Introduction to Business Law
Review Questions
Course Introduction
Introduction to Business Law offers students a foundational understanding of the legal principles relevant to the modern business environment. This course examines the structure of the legal system, sources of law, and key areas such as contracts, torts, agency, employment law, and forms of business organizations. Emphasis is placed on how laws affect commercial transactions and the practical implications of legal decisions in business contexts. Through case studies and real-world examples, students gain insight into ethical considerations and learn to identify potential legal issues in business operations, preparing them for informed decision-making and responsible management practices.
Recommended Textbook
Business Law Today Standard Text and Summarized Cases 10th Edition by Roger LeRoy Miller
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Chapter 1: The Legal Environment
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Q1) Japan violates an international law. Other countries may take coercive actions, which include
A) violating the same law in the same way with impunity.
B) confiscating Japanese businesses.
C) boycotting Japanese goods.
D) taxing Japanese citizens.
Answer: C
Q2) Congress enacts a statute, the Federal Deposit Insurance Corporation (an administrative agency) issues rules, the Southeast Financial Institutions Association (a private organizations) issues instructions, South Valley Bank posts a memo with orders for its employees, and Tina tells her co-worker about a recent news story. Sources of law include
A) the instructions issued by private associations.
B) the orders posted by employers.
C) the rules issued by federal administrative agencies.
D) the stories released by news agencies.
Answer: C
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Page 3
Chapter 2: Constitutional Law
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Sample Questions
Q1) Individuals have a right to obtain access to information about them collected in government files.
A)True
B)False
Answer: True
Q2) Brad stands in front of Rooster's Round-Up Café, shouting "fighting words" that are likely to incite Rooster's patrons to respond violently. The First Amendment protects such speech
A) all of the time.
B) none of the time.
C) only if it is noncommercial.
D) only if it is symbolic.
Answer: B
Q3) Julia is a U.S. citizen. She establishes a website that posts threatening messages about celebrities. Her website is
A) protected by the First Amendment.
B) not protected by the First Amendment.
C) protected by the Fifth Amendment.
D) protected by the Tenth Amendment.
Answer: B
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Chapter 3: Courts and Alternative Dispute Resolution
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Q1) A default judgment is a judgment entered against the party who brought the claim before the court.
A)True
B)False
Answer: False
Q2) In Kettle Cafe's suit against Food Services, Inc., the court issues a judgment in Kettle's favor. The judgment can be appealed to an appropriate court of appeals by A) either party.
B) Kettle only.
C) Food Service only.
D) neither party.
Answer: A
Q3) There is at least one federal district court in every state.
A)True
B)False
Answer: True
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Chapter 4: Torts and Cyber Torts
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Q1) The Class Action Fairness Act of 2005
A) shifted jurisdiction over certain class-action lawsuits from the state courts to the federal courts.
B) shifted jurisdiction over certain class-action lawsuits from the federal courts to the state courts.
C) made forum shopping punishable by large fines.
D) limited the amount of damages that could be awarded in a medical malpractice suit.
Q2) Barbara is selling her car. She knows that the brakes do not work. When a potential buyer asks Barbara if there are any problems with the car, Barbara assures the buyer that there are no problems. The buyer purchases the car based on the assurance that there is nothing wrong with it. The buyer may be able to sue Barbara for A) assault.
B) defamation.
C) fraudulent misrepresentation.
D) appropriation.
Q3) The extreme risk of an activity is a defense against imposing strict liability.
A)True
B)False
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Chapter 5: Intellectual Property and Internet Law
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Q1) New Apps Company develops "Browser Lite" software, which speeds the display of graphics on Web sites. Browser "Lite" has the most copyright protection under A) the Berne Convention.
B) the Paris Convention
C) the TRIPS Agreement.
D) the Madrid Protocol.
Q2) Riley invents a new valve to cap undersea oil spills. He names the valve "Great Catch." He also writes the installation manual to be included with each valve. Riley can obtain copyright protection for
A) the valve.
B) the "newness" of the valve.
C) the name.
D) the installation manual.
Q3) Cybersquatting occurs when a person repeatedly visits a business's website.
A)True
B)False
Q4) Pricing information is not a trade secret.
A)True
B)False
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Chapter 6: Criminal Law and Cyber Crime
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Q1) It is not a crime to defraud the public through the use of ads on television.
