Contracts and Sales Law
Midterm Exam
Course Introduction
Contracts and Sales Law explores the foundational principles and doctrines governing the formation, interpretation, performance, and enforcement of contracts, with a particular focus on agreements for the sale of goods. The course examines common law rules, statutory frameworks such as the Uniform Commercial Code (UCC), and relevant case law shaping modern contract and sales transactions. Key topics include offer and acceptance, consideration, capacity, defects in consent, breach of contract, remedies, warranties, and risk of loss. Through analysis of real-world scenarios and legal problems, students gain critical understanding of how contracts are constructed, interpreted, and litigated in both personal and commercial contexts.
Recommended Textbook
Business Law Text and Exercises 8th Edition by Roger LeRoy Miller
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Chapter 1: Introduction to the Law and Our Legal System
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Q1) Being a small-business owner means that you will never have to take on the role of finance manager,marketing manager or accountant.
A)True
B)False
Answer: False
Q2) Cato and Dolly are involved in a lawsuit.The best definition of a lawsuit is
A) a criminal prosecution, not a civil proceeding.
B) a failure to perform a legal obligation.
C) a judicial proceeding for the resolution of a dispute.
D) an enactment of law by a legislative body.
Answer: C
Q3) Administrative law includes only state regulations.
A)True
B)False
Answer: False
Q4) Criminal law focuses on duties that exist between persons.
A)True
B)False Answer: False
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Chapter 2: Ethics in Business
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Q1) Corporations can be viewed as "citizens" that are expected to participate in bettering society.
A)True
B)False
Answer: True
Q2) According to utilitarianism,it does not matter how many people suffer a negative effect from an act.
A)True
B)False
Answer: False
Q3) Focusing on a firm's short-term profits without considering the company's long-term needs may be acting unethically.
A)True
B)False
Answer: True
Q4) If an action is legal,it is ethical.
A)True
B)False Answer: False
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Chapter 3: The Courts and Alternative Dispute Resolution
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Q1) Sofia files a suit against Turista Airlines,Inc.Turista responds that it appears from the pleadings that the parties do not dispute the facts and the only question is how the law applies to those facts.Turista supports this response with witnesses' sworn statements.This is a
A) counterclaim.
B) motion for judgment on the pleadings.
C) motion for summary judgment.
D) motion to dismiss.
Answer: C
Q2) No court offers mediation as an option before a case goes to trial.
A)True
B)False
Answer: False
Q3) An appellate court can reverse the decision of a trial court that erred.
A)True
B)False
Answer: True
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Chapter 4: Constitutional Law
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Q1) Bay Town enacts an ordinance to allow only a few recreational boating outfits to operate in certain areas of its harbor,for the purpose of reducing traffic.A court would likely review this ordinance under the principles of
A) equal protection.
B) free exercise.
C) due process.
D) free speech
Q2) The commerce clause's express grant of exclusive authority to regulate commerce that substantially affects trade and commerce among states is referred to as the
A) dormant aspect.
B) regulatory aspect.
C) substantive aspect.
D) exclusive aspect.
Q3) A confederal form of government is a confederation of independent states with a central government of very limited powers.
A)True
B)False
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Chapter 5: Tort Law
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Q1) Basil,a clerk at Cycle World,takes a bicycle from the store without the owner's permission.Basil is liable for conversion
A) if he damages the bicycle.
B) if he does not have a good reason for taking the bicycle.
C) if he fails to prevent a theft of the bicycle from his possession.
D) under any circumstances.
Q2) Jean is playing a computer game on a bad disk that melts in her drive,starting a fire that injures her hands.Jean files a suit against K-Tech,Inc.,the game's manufacturer.K-Tech is held liable under the doctrine of strict liability.A significant application of this doctrine is in the area of
A) criminal law.
B) intentional torts.
C) product liability.
D) negligence.
Q3) Ike pushes Joan,who falls and breaks her arm.Ike is liable for the injury
A) if Ike intended to push Joan.
B) only if Ike did not intend to break Joan's arm.
C) only if Ike had a bad motive for pushing Joan.
D) only if Ike intended to break Joan's arm.
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Page 7
Chapter 6: Intellectual Property
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Q1) Creation Worx,Inc.,develops,makes,and markets new computer programs for businesses and consumers.Generally,copyright protection extends to
A) all aspects of the software.
