Course Introduction
Corporate Law
Textbook Exam Questions
Corporate Law explores the legal framework governing the formation, operation, and regulation of corporations. The course examines key concepts such as corporate personality, limited liability, corporate governance, and the duties and responsibilities of directors and officers. It also addresses shareholder rights, mergers and acquisitions, and the regulatory role of government bodies. Through analysis of statutes, case law, and contemporary developments, students gain a comprehensive understanding of the legal principles that underpin business organizations and their interactions within the broader legal and commercial environment.
Recommended Textbook
Business Law Today Standard Text and Summarized Cases 10th Edition by Roger LeRoy Miller
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Page 2
Chapter 1: The Legal Environment
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Sample Questions
Q1) Judge Julia decides that the precedent for the case she is hearing is no longer correct due to technological changes. She overturns the precedent when she decides the case. It is most likely that her case will
A) go unnoticed by the public.
B) be thrown out of court.
C) receive a great deal of publicity.
D) be ignored by the media.
Answer: C
Q2) Smithy Saddlery is a saddle shop subject to the laws of New York. In New York, the highest-ranking (superior) law is
A) a case decided by the New York Court of Appeals.
B) a rule created by a New York state administrative agency.
C) a provision in the New York constitution.
D) a statute enacted by the New York legislature.
Answer: C
Q3) Administrative law is a source of American law that is comprised of statutes.
A)True
B)False
Answer: False
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Chapter 2: Constitutional Law
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Sample Questions
Q1) Jon, a law enforcement official, monitors Kelsey's Internet activities-e-mail and Web site visits-to gain access to her personal financial data and student information. This may violate Kelsey's right to
A) equal protection of the law.
B) privacy.
C) procedural due process.
D) substantive due process.
Answer: B
Q2) The judicial branch has the power to hold actions of the other branches of government unconstitutional.
A)True
B)False
Answer: True
Q3) The Second Amendment to the U.S. Constitution reserves all powers not delegated to the national government to the states.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Courts and Alternative Dispute Resolution
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Sample Questions
Q1) A motion for a new trial will be granted only if a constitutional issue is involved.
A)True
B)False
Answer: False
Q2) Kit loses her suit against Lou in a Minnesota state trial court. Kit appeals to the state court of appeals and loses again. Kit would appeal next to A) a U.S. district court.
B) the Minnesota Supreme Court.
C) the United States Supreme Court.
D) the U.S. Court of Appeals for the Eighth Circuit.
Answer: B
Q3) Refer to Fact Pattern 3-1. If Bean and Java resolve their dispute by having a neutral third party render a binding decision, they will have used the method of A) arbitration.
B) conciliation.
C) intervention.
D) mediation.
Answer: A
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Chapter 4: Torts and Cyber Torts
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Sample Questions
Q1) Oakley posts a defamatory remark about Pierre in "Roominate," an online social network maintained by SocNet, Inc., an Internet service provider. Most likely to be held liable for the remark will be
A) Oakley.
B) Pierre.
C) Roominate.
D) SocNet.
Q2) Failure to live up to a standard of care may be an act or an omission.
A)True
B)False
Q3) A failure to return personal property is disparagement of property even if the rightful owner consented to the initial taking.
A)True
B)False
Q4) If no harm results from an allegedly negligent act, there is no liability.
A)True
B)False
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6
Chapter 5: Intellectual Property and Internet Law
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Sample Questions
Q1) In cyberspace, no two businesses can use the same domain name.
A)True
B)False
Q2) Information that is not or cannot be protected under trademark, patent, or copyright law may be protected under the law of trade secrets.
A)True
B)False
Q3) Anyone who writes a book has automatic international copyright protection.
A)True
B)False
Q4) Go! is a handheld video game featuring races between imaginary creatures and vehicles. The graphics used in the game are protected by A) copyright law.
B) patent law.
C) trademark law.
D) trade secrets law.
Q5) It is possible to copyright an idea.
A)True
B)False
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Chapter 6: Criminal Law and Cyber Crime
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Sample Questions
Q1) A criminal case must be proved beyond a reasonable doubt.
A)True
B)False
Q2) Under the exclusionary rule, all evidence must be included in a criminal prosecution.
