Commercial Law
Chapter Exam Questions
Course Introduction
Commercial Law is a comprehensive study of the legal principles governing business and commercial transactions. The course covers key topics such as the formation and enforcement of contracts, the sale of goods, agency relationships, negotiable instruments, secured transactions, and bankruptcy. Students will learn about the legal framework regulating partnerships, corporations, and other business entities, gaining insight into the rights and obligations of parties involved in commerce. The course also addresses relevant statutes and case law, providing practical scenarios to understand dispute resolution, risk management, and the impact of commercial law in both domestic and international business operations.
Recommended Textbook Essentials of Business Law 4th Edition by Jeffrey F. Beatty
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Chapter 1: Introduction to Law
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Q1) Which of the following statements about treaties is true:
A)they must be approved by the Supreme Court.
B)they must be ratified by Congress.
C)they are not binding upon citizens.
D)all of the above.
Answer: B
Q2) In 1992,the North Carolina Supreme Court ruled in a case entitled Goodman v.Wenco Foods,Inc.,that when a substance in food causes injury to a consumer of the food,it is not a bar to recovery against the seller that the substance was natural to the food.If,in a 2008 case involving a consumer's injury caused by a fish bone in a bowl of fish chowder,the court followed the decision in Goodman v.Wenco Foods,Inc.,the court's action in the second case is an example of:
A)stare decisis.
B)statutory law.
C)public law.
D)criminal law.
Answer: A
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Chapter 2: Business Ethics and Social Responsibility
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Q1) Unethical behavior can be costly.
A)True
B)False
Answer: True
Q2) Paul decided he did not want the new jeans he had purchased from a large discount department store.He had worn them three times and decided he just did not like them.The jeans fit him fine and there is nothing wrong with them.He takes the jeans back to the store and,as is its policy,the store gave him a full refund of his money.Which statement is correct?
A)Paul's conduct was not unethical since the store's policy of giving full cash funds applied.
B)Paul's conduct was unethical.
C)Paul's conduct was unethical, even though the store had a legal obligation to return his money.
D)Paul's conduct was ethical since the store has a legal duty to return his money when he returned the jeans.
Answer: B
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Chapter 3: Dispute Resolution
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Q1) Disputants Martin and Daulton have hired Thurman to mediate their disagreement.Although Martin and Daulton must accept whatever decision Thurman makes,the mediation has the advantage of keeping Martin and Daulton out of court.
A)True
B)False
Answer: False
Q2) Randi,a resident of Oregon,was involved in a auto accident while in Idaho.The other party lives in Wyoming.Randi wishes to recover the $28,000 cost to repair her car.The most appropriate court for her to file her lawsuit is in a:
A)federal court in Idaho.
B)state court in Idaho.
C)federal court in Wyoming.
D)federal court in Oregon.
Answer: B
Q3) Emails and their attachments are not subject to pretrial discovery.
A)True
B)False
Answer: False
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Chapter 4: Common Law, statutory Law, and Administrative Law
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Q1) If the President vetoes a bill and if both the House and Senate repass the bill by a two-thirds margin,the bill becomes law.
A)True
B)False
Q2) Define the common law.Discuss its conflicting goals and the doctrine created to serve one of these goals.
Q3) While at the park,Tasha saw a small child fall into the lake.Tasha did not know the child.Under the common law of most states,Tasha has a legal duty to take reasonable steps to assist the child if Tasha is able to provide positive assistance and the assistance will not jeopardize Tasha's well being.
A)True
B)False
Q4) The doctrine of stare decisis,though vital to the creation of the common law when this country was settled,is not important to our modern,complex society.
A)True
B)False
Q5) Discuss the four most important limitations on the power of federal administrative agencies.
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Chapter 5: Constitutional Law
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Q1) A governmental classification based on gender would be subject to strict scrutiny.
A)True
B)False
Q2) The "dormant" aspect of the Commerce Clause:
A)is also known as the "negative" aspect.
B)means that there are many unused powers still available to the government to regulate trade between the states.
C)guarantees that Congress has the power to regulate trade with foreign countries that have not yet developed trade practices with the United States.
D)guarantees that the states have the power, even if unused, to impose regulations affecting interstate commerce.
Q3) Hall was arrested for burning the United States' flag in a protest of governmental policy.His action is protected under the First Amendment's guarantee of free speech because the flag burning is considered symbolic speech.