B) the "look and feel" of the software.
C) those parts of the software that can be read by humans.
D) all of the choices.
Q2) Mace copies Nick's book,Off the Beaten Path,in its entirety and sells it to Parkland Books,Inc.,without Nick's permission.Parkland publishes it under Mace's name.This is
A) copyright infringement.
B) fair use.
C) licensing.
D) protected expression.
Q3) Like most successful companies,Pads & Phones,Inc.(P&P),has trade secrets.The law protects those secrets if
A) P&P employees do not divulge the information to outside parties.
B) P&P employees do not handle confidential documents.
C) P&P employees never leave the company's employ.
D) the information is unique and has value to a competitor.
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Chapter 7: Internet Law, social Media, and Privacy
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Sample Questions
Q1) The manufacture,import,sale,and distribution of devices or services for the circumvention of encryption software is prohibited.
A)True
B)False
Q2) Keisha is an employee of Leeway Corporation.She uses social media in a way that violates her employer's stated social media policies.Leeway first disciplines its employee and then,after a second transgression,fires her.This
A) is a violation of Keisha's rights as an employee.
B) is within Leeway's rights as an employer.
C) is a subject for dispute resolution by the social media that Keisha used.
D) falls under the "business-extension exception" to the Electronic Communications Privacy Act.
Q3) A licensor might grant a license allowing a trademark to be used as part of a domain name.
A)True
B)False
Q4) Social media posts have no uses in litigation.
A)True
B)False
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Chapter 8: Criminal Law and Cyber Crime
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Sample Questions
Q1) Chadwick signs Dolores's name,without her authorization,to the back of her paycheck issued by E-Market Solutions,Inc.This is
A) embezzlement.
B) forgery.
C) larceny.
D) robbery.
Q2) One element that normally must exist for a person to be convicted of a crime is the performance of a prohibited act.
A)True
B)False
Q3) Herb,a computer programmer for Inventory Control Corporation,is arrested in his employer's parking lot on suspicion of larceny.Herb must be informed of his right to A) a trial by jury.
B) punishment.
C) question witnesses.
D) remain silent.
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Chapter 9: Introduction to Contracts
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Sample Questions
Q1) Clay offers to pay Dot $50 for a golf lesson for Eula.They agree to meet the day after tomorrow to exchange the cash for the lesson.These parties have
A) a bilateral contract.
B) a trilateral contract.
C) a unilateral contract.
D) no contract.
Q2) Expert Pavers,Inc.,contracts with Fabricated Building Corporation to repave Fabricated's parking lot for which Fabricated agrees to pay.The requirements of this,and any other,contract do not include
A) consideration.
B) capacity.
C) legality.
D) practicality.
Q3) An express contract must be in writing.
A)True
B)False
Q4) Every contract involves at least three parties.
A)True
B)False
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Chapter 10: Offer and Acceptance
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Sample Questions
Q1) Beth goes to Dr.Carlton for surgery.Carlton says that Beth should be fully healed within a week.Beth is not healed within a week.With respect to breach of contract,Carlton is
A) liable.
B) not liable, because surgery is not a proper subject for a contract.
C) not liable, because the statement was an opinion.
D) not liable, but Beth is excused from paying Carlton.
Q2) Business Properties,Inc.(BPI),offers to sell a warehouse to Corporate Investments.Corporate says that it will pay BPI $100 to hold the offer open for three business days.This
A) creates an illegal contract by adding a clause to BPI's offer.
B) makes the offer irrevocable for three days if BPI accepts.
C) negates BPI's offer by changing the price term.
D) voids BPI's offer by extending the time term.
Q3) Revocation is effective on dispatch.
A)True
B)False
Q4) No offer can be accepted by silence.
A)True
B)False
Page 12
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Chapter 11: Consideration
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Sample Questions
Q1) Jenilee promises to pay Kyle $500 because "he does not have as much money as other people." Jenilee's promise is
A) enforceable because society wants people to keep their promises.
B) enforceable because the redistribution of wealth is a valid social goal.
C) not enforceable because Jenilee could have paid Kyle more.
D) not enforceable because Kyle has not given consideration in return.