A)True
B)False
Q3) The crime of theft requires the taking of property, without regard to whether the perpetrator knew it belonged to another.
A)True
B)False
Q4) Ivan signs Jeb's name, without his authorization, to the back of a check. This is
A) no crime.
B) forgery.
C) larceny.
D) robbery.
Q5) Bribing foreign officials to obtain favorable business contracts is not a crime.
A)True
B)False
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Chapter 7: Ethics and Business Decision Making
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Q1) Ergonomic Corporation convenes its employees for its managers to announce (1) a new company-wide ethical code of conduct, (2) an ad campaign to publicize the new code, and (3) the discharge of employees who do not adhere to the code. One of the most effective ways to set a tone of ethical behavior within a business organization is A) to create an ethical code of conduct.
B) to discharge employees who create the appearance of impropriety.
C) to post a marketing campaign online touting the firm's ethical tone.
D) for management to direct employees to "do as we say, not as we do."
Q2) An ethics program can clarify what a company considers to be unacceptable conduct.
A)True
B)False
Q3) Peak & Vale Accountants provides other firms with accounting services. Questions of what is ethical involve the extent to which Peak & Vale has
A) a legal duty beyond those duties mandated by ethics.
B) an ethical duty beyond those duties mandated by law.
C) any duty beyond those mandated by both ethics and the law.
D) any duty when it is uncertain whether a legal duty exists.
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Chapter 8: International Law in a Global Economy
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Sample Questions
Q1) The government of Japan sets a limit on the amount of rice that can be imported from the United States. This is
A) a dumping duty.
B) an antidumping duty.
C) a quota.
D) a tariff.
Q2) Suisse Internationale, a Swiss maker of athletic equipment, enters into a price fixing agreement with Total World Sports, a U.S. wholesaler of Suisse's products. U.S. courts will apply U.S. antitrust laws if
A) the agreement was made in Switzerland.
B) the agreement was made in the United States.
C) the price fixing has a substantial effect on U.S. commerce.
D) the Swiss government agrees to be sued in the United States.
Q3) The chief aim of the European Union and other trade organizations is to minimize trade barriers among their members.
A)True
B)False
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Chapter 9: Nature and Classification
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Sample Questions
Q1) The term consideration refers to the voluntary consent of all of the parties to a contract.
A)True
B)False
Q2) In negotiations with Coastal Distribution Company, Briggs Trucking, Inc., insists that their contract be drafted according to certain plain language laws. These laws concern the phrasing of A) contracts.
B) ads.
C) product instruction manuals.
D) documents of delivery.
Q3) The intention to enter into a contract is judged by objective facts as interpreted by a reasonable person.
A)True
B)False
Q4) A check, like other negotiable instruments, is a formal contract.
A)True
B)False
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Page 11
Chapter 9: 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) In most states, revocation becomes effective on receipt.
A)True
B)False
Q3) Digital Products Company includes a shrink-wrap agreement in a transaction with Eagle Engineering Corporation. A shrink-wrap agreement is an agreement whose terms are expressed
A) in code at the end of a computer program .
B) inside a box in which goods are packaged.
C) in small print at the end of a paper contract signed by both parties.
D) on a computer screen.
Q4) In a bilateral contract, communication of acceptance is necessary.
A)True B)False
Page 12
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Chapter 11: Consideration, Capacity, and Legality
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Q1) Inadequate consideration always indicates undue influence.
A)True
B)False
Q2) Duffy and Elbert agree to hijack a truck carrying a load of pecans. If Duffy later refuses to go through with the crime, Elbert can
A) enforce the agreement.
B) obtain damages from Duffy in the amount of Duffy's probable share of the illegal profits.
C) recover in quasi contract for the loss of his share of the illegal profits.
D) do nothing.
Q3) Chris promises Dina $40,000 if she graduates from Eagle College. Dina enrolls in Eagle, attends full-time for four years, and graduates. When Dina asks Chris for $40,000, Chris says, "I don't remember promising you $40,000. But if there was a promise, it's not enforceable, because we didn't bargain for it. And even if there was a prom?ise that would otherwise be enforceable, I revoke it now." Can Dina enforce Chris's "promise"?