A)True
B)False
Q4) Discuss the Miller test to determine if a creative work is obscene.
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Chapter 6: Torts
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Q1) An Internet service provider may not be held liable for defamation based on a posting on its bulletin board.
A)True
B)False
Q2) In most states,dram shop acts apply to:
A)liquor stores, bars, and restaurants but not to social hosts.
B)liquor stores, bars, restaurants and to social hosts.
C)social hosts, liquor stores, and bars.
D)None of the above.
Q3) Tropical Nectars,Inc.wanted Steve,a famous comedian,to endorse its products.Steve,however,was not interested.Tropical Nectars was not deterred and hired a Steve impersonator for its radio commercials.Tropical Nectars has:
A)intruded into Steve's privacy.
B)defamed Steve.
C)interfered with a business relationship.
D)engaged in conduct that raises the issue of commercial exploitation.
Q4) Written defamation is called "libel."
A)True
B)False
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Chapter 7: Crime
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Q1) The criminal penalties under RICO include all EXCEPT:
A)imprisonment.
B)capital punishment.
C)confiscation of property acquired through the criminal activity.
D)fines.
Q2) Dan was arrested and taken to an interrogation room for questioning.After signing a statement waiving his Miranda rights,he agreed to answer questions without a lawyer.After about ten minutes,he told the officers he changed his mind and wanted to talk to a lawyer before answering any more questions.The officers left the room and then came back in.They told Dan that his partner was confessing to the crime and that,"If your partner confesses first and makes a deal,you're the one who's going to go down for this." Dan looked at them without saying anything.After a minute,the officer began questioning Dan again and he confessed to the crime after about an hour.Is this confession admissible?
Q3) A felony is a crime for which a defendant can be sentenced to up to one year in prison.
A)True
B)False
Q4) Compare and contrast money laundering and embezzlement.Give an example of each.
Page 9
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Chapter 8: International Law
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Q1) Oxtron,Inc.,a U.S.company,and Leer,an Argentinean company,orally agreed to a contract under which Oxtron is to ship medical devices to Leer.The contract is governed by the CISG.Which statement is correct?
A)The contract is not enforceable because it is oral.
B)Whether the contract is enforceable without a written agreement depends on the value of the medical devices.
C)Whether the contract is enforceable without a written agreement depends on whether the medical devices are a necessity.
D)The contract is enforceable without a written agreement.
Q2) Lindell,Inc.,a U.S.company,and Halden,AG,a German company,entered into a contract under which Halden is to ship party supplies to Lindell.One of the terms of the contract states,"Any disputes that arise under this contract will be resolved in the courts of Germany." This contract term is:
A)a forum selection clause.
B)a choice of law clause.
C)an arbitration clause.
D)not enforceable.
Q3) Explain the origin and purpose of the World Trade Organization.
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Chapter 9: Introduction to Contracts
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Q1) A valid contract can legally be voided by either party.
A)True
B)False
Q2) Which of the following represents a unilateral offer?
A)"I will pay you $50 if you mow my lawn."
B)"I am willing to shovel your driveway if you accept to pay me $50."
C)"I will pay you $50 for your CD player."
D)"Your backpack is probably worth $50."
Q3) Mike made the following offer to Mick: "I will pay you $500 if you agree to paint my house." Mick replied that he would.At this point,the contract is an:
A)executed, bilateral, express contract.
B)executory, bilateral, implied-in-law contract.
C)executory, unilateral, express contract.
D)executory, bilateral, express contract.
Q4) Explain what the Restatement of Contracts is and describe the role it plays in contract law.
Q5) A quasi-contract is the legal designation of an oral contract.
A)True
B)False
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Chapter 10: Agreement
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Q1) David and George have a contract wherein George agrees to buy sporting goods and equipment.Since the goods are not to be delivered for several months,they left the price open.Under the UCC,which of the following will be true?
A)The price will be the reasonable price based on fair market value of the goods at the time of delivery.
B)David has the freedom to set any price he wants considering George was foolish enough to enter into a contract without a price established.
C)George has the right to establish a price because he is the buyer.David should have taken steps to protect his sales interest.
D)None of the above.The contract is not valid because the terms are not definite and certain.
Q2) According to the UCC,one or more open terms will cause a sales contract to fail for indefiniteness.