Q2) Rescission is the remaking of a contract so as to enrich one party at the expense of the other.
A)True
B)False
Q3) Risks ordinarily assumed in business constitute consideration for the modification of a contract.
A)True B)False
Q4) A transaction that lacks a bargained-for exchange lacks an element of consideration.
A)True
B)False
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Chapter 12: Capacity
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Q1) Fay is mentally incompetent but has not been so adjudged by a court.Any contract Fay enters into is
A) voidable if Fay has a lucid interval at the time of contracting.
B) voidable if Fay lacks the capacity to comprehend the consequences.
C) voidable if the other party does not realize that Fay is incompetent.
D) unavoidable.
Q2) A minor who enters into a contract for necessaries may disaffirm the contract but remains liable for the reasonable value of the goods.
A)True
B)False
Q3) The age of majority in most states is eighteen years.
A)True
B)False
Q4) Jody,a minor,is living at home with her parents,but signs a lease with Idyll Grove
Apartments,a land-lord,to rent an apartment.Jody can
A) disaffirm the lease because her parents can be held liable for it.
B) disaffirm the lease without liability.
C) not disaffirm the lease because an apartment is a "necessary."
D) not disaffirm the lease because she intended to live on her own.
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Chapter 13: The Legality of Agreements
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Q1) Bay City Mall requires its tenants to sign a lease that includes a clause releasing Metro from liability in the event of monetary or physical injury no matter who is at fault.Coco's Chocolate Creations signs a lease with Bay City that contains the clause.This is
A) a covenant not to compete.
B) an adhesion contract.
C) an exculpatory clause.
D) an illusory promise.
Q2) U-Can-Own-It Corporation sells appliances to less educated consumers,including Vi,on installment plans.U-Can-Own-It files a suit against Vi when she stops making payments.Vi claims that the deal is unconscionable.The court will most likely consider
A) the geographic area of the relevant market.
B) the parties' relative bargaining power.
C) the quality of related products in the general market.
D) the relation of this deal to those of other customers.
Q3) When a statute protects a certain class of people,a member of that class can enforce a contract in violation of the statute.
A)True
B)False
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Page 15
Chapter 14: Voluntary Consent
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Q1) Mark fails to reveal a material fact in a business deal with Nancy.This constitutes fraud
A) if Mark is unaware of the fact and the failure.
B) if the amount of consideration received is grossly inadequate.
C) if the fact concerns a serious defect known to Mark and unlikely to be known by Nancy.
D) under any circumstances.
Q2) Hank,a salesperson for Ideal Autos,promises Jennie a certain car will give her a "smooth ride." Hank offers a test drive,which Jennie de-clines.She buys the car but soon realizes its suspension is in poor condition.Jennie
A) can rescind the contract on the ground of fraud.
B) can rescind the contract on the ground of misrepresentation.
C) can rescind the contract on the ground of mistake.
D) was not defrauded.
Q3) Reliance on a misrepresentation is justified if the misrepresentation is an obviously extravagant statement.
A)True
B)False
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Page 16
Chapter 15: Written Contracts
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Sample Questions
Q1) Written evidence or an electronic record of a contract for a sale of goods priced at $50 or more is required.
A)True
B)False
Q2) Air Flo,Inc.,and Banyan Grove Apartments enter into an oral contract in which Air Flo agrees to provide air-conditioning and heating maintenance for Banyan Grove's facilities for two years.This contract is enforceable by
A) Air Flo.
B) Banyan Grove.
C) any third party, such as a HVAC supplies provider.
D) none of the choices.
Q3) An oral contract may be enforceable if the person making the promise could foresee that the promisee would rely on the promise.
A)True
B)False
Q4) There are exceptions to the Statute of Frauds.
A)True
B)False
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Chapter 16: Third Party Rights
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Q1) Lyle and Miranda agree that Lyle will fix the refrigeration unit in Miranda's Buns n' Burgers in exchange for her payment of a debt that Lyle owes to New Credit Corporation.New Credit is
A) a delegatee.
B) an intended beneficiary.
C) an incidental beneficiary.
D) an assignor.
