Commercial Law
Exam Practice Tests
Course Introduction
Commercial Law is a branch of law that governs business and commercial transactions, covering areas such as contracts, sales, agency, negotiable instruments, and secured transactions. This course introduces students to the fundamental principles and regulations that shape the commercial environment, including the formation and enforcement of legally binding agreements, the rights and duties of parties in commercial dealings, and the legal framework for resolving commercial disputes. Students will analyze case law, statutory provisions, and contemporary issues impacting commerce to develop practical legal problem-solving skills and a thorough understanding of the legal landscape in which businesses operate.
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) Identify and explain the parts of the following case name: Palsgraf v.Long Island Railroad Co.,248 N.Y.339,162 N.E.99,New York Court of Appeals.
Answer: the case name is Palsgraf v.Long Island Railroad Co.Palsgraf and the Long Island Railroad Co.are the parties to the lawsuit.the order of the names does not necessarily identify which party initially brought the lawsuit.the part stating "248 N.Y.339,162 N.E.99" is the legal citation,which indicates where to find the case in a law library.the first part of the citation means the Palsgraf case can be found on page 339 of the 248th volume of the official court reporter of the state of New York.the decision is also reported starting on page 99 of the 162nd volume of the Northeast Reporter,a regional reporter.the reported case was heard by the New York Court of Appeals.
Q2) In the case of Panavision Int'l v.Toeppen,the Ninth Circuit Court of Appeals affirmed the district court's decision.This means that the Ninth Circuit approved the district court's decision and upheld the outcome in the case.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Business Ethics and Social Responsibility
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Q1) A company that engages in unethical behavior may suffer severe consequences.
A)True
B)False
Answer: True
Q2) E-presto,Inc.has established an EthicsLine.EthicsLine is a toll-free phone number that employees can call any time of the day,any day of the week to discuss ethics and report suspected unethical or improper conduct.Why would E-presto establish the EthicsLine?
A)Ethical behavior improves productivity.
B)Ethical behavior increases job stability.
C)Unethical behavior can destroy a business.
D)All of the above are reasons that would justify establishing an EthicsLine.
Answer: D
Q3) Stakeholders include:
A)Members of the community.
B)Customers.
C)Managers.
D)All of the above.
Answer: D
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4
Chapter 3: Dispute Resolution
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Q1) Summary judgment is appropriate when essential facts are disputed.
A)True
B)False Answer: False
Q2) If Albert is seeking an injunction against Alicia to prevent her from selling materials that infringe his copyright,he is entitled to a jury trial.
A)True
B)False
Answer: False
Q3) 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
Q4) 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) Common law is the primary source of law in torts and contracts.
A)True
B)False
Q2) The Occupational Safety and Health Administration (OSHA)has proposed rules aimed at reducing repetitive-stress injuries.ATC,Inc.disagrees with the proposed rules.ATC,Inc.should challenge the proposed rules in court to prevent them from becoming final rules.
A)True
B)False
Q3) The Environmental Protection Agency was investigating whether Exgrow,Inc.violated the Clean Air Act.Exgrow refused to give the EPA its computerized reports concerning pollution.To get the reports,EPA should use:
A)a stare decisis.
B)a de novo decision.
C)a subpoena duces tecum.
D)a writ of certiorari.
Q4) Statutory law is a minor source of US law.
A)True
B)False
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Chapter 5: Constitutional Law
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Q1) 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.
Q2) Ikerd was entering the United States from a trip abroad when the Customs Service confiscated some goods she had purchased and brought back with her.The determination of whether the government is attempting to take property and what type of hearing the Customs Service must offer Ikerd,is an analysis of:
A)substantive due process.
B)procedural due process.
C)the Takings Clause.
D)eminent domain.
Q3) Discuss the Miller test to determine if a creative work is obscene.
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Chapter 6: Torts
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Q1) Mavrex,Inc.received an application from Larry and,since his written qualifications seemed to meet a pressing current need,they hired him without checking his references or prior records.Actually,Larry had been in prison for murder several years earlier.Tom,a long-time Mavrex employee,angered Larry when Tom tried to tell Larry how to do his job.Larry attacked and injured Tom.If Tom sues Mavrex,what would his cause of action be,and what elements would Tom need to prove to win his case?
Q2) As assistant manager of a discount department store,you have been asked to review the store's policy concerning shoplifters.(a)Discuss the legal standard used in most states governing the detention of suspected shoplifters.(b)In reviewing the store's policy,discuss some of the items that you will consider.