A)True
B)False
Q3) Revocation is the withdrawal of an offer by the offeror.
A)True
B)False
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Chapter 11: Consideration
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Q1) In Dementas v.Estate of Tallas,the Utah Court of Appeals ruled that Tallas's promise was not enforceable as past consideration is not valid.
A)True
B)False
Q2) Police Officer Paul apprehends a wanted criminal and then demands the $10,000 reward offered by Crime Stoppers.Which of the following statements is true?
A)Police Officer Paul is not entitled to the reward because past consideration is never valid consideration.
B)Police Officer Paul is entitled to the reward because he puts his life on the line every day.
C)Police Officer Paul is not entitled to the reward because he was under a pre-existing duty to make the arrest.
D)Police Officer Paul is not entitled to the reward but may have an argument under promissory estoppel.
Q3) Benny's Furniture Company promised in a written agreement to purchase all the oak wood it needs Forestry Products,Inc.If Benny's purchased oak wood from Milton Wood Co.and Forestry Products sued,what is the likely result?
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Page 13
Chapter 12: Legality
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Q1) Eintz Corp.hired Jose to bribe a foreign government official.Eintz gave Jose $10,000 in cash to make the bribe payment and $2000 for Jose's efforts.Instead of paying the bribe,Jose pocketed all of the money.If Eintz sues Jose,Eintz will:
A)be able to recover the $12,000.
B)be able to recover the $10,000, but not the $2,000.
C)be able to recover the $2,000 but not the $10,000.
D)not be able to recover the $12,000.
Q2) Roger parked his car at a garage that has a large sign at the entrance saying,"This garage is not liable for items stolen from a car." This type of notice is referred to as an exculpatory clause.
A)True
B)False
Q3) In bailment cases,exculpatory clauses:
A)are very rarely used.
B)are somewhat more likely to be enforced than in other types of cases.
C)ordinarily involve an attempt to limit liability for damage to persons rather than property.
D)illegal by statute.
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Chapter 13: Capacity and Consent
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Q1) Greg purchased a used car from Knutson's Auto Mart for $12,000.As Greg was writing the check,Knutson told Greg that the car was featured in a Clint Eastwood's movie.Greg later found out that the car had not appeared in the movie.If Greg seeks to rescind the deal based on Knutson's statement,Greg will:
A)win because Knutson's statement was fraudulent.
B)win because there was a misrepresentation of a material fact.
C)lose because he will not be able to prove reliance on the misrepresentation.
D)lose because Knutson's statement was innocent.
Q2) In the case Hess v.Chase Manhattan Bank,USA,N.A.,the Missouri Supreme Court held that Chase had no duty to disclose the ongoing investigation by the Environmental Protection Agency to Hess.
A)True
B)False
Q3) Angie,a minor,wants to avoid a contract she made with Cumberland Cycles.She may disaffirm the contract by:
A)notifying Cumberland orally that she will not honor the agreement.
B)filing a lawsuit to have a court formally cancel the contract.
C)just refusing to perform her obligations under the contract.
D)All of the answers are correct.
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Page 15
Chapter 14: Written Contracts
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Q1) For statute of frauds purposes,an interest in land includes:
A)a house.
B)a real estate mortgage.
C)an easement.
D)All of the above.
Q2) The Uniform Commercial Code provides that,under certain circumstances,a merchant may be liable on a written contract,even though that merchant has NOT signed it.
A)True
B)False
Q3) Which of the following would suffice for a signature on a writing under the statute of frauds?
A)A stamped signature.
B)A retinal scan.
C)A name keyed at the bottom of an e-mail.
D)Any of the above would suffice.Judges define "signature" very broadly.
Q4) List the types of agreements that are within the statute of frauds and explain the consequences if the parties do not comply with the requirements of the statute of frauds.
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Chapter 15: Third Parties
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Q1) In the case Rosenberg v.Son,Inc.,the Court held that:
A)Son, Inc., as the assignee, was liable to the Rosenbergs.
B)Despite the assignment of her rights, Pratt remained liable to the Rosenbergs.
C)The assignment became a novation because Rosenberg signed it.
D)The Rosenbergs became liable to Son, Inc.
Q2) An assignment is effective from the moment it is made,provided the assignor notifies the obligor.