Q2) A-One Landscapers,Inc.,owes Friendly Finance Company $5,000.A-One enters into a contract with Suburban Office Park under which A-One promises to maintain the landscaping on Suburban's property.Under the contract,Suburban promises to pay Friendly Finance the amount that will be due A-One until A-One's debt to Friendly Finance is paid.A-One performs as promised,but Suburban does not pay Friendly Finance.Can Friendly Finance succeed in a suit against Suburban? Why or why not?
Q3) Alienation is a transfer of land ownership.
A)True
B)False
Q4) The person to whom rights in a contract are assigned is the assignor.
A)True
B)False
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Chapter 17: Contract Discharge and Remedies
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Q1) Damages that compensate the nonbreaching party for the loss of a bargain are known as consequential damages.
A)True
B)False
Q2) Hybrid Corporation enters into a contract with Insure Service,Inc.(ISI),to obtain health insurance for Hybrid employees.If ISI breaches the contract and Hybrid is awarded compensatory damages,the purpose would be to
A) establish, as a matter of principle, that ISI acted wrongfully.
B) provide Hybrid with funds for a foreseeable loss beyond the contract.
C) provide Hybrid with funds for its loss of the bargain.
D) punish ISI and set an example to deter others from similar acts.
Q3) A material breach occurs when performance is substantial,but not complete.
A)True
B)False
Q4) Quest Resources,Inc.,contracts with Ring Communications Corporation (RCC)for RCC to design and build an all-weather communications system for Quest's field operations.RCC builds the system,but it functions effectively only in good weather.Is this a breach of the contract? If so,what remedies does Quest have?
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Page 19
Chapter 18: Introduction to Sales and Lease Contracts
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Q1) Goods associated with real estate never fall within the scope of UCC Article 2.
A)True
B)False
Q2) Mary owns a small real estate company that arranges apartment leases for college students.She leases an apartment for nine months to Sara,a new undergraduate in the area.On her son's eighteenth birthday,Mary gives him a gift of a car.On her daughter's sixteenth birthday,Mary gives her a gift of $500.Mary sells her home gym to her neighbor for $1,000.Article 2 of the UCC covers Mary's
A) lease.
B) gift of the car.
C) gift of $500.
D) sale of the gym.
Q3) Refined Cereal Grains,Inc.,agrees to sell to Sunny Breakfast Cereal Company a certain quantity of refined oats each week but no mention is made of where the goods are to be delivered.In general,the UCC requires that the delivery take place at
A) a neutral place of business halfway between the parties' locations.
B) a "reasonable" place of delivery.
C) Refined Cereal's place of business.
D) Sunny's place of business.
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Page 20
Chapter 19: Title and Risk of Loss
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Q1) Candy Corporation orders Delicioso-brand chocolate from Edibles Distribution Company.Edibles identifies the goods.Before they are shipped to Candy Corporation,an insurable interest in the goods exists in
A) Candy Corporation and Edibles Distribution.
B) Delicioso and Edibles Distribution.
C) Candy Corporation and Delicioso.
D) all of the parties as tenants in common.
Q2) Organicos Café orders five gallons of PureMaid-brand transfat-free olive oil from Quico Cooking Supplies,Inc.Quico mistakenly ships soy oil,which Organicos keeps,despite the nonconformity.The oil is destroyed in a fire.The loss is suffered by
A) all of the parties as owners in common in equal measure.
B) PureMaid.
C) Organicos Café.
D) Quico Cooking Supplies.
Q3) If a lessor is a merchant,the risk of loss passes to a lessee when the lessee takes physical possession of the goods.
A)True
B)False
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Chapter 20: Performance and Breach
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Q1) Levi's Toy Store orders one hundred board games from Big Board Games Warehouse.When the games are delivered,they are all missing pieces.Levi's Toy Store rejects the shipment.Big Board Games wants to cure.Big Board Games must
A) promptly notify Levi's Toy Store of the intent to cure.
B) pay Levi's Toy store a cure fee.
C) send a truck to pick up the nonconforming goods before the end of the business day.
D) create a new contract with Levi's Toy Store.
Q2) Pine Mills Corporation and Ur-Choice Lumberyards enter into a contract for a sale of plywood.Under a destination contract,the seller must
A) allow the buyer to reject the goods for any reason.
B) deliver the goods to a particular destination.
C) inspect the goods before tendering their delivery.
D) place the goods into the hands of a carrier.