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.
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Chapter 7: Crime
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Q1) The trespassory taking of personal property with the intent to steal it is a definition of:
A)arson.
B)larceny.
C)embezzlement.
D)misdemeanor.
Q2) Jeff picks up a piece of metal pipe and swings it at Gary,hitting him across the back of the head.In a case for criminal assault,the prosecution must prove what mens rea?
A)Specific intent.
B)Jeff voluntarily hit Gary.
C)Jeff intended to hit Gary.
D)Jeff intended to cause serious injury to Gary.
Q3) The parties to a criminal trial are the victim and the defendant.
A)True
B)False
Q4) Entrapment can be a defense to a criminal act.
A)True
B)False
Q5) Compare and contrast money laundering and embezzlement.Give an example of each.
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Chapter 8: International Law
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Q1) As of 2007,the top 2 countries which traded goods with the United States were China and Japan.
A)True
B)False
Q2) Trein,Inc.,a U.S.company entered into an exclusive distributorship agreement with Posty,Inc.,a Zambian company.This means that Trein will only use Posty to distribute products in Zambia.
A)True
B)False
Q3) If the United States sets a limit on the number of cars that can be imported,this action is a form of tariff.
A)True
B)False
Q4) Ad valorem duty is based on the price actually paid for the good when sold for export to the United States.
A)True
B)False
Q5) Explain what the General Agreement on Tariffs and Trade (GATT)is and give pro and con arguments concerning this agreement.
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Chapter 9: Introduction to Contracts
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Q1) Dawn and Isaac sign a contract in which Dawn agrees to deliver 8 bags of flour in exchange for Isaac's promise to pay $25 per bag.Dawn delivers the flour.Isaac pays for the goods.This contract is fully executory.
A)True
B)False
Q2) Noncompetition agreements are:
A)more common today than they were in the past, although policy issues they raised in the 1700s have never gone away.
B)now illegal, as they violate antitrust laws.
C)infrequently litigated.
D)relatively recent developments, first used following the Great Depression in the United States.
Q3) When promissory estoppel is used by the courts,it is because there is NOT an enforceable contract present.
A)True
B)False
Q4) One purpose of contract law is to make business matters more predictable.
A)True
B)False
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Chapter 10: Agreement
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Q1) John owns a thoroughbred horse named Prince Charming that just ran in the Kentucky Derby.Prince Charming came in last,much to John's frustration and embarrassment.John exclaims in a loud voice,"I'm selling that horse to the first person who hands me $100 bucks!" John has:
A)made an offer to anyone within hearing distance and will be bound by his offer to the first person who produces $100.
B)made a firm offer and will be bound by his offer for a reasonable period of time.
C)made an acceptance to the first person who can produce $100.
D)not made an offer because under the circumstances a reasonable person would not conclude that John had intent to make an offer.
Q2) Discuss the circumstances under which an offer would be terminated by law and give examples.
Q3) A letter of intent summarizes progress made during business negotiations,but it does not necessarily create a binding contract.
A)True
B)False
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Page 12
Chapter 11: Consideration
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Q1) The UCC requires consideration for agreements modifying contracts for the sale of goods.
A)True
B)False
Q2) Reuben climbs up a tree in his front yard in order to retrieve his daughter's kite.All of a sudden,he realizes he is paralyzed with fear.Burt,his neighbor,passes by.He sees Reuben,runs in his garage,grabs a ladder and comes to his neighbor's rescue.Once Reuben is on the ground,he hugs Burt and promises to give him a case of wine next time he sees him.Reuben changes his mind.Burt will be successful in enforcing Reuben's promise as there was valid consideration.
A)True
B)False
Q3) Courts normally require adequate consideration.
A)True
B)False
Q4) Output contracts in the sale of goods are expressly prohibited by Section 2-306 of the UCC.
A)True
B)False
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Chapter 12: Legality
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Q1) Which of the following exculpatory clauses will most likely be enforceable?
A)An exculpatory clause that relieves a windsurf school of gross negligence.
B)An exculpatory clause that relieves a windsurf school of negligence.
C)An exculpatory clause that relieves a windsurf school from intentional torts.
D)None of the above as exculpatory clauses are illegal.
Q2) An exculpatory clause is generally unenforceable when:
A)it attempts to release a party from liability for ordinarily negligent behavior.
B)it involves public transportation.