Why or why not?
Q4) All forms of gambling are legal in all states.
A)True
B)False
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Chapter 12: Defenses to Contract Enforceability
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Sample Questions
Q1) A fact is objective and verifiable.
A)True
B)False
Q2) Ted and Svetlana orally agree to several different oral contracts. The Statute of Frauds will bar enforcement of an oral contract for
A) a deal that will be performed within a year.
B) a primary obligation.
C) a sale of goods for $100.
D) a sale of land.
Q3) A prenuptial agreement must be in writing to be enforceable.
A)True
B)False
Q4) An oral contract may be enforceable if enforcing the promise is the only way to avoid injustice.
A)True
B)False
Q5) An oral contract for a transfer of land is always enforceable.
A)True
B)False
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Chapter 13: Third Party Rights and Discharge
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Q1) A contract between Slim and Goldie may not be assigned if it A) does not expressly permit assignment. B) involves a sale of goods. C) involves personal services. D) is oral.
Q2) In most contracts, promises of performance are expressly qualified.
A)True
B)False
Q3) All that a delegator needs to do to make a delegation effective is to express an intention to make the delegation.
A)True
B)False
Q4) Banks may not assign their loan contracts to other firms.
A)True
B)False
Q5) A novation occurs when there is a substitution, by agreement, of a new contract for an old one, with the rights under the old one being terminated. A)True
B)False
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Chapter 14: Breach and Remedies
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Sample Questions
Q1) The failure of one party to perform a contract entitles the other party to rescind it.
A)True
B)False
Q2) Pure Oil Company enters into a contract with QuikBilt, Inc., to construct an oil pipeline to withstand specific conditions. If QuikBilt fails to meet this standard, which is construed as a breach of contract and a breach of a duty of care, Pure might be awarded punitive damages to
A) establish, as a matter of principle, that QuikBilt acted wrongfully.
B) provide Pure with funds for a foreseeable loss beyond the contract.
C) provide Pure with funds for its loss of the bargain.
D) punish QuikBilt and deter others from similar acts.
Q3) Expenses that are caused directly by a breach of contract-such as those incurred to obtain performance from another source-are compensatory damages.
A)True
B)False
Q4) A liquidated damages provision is the same as a penalty provision.
A)True
B)False
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Page 16
Chapter 15: The Formation of Sales and Lease Contracts
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Sample Questions
Q1) Sweetwater Café orders five gallons of transfat-free cooking oil from Restaurant Supply, Inc. The seller mistakenly ships the wrong oil, which the buyer keeps, despite the nonconformity. The oil is destroyed in a kitchen fire. The loss is suffered by
A) Sweetwater and Restaurant Supply, but not Sweetwater customers.
B) Sweetwater, Restaurant Supply, and Sweetwater customers.
C) Sweetwater only.
D) Restaurant Supply only.
Q2) Bill orders 1,000 nails from Super Hardware, Inc. Super Hardware keeps its nails in packages of 100,000. Bill and the agent for Super Hardware both sign the contract for the sale of the nails on Monday. The agent separates 1,000 nails on Wednesday. The agent delivers the nails to Bill on Thursday morning, and Bill pays for the nails on Friday.
Identification of the nails took place on
A) Monday.
B) Wednesday.
C) Thursday.
D) Friday.
Q3) All oral contracts are enforceable under the UCC.
A)True
B)False
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Page 17
Chapter 16: Performance and Breach of Sales Lease Contracts
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Q1) The seller's or lessor's major obligation under a sales contract is to tender conforming goods to the buyer or lessee.
A)True
B)False
Q2) On January 10, Winchester Pet Supplies orders fifty small dog collars from Quality Collars, Inc. to be delivered by January 15. On January 13, Quality Collars tenders fifty large dog collars. Winchester Pet Supplies rejects the shipment. Quality Collars has
A) no right to cure.
B) until January 15 to cure.
C) until the end of the business day on January 13 to cure.
D) unlimited time to cure.
Q3) Under the UCC, there are no exceptions to the perfect tender rule.