A)True
B)False
Q3) Generally,duties may not be delegated.
A)True
B)False
Q4) Alice owes money to Bob.Bob enters into a contract with Alice asking her to pay the money she owes him to his sister Trish,to whom he owes money.Trish is:
A)a third party creditor beneficiary.
B)the assignee.
C)a third party incidental beneficiary.
D)a third party donee beneficiary.
Q5) Briefly discuss the enforceability of contracts by third parties.
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Chapter 16: Performance and Discharge
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Q1) Al contracted to sell his house to Bev.Subsequently,they both changed their minds and agreed to cancel the contract.The contract between Al and Bev is discharged by:
A)full performance.
B)rescission.
C)accord and satisfaction.
D)novation.
Q2) Which of the following events would probably excuse performance of a contract based on commercial impracticability?
A)The price of a raw material increases slightly so that the contract will not be as profitable.
B)An unforeseeable trade embargo causes prices to triple.
C)The promisor of personal services dies.
D)The subject matter of the contract is destroyed.
Q3) Name and describe the types of conditions,explain how conditions are created,and discuss whether it is important to identify the type of condition in a contract.
Q4) Most contracts are discharged by mutual agreement.
A)True
B)False
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Chapter 17: Remedies
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Q1) Nominal damages are awarded in contract cases in which a damage amount was named in the contract.
A)True
B)False
Q2) Banner enters into a contract with Sylvia to buy her house for $150,000.Sylvia decides later not to sell because she is so emotionally attached to the house.Banner insists that he is entitled to the house.Banner can successfully sue for specific performance.
A)True
B)False
Q3) The Milicic v.Basketball Marketing Company,Inc.illustrates when courts may order specific performance.
A)True
B)False
Q4) Tess,a tenant,moves from her apartment in breach of the lease agreement.The landlord,Lenny,has no duty to mitigate his damages by attempting to rent the apartment.
A)True
B)False
Q5) Discuss the remedy of specific performance.
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Chapter 18: Introduction to Sales
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Q1) Price's Department Store contracted to buy 1,000 drop-waist velour dresses in heather gray from TriColor.Subsequently,TriColor called and asked to ship mink-colored dresses instead of heather gray.Price agreed,in writing,to the change.Which statement is correct?
A)The modification is not enforceable since there was no consideration for the change.
B)The modification is not enforceable since the parties are merchants.
C)The modification is enforceable.
D)Whether the modification is enforceable depends on the gap-filler rule.
Q2) In the case Mathis v.Exxon Corporation,the Federal Court of Appeals held that:
A)Exxon fixed the price of gasoline in bad faith.
B)the UCC did not apply to the sale of gasoline as it is not a "good".
C)the decision of the District court had to be reversed.
D)it did not have jurisdiction as the UCC is not a Federal statute.
Q3) In a mixed contract involving goods and services,Article 2 of the UCC will govern if the predominant purpose is the sale of goods.
A)True
B)False
Q4) Discuss open price under the UCC.
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Page 20
Chapter 19: Ownership and Risk
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Q1) Baker Furniture sold 50 living room sets to King's Department Store.The parties did not agree on passage of title,but the delivery term was F.O.B.place of shipment.Discuss title and risk of loss regarding the furniture.
Q2) Graham,an adult,purchases a car from a minor,and subsequently sells it to Harlow,another adult.Harlow paid full value for the car and had no reason to know that Graham had purchased the car from a minor.Which of the following best describes this situation?
A)Graham had good title and Harlow gets good title.
B)Graham had good title and Harlow gets a voidable title.
C)Graham had voidable title and Harlow gets good title.
D)Graham had void title and Harlow gets void title.
Q3) In a shipment contract,title and risk of loss pass to the buyer when the goods are properly tendered at the destination point.
A)True
B)False
Q4) To determine ownership in goods,the UCC looks at title,insurable interest and identification.
A)True
B)False
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Chapter 20: Warranties and Product Liability
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Q1) In order to establish strict liability,the plaintiff must prove that:
A)The seller sells normally the kind of product that was defective.
B)There was a contracxtual relation between the plaintiff and the manufacturer.
C)The manufacturer breached his duty of due care,
D)All of the above.
Q2) Daddy buys an electric car for his 10-year-old son.Daddy follows the directions for assembly carefully,but the son gets an injuring shock when he sits in the car.If Daddy and son sue the manufacturer for negligence,they will:
A)be successful only if they can prove that the car manufacturer knew of the defect and failed to correct it.