C)it is written clearly and in bold, large print.
D)the affected activity is a recreational activity.
Q3) In many states it is legal to lend money to help someone gamble as gambling is legal.
A)True
B)False
Q4) Discuss the pros and cons of gambling and whether there might be any reason for a court or legislature to treat gambling on credit any differently from gambling itself.
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Page 14
Chapter 13: Capacity and Consent
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Q1) Peter,a minor,purchased a car from ACME Motors.Using a fake ID,he misrepresented his age to be 18.The contract is fully executed.Which of the following is correct?
A)Peter cannot disaffirm the contract because a car is a necessary.
B)Peter cannot disaffirm the contract because of his misrepresentation.
C)Peter can disaffirm the contract, because a minor must be saved from his own poor judgment, including his lie.
D)Either b or c may be applicable depending on the law of the jurisdiction in which the contract was formed.
Q2) Ron,a minor,goes to the hospital for treatment of the flu.On the new-patient form Ron signs,he agrees to pay for any care or treatment he receives.When billed for the treatment:
A)Ron must pay for the value of the benefit he received, because medical care is a necessary.
B)Ron must pay for the benefit he received because the contract is fully executory.
C)Ron must pay for the benefit he received because he ratified the contract.
D)Ron does not have to pay for the benefit he received.
Q3) Discuss the concept of a "material fact" in fraud situations.
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Chapter 14: Written Contracts
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Q1) Rick and Rita ordered as party favors for their wedding 500 t-shirts personalized a the young couple's photograph from Daniel Graphics.Daniel Graphics had just finished printing the shirts when Rick called and canceled the order.Daniel Graphics will be able to enforce the agreement even though there was no writing.
A)True
B)False
Q2) The Uniform Electronic Transmission Act (UETA):
A)declares that a contract or signature may not be denied enforceability just because it is in electronic form.
B)was passed by Congress in 2002.
C)creates a safe cyberspace environment in which business communications cannot be intercepted or fraudulently altered.
D)All of the above.
Q3) Any contract involving a sale of goods of $500 or more must be in writing to be enforceable.
A)True
B)False
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Page 16
Chapter 15: Third Parties
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Questions
Q1) Robert hired James,a CPA,to prepare his tax returns.James was too busy and delegated the work to Sara,also a CPA.This delegation is:
A)enforceable, as Sara is also a CPA.
B)enforceable, as there was no expectation James would do the work.
C)not enforceable, as Robert hired James to perform personal services.
D)not enforceable, as this violates public policy.
Q2) Linda assigns to Ben a right to receive rent payments.The law implies the following warranty on Linda's part:
A)the tenant is solvent.
B)Linda actually has a right to the rental payments.
C)the tenant will actually pay.
D)No warranties are implied by law in an assignment.
Q3) If Ray agrees to rake leaves for Michelle in exchange for Michelle's promise to pay off the debt Ray owes to Dean,then Dean is a donee beneficiary of the agreement between Ray and Michelle.
A)True
B)False
Q4) Briefly discuss the enforceability of contracts by third parties.
Q5) Discuss the potential liability differences between a delegation and a novation.
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Chapter 16: Performance and Discharge
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Q1) A court:
A)will enforce any express conditions intended by the parties.
B)may refuse to enforce an express condition intended by the parties if the court determines it is unfair and harmful to the general public.
C)requires strict performance if a clause of the contract expressly demands it.
D)applies an objective standard whenever ruling on a personal satisfaction contract.
Q2) In the Strategic Resources Group v.Knight-Ridder,Inc.case,the court found that Knight-Ridder:
A)intentionally breached the contract.
B)did not substantially perform the contract, so the trial court incorrectly granted summary judgment.
C)intentionally reduced the size of its advertisements, but that the size reduction was not easily discernable.
D)properly notified its customers it was reducing the size of the advertisements.
Q3) Most contracts are discharged by mutual agreement.
A)True
B)False
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18
Chapter 17: Remedies
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Q1) A contract clause which specifies the amount of damages to be paid in the event of a breach is called:
A)a specific performance clause.
B)a liquidated damages clause.
C)a consequential damages clause.
D)an incidental damages clause.
Q2) Mercury Motors inadvertently mixes up a work order on Peter's car.Peter brought the car in to have the tires rotated.Mercury tuned up the motor by mistake,conferring a benefit on Peter.If Mercury Motors insists that Peter pay for the price of the tune-up,Mercury Motors:
A)can recover its reliance interest.