A)True
B)False
Q4) Tender of delivery requires that the seller or lessor hold the goods at the buyer's or lessee's disposal, but not that the goods be conforming.
A)True
B)False
Page 18
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Chapter 17: Warranties and Product Liability
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Sample Questions
Q1) SurgeStop Company makes electrical cords and other connectors for electronic devices. Rollo files a product liability suit against SurgeStop, alleging a warning defect. In deciding whether to hold SurgeStop liable, the court may consider
A) consumers' general lack of desire to read the product's warnings.
B) the plaintiff's specific lack of desire to read the product warnings.
C) the obvious risks of other products.
D) the obvious risks of this product.
Q2) A product is unmerchantable if an accident could arise in connection with the goods.
A)True
B)False
Q3) Olga, a salesperson for Pre-owned Cars & Trucks, Inc., tells Quincy, "This is the best car I've ever seen." This statement is
A) an express warranty.
B) an implied warranty.
C) a warranty of title.
D) puffery.
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19
Chapter 18: Negotiable Instruments: Transferability Liability
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Q1) The good faith requirement applies to both the holder and the transferor.
A)True
B)False
Q2) Stature Loan Company has notice that a promissory note is overdue if the note is a demand instrument and Stature takes it
A) an unreasonable time after its due date.
B) before its due date.
C) on its due date.
D) without noticing its due date.
Q3) Commercial Credit Company has in its possession an instrument dated May 1, 2012. The instrument is payable to the order of Alpha Company "on June 1, 2013," for $5,000. In the upper left corner is an address for Beta Corporation-10 Corporate Park Avenue, Chicago, Illinois-and in the lower right corner is the signature of "Delta, Inc., By Eve, President." In the lower left corner is stamped "ACCEPTED: Beta Corporation by Frank, President, May 5, 2012." On the back is the signature of "Alpha Company By Gail, President." Who, if anyone, is primarily liable on this instrument on May 1? On May 5? Who, if anyone, is secondarily liable on this instrument?
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Page 20
Chapter 19: Checks and Banking in the Digital Age
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Q1) Rikki signs a check "pay to the order of Scholar University" drawn on Rikki's account in Town Bank to pay her tuition. Rikki is
A) the certifier.
B) the drawee.
C) the drawer.
D) the payee.
Q2) A customer has a right to stop payment on a check that has been certified or accepted by a bank.
A)True
B)False
Q3) Under the Check Clearing in the 21st Century Act, a bank has to credit a customer's account as soon as the bank receives the funds.
A)True
B)False
Q4) A written stop payment order is valid for only thirty days.
A)True
B)False
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21
Chapter 20: Secured Transactions
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Q1) The payment of Waldo's debt to Main Street Bank is guaranteed by Waldo's personal property. This is governed by
A) the Uniform Commercial Code.
B) the Federal Trade Commission.
C) the U.S. Constitution's commerce clause.
D) the Bankruptcy Reform Act of 2005.
Q2) Efrem owns Fans & Players, a retail sporting goods shop. When Great Hill Lodge, a new ski resort, is built in the area, Efrem decides to expand and borrows a large sum from Hometown Bank. The bank takes a security interest in Efrem's present inventory and any after-acquired inventory as collateral for the loan. The bank properly perfects the security interest by filing a financing statement. Efrem's business is profitable, and he begins doubling his inventory. A year later, an avalanche destroys the ski slope and lodge. Efrem's business takes a turn for the worse, and he defaults on his debt to the bank. The bank seeks possession of his entire inventory, even though the inventory is twice as large as it was when the loan was made. Efrem claims that the bank has rights to only half of his inventory. Is Efrem correct? Explain.
Q3) A financing statement must include the creditor's signature.
A)True
B)False
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Page 22
Chapter 21: Creditors Rights and Bankruptcy
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Q1) A court awards a judgment to Alice, who is the creditor, against Ada, who is the debtor. After the judgment, Alice requests a court order to seize Ada's property to ensure that the judgment will be collectible. This is
A) a judicial lien.
B) a writ of attachment.
C) a writ of execution.
D) a violation of most state laws.
Q2) To use attachment as a remedy, a creditor must have an enforceable right to payment of the debt.