B)be successful only if they can prove that the car manufacturer failed to use reasonable care in designing, manufacturing, or warning the purchasers about intended uses and foreseeable misuses.
C)lose, because the son has no privity of contract and therefore no standing to sue.
D)not be successful if the car was sold "ASĀ IS."
Q3) Under the UCC,no warranty of title arises unless the contract is in writing.
A)True
B)False
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Chapter 21: Performance and Remedies
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Q1) Matson agrees to purchase 500 wooden chairs from Woodcarvers,Inc.After Woodcarvers sets the chairs aside in its warehouse,but before the risk of loss passes to Matson,the chairs are destroyed in a fire,which was not the fault of Woodcarvers.The contract between Matson and Woodcarvers is void.
A)True
B)False
Q2) Family Time Restaurant has a contract with Prime Meats for Prime to deliver 100 pounds of ground sirloin twice a week for the next three months.If,on one delivery,Prime brings 95 pounds of ground chuck instead of 100 pounds of ground sirloin:
A)Family Time may unquestionably reject the non-conforming goods because they vary in both quantity and quality.
B)Family Time may reject the non-conforming installment only if it substantially impairs the value of that installment and cannot be cured.
C)Prime has no right to cure.
D)the perfect tender rule applies.
Q3) Identify seven possible remedies for a buyer when the seller breaches a contract.
Q4) Identify six possible remedies for a seller when the buyer breaches a contract.
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Chapter 22: Creating a Negotiable Instrument
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Q1) Personal and real defenses are valid against an ordinary holder,only real defenses can be used against a holder in due course.
A)True
B)False
Q2) Discuss the effect on an instrument of: (a)contradictory amounts between the numerals and amount written in words on a check; (b)the interest rate left blank on a promissory note; and (c)contradictory terms that are typed onto a promissory note and terms that are preprinted on the note form.
Q3) Kent Weston wrote a check for $500 payable to the order of Chester Jones.Chester indorsed the back of the check as follows: "Chester Jones." The check is now:
A)order paper.
B)bearer paper.
C)a cashier's check.
D)special paper.
Q4) A check is the most common form of a draft.
A)True
B)False
Q5) Define commercial paper and explain what it is used for.
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Chapter 23: Liability for Negotiable Instruments
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Q1) List the warranties a transferor of a negotiable instrument makes.
Q2) If the note is dishonored by Jessie after it is properly presented to her for payment by Liz,then Liz,after giving timely notice to Tyler,Ryan,and Breanna,may collect payment under signature liability from:
A)Tyler only.
B)Breanna and Tyler only.
C)either Tyler, Ryan, or Breanna.
D)neither Tyler, Ryan, nor Breanna.
Q3) At the time a check is issued,primary liability falls on:
A)the maker.
B)the drawer.
C)the drawee.
D)None of the above.
Q4) Nelson writes Leah a check for mowing his lawn.Leah deposits the check in her bank,but it is not paid by Nelson's bank.Leah calls Nelson to notify him that her bank returned his check to her unpaid.Leah's notice of the dishonor is insufficient; she must provide written notice.
A)True
B)False
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Chapter 24: Liability for Negotiable Instruments: Banks and Their Customers
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Q1) The case Broxton-King v.LaSalle Bank,N.A.was about violation of the Electronic Fund Transfer Act.
A)True
B)False
Q2) When Kathy went to pick up her car at Al's Repair Shop,she questioned the mechanic's bill which claimed he did more work on the car than what she had authorized.The mechanic asserted that Kathy had authorized him to do whatever it took to completely fix the problem.Kathy wrote the check to Al's for $538 because she knew the shop would not release the car to her without getting paid for the work.When she left the garage,she drove immediately to her bank and put a stop payment order on the check.By accident,even with the stop payment order in place,the bank paid the check two days later when it was presented for payment.The bank must recredit Kathy's account but can recover from either Kathy or Al's,whichever party was wrong in the contract dispute over the car.
A)True
B)False
Q3) Discuss warranty liability of a bank that transfers or presents an electronic or substitute check.
Q4) Discuss a bank's liability for both stale checks and post-dated checks.
