Archives: Quiz

Neither the common law nor federal law recognizes an accountant-client privilege. A reversion is held by a person other than the grantor or his successors. Answer: F Substantive unconscionability involves scrutiny by the court for “bargaining naughtiness.” Answer: F The […]

In their contract for the sale of window shades, Lela Window Treatments, Inc. and Shane agree that Lela will have the right to replace any defective goods that are delivered to Shane. This contractual provision will not have any effect […]

The capacity to be a principal, and thus to act through an agent, depends on the capacity of the principal to do the act. The Securities Act of 1933 regulates tender offers and proxy solicitations. Answer: F A license is […]

Diane prepared a registration for the first issuance of stock of the Ledmar Corporation. Diane took the assignment very seriously and spent a great deal of time preparing the statement. Two years after the statement was filed, the SEC began […]

A gratuitous agent has a duty of loyalty but is not liable for any harm caused by his careless performance. Sean breaches an agreement in his employment contract with Inmett Corporation by also working for Inmett’s major competitor. Sean’s promise […]

An operating agreement is adopted by members of most limited liability companies. Mary receives her monthly bank statement on December 30th. She looks at it quickly, then sets it aside. Three days later, she examines it again and discovers a […]

Discuss preemptive rights. Are preemptive rights more important in a closely held corporation or in a publicly held corporation? Explain. The Uniform Electronic Transactions Act, which has been adopted by all of the states and the District of Columbia, gives […]

A security interest in consumer goods is always automatically perfected upon attachment. Anne is hired to manage an unincorporated dress boutique owned by Betty. The two agree that Anne will receive one-third of the net profits, which amount is to […]

Legislation to protect the environment from precipitation containing high levels of sulfuric or nitric acid, or acid rain, is aimed primarily at electric utility companies. The liability of manufacturers and sellers of goods for a defective product or for its […]

In Alzado v. Blinder, Robinson & Company, Inc., Blinder, Robinson & Co. was found liable to partnership creditors as a general partner because it assumed control of the business and thus lost its limited partnership status. A shareholders’ written agreement, […]

According to Milton Friedman, the social obligation of a corporation is to return as much money as possible to its direct stakeholders. The requirement of legally sufficient consideration is concerned with whether the bargain was good. Answer: F The executor-administrator […]

The Code has expanded the rights of good faith purchasers with respect to sales by minors. If no place of tender is indicated by the contract, delivery is presumed to be made at seller’s place of business. Answer: T Unless […]

An express warranty may consist of a sample. Under the Revised Act, the filing of the articles of incorporation by the Secretary of State is conclusive proof that the incorporators have satisfied all conditions precedent to incorporation so that a […]

Despite 402A’s bar of contributory negligence in strict liability cases, some courts apply comparative negligence to strict liability cases. Presentment for payment is one step necessary to charge an indorser with the obligation to pay. Answer: T An uncommon but […]

A buyer is obliged to accept conforming goods and to pay for them according to the contract terms. In most states, it is not necessary to record a deed for title to pass to the grantee. Answer: T An employer’s […]

Clayton Tile has a secured bond on specific property of Ceramic Creations, Inc. Clayton’s claim against Ceramic is enforceable only against that specific property. The remedy of identification of goods to the contract enables the seller to also exercise the […]

Tim and his friend are playing catch in the back yard when Tim suddenly turns around and throws the ball over the fence into the neighbor’s yard where it breaks the window. This is trespass to real property, even if […]

Intoxicated persons are liable in quasi-contract for necessaries furnished during their incapacity. The recovery for a lessee’s wrongful repudiation of a lease is the difference between the present value of the old rent due under the original lease and the […]

Under the UPA, one of the advantages of the partnership form of doing business is continuity of existence. Under a Kantian approach to ethics, a person should not lie to colleagues unless that person supports the right of all colleagues […]

A check is a draft payable on demand. Jessica at the age of 15 entered into a contract to sell five acres of land to her uncle. She may disaffirm this contract at any time before reaching her majority. Answer: […]

In a Chapter 11 or 13 proceeding, the bankruptcy estate of an individual includes wages earned after commencement of the proceeding. Objective impossibility occurs if a particular contracting party is unable to perform because of financial inability or lack of […]

An agency may impose in its orders sanctions, such as seizing property or revoking a license. Holders of preferred stock with a dividend preference must receive dividends at the end of each corporate fiscal period. Answer: F Title VII of […]

The right of exoneration allows the surety to require the principal debtor to pay his obligation to the creditor. Under the 1934 Act, an accountant’s liability for false or misleading statements is based on a good faith negligence standard. Answer: […]

Under what conditions do courts impose a constructive trust? What is the Council on Environmental Quality? Answer: The CEQ is a three-member advisory group that is part of the Executive Office of the President. It makes recommendations to the President […]

Infringement is the unauthorized use of a trademark of another or use of a substantially indistinguishable mark. What rights are protected by the First Amendment? What sorts of speech are constitutionally protected? Explain. Answer: The First Amendment prohibits Congress from […]