A)True
B)False
Q3) Bobby has fifteen creditors. To force Bobby into bankruptcy proceedings, at least three creditors must join the petition and their unsecured claims must add up to at least
A) $500.
B) $10,250.
C) $14,425.
D) $50,000.
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23
Chapter 22: Mortgages Foreclosures After the Recession
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Q1) A lender can make a higher-priced mortgage loan based on the value of the consumer's home without verifying the consumer's other credit obligations.
A)True
B)False
Q2) Refer to Fact Pattern 22-2. Under federal law, disclosures with respect to one of 24-Hour Credit's loans must be provided
A) a certain number of days after the loan is finalized.
B) a certain number of days before the loan is finalized.
C) at the same time at which the loan is finalized.
D) at whatever time is most rational and appropriate.
Q3) Reed borrows $150,000 from Suburban Credit Union to buy a home, which secures the loan. Three years later, Reed stops making payments on the loan. After Suburban Credit repossesses and auctions off the property to Tyler, equity remains. This amount most likely belongs to A) Reed.
B) Suburban Credit Union. C) Tyler.
D) the county in which the property is located.
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Chapter 23: Agency Relationships in Business
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Q1) An agency relationship created for an illegal purpose is enforceable.
A)True
B)False
Q2) An agency relationship may occur by operation of law in a family.
A)True
B)False
Q3) Jackson Lumber hires Owen to purchase wood from various sources on behalf of Jackson Lumber. In this relationship, Jackson Lumber is the A) employee.
B) independent contractor.
C) principal.
D) agent.
Q4) The equal dignity rule requires that a principal and agent treat each other with "equal dignity."
A)True
B)False
Q5) If a principal does not ratify an authorized contract, the principal is not bound. A)True
B)False
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Chapter 24: Employment, Immigration, and Labor Law
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Q1) Nimble Numbers Accounting Corporation, a private employer, handles bookkeeping for small employers. In most circumstances, with exceptions, federal law clearly prohibits Nimble from subjecting its employees to A) job-skills tests.
B) monitoring of business communications.
C) drug tests.
D) lie-detector tests.
Q2) The basis for an employee's contribution to Social Security is the employee's age. A)True
B)False
Q3) Hu, Ivan, and Juana apply to work for King Meatpacking Company. These individuals' identities and eligibility to work must be verified by A) the employer.
B) the individuals.
C) the individuals' countries of origin.
D) the U.S. Citizenship and Immigration Services.
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Chapter 25: Employment Discrimination and Diversity
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Q1) Disparate-impact discrimination occurs when a protected class of individuals is adversely affected by an employer's practices, even though they do not appear to be discriminatory.
A)True
B)False
Q2) Lee is seventy years old and Mira is gay. Based on this information, members of protected classes include
A) Lee and Mira.
B) Lee only.
C) Mira only.
D) neither Lee nor Mira.
Q3) Truman applies for a job at Skylight Canopy Corporation for which he is well qualified, but for which he is rejected. Skylight continues to seek applicants and eventually fills the position with a person who is not a member of a minority. Truman is most likely to succeed in a suit against Skylight for discrimination if he is a member of A) a protected class.
B) a majority group.
C) an employers' association.
D) a union.
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Chapter 26: Sole Proprietorships and Private Franchises
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Q1) Leigh wants to go into the business of construction contracting. Among the reasons that would probably convince Leigh to set up his business as a sole proprietorship would be
A) its greater organizational flexibility.
B) its limited liability.
C) its perpetual existence.
D) the ease of transferring the business to other family members.
Q2) A franchise agreement may specify that the premises for the business must be leased.
A)True
B)False
Q3) Normally, a franchisee determines the territory that it will serve.
A)True
B)False
Q4) Refer to Fact Pattern 26-1. Jumbo Juice makes earnings claims to potential investors. For those claims, the franchisor must have
A) a hypothetical basis.
B) a reasonable basis.
C) an actual basis.
D) no basis.
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Chapter 27: All Forms of Partnership
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Q1) Refer to Fact Pattern 27-1. The partners decide to dissolve Eastside. Dora collects and distributes the firm's assets. This results in
A) nothing with respect to the firm's existence.
B) the continuation of the firm's business.