Page 26
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Chapter 25: Secured Transactions
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Q1) At her neighbor's garage sale,Constance buys a vanity dressing table from her neighbor,Carlos,for $1600.Constance purchased the vanity table for her own personal use,without any knowledge that Carlos had signed a security agreement giving All Purpose Furniture,Inc.a security interest in the vanity table.All Purpose Furniture did not file a financing statement.Constance does not know that Carlos is still paying off the purchase money security interest and owes All Purpose Furniture,Inc.$1000.Under these circumstances:
A)Constance takes the vanity table subject to All Purpose's security interest because All Purpose's security interest automatically perfected.A perfected security interest takes priority.
B)Constance takes the vanity table free of All Purpose's security interest because she is a buyer of consumer goods
C)Constance takes the vanity table free of All Purpose's security interest because she is a buyer in the ordinary course of business.
D)Constance must pay All Purpose $1000 or the table must be resold, and she and All Purpose will proportionately share the proceeds from the sale of the table.
Q2) Explain the difference between attachment and perfection.
Q3) Discuss the concept of software under Article 9.
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27
Chapter 26: Bankruptcy
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Q1) Karen has filed for bankruptcy.Who has the authority to confirm or reject a plan of payment,and what factors will be considered when deciding whether to approve a repayment plan under Chapter 13?
Q2) Artistic Framing,a business with $120,000 of unsecured debt,needs to file for bankruptcy,but wants to continue in business.Discuss what chapter of the Bankruptcy Code should be used,and discuss the effect of the 2005 amendment to the Code on the proceedings.
Q3) Bankruptcy is regulated by both federal and state law.
A)True
B)False
Q4) Which of the following actions would prevent a discharge of debts under Chapter 7?
A)Discharge under Chapters 7 or 11 within the past eight years.
B)Falsified records presented to bankruptcy court by debtor.
C)Failure to disclose assets.
D)All of the above would prevent a discharge of debts.
Q5) What is a voidable preference? What requirements must be met in order for a preference to be voided?
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Page 28
Chapter 27: Agency
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Q1) Victoria is the director of marketing for B & G Corporation.Victoria needed to negotiate an out-of-town contract on behalf of B & G.B & G has a legal duty to reimburse Victoria for the hotel expenses she incurs on the trip to negotiate the contract.
A)True
B)False
Q2) In the Abkco Music,Inc.v.Harrisbongs Music,Ltd.,the court held that Klein violated his fiduciary duty to Harrisbongs because:
A)He received profits that the principal neither knew about nor approved.
B)He used confidential information after the agency relationship terminated.
C)He competed with Harrisbongs.
D)He was acting for a second principal whose interests conflicted with those of Harrisbongs.
Q3) Morgan is so grateful to Patrick for his work preparing insurance quotes for him that Morgan gives Patrick two tickets to an upcoming NFL game.Patrick may not keep the tickets unless he lets his agency know,and the agency may take the tickets or let Patrick keep them.
A)True
B)False
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29
Chapter 28: Employment Law
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Q1) How many weeks is David allowed to take off under the Family and Medical Leave Act in this situation?
A)Six weeks.
B)12 weeks.
C)24 weeks.
D)None.
Q2) When may an employer require an employee to submit to a lie detector test?
A)When the employee has been hired for less than 90 days
B)When the test is part of an on-going investigation into crimes that have occurred.
C)When the employer has reason to believe the employee is using illegal drugs on the job.
D)When all employees are being questioned using a lie detector.
Q3) Wrongful discharge prohibits an employer from firing a worker for a bad reason. A)True
B)False
Q4) Some courts have held that employee handbooks create binding contract terms. A)True
B)False
Q5) Discuss the requirements of the Family and Medical Leave Act.
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Chapter 29: Starting a Business: Llcs and Other Options
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Q1) John,his parents,and three brothers own all the stock of their family farm corporation.This corporation,which is taxed as a corporation,is probably:
A)an S corporation.
B)a C corporation.
C)a close corporation.
D)an LLC.
Q2) An S Corporation cannot have more than ____ shareholders.
A)25
B)50
C)75
D)100
Q3) The most common form of business ownership is the sole proprietorship.
A)True
B)False
Q4) To form an LLC,a charter and an operating agreement must be filed with the Secretary of State in the jurisdiction where the business will operate.