Q3) Under the UCC,there are no exceptions to the perfect tender rule.
A)True
B)False
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Page 22
Chapter 21: Warranties and Product Liability
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Q1) If a warranty of infringement is breached and the buyer is sued by the claim holder,the buyer need not notify the seller of the lawsuit.
A)True
B)False
Q2) Implied warranties can arise from a "usage of trade."
A)True
B)False
Q3) Beginners Run Ski Shop sells a pair of skis to Crystal.When Crystal first uses the skis,they snap in two.The cause is something that Beginners Run did not know about and could not have discovered.Beginners Run breached
A) the merchant's implied duty of inspection.
B) the implied warranty of merchantability.
C) no duty or warranty because Beginners Run knew nothing about the defect that made the goods unsafe.
D) no duty or warranty because consumers should reasonably expect to occasionally find a product that does not work as warranted.
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Chapter 22: Consumer Protection
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Q1) The Truth-in-Lending Act applies to persons who,in the ordinary course of their business,lend money,sell on credit,or arrange for the extension of credit.
A)True
B)False
Q2) Herman's Hammer Company and Melissa's Mallets,Inc.both make hammers.Both companies only use steel produced in the United States to make their hammers.Herman's Hammer Company displays an ad in the local hardware store that says,"Buy from Herman's - we only use American steel,while competitors like Melissa's Mallets use inferior foreign steel!" The statement in the ad is
A) an obvious exaggeration.
B) puffery.
C) a false claim about a competitor's product.
D) a half-truth.
Q3) Food products are required to bear labels detailing the nutritional content.
A)True
B)False
Q4) Package labels must use words that the ordinary consumer understands.
A)True
B)False
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Chapter 23: The Essentials of Negotiability
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Q1) An instrument that promises to pay "in goods" can be negotiable.
A)True
B)False
Q2) Instruments that say nothing about when payment is due are payable on demand.
A)True
B)False
Q3) On a sheet of paper,Elle writes,without her signature,"I acknowledge that I owe Frank $600,payable out of the proceeds of the sale of my car,a 1995 Honda Civic,which I promise to advertise 'For Sale' next week.Payment is to be made on or before six months from today." What type of instrument is this? Is it negotiable? If not,why not?
Q4) A restrictive indorsement does not destroy negotiability.
A)True
B)False
Q5) For an instrument to be negotiable,it must be in writing.
A)True
B)False
Q6) A sight draft may be payable on acceptance.
A)True
B)False
Page 25
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Chapter 24: Transferability and Liability
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Q1) Vera gives Willy a $500 check as payment for a debt.Willy crudely raises the amount of the check to $5,000 and transfers it to Xtreem Sportz store for a new bike.Xtreem deposits the check in its Yankee Bank account.Vera is liable for the payment of $5,000 to A) no one.
B) Willy, Xtreem Sportz, and Yankee Bank.
C) Willy only.
D) Xtreem Sportz and Yankee Bank only.
Q2) Jill,in good faith and for value,gets from Kiley a negotiable bearer instrument.Jill does not know that Kiley stole the instrument.Jill is
A) an HDC.
B) not an HDC, because Kiley did not acquire the instrument for value.
C) not an HDC, because Kiley did not acquire the instrument in good faith.
D) not an HDC, because the instrument is a bearer instrument.
Q3) Failure to present an instrument on time is not improper presentment.
A)True
B)False
Q4) A holder takes an instrument for value by promising to perform in the future.
A)True
B)False
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Chapter 25: Checks and Banking in the Digital Age
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Q1) The first bank to receive a check for payment is the intermediary bank.
A)True
B)False
Q2) Avis signs a check "pay to the order of Blythe" drawn on Avis's account in County Bank.Avis has $400 in her account but the amount of the check is $500,which the bank pays.This is
A) a dishonored check.
B) an overdraft.
C) a postdated check.
D) a stale check.
Q3) TriState Bank agrees to accept a check by setting aside sufficient funds to cover the amount.This check is considered
A) cashed.
B) certified.
C) deposited.
D) provisionally credited.
Q4) The incompetence of a customer revokes a bank's authority to pay an item.
A)True
B)False
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Chapter 26: Agency
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Q1) Without authorization,Rolf contracts on behalf of Sari to have Tige paint the interior and exterior of Sari's house.Sari ratifies the contract.Later,Sari tries to rescind the part of the contract relating to the exterior.This attempt will be
A) partly successful.