B)cannot recover its expectation interest because there was no enforceable agreement.
C)will win based on breach of contract.
D)will lose because a personal service contract was involved.
Q3) Specific performance is available when the subject matter of the contract is unique.
A)True
B)False
Q4) Discuss the remedy of specific performance.
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Page 19
Chapter 18: Introduction to Sales
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Q1) Luke,the owner of a hardware store,sends a preprinted purchase order offering to buy goods from Benton,Inc.,a supplier.Benton acknowledges Luke's offer with a preprinted acceptance form.The terms of the two forms do not mirror each other.Under the UCC,no contract may be formed if the terms of the acceptance are not the mirror image of those of the offer.
A)True
B)False
Q2) Elizabeth worked as a salesperson in a carpet store.She was in the process of divorcing her husband and needed some money.Elizabeth sold her wedding ring.Elizabeth is considered a merchant with regard to the sale of the ring.
A)True
B)False
Q3) Frank buys his friend Andy's jet-ski for $2,300.There agreement is governed by the UCC as a jet-ski is within the definition of "goods."
A)True
B)False
Q4) Discuss the UCC good faith requirement.Does it apply differently depending on whether the parties are merchants or not?
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Page 20
Chapter 19: Ownership and Risk
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Q1) The Grand Hotel of Jonesville,Kentucky,purchased 200 chairs from Holton Furniture,whose business is in Minnesota.The purchase order included the following term: "F.O.B.Minneapolis,MN." The contract makes no mention of risk of loss or title.The contract can be described as a:
A)shipment contract.
B)destination contract.
C)sale or return..
D)sale on approval.
Q2) In the case Lindholm v.Brant,the Supreme Court of Connecticut held that Brant was a buyer in ordinary course,and,as such,was entitled to keep the painting.
A)True
B)False
Q3) Buyer is located in Des Moines,Iowa and seller is located in Sacramento,California.The contract specifies F.O.B.Des Moines.This contract is a:
A)destination contract.
B)sale or return.
C)shipment contract.
D)sale on approval.
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Chapter 20: Warranties and Product Liability
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Q1) In order to disclaim a warranty of fitness for a particular purpose,a merchant: A)need do nothing; such a warranty will not exist unless the merchant intends to create the warranty.
B)must make the disclaimer orally and directly to the buyer.
C)may disclaim the warranty with any language that is clear and conspicuous. D)None of the above.Implied warranties cannot be disclaimed.
Q2) Explain what the warranty of title and the warranty against claims of infringement are.
Q3) Many states prohibit a seller from disclaiming implied warranties in the sale of consumer goods.
A)True
B)False
Q4) Inez contracted with Filippo Furnaces Co.for the installation of a new furnace.Inez selected the furnace she wanted,accepting no suggestions from Filippo Furnaces' heating engineer.The furnace operated fine,but it did not heat the entire house.The size of the blower on the furnace was too small to accommodate the third floor of the house.Inez sued Filippo Furnaces Co.for the breach of the implied warranties of merchantability and fitness.What result?
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Page 22
Chapter 21: Performance and Remedies
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Q1) A buyer who accepts goods but notifies the seller the goods are non-conforming:
A)cannot recover any damages.
B)can recover the difference between the goods as promised and as delivered, plus incidental and consequential damages.
C)cannot recover incidental damages.
D)cannot recover consequential damages.
Q2) The common law requirement that the seller make a tender of delivery that conforms in all respects to the contract requirements was retained by drafters of the UCC,although the Code includes sections that limit the rule's effect.
A)True
B)False
Q3) If a buyer does not receive goods by the contract deadline,remedies available include:
A)incidental and consequential damages.
B)cover.
C)damages for non-delivery.
D)All of the above.
Q4) Identify six possible remedies for a seller when the buyer breaches a contract.
Q5) Can the buyer revoke his acceptance? If so,under what circumstances?
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Chapter 22: Creating a Negotiable Instrument
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Q1) Felicia,an elderly woman,does not speak or read English well.Felicia is a recent immigrant to this country.A dishonest immigration officer tells Felicia to sign several documents as being necessary to maintain her legal alien status.Unknown to Felicia,she signs a promissory note.The immigration officer thereafter sells the note to Neighborhood Bank,a holder in due course,who goes after Felicia for payment of the note.Felicia's defense to the Neighborhood Bank is:
A)fraud in the inducement; a real defense.