A)True
B)False
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Chapter 30: Corporations
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Q1) Laurie is incorporating her business.The business's home state is Wisconsin.Business will be conducted in California,Michigan,Pennsylvania,and Virginia.Laurie:
A)must incorporate the business in Wisconsin, the home state.
B)must incorporate the business in Wisconsin, California, Michigan, Pennsylvania, and Virginia.
C)must incorporate in Delaware.
D)can incorporate the business in any state.
Q2) What is the business judgment rule and what is its purpose?
Q3) The "business judgment rule" has been abandoned in most states.
A)True
B)False
Q4) Jerry works for a SpringBrook nursing home.He signs a contract on behalf of the nursing home with Sunny Floral to have fresh flowers delivered every week.No one at SpringBrook knows that,with three other family members,Jerry owns Sunny Floral.This is an issue of:
A)violation by Jerry of his duty of care.
B)violation of the business judgment rule.
C)self dealing.
D)fraud.
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Chapter 31: Securities Regulation
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Q1) Typically,exemptions from registration under the 1933 Act are based on either the type of security or the type of transaction.
A)True
B)False
Q2) Define a direct public offering.What are its advantages?
Q3) Under the 1933 Act,what remedy may the purchaser of an unregistered security obtain?
A)Rescission only.
B)Damages only.
C)Rescission or damages.
D)He may not obtain any remedy.
Q4) Under Rule 504,a restricted security:
A)can be sold at any time.
B)cannot be sold within nine months of its offering.
C)cannot be resold, either publicly or privately, for one year.
D)cannot be sold until the SEC issues a release letter allowing it to be sold.
Q5) Identify and explain three options that ease the process of complying with state securities requirements.
Q6) What are the three primary ways the SEC creates law?
Page 33
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Chapter 32: Property
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Q1) Ollie leased a building in Old Town.Ollie installed a washer and dryer unit and a new furnace in the basement of the building with new duct work throughout the building.Upon expiration of the lease,Ollie intends to remove the washer and dryer,but not the furnace.The washer and dryer can easily be removed without harming anything.Removal of the furnace,however,will damage the building.Are the washer,dryer,and furnace fixtures?
A)The washer, dryer, and furnace are all fixtures.
B)The furnace is a fixture, but the washer and dryer are not.
C)The washer and dryer are fixtures, but the furnace is not.
D)The furnace and the washer are fixtures, but the dryer is not.
Q2) The landlord's duty to provide quiet enjoyment of the premises and the landlord's duty to deliver and maintain the premises in a habitable condition are one and the same.
A)True
B)False
Q3) The issue in the case Mitchell v.Bank of America National Association was to determine whether there was a bailment.
A)True
B)False
Q4) Identify and explain the different types of tenancy.
Page 34
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Chapter 33: Cyberlaw
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Q1) Explain the difference between an ISP and a Web host,and discuss whether they are treated alike under the Communications Decency Act (CDA).
Q2) In the case Carafano v.Metrosplash.Com,Inc.,the court discusses the application of the Communications Decency Act.
A)True
B)False
Q3) Bidding on one's own goods at an online auction may subject the bidder to liability under anti-fraud statutes as well as liability under state statutes explicitly prohibiting shilling.
A)True
B)False
Q4) The case United States of America v.Angevine discussed the application of: A)COPPA
B)the Communications Decency Act.
C)the Fourth Amendment.
D)the Gramm-Leach-Biley Privacy Act.
Q5) Discuss the European Directive on the protection of personal Data.
Q6) Discuss common abuses that occur with auctions on the Internet and how these abuses are being addressed.
Page 35
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Chapter 34: Intellectual Property
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Q1) A copyright is valid for 28 years after it is obtained and can be renewed for another 28 years.
A)True
B)False
Q2) A design patent protects the appearance of an item and is valid for 14 years.
A)True
B)False
Q3) A trademark lasts for:
A)20 years after the application is filed.
B)70 years after the death of the creator.
C)10 years, but it can be renewed for an unlimited number of terms as long as it is used.
D)as long as it is kept confidential.
Q4) Which of the following words could be registered as a trademark?
A)Crunchy peanut butter.
B)White garbage bags.
C)Orange Juice.
D)Jones Soy Milk.
Q5) Briefly discuss a patent,copyright,and trademark.
Q6) Describe what copyright infringement means.
Page 36
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