C) the termination of the firm's legal existence.
D) the temporary suspension of the firm's business.
Q2) Mead, Nero, and Olen do business as Pipe & Plumbing Services. After Mead's relationship to the firm ends, Nero and Olen agree to discontinue the business. This is A) dissociation.
B) dissolution.
C) gross negligence.
D) simple misconduct.
Q3) For federal income tax purposes, a partnership is not a tax-paying entity. A)True
B)False
Q4) A partner owes to the partnership and the other partners a duty of loyalty.
A)True
B)False
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Chapter 28: Limited Liability Companies Special Business
Forms
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Q1) As the trustee of a business trust, Dwight is required to
A) manage the trust and distribute its profits.
B) assume liability for the trust's debts.
C) draft a written trust agreement.
D) none of the choices.
Q2) A business trust resembles a corporation.
A)True
B)False
Q3) Exotic Stuff Company and First Pier, Inc., form a business organization to engage in importing and exporting. Its property is held in the names of the members and its shareholders have personal liability. This business organization is
A) a business trust.
B) a joint stock company.
C) a joint venture.
D) a syndicate.
Q4) If there is no limited liability company (LLC) agreement covering a topic under dispute, the state LLC statute will govern the outcome.
A)True
B)False
30
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Chapter 29: Corporate Formation, Merger, and Termination
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Q1) A corporation has perpetual existence in most states unless the articles of incorporation state otherwise.
A)True
B)False
Q2) The U.S. Postal Service is a public corporation.
A)True
B)False
Q3) Eagle Financial Corporation merges with First Bank Corporation, with Eagle Financial absorbing First Bank. After the merger
A) a different, new corporation is the surviving corporation.
B) Eagle Financial and First Bank are both surviving corporations.
C) Eagle Financial is the surviving corporation.
D) First Bank is the surviving corporation.
Q4) Erin is a shareholder in African Adventures. As a shareholder, Erin
A) owns shares of stock in African Adventures.
B) is the founder of African Adventures.
C) has no say in the election of African Adventure's board of directors.
D) is liable for all the debts of African Adventures.
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Chapter 30: Management and Ownership of a Corporation
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Q1) The board of directors of Integral Components Corporation consists of Frida, Gayla, and Hart. A quorum is the minimum number of these directors
A) who must be at odds in a dispute to call for its resolution.
B) who must be present to validly transact business.
C) that the shareholders may remove from office at any one time.
D) whose positions must be vacant to warrant an election.
Q2) A corporate officer cannot act as an agent of the corporation.
A)True
B)False
Q3) If a corporation fails, the shareholders are all individually liable.
A)True
B)False
Q4) In most states, a director cannot be removed from a corporate board for a breach of duty.
A)True
B)False
Q5) Every shareholder is entitled to inspect corporate records for a proper purpose. A)True
B)False
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Chapter 31: Investor Protection, Insider Trading, Corp Gov
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Q1) Before filing a registration statement, an issuer must offer to sell securities.
A)True
B)False
Q2) SEC Rule 10b-5 prohibits the commission of fraud in connection with the purchase or sale of any security.
A)True
B)False
Q3) Corporations' chief executive officers are directly accountable for the accuracy of financial statements filed with the Securities and Exchange Commission.
A)True
B)False
Q4) Players Video Game Centers, Inc., wants to issue stock of $1 million in a single offering. Players must provide all investors with material information about itself, its business, and its securities if
A) all investors are accredited.
B) under any circumstances.
C) any investors are accredited.
D) any investors are unaccredited.
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Page 33
Chapter 32: Promoting Competition
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Q1) Mango Corporation believes that Melon Corporation engages in anticompetitive behavior in an attempt to drive Mango and its other competitors out of the market. Antitrust laws can be enforced against Melon by A) Mango and its competitors only.
B) Mango, its competitors, and the Federal Trade Commission only.
C) Mango, its competitors, the Federal Trade Commission, and the U.S. Department of Justice.
D) the Federal Trade Commission and U.S. Department of Justice only.
Q2) To drive its competitors out of a certain geographic segment of its market, Fryin' Potatoes, Inc., sets the prices of its products below cost for the buyers in that area. This is A) a refusal to deal.