B)fraud in the execution; a real defense.
C)unauthorized completion; a personal defense.
D)breach of contract; a real defense.
Q2) An instrument is negotiable if it satisfies six standards.Which of the following is a standard of negotiability?
A)The instrument can be oral provided there is proof beyond a reasonable doubt.
B)The instrument must be payable on demand.
C)The instrument must be conditional.
D)The instrument must state a definite sum of money.
Q3) Define commercial paper and explain what it is used for.
Q4) Explain the shelter rule.
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Chapter 23: Liability for Negotiable Instruments
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Q1) The accidental destruction of a negotiable instrument will result in its cancellation.
A)True
B)False
Q2) 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
Q3) Negotiable instruments are usually not issued to fulfill a contract. A)True
B)False
Q4) Olga draws a check payable to Sven.Sven indorses the back of the check "without recourse" and negotiates the check to Hansel who in turn negotiates the check by a blank indorsement and delivers the check to Gretta.Gretta deposits the check in her checking account.If the bank dishonors the check because Olga has filed for bankruptcy,and returns the check to Gretta,who has liability on the check?
Q5) List the warranties a transferor of a negotiable instrument makes.
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Chapter 24: Liability for Negotiable Instruments: Banks and Their Customers
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Q1) Discuss the type of negotiable instrument created by the Check 21 Act and the reason for the statute.
Q2) Issam and James planned to spend spring break in Mexico.James was to make the final plans.To pay for the trip,Issam gave James a signed check that left the name of the payor and amount blank.Using Issam's check,James made the check out to himself for $500.Issam's bank paid the check not knowing that the completion was improper.The bank:
A)is liable because the instrument was forged.
B)is liable because the instrument was unauthorized.
C)is liable for half of the loss.
D)is not liable.
Q3) First National Bank wrongfully dishonored an authorized check written by Horton,Inc.First National Bank:
A)is liable for all actual and consequential damages.
B)is liable for treble damages.
C)is liable for incidental damages.
D)all of the above.
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) In the case In Re CFLC,Inc.,the court ruled that:
A)Expeditors had a security interest in Everex's goods because the latter were consumer goods.
B)Expeditors' security interest in Everex's goods had not been perfected.
C)Expeditors did not have a security interest in Everex's goods absent an agreement.
D)Expeditor's security interest was void because it was obtained by fraud.
Q2) A security interest may be attached in electronic chattel paper.
A)True
B)False
Q3) To perfect a security interest in a negotiable instrument,Second State Savings and Loan should:
A)file a financing statement.
B)take possession of the instrument.
C)do nothing.Perfection is automatic.
D)secure a court order.
Q4) Fowler Bros.has applied to Gibralter Bank for a $50,000 loan for its business expansion.If Fowler Bros.plans to use its account at Gibralter Bank as collateral,discuss what the bank needs to do for a security interest to attach.
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Page 27
Chapter 26: Bankruptcy
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Q1) According to the case In Re: John & Julie Hoffman,a court:
A)cannot approve a reaffirmation agreement under Chapter 7.
B)may void reaffirmation agreements under Chapter 13.
C)will approve a reaffirmation agreement provided there is proof that the debtor can make the required payments.
D)will approve a reaffirmation agreement if it is signed by a financial institution.
Q2) The Bankruptcy Code has two main goals: rehabilitation and liquidation.
A)True
B)False
Q3) The goal of Chapter 11is to shut down the business and distribute its assets to creditors.
A)True
B)False
Q4) Even though Lilian is neither a layer nor a CPA,she can serve as a trustee in a bankruptcy case.
A)True
B)False
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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) Janet was employed as a sales representative for Esday,Inc.An appreciative customer gave her a diamond bracelet for all her hard work on a complicated contract.Can Janet keep the bracelet?
A)Yes.The bracelet was given to Janet personally and intended for her.
B)Yes, but only if she discloses the gift to Esday and Esday consents to her keeping the bracelet.
C)No.An agent is not allowed under any circumstances to personally profit as a result of the agency relationship.
D)No.The giving of the bracelet is regarded as an unfair trade practice and violates antitrust law.
Q3) The bankruptcy of an agent automatically terminates an agency relationship. A)True
B)False
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Chapter 28: Employment Law
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Q1) 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.
Q2) If a whistleblower successfully brings suit against a company that defrauds the government,the whistleblower can receive 30 percent of the damages awarded to the government.