A)True
B)False
Q2) Patricia commits an act via e-mail against Othman Finance Company, a business in California, where the act is a cyber crime. Patricia resides in New York where the act is not a crime. Prosecution of Patricia in California involves questions of A) jurisdiction.
B) "maximum contacts."
C) the immunity of Internet service providers.
D) encryption.
Q3) Divestiture of a business interest is a possible penalty under RICO.
A)True
B)False
Q4) One purpose of criminal sanctions is to deter others from committing similar crimes in the future.
A)True
B)False
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Chapter 7: Ethics and Business Decision Making
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Q1) Management's behavior sets the ethical tone of a firm.
A)True
B)False
Q2) Carrie Ann works at Paper Products, Inc. She considers taking home a few sheets of stationery so she can write letters to her ailing grandmother. Since Paper Products produces thousands of sheets of stationery every day no one will miss the few sheets she takes and company profits will not be affected. Carrie Ann then considers what would happen if every employee took some stationery home and decides not to take any. Carrie Ann is being influenced by
A) the categorical imperative.
B) the principle of rights.
C) a cost-benefit analysis.
D) outcome-based ethics.
Q3) Adhering strictly to all business laws is all that is necessary to fulfill all business ethics obligations.
A)True
B)False
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Chapter 8: International Law in a Global Economy
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Q1) Premier Clothing, Inc., a U.S. firm, obtains a judgment in a U.S. court against Quang Tri, Ltd., a Vietnamese business. Whether the court's judgment will be enforced by a court in Vietnam depends on the Vietnamese court's application of A) the act of state doctrine.
B) the doctrine of sovereign immunity.
C) the principle of comity.
D) the World Trade Organization.
Q2) The doctrine of sovereign immunity cannot immunize a foreign nation from the jurisdiction of U.S. courts.
A)True
B)False
Q3) To obtain a contract with the Chinese government, Bammo Engineering Corporation, a U.S. firm, gives a Chinese official a sport utility vehicle. This may violate A) the act of state doctrine.
B) the doctrine of sovereign immunity.
C) the Foreign Corrupt Practices Act.
D) the principle of comity.
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Chapter 9: Nature and Classification
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Q1) Jim tells Dana that he will take her out to lunch on Thursday. Jim has made Dana a A) prediction.
B) promise.
C) bilateral contract.
D) void contract.
Q2) Holiday Sales Company and Global Distributors, Inc., enter into an express contract for the delivery of imported specialty goods. Express contract terms are given
A) less priority than the parties' prior dealing.
B) less priority than the trade usage in the parties' industry.
C) less priority than the parties' course of performance.
D) more priority than the prior dealing, course of performance, and trade usage.
Q3) Cynthia tells Darryl that she will deliver his boxes of Paradise Cookies as he directs. A declaration that one will do something in the future is part of the definition of A) a prediction.
B) a premise.
C) a principle.
D) a promise.
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Chapter 9: Offer and Acceptance
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Q1) If an offeror does not expressly specify a certain mode of acceptance, then acceptance can be made by any reasonable means.
A)True
B)False
Q2) A circular letter-"Dear Mr. or Ms. Jones, This is our biggest sale ever!"-is not evidence of an intent to enter into a contract.
A)True
B)False
Q3) In most cases, an offeror can revoke an offer as long as the revocation is communicated before the offeree accepts.
A)True
B)False
Q4) Mark is creating a Web site through which he will enter into contracts over the Internet. Important terms to include in his offers include A) provisions specifying the remedies if the contract is breached.
B) a detailed history of his business.
C) glowing reviews from former customers.
D) his educational background.
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Page 12
Chapter 11: Consideration, Capacity, and Legality
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Q1) Kingston promises to pay Melina $500 to install a sump pump in his warehouse. Melina completes the installation. The act of installing the pump
A) imposes a moral obligation on Kingston to pay Melina.
B) imposes no obligation on Kingston unless he is satisfied with the job.
C) is not sufficient consideration because it is not goods or money.
D) is the consideration that creates Kingston's obligation to pay Melina.
Q2) Genovese Contracting, Inc., agrees to build a warehouse for Hawthorne Distributors. Genovese runs into the types of difficulties that contractors ordinarily confront, and Hawthorne agrees to pay extra compensation to overcome them. Regarding the agreement to pay more, a court would likely
A) enforce it.
B) rescind it.
C) order the parties to renegotiate it.
D) not enforce it.
Q3) Past consideration can be legally sufficient consideration.