What is the basic purpose of the World Trade Organization (WTO)? Discuss the arguments for and against businesses’ involvement in socially responsible activities. Answer: The prime responsibility of business is to make a reasonable return on its investment by producing […]

Constructive trusts are generally found where the creator clearly intended a trust to be formed. The Magnuson-Moss Warranty Act is administered by the Federal Trade Commission. Answer: T How does liability based upon negligence differ from that based upon strict […]

All jurisdictions have enacted laws making it a crime to write a check when there is not enough money in the account to cover the check. Over the last half-century, the scope of administrative law has expanded enormously because of […]

A plaintiff who has not sustained any loss resulting from the defendant’s breach of contract cannot recover any damages. If an agent who has actual authority and receives reimbursement does not tell the third party that he is working in […]

Tate brings an action against Marsheen for damages from trespass to Tate’s property. Tate must prove the case by a preponderance of the evidence. Discuss the concept of freedom of contract under Articles 2 and 2A of the UCC. Answer: […]

The UCC modifies the common law rule by requiring additional consideration for the modification of a contract. All contracts do not have to be in writing to be enforceable. Answer: T What is the purpose of the Code remedies for […]

The tort of false light imposes liability if the matter in question is objectionable to a reasonable person, but is not necessarily defamatory. An agreement to refrain from a particular trade, profession, or business is enforceable if two requirements are […]

Bill would like to propose to the board of directors of Bizmarc, Inc., that the corporation distribute one percent of its pre-tax yearly income to feed the poor. To Milton Friedman and others, Bill’s proposal might be considered unethical, because […]

Define incidental damages and give an example. The CEQ requires that federal agencies make environmental assessments that are major, lengthy studies of potential environmental destruction. Answer: F Exclusive dealing contracts are illegal and void. Answer: F Under federal law, employers […]

Protected individuals under the Restatement view of tort liability for an accountant include potential investors and the general public. In interpreting a contract, terms which have been separately negotiated are given priority over standardized pre-printed terms. Answer: T When one […]

A material breach by the seller will discharge the buyer from his obligations under a contract. The Code requires that the affirmations, promises, or descriptions the seller makes be relied on by the buyer to be an express warranty. Answer: […]

Within 30 days after relief is ordered, a meeting of creditors must be held, at which the debtor must submit to examination by creditors and the court. If an agent tortiously injures a third party, the third party may not […]

If Gene mistakenly hits Audrey with his truck and kills her, when he intended to hit and kill Cerise, his intent to kill Cerise is transferred to Audrey, regardless of whether he even knew Audrey, for the purpose of fulfilling […]

To be effective, a gift requires delivery. The Sarbanes-Oxley Act passed in 2002 is the first comprehensive federal statute prohibiting computer crime. Answer: F In a Chapter 7 proceeding, an unsecured creditor who files a claim with the court after […]

Briefly discuss legislation relating to computer crimes. Fitness for a particular purpose and merchantability are implied warranties that apply only to sales by commercial vendors. Answer: F Under the CISG, avoidance of a contract cancels any provision for settlement of […]

What is a statute of repose? Why have some states adopted such statutes? A tiger gets loose from the tent of a circus and mauls a passerby. The circus claims it has always treated the animal well and that it […]

Obligations contingent upon the happening or nonhappening of an event not certain to occur are known as conditional promises. The courts have interpreted the Sherman Act as prohibiting all monopolies. Answer: F A depositary bank is any bank handling an […]

Al, the bus driver on a cross-country Greyhound, kisses Susie, a passenger, while she sleeps. Al could be sued for battery. Restitution requires a return of value to the aggrieved party. Answer: T Statutory provisions do not protect creditors upon […]

An important and fundamental part of administrative law is the limits imposed by judicial review upon the activities of administrative agencies. Increased production costs will allow the seller to avoid a contract based upon commercial impracticability. Answer: F All bills […]

An indorsement “Pay to Jones Construction Company upon completion of the job at No. 10 Park Place” is nonnegotiable. Under the common law, a modification of a preexisting contract must be supported by mutual consideration; under the Code, a contract […]

The attorney general of the state of incorporation may bring a court action to dissolve a corporation if the corporation obtained its charter through fraud. The warranty of merchantability is found in Section 402A of the Restatement of the Law […]

A finance lease is a special type of lease transaction that generally involves three parties instead of two. An agreement for an illegal substance will be enforced by the courts if all other elements of the contract are present. Answer: […]

Under FTC regulations and state legislation, a seller may not advertise goods at one price and then raise the price once demand has been stimulated. Affirmative action generally means active recruitment of a designated group of applicants. Answer: T Like […]

Robert paid William $1,000 for a rare first edition of an Edgar Allen Poe novel. The sales contract states that the book is to be delivered within ten days. William, however, refused to deliver the book as promised. In order […]

Upon dissolution of a partnership, all authority of a partner to act on behalf of the partnership terminates. A constitution is the fundamental law of a particular level of government, establishing the structure of government and defining the political relationships […]