A)True
B)False
Q3) Under Title VII,employers with 15 or more employees may not discriminate based on:
A)sexual orientation.
B)marital status.
C)race.
D)all of the above.
Q4) What are three general defenses an employer can raise if sued for violating Title VII of the Civil Rights Act?
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Chapter 29: Starting a Business: Llcs and Other Options
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Q1) The case of Apcar v.Gaus illustrates that it is essential to comply with all the technicalities of a limited liability partnership statute.
A)True
B)False
Q2) State laws regulate corporations,but federal statutes determine their tax status.
A)True
B)False
Q3) Cooperatives may be either incorporated or unincorporated businesses.
A)True
B)False
Q4) Susan and Brenda started a retail business called Eagle's Nest Hobbies.The business is operated as a partnership.Under partnership law,Susan is personally liable for any:
A)business contracts entered into by Brenda.
B)business debts, regardless of whether she or Brenda created the obligation.
C)negligent act committed by Brenda in the scope of the business activity.
D)All the above.
Q5) What are the advantages of electing Subchapter S status? What are the requirements?
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Chapter 30: Corporations
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Q1) What is the business judgment rule and what is its purpose?
Q2) 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.
Q3) Fashions,Inc.has 52 shareholders.There is no shareholder agreement concerning the board of directors.The company is subject to the Model Act.How many directors is Fashions,Inc.required to have?
A)None.
B)One.
C)Two.
D)Five.
Q4) Owners of preferred stock typically have a preference in liquidation.
A)True
B)False
Q5) Discuss how a corporation is terminated.
Page 32
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Chapter 31: Securities Regulation
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Q1) Identify and explain three options that ease the process of complying with state securities requirements.
Q2) 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
Q3) What are the three primary ways the SEC creates law?
Q4) Which of the following statements is correct?
A)Investors generally do not receive a copy of the registration statement.
B)Investors generally receive the company's prospectus.
C)A prospectus provides disclosure about the offering but does not include as much information as the registration statement, such as information that would be of interest to the SEC but not the typical investor.
D)All the above.
Q5) Offerings under Regulation A of the Securities Act of 1933,although called private offerings,are really small public offerings.
A)True
B)False
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Chapter 32: Property
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Q1) Amber purchased a fee simple absolute in a unit in a multi-unit apartment building.She belongs to an association which manages the common areas.Amber's interest is:
A)ownership in a condominium.
B)ownership of a share in a cooperative.
C)community property with the other apartment owners.
D)a tenancy by the entirety with the other apartment owners.
Q2) Real property consists of:
A)buildings.
B)air rights.
C)plant life.
D)All of the above.
Q3) Percival takes his computer to a repair shop to have the disk drive repaired.This is most likely a:
A)bailor benefit bailment.
B)bailee benefit bailment.
C)mutual benefit bailment.
D)leasehold arrangement.
Q4) Identify and explain the different types of tenancy.
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Chapter 33: Cyberlaw
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Q1) The European Union does not regulate the transfer of personal customer information to countries that lack adequate privacy protection.
A)True
B)False
Q2) When you surf the Internet,information,much of which is anonymous,is collected about you.
A)True
B)False
Q3) The Computer Fraud and Abuse Act prohibits which of the following?
A)Computer trespass.
B)Trafficking in computer passwords
C)Negligent damage to a computer attached to the Internet.
D)All of the above.
Q4) The Internet was started in the 1960s as a project to link military contractors and universities.The World Wide Web was created in 1991 as a subnetwork of the Internet.
A)True
B)False
Q5) Discuss the European Directive on the protection of personal Data.
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Chapter 34: Intellectual Property
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Q1) Which of the following is correct?
A)A copyright can be renewed once it expires.
B)A patent can be renewed once it expires.
C)A trademark can be renewed as long as the mark is still in use.
D)None of the above.
Q2) Anderson Corp.owns a very long customer list which it guards because it gives the company a competitive advantage.If Alice willfully misappropriates the list,a court may hold her liable to Anderson for double damages.
A)True
B)False
Q3) List the four different types of "marks" that can be protected under trademark law.Explain how each mark is used.
Q4) If Cub Cadet wins a trademark infringement suit by proving the defendant's trademark,Kub Kadet,is likely to deceive customers about who made the goods,Cub Cadet is entitled to:
A)up to three times actual damages.
B)an injunction to prevent further infringement.
C)any profits Kub Kadet made on its infringing product.
D)All of the above.
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