A)True
B)False
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Chapter 12: Defenses to Contract Enforceability
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Q1) A seller's failure to disclose a serious defect about a product for sale may give rise to an action for fraud.
A)True
B)False
Q2) Andy knows nothing about horses. Peter, an expert horse trainer, knows that a certain horse has no talent and is not likely to win any competitions. Peter convinces Andy to buy the horse for $500,000 by assuring him that it has great talent. The horse turns out to have no talent and never wins any competitions. Andy can most likely recover damages based on A) fraud.
B) mistake.
C) undue influence.
D) duress.
Q3) A contract must be in writing to be enforceable if the contract makes performance possible within any definite period of time.
A)True
B)False
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Chapter 13: Third Party Rights and Discharge
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Q1) Hal contracts with Credit Services, Inc. (CSI), to pay $500 for its services. After CSI performs, they sign an accord, in which Hal promises to pay $400 within ten days instead of the $500. Hal does not pay. CSI can sue Hal under
A) neither the accord nor the contract.
B) the accord only.
C) the accord or the contract.
D) the contract only.
Q2) Valley View Farms enters into a contract to sell Sarah's Corner Shop a truckload of eggs from free range chickens. Valley View then fails to deliver the eggs to Sarah's Corner Shop. Sarah
A) must still pay for the eggs or she will be in breach of contract.
B) does not have to pay for the eggs because Valley View failed to perform.
C) must still pay for the eggs, but can file suit against Valley View for breach of contract.
D) does not have to pay for the eggs, but cannot file suit against Valley View for breach of contract.
Q3) A novation does not require the extinguishing of the old obligation.
A)True
B)False
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Chapter 14: Breach and Remedies
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Q1) Sonny agrees to buy a unique collection of Olympics memorabilia for $7,000 from Jana and sends $1,500 as a down payment. When Sonny sends Jana the rest of the price, she refuses to ship the collection. Sonny should seek
A) a penalty.
B) liquidated damages.
C) restitution.
D) specific performance.
Q2) Compensatory damages compensate the injured party for injuries sustained due to loss of the contract and also punish the party that breached the contract.
A)True
B)False
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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Q1) Elizabeth buys a car from Silas, who is sixteen years old. Elizabeth then wants to sell the car to her neighbor, John. Elizabeth's title to the car is
A) valid.
B) voidable.
C) void.
D) good.
Q2) A course of performance is the conduct that occurs under the terms of a particular agreement.
A)True
B)False
Q3) Good Food Corporation buys from Home Farms, Inc., a rice crop that Home Farms plans to plant and harvest during the next growing season. Good Food plans to sell the rice to Interstate Grocery Stores. After the rice is planted, but before it is harvested, an insurable interest in the rice exists in
A) Good Food and Home Farms, but not Interstate Grocery.
B) Good Food, Home Farms, and Interstate Grocery.
C) Good Food only.
D) Home Farms only.
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Chapter 16: Performance and Breach of Sales Lease Contracts
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Q1) If a buyer repudiates a contract, the seller cannot recover damages.
A)True
B)False
Q2) An installment contract is breached if a buyer accepts any nonconforming goods.
A)True
B)False
Q3) The doctrine of commercial impracticability only extends to problems that are unforeseen.
A)True
B)False
Q4) Tender must occur at a reasonable hour and in a reasonable manner.
A)True
B)False
Q5) Screen Perfect, Inc., and TV Stores enter into a contract for a sale of high-definition television sets. Screen Perfect ships goods that do not exactly conform to the contract in some details. TV Stores
A) cannot reject the entire shipment.
B) can reject the entire shipment.
C) must accept the entire shipment.
D) must reject the entire shipment.
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Chapter 17: Warranties and Product Liability
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Q1) Express warranties can not be disclaimed in contracts.
A)True
B)False
Q2) Goldtone Corporation makes cell phones. Haji files a product liability suit against Goldtone, alleging a design defect. In deciding whether to hold Goldtone liable, the court may consider an alternative design's
A) popularity among industrial designers.
B) attractiveness to consumers.
C) aesthetics.
D) effect on the product.
Q3) General descriptions take precedence over inconsistent samples.
A)True
B)False
Q4) If a seller is an expert and gives an opinion as an expert, then he or she usually creates an express warranty.
A)True
B)False
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19
Chapter 18: Negotiable Instruments: Transferability Liability
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Q1) Entrepreneur Auto Rentals owes Sole Saver Auto Dealership $2,000. Entrepreneur executes a note to Sole Saver as security for the debt. This security
A) does not constitute sufficient consideration for HDC status.