B) partly unsuccessful.
C) totally successful.
D) totally unsuccessful.
Q2) A principal's ratification of an agent's unauthorized act must be express.
A)True
B)False
Q3) Refer to Fact Pattern 26-2.Liability to Désean for nonperformance of the contract may be imposed on
A) none of the choices.
B) Berry and Cuisine Catering.
C) Berry only.
D) Cuisine Catering only.
Q4) A person must have contractual capacity to be an agent.
A)True
B)False
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Chapter 27: Employment, immigration, and Labor Law
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Q1) Ester is a current employee of Fiber Optics,Inc.Gage,a former Fiber Optics employee,is currently unemployed.To collect unemployment compensation,Gage must
A) be willing and able to work.
B) have been fired for misconduct.
C) have voluntarily left his job.
D) not be actively seeking employment.
Q2) Steel Production Industries,Inc.,employs five hundred workers.For the Occupational Safety and Health Administration,Steel Production must do all of the following except
A) keep occupational injury and illness records for each employee.
B) report any work-related diseases.
C) report any work-related injuries.
D) pay employees higher wages for working in more dangerous areas.
Q3) Flannery is thirteen years old.Under the Fair Labor Standards Act,she cannot work
A) in the entertainment industry.
B) in a hazardous occupation.
C) for her parents.
D) in the agriculture industry.
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Chapter 28: Employment Discrimination
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Q1) The Americans with Disabilities Act requires that employers accommodate the needs of applicants or employees with disabilities who are not otherwise qualified for the work
A)True
B)False
Q2) Inez files an employment discrimination suit against Jiffy Delivery Service,Inc.,under the Civil Rights Act,based on Jiffy's discharge of Inez.Possible relief includes
A) imprisonment.
B) reinstatement.
C) fines.
D) an order to shutdown the employer's business.
Q3) Conrad and Delilah are employees of EcoCrop Feed & Seed Corporation.Under the Equal Pay Act,EcoCrop can legitimately pay different wages on the basis of
A) seniority.
B) job descriptions.
C) substantial equality of skill, effort, and responsibility.
D) gender.
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Chapter 29: Sole Proprietorships, partnerships, and Limited Liability Companies
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Q1) In a general partnership,all partners have equal rights in managing the partnership. A)True
B)False
Q2) On a partner's dissociation,his or her interest in the partnership must be purchased.
A)True
B)False
Q3) In a general partnership,the acts of one partner in the ordinary course of business do not subject the other partners to personal liability.
A)True
B)False
Q4) Wren owns and operates Yoga Center without creating a separate business organization.She receives all the profits from the doll sales.Yoga Center is most likely
A) a general partnership.
B) a limited liability partnership.
C) a sole proprietorship.
D) a limited liability company.
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Chapter 30: Formation and Termination of a Corporation
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Q1) A corporation has an implied power to extend credit to those with whom it has a legal or contractual relationship.
A)True
B)False
Q2) Like other corporations,Western Steel Corporation can extend its operations through
A) a merger.
B) a dissolution.
C) a termination.
D) a liquidation.
Q3) Corporate Investments,Inc.,attempts to acquire a substantial number of the shares of Downtown Properties Corporation through a public offer to Downtown's shareholders.This is
A) a consolidation.
B) a tender offer.
C) a short-form merger.
D) a dissolution.
Q4) The purpose of a corporation may be specified in its articles of incorporation.
A)True
B)False
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Chapter 31: Management and Ownership of a Corporation
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Q1) A corporation's officers and other executive employees are hired by corporate shareholders.
A)True
B)False
Q2) Choosing a new product line is a decision that would be made by shareholders.
A)True
B)False
Q3) Brandi is a shareholder of Cloud Servers & Routers Inc..Brandi will be deemed to have a fiduciary duty to Cloud and its minority shareholders if she has a sufficient number of shares to
A) participate in a cumulative vote.
B) assert the business judgment rule.
C) exercise de facto control.
D) bring a shareholder's derivative suit.
Q4) RayAnn is a corporate officer for Timmy's Trees,Inc.As a corporate officer,RayAnn is
A) the head of the board of directors.