B) business acumen.
C) predatory bidding.
D) price discrimination.
Q3) Market concentration refers to the number of firms in the market.
A)True
B)False
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Chapter 33: Consumer and Environmental Law
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Q1) Special requirements must be met to discharge toxic chemicals into surface waters.
A)True
B)False
Q2) An environmental impact statement is required for every major federal action that significantly affects the quality of the environment.
A)True
B)False
Q3) Tory borrows $10,000 from USA National Bank to remodel a room in her home. This transaction is subject to
A) no federal law.
B) the Consumer Leasing Act.
C) the Consumer Product Safety Act.
D) the Truth-in-Lending Act.
Q4) Common law judicial decisions that serve to protect the interests of consumers are not classified as consumer law.
A)True
B)False
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Chapter 34: Liability of Accountants Other Professionals
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Q1) Pat, an accountant, includes a false statement in a report for Quantity Overstock, Inc., that is filed with the Securities and Exchange Commission. Quantity publishes a misleading ad about its future prospects. Rita sees the ad and calls Stan, who buys stock in Quantity. Under Section 18 of the Securities Exchange Act of 1934, liability may attach to A) Pat's report.
B) Quantity's ad.
C) Rita's call.
D) Stan's purchase.
Q2) Under the Sarbanes-Oxley Act, accountants must retain working papers relating to an audit or review for a certain period of time.
A)True
B)False
Q3) Hadley, an accountant, accumulates working papers while performing an audit for Ilene. After the audit, these documents belong to
A) Hadley, with Ilene having a right of access to the papers.
B) Ilene, with Hadley having a right of access to the papers.
C) neither Hadley nor Ilene-the papers must be disposed of.
D) the Public Company Accounting Oversight Board.
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Chapter 35: Personal Property and Bailments
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Q1) It is presumed that a co-tenancy is a tenancy in common unless it is clear that the parties intended to establish a joint tenancy.
A)True
B)False
Q2) Emily checks her luggage at Flyaway Airlines's ticket counter before boarding her flight to Houston, Texas. Subject to a bailment is A) Emily.
B) Emily's luggage.
C) Emily's ticketed seat on the flight.
D) none of the choices.
Q3) Clancy sells shares in Darling Pool & Spa Company to Eton. Clancy does not deliver the actual possession of the shares to Eton, but gives him the key to a safety-deposit box in First State Bank in which the stock certificates are locked. Presenting the key is A) real delivery.
B) constructive delivery.
C) delivery by agent .
D) no delivery.
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Chapter 36: Real Property and Landlord-Tenant Law
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Q1) A license is the revocable right of a person to come onto another person's land.
A)True
B)False
Q2) A recording statute allows deeds to be recorded to give notice to the public.
A)True
B)False
Q3) A landlord is usually required to give some period of notice to terminate a periodic tenancy.
A)True
B)False
Q4) Jack owns the surface rights for Rocky Ridge Ranch, but does not own the subsurface rights. Ginny owns the subsurface rights. Rocky Ridge Ranch has a historic barn, which is damaged when Ginny is excavating minerals from the ranch. Who is most likely responsible for the damage to the barn?
A) Ginny only
B) Jack only
C) Ginny and Jack
D) no one
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Page 38
Chapter 37: Insurance, Wills, and Trusts
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Q1) Juli types onto a computer what she intends to be "My Will" and prints it out. Juli has capacity. "My Will" is
A) invalid.
B) valid if Juli signs it.
C) valid if Juli signs it and has three witnesses sign it.
D) valid if Juli signs it, has three witnesses sign it, and files it in a certain state office.
Q2) Edy obtains a property insurance policy with First Source Insurance Company for Edy's fishing trawler. First Source can cancel the policy
A) if Edy appears as a witness in a case against First Source.
B) if Edy fails to pay the premiums.
C) if Edy makes changes that add to the trawler's value.
D) under no circumstances.
Q3) Dieter's will provides for a distribution of his assets on his death. Who will "distribute" Dieter's property, and what are the steps involved?
Q4) An "X" can qualify as a signature on a will.
A)True
B)False
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Page 39