B) does not satisfy the value requirement for HDC status.
C) satisfies the consideration requirement for HDC status.
D) satisfies the value requirement for HDC status.
Q2) Instruments that say nothing about when payment is due are payable on demand. A)True
B)False
Q3) Jeff's grandmother is the payee of a promissory note for $7,500. Jeff's grandmother gives Jeff the note for his sixteenth birthday. Jeff is A) an HDC.
B) not an HDC, because he received the note as a gift.
C) not an HDC, because he is a minor.
D) not an HDC, because the note was for less than $10,000.
Q4) To be negotiable, an instrument must be payable in a fixed amount.
A)True
B)False
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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) The Federal Reserve System acts as a clearinghouse where banks exchange checks.
A)True
B)False
Q3) A customer who writes a bad check may be subject to criminal prosecution.
A)True
B)False
Q4) A bank that pays a customer's check with a forged drawer's signature can generally pass the loss onto the customer.
A)True
B)False
Q5) The Uniform Commercial Code governs checks. A)True
B)False
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Chapter 20: Secured Transactions
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Q1) Perfection refers to the quality of the collateral that secures a creditor's interest in a debtor's debt.
A)True B)False
Q2) A security interest is not enforceable after the creditor's rights have attached to the collateral.
A)True B)False
Q3) A debtor is the person in whose favor there is a security interest.
A)True
B)False
Q4) Elias repays his debt, incurred to buy consumer goods, to Fidelity Bank and immediately files a written request for a termination statement. Fidelity
A) must comply within one month of receipt of the letter.
B) must comply within twenty days of receipt of the letter.
C) must refund $500 to Elias.
D) need not comply.
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Chapter 21: Creditors Rights and Bankruptcy
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Q1) Dina asks Edie to co-sign a credit application so that she can borrow money and buy a truck from First Street Motors. If, after the loan agreement is signed, Dina agrees to a higher rate of interest without telling Edie, then Edie is
A) discharged from the agreement.
B) liable at the higher rate of interest.
C) liable at the lower rate of interest.
D) liable for the principal only.
Q2) Creditors can agree with a debtor to discharge the debtor's debts on payment of a sum less than that owed.
A)True
B)False
Q3) Ed is a debtor. Financial Loans, Inc., and the government are Ed's creditors. For these parties, a bankruptcy proceeding under Chapter 13 could be initiated by the filing of a petition by
A) Ed alone or by his creditors jointly.
B) Ed only.
C) Financial Loans only.
D) the government only.
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Chapter 22: Mortgages Foreclosures After the Recession
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Q1) Milo borrows $125,000 from North State Bank to buy a home. To comply with the Statute of Frauds, the mortgage must be
A) a highly formal document.
B) a particular form.
C) in the same format as the lender's other loans.
D) in writing.
Q2) If a lender fails to provide certain material disclosures, a borrower has up to seven years to rescind the mortgage.
A)True
B)False
Q3) The initial interest rate is the part of a purchase price that is paid up front in cash. A)True
B)False
Q4) Under a deed in lieu of foreclosure, the property is conveyed to the lender in satisfaction of the mortgage.
A)True
B)False
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Page 24
Chapter 23: Agency Relationships in Business
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Q1) Bayou Development Corporation (BDC) hires Gulfview Brokerage Associates to sell the condominiums in a building at BDC's coastal resort. The agency will terminate
A) after the condos have been sold.
B) if the prices of the condos must be reduced to sell them.
C) once BDC obtains insurance to cover the property.
D) when BDC pays Gulfview its first commission.
Q2) Bud approves on behalf of Cody-but without authorization-a contract with Dik to build a new silo. Cody does not ratify the contract. Later, Dik tries to enforce the deal. This attempt will be
A) partly successful.
B) partly unsuccessful.
C) totally successful.
D) totally unsuccessful.
Q3) Carol is married to Andy. Carol buys food for their children's lunches and charges the cost to Andy's account. This is
A) an agency by operation of law.
B) an agency by estoppel.
C) an agency by ratification.
D) not the creation of an agency relationship.
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Page 25
Chapter 24: Employment, Immigration, and Labor Law
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Q1) Generally, an employer's monitoring of electronic communications in the workplace does not violate employees' privacy rights.