B) involved in the day-to-day operations of Timmy's Trees.
C) in charge of selecting members of the board of directors.
D) not involved in the day-to-day operations of Timmy's Trees.
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Chapter 32: Secured Transactions
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Q1) Fiona borrows $1,000 from Garden State Bank,using her recreational vehicle (RV)motor home,which she purchased at Hugo's RV Sales & Service,as collateral.To perfect its security interest,the bank must file its financing statement with
A) the secretary of state.
B) the county clerk.
C) the city treasurer.
D) Hugo's RV Sales & Service.
Q2) Capital Projects,Inc.,files a financing statement to provide notice of its security interest in the property of Data Network Corporation.The initial effective term of a financing statement is a period of
A) five days.
B) five months.
C) five weeks.
D) five years.
Q3) Most of the customers in any business are buyers in the ordinary course of business.
A)True
B)False
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34
Chapter 33: Creditors Rights and Remedies
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Q1) Francis performs a contract with Genie to add a garage to Genie's property,but Genie does not pay.Francis can file a lien on Genie's property if,from the last date labor or materials were provided,he acts
A) immediately.
B) within 60 to 120 days.
C) within two years.
D) within a reasonable time.
Q2) Laurel borrows $150,000 from Marketplace Mortgage Loans to buy a home.The financing documents require Laurel to maintain the property,obtain homeowners' insurance,and pay all property taxes and other assessments through the lender.With respect to these terms,a court is most likely to
A) enforce them.
B) refuse to enforce them.
C) rescind them.
D) rewrite them.
Q3) A homestead exemption allows a debtor to subtract the value of the family home from the amount of a debt.
A)True
B)False
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Chapter 34: Bankruptcy
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Q1) The filing of a petition for bankruptcy will automatically stay most legal actions against the debtor.
A)True
B)False
Q2) Philo files a petition in bankruptcy for relief through an individual's repayment plan.He is granted a discharge.Debts that will not be discharged include claims forPhilo files a petition in bankruptcy for relief through an individual's repayment plan.He is granted a discharge.Debts that will not be discharged include claims for
A) all debts provided for by the plan.
B) money owed for services rendered.
C) allowed claims not provided for by the plan.
D) credit-card debt.
Q3) The clerk of a bankruptcy court must provide consumer-debtors with information on the types of services available from credit counseling agencies.
A)True
B)False
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Chapter 35: Insurance
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Q1) Insurance coverage is always effective the moment an insurance broker accepts the applicant's first payment toward the premium.
A)True
B)False
Q2) Anna obtains a business liability insurance policy for her Brew & Bagels Coffee Shop from ChoiceFirst Insurance Company.When an event occurs that gives rise to a claim,each party has a duty to
A) cooperate in an investigation to determine the facts.
B) file a suit against the other so that a court can settle the claim.
C) find a third party on whom to impose liability.
D) pay any outstanding premium or refund any unearned amount.
Q3) Risk management is the transfer of certain risks from an individual to an insurance company.
A)True B)False
Q4) A person who obtains insurance from an insurance company's agent is not usually protected until a formal written policy is issued.
A)True B)False
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Chapter 36: Personal Property and Bailments
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Q1) Frenchy's Fast Fries (3F)requires that its employees wear uniforms and protective clothing while on the job.3F provides a locker room for the employees to leave their street clothes and personal items while working.Grant,a 3F employee,changes his clothes in the locker room before starting work and leaves his wallet and watch in a pocket of his jacket hanging in his locker.Does Grant's leaving personal items in the locker room constitute a bailment? If not,what legal relationship is it? For whose benefit are the lockers provided and used?
Q2) Confusion of fungible goods results in the owners' loss of their rights in the property.
A)True
B)False
Q3) Nero and Omar agree to buy natural gas to sell to Power Fuel Refinery and to share storage costs until Power Fuel can take delivery.The gas is commingled so that Nero's cannot be distinguished from Omar's.This is
A) accession.
B) confusion.
C) conversion.
D) a bailment.
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Chapter 37: Real Property
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Q1) The rights that accompany a fee simple absolute include the right to use the land for whatever purpose it is best suited,not necessarily for whatever purpose the owner sees fit.
A)True
B)False
Q2) Land does NOT include the artificial structures attached to it.
