1) A buyer who rightfully rejects nonconforming goods may obtain cover or cancel the
contact, but may not seek damages.
2) In a phishing attack, a perpetrator “fishes” for financial data and passwords from
consumers by posing as a legitimate business.
3) Generally, U.S. employers abroad must abide by U.S. discrimination laws unless to
do so would violate the laws of the country where their workplaces are located.
4) BA court will normally interpret the language of a contract according to what the
parties claim their intent was when they made it.
5) Under the Sarbanes-Oxley Act of 2002, accountants need not retain working papers
relating to an audit or review.
6) An absolute defense against payment exists if the insurer can show that the insured
lacked an insurable interest.
7) A remedy is the relief provided to an innocent contracting party when the other party
breaches the contract.
8) Marketable title means that the grantor’s ownership is saleable even if there are
encumbrances or defects.
9) Financial institutions that exchange digital images of checks must also send the
original paper checks.
10) All aspects of software are protected by copyright law.
11) Any breach allows the nonbreaching party to cancel the contract.
12) The Securities and Exchange Commission does not regulate the content of proxy
statements.
13) A trust created by a will to come into existence on the settlor’s death is an
irrevocable living trust.
14) Professionals are required to deliver services but the competency of the services is
never an issue.
15) Before a loss has occurred, a fire insurance policy is assignable without the consent
of the insurer.
16) 12.Mark is creating Nu2U.com, a Web site through which he will enter into
contracts over the Internet. Important terms to include in his offers include
a.provisions specifying the remedies if the contract is breached.
b.a detailed history of his business.
c.glowing reviews from former customers.
d.his educational background.
17) a.agree to settle any lawsuits that may arise over the documents.
b.be able to download or save all electronic documents.
c.provide e-mail addresses for
d.register with the Federal Trade Commission via
18) Dairy Products, Inc., and Eden Farms Corporation form a joint venture to make and
test-market Frosty Ice Cream. A joint venture is usually formed for
a.an implied duration of not more than six months.
b.a single transaction or project.
c.a stated duration of not more than one year.
d.a perpetual existence.
19) Gena borrows $350,000 from Fish Island Bank to buy a home, which secures the
mortgage. In the seventh year of the loan, Gena stops making payments. After the bank
repossesses the property but before it is sold, Gena may buy it by paying
a.an amount that equals the potential proceeds from the property’s sale.
ban amount that exceeds the potential proceeds from the property’s sale.
c.the amount of the missed payments, but not more.
d.the full amount of the debt, plus any interest and costs.
20) The operations of Commercial Concrete, Inc., are major sources of air pollution.
These operations must use
a.the absolutely cleanest air technology.
b.the best available filter technology.
c.the maximum achievable control technology.
d.the most affordable scrubbing technology.
21) Neville, a member of a protected class, applies for a job with Origami Paper
Products Corporation, but fails the company’s employment test and is not hired. Neville
believes that the test has an unintentionally discriminatory effect. If so, this is
a.reverse discrimination.
b.disparate-impact discrimination.
c.disparate-treatment discrimination.
d.not discrimination.
22) Gas & Wood Stove Shop receives Hearthwarm-brand stoves from Independent
Dealer, Inc., under a sale or return agreement. While the stoves are in Gas & Wood’s
possession, title is held by
a.Independent Dealer.
b.Gas & Wood.
c.Gas & Wood’s creditors.
d.Hearthwarm.
23) State and federal transportation agencies may issue regulations that conflict. When
a state regulation conflicts with a federal regulation
a.the federal regulation takes precedence.
b.the state regulation takes precedence.
c.the regulations are mutually void.
d.the regulations are of equal effect.
24) Fiona writes a check “pay to the order of Gerri” drawn on Fiona’s account at Home
State Bank. Gerri presents the check for payment to Home State, which accepts it.
Primarily liable on the check is
a.Fiona.
b.Gerri.
c.Home State.
d.none of the choices.
25) Bess wishes to appeal a decision of a bankruptcy court. Bess may appeal to
a.no court – there is no appeal from a bankruptcy court decision.
b.a federal district court.
c.the U.S. Supreme Court.
d.a state court.
26) Fact Pattern 3–B1
Destiny and Enzo engage in a business transaction for the creation and baking of a cake
and other pastries and desserts for Destiny’s wedding dinner and reception. When a
dispute arises, Destiny initiates a lawsuit against Enzo by filing a complaint.
Refer to Fact Pattern 3-B1. If Enzo files a motion to dismiss, and the court denies it,
a.Destiny will be given time to file an amended complaint.
b.Destiny will have a judgment entered in her favor.
c.Enzo will be given time to file another response.
d.Enzo will have a judgment entered in his favor.
27) Vijay enters into a contract to sell his laptop to Winnie. Winnie takes possession of
the laptop as a minor and continues to use it well after reaching the age of majority.
Winnie has
a.expressly ratified the contract.
b.impliedly ratified the contract.
c.disaffirmed the contract.
d.none of the choices.
28) 11.Online GPS Corporation owns 95 percent of the shares of Pinpoint AppInc.
Through a certain transaction, Online GPS combines with Pinpoint App, but only
Online GPS continues to exist. This is
a.a consolidation.
b.ashare exchange.
c.ashort-form merger.
d.a termination.
29) Lon says to Milli, “I would like to sell you my comic book collection.” This is not
an offer because it
a.does not describe the subject matter specifically.
b.does not include a price term.
c.only expresses an opinion.
d.only invites Milli to negotiate.
30) Dave’s uncle tells Dave that if “he feels that Dave deserves it,” he will give Dave
$10,000 when Dave graduates from college. Dave’s uncle’s promise is
a.illusory.
b.a contract.
c.a forbearance.
d.a preexisting duty.
31) The U.S. Congress enacts a new federal statute that imposes liability on businesses
hiring employees without verifying their citizenship status. This statute applies
a.only to businesses not covered by state law.
b.only to those states that consent to apply it.
c.to all of the states.
d.to none of the states.
32) Buckley is a general partner in Cut-Rate Shipping, LLLP, a limited liability limited
partnership, which cannot pay its debts. Buckley is personally liable for the debts
a.in proportion to the number of partners in the firm.
b.to no extent.
c.to the extent of his capital contribution.
d.to the full extent.
33) Congresswoman Smith and other politicians want to prohibit the import of certain
genetically modified agricultural products that they believe may pose a danger to
domestic crops. With respect to these products’ import, Congress can
a.do nothing.
b.impose quotas, but not tariffs.
c.impose tariffs, but not quotas.
d.prohibit the imports.
34) Orla leases a building to Pleasant Valley Residence, an assisted living facility.
During the term of the lease, Orla installs a new roof and commercial kitchen
appliances, and repaves the parking lot. Most likely to meet the definition of a trade fix-
ture is
a.the kitchen appliances.
b.the parking lot.
c.the roof.
d.none of these choices.
35) The majority rule controls decisions that significantly affect the nature of the
partnership or that are outside the ordinary course of the partnership business.
36) The entrustment rule basically allows innocent buyers to obtain legitimate title to
goods purchased from merchants even if the merchants do not have good title.
37) An action in strict product liability requires that a product be in a defective
condition caused by its purchaser.
38) A manufacturing defect is a departure from a product unit’s design specifications
that results in products that are physically flawed.
39) A primary obligation is a promise to pay another’s debt only if that party fails to
pay.