A)True
B)False
Q2) Cash is an employee of Drowsy Resort, Inc., covered by federal overtime provisions, which apply only after an employee has worked more than
A) eight hours in a day.
B) forty hours in a week.
C) 160 hours in a month.
D) one year for the same employer.
Q3) An employee can usually recover workers' compensation for injuries occurring on the commute to and from work.
A)True
B)False
Q4) If an employee dies in a work-related incident, the employer must notify OSHA within eight hours.
A)True
B)False
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Chapter 25: Employment Discrimination and Diversity
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Q1) The Americans with Disabilities Act of 1990 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) Under the Americans with Disabilities Act of 1990, an employer must hire unqualified applicants who have disabilities.
A)True
B)False
Q3) Under the Age Discrimination in Employment Act of 1967, a plaintiff must prove that he or she was replaced by a person "outside the protected class."
A)True
B)False
Q4) A tangible employment action is a significant change in employment status or benefits.
A)True
B)False
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Chapter 26: Sole Proprietorships and Private Franchises
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Q1) Cal sells "DownSize," a weight-reduction program, from a Web site, in competition with Eat-Less Inc.'s product "Fit 'n Trim." Eat-Less files a suit against Cal, alleging in part that he is a sole proprietor, but his enterprise should be deemed a different form of business. Cal's enterprise should most likely be considered
A) a corporation because DownSize is sold online.
B) a franchisee because DownSize is sold in competition to Fit 'n Trim.
C) a sole proprietorship because Cal is a sole proprietor.
D) no form of business entity because Cal has no formal organization.
Q2) A sole proprietor has unlimited liability for all obligations that arise in doing business.
A)True
B)False
Q3) In determining whether a franchisor acted in good faith in terminating a franchise relationship, a court would balance the rights of both parties.
A)True
B)False
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Chapter 27: All Forms of Partnership
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Q1) The majority rule controls decisions on ordinary matters connected with partnership business.
A)True
B)False
Q2) Refer to Fact Pattern 27-1. Brad's dissociation from the firm results in
A) the automatic termination of the firm's legal existence.
B) the partnership's buyout of Brad's interest in the firm.
C) the immediate maturity of all partnership debts.
D) the temporary suspension of the partnership's business.
Q3) Newt is considering forms of business organization for Newton Design, an architectural firm. An advantage of a limited liability partnership is that partners can avoid personal liability for
A) their own wrongful acts.
B) only other partners' malpractice.
C) only partnership obligations that exceed capital contributions.
D) only partnership obligations that fall within capital contributions.
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) The alter-ego doctrine can be applied to a limited liability company.
A)True
B)False
Q2) Rafaela Art Gallery and Sequoia Exhibitions form a joint venture. When a dispute arises, Rafaela files a suit against Sequoia. The court is most likely to apply the same principles to this joint venture as it applies to A) business trusts.
B) cooperatives.
C) corporations.
D) partnerships.
Q3) Location! Realty LLC is a limited liability company. Like other LLCs, for federal jurisdictional purposes, Location! Realty is most likely a citizen of A) all states.
B) every state in which its members are citizens.
C) no state.
D) only the state in which it was formed.
Q4) A limited liability company is not a citizen of any state.
A)True
B)False
30
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Chapter 29: Corporate Formation, Merger, and Termination
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Q1) Yellowbox, a DVD rental company, would like to change its corporate status to that of an S corporation to avoid income taxes at the corporate level. To qualify, Yellowbox must A) be located in the United States.
B) have more than one hundred shareholders.
C) be a non-profit corporation.
D) have more than one class of stock.
Q2) A de jure corporation is one that is not properly formed. A)True B)False
Q3) Starr Cardio, Inc., is a small business. Ted, Uma, and eleven other members of the Starr family own all of its stock. Currently, Starr's income is taxed at the corporate level and, after being distributed to the family members, at the shareholder level. Can Starr retain its corporate status but otherwise avoid this double taxation? If so, how?
Q4) Express powers of a corporation can be found in the articles of incorporation. A)True B)False
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Chapter 30: Management and Ownership of a Corporation
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Q1) Etta is a director of Trendy Stuff Corporation. Without informing Trendy, Etta goes into business with GR8 Things, Inc., in competition with Trendy. Etta is liable for breach of A) no duty or rule
B) the business judgment rule.
C) the duty of care.
D) the duty of loyalty.
Q2) In certain instances of fraud, a court may "pierce the corporate veil" to hold the shareholders individually liable.