A)True
B)False
Q3) All-Mart Discount Stores Corporation contracts to buy ten acres from Suburban Enterprises,Inc.,as a site for a new store.The contract calls for a "warranty deed." According to a survey that All-Mart commissions,one corner of an adjacent,enclosed parking lot is on part of the property that Suburban is attempting to convey.Can All-Mart avoid the contract? If so,on what basis? If not,why not?
Q4) Flights over private land normally do NOT violate the property owners' rights.
A)True
B)False
Q5) Defeasible means capable of being terminated.
A)True
B)False
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Chapter 38: Landlord and Tenant Law
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Q1) Paul wants to lease a condo for two years from Cool Condos Company.In most states the lease agreement
A) must be in writing.
B) can be oral or written.
C) must be oral.
D) must be signed by a judge.
Q2) Refer to Fact Pattern 38-1.In some jurisdictions,Stores & Shops would be
A) entitled to damages from Unique Fashions for its business decision.
B) entitled to increase other tenants' rent to cover Trends Clothing's unpaid rent.
C) entitled to the unpaid rent from Trends Clothing.
D) required to mitigate its damages.
Q3) Constructive eviction occurs when a tenant moves off the premises in retaliation against the landlord.
A)True
B)False
Q4) If a tenant abandons the premises,a landlord is required to mitigate his or her damages.
A)True
B)False
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Chapter 39: Wills and Trusts
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Q1) The recipient of a legacy is a devisee.
A)True
B)False
Q2) Giovanni opens an account for $250,000 at Home Federal Bank.The account pro-vides that its funds,which represent most of Giovanni's assets,are held in trust for Harriet,the nurse who cares for Giovanni during the last years of his life.Less than a year later,Giovanni dies,and Harriet withdraws the funds.These facts indicate
A) a will substitute.
B) a holographic will.
C) per stirpes distribution.
D) undue influence.
Q3) A valid will is one that represents the maker's intention to transfer and distribute his or her property.
A)True
B)False
Q4) A testator is a decedent who dies without a will.
A)True
B)False
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Chapter 40: Administrative Law
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Q1) The Federal Trade Commission (FTC)orders GR8 Steaks Company to reveal certain information.GR8 Steaks complains to a court,arguing that the order is an abuse of the FTC's discretion.Like other agencies,the FTC can use a subpoena to
A) compel a party to testify, but not to obtain documents.
B) obtain any information except what a party refuses to reveal.
C) harass an uncooperative business or individual.
D) reveal regulatory violations.
Q2) The Department of Health and Human Services (HHS)was founded in 1980.All of the following subagencies are within HHS except
A) the Centers for Medicare and Medicaid Services.
B) the Food and Drug Administration.
C) the Internal Revenue Service.
D) the Centers for Disease Control.
Q3) Executive agencies are NOT subject to the authority of the president.
A)True
B)False
Q4) An administrative agency can never conduct a warrantless search.
A)True
B)False
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Chapter 41: Antitrust Law
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Q1) An act must substantially affect interstate commerce to violate antitrust law.
A)True
B)False
Q2) The primary measure of monopoly power is a competitor's assessment of the acts of a firm under review.
A)True
B)False
Q3) The Sherman Act,the Clayton Act and the Federal Trade Commission Act are all examples of legislation designed to curb anticompetitive business practices.
A)True
B)False
Q4) Dredgers,Inc.,is the major wholesale distributor of heavy equipment in the state of Georgia.Its closest competitor is Excavators Company,another Georgia firm.The two firms agree that Excavators will operate in southern Georgia and Dredgers will operate in northern Georgia.This is
A) a group boycott.
B) a market division.
C) a price-fixing agreement.
D) a tying arrangement.
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Chapter 42: International Law
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Q1) The simplest way for a U.S.firm to do business in a foreign market is to export its products directly to that market.
A)True
B)False
Q2) The chief aim of the World Trade Organization is to maximize trade barriers among their members.
A)True B)False
Q3) Few countries guarantee compensation to foreign investors if their property is taken.
A)True B)False
Q4) Restrictions on imports may not include quotas.
A)True
B)False
Q5) Under the principle of comity,all foreign governments are subject to all U.S.laws. A)True B)False
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Page 44