words “payment in
full.” Payday agrees to accept the lesser sum and cashes the check. This discharges the
entire debt
a.if the debt is liquidated.
b.if the debt is past due.
c.if the debt is unliquidated.
d.under no circumstances.
23) In studying the business law, students also review ethics in a business context.
Ethics includes the study of what constitutes
a.right or wrong behavior.
b.financially rewarding behavior.
c.legal behavior.
d.religious behavior.
24) Ronelle, the human resources director for Small Business Solutions, Inc., attempts
to comply with the law in dealing with applicants and employees. One of the challenges
Ronelle faces is that the legality of an action is
a.always clear.
b.never clear.
c.only sometimes clear.
d.usually clear.
25) Terms in a shrink-wrap agreement have been enforced in the same way as the terms
of other contracts.
26) It is legally necessary to notify the obligor of any assignment of rights to a third
party.
27) Often, whether a holder will be able to obtain payment on an instrument will
depend on whether he or she is a holder in due course.
28) Every state has a statute that stipulates what types of contracts must be in writing.
29) Apparent authority usually comes into existence through a principal’s pattern of
conduct over time.
30) Ingrid is the trustee of a trust in which Jens has a life estate and Karin has the
remainder interest. The trust property is a farm. The farm is leased to Lars, who pays
the rent to the trust. Property taxes are paid annually on the farm. Long-term
improvements are occasionally made and paid for. A section of the farm’s land is sold to
Margo, one of the farm’s neighbors. How are the payments for taxes and improvements
classified (ordinary or extraordinary)? How are the receipts of rent and the proceeds
from the land sale classified? To whom are these costs and benefits allocated?