A)True
B)False
Q3) A corporation's officers and other executive employees are hired by corporate shareholders.
A)True
B)False
Q4) A board of directors can delegate some functions to corporate officers. A)True
B)False
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Chapter 31: Investor Protection, Insider Trading, Corp Gov
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Q1) North American Properties, Inc., and its officers, directors, and shareholders, buy and sell securities. Section 16(b) of the Securities Exchange Act of 1934 covers
A) all purchases and sales of securities.
B) only purchases and sales of securities involving misappropriation.
C) only purchases and sales of securities involving short-swing profits.
D) only purchases and sales of securities involving tippers and tippees.
Q2) When Looking Glass Corporation wishes to issue certain securities, it must provide sufficient information for Alice, and other unsophisticated investors, to evaluate the financial risk involved. Specifically, the law imposes liability for making a false statement or omission that is "material." What sort of information would Alice consider material?
Q3) Global Investments Corporation buys and sells securities. Section 10(b) of the Securities Exchange Act of 1934 applies to
A) only the purchase or sale of a security involving an insider.
B) only the purchase or sale of a security involving short-swing profits.
C) only the purchase or sale of a security involving a tipper and tippee.
D) the purchase or sale of any security.
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Chapter 32: Promoting Competition
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Q1) Charging different prices to different buyers for identical goods is price discrimination.
A)True
B)False
Q2) Monopoly power may be proved by evidence that a firm used its power to control prices.
A)True B)False
Q3) 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.
Q4) Insurance companies are exempt from antitrust laws whenever state regulation exists.
A)True
B)False
Page 34
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Chapter 33: Consumer and Environmental Law
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Q1) Remote Disposal Company operates a hazardous waste storage facility. Concerned that there may be a release of chemicals from the site, Remote sells the property to Serene Developers, Inc. If there is a release, Remote is most likely A) liable.
B) not liable because the site was sold before the release.
C) not liable because Remote was concerned about the release.
D) not liable because Remote no longer operates the facility.
Q2) The key federal statute regulating the credit and credit-card industries is basically a disclosure law.
A)True
B)False
Q3) Common law judicial decisions that serve to protect the interests of consumers are not classified as consumer law.
A)True
B)False
Q4) Injured individuals can rely on the common law to obtain damages and injunctions against business polluters.
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) If a third party will be affected by a contract, the parties to the contract are in privity with the third party.
A)True
B)False
Q3) A professional's gross negligence in performing a duty constitutes actual fraud. A)True
B)False
Q4) Each state establishes rules that govern the conduct of attorneys
A)True
B)False
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36
Chapter 35: Personal Property and Bailments
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Q1) Delivery of intangible personal property is never accomplished by constructive delivery.
A)True
B)False
Q2) Gilbert finds an iPad on the counter at Starbucks. He takes the iPad to the police station's lost and found desk. The officer at the desk tells Gilbert that if the iPad is not claimed in a certain amount of time, Gilbert can obtain title to it. This is an example of acquiring possession by
A) an estray statute.
B) a bailment.
C) confusion.
D) production.
Q3) Ruby is young and healthy when she gives Pearl a prize-winning horse. The gift meets all the requirements to be effective. This is a gift
A) inter vivos.
B) causa mortis.
C) by accession.
D) by confusion.
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Chapter 36: Real Property and Landlord-Tenant Law
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Q1) Moby leases from National Theater Corporation a theater in which to stage a series of concerts. Ollie buys a ticket to the series. What distinguishes Moby, a tenant, from Ollie, a licensee, is
A) the exclusivity of possession.
B) the quiet enjoyment of rights.
C) the temporary nature of possession.
D) the title to the property.
Q2) Bakri owns a house. In the house, on a tile floor is a throw rug. Most likely to meet the definition of a fixture is
A) the house.
B) the throw rug.
C) the tile floor.
D) none of these choices.
Q3) Alf rents an apartment. The lease does not specify how long it will last, but it does specify that Alf must pay rent every month. Alf's tenancy is
A) a fixed-term tenancy.
B) a periodic tenancy.
C) a tenancy at will.
D) not a tenancy.
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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) Doctors Medical Associates obtains an insurance policy that protects its members against negligence claims by their patients. This is
A) casualty insurance.
B) fidelity or guaranty insurance.
C) malpractice insurance.
D) workers' compensation insurance.
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) A party must own property to have an insurable interest in it.
A)True
B)False
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