Law for Accountants Study Guide Questions
Course Introduction
Law for Accountants provides an essential overview of the legal principles and frameworks relevant to the accounting profession. The course examines topics such as contract law, torts, business organizations, agency, and the legal responsibilities of accountants to their clients, employers, and the public. Students will explore regulations related to professional conduct, fraud, liability, and compliance with state and federal laws. Through real-world case studies and practical examples, the course equips students with the legal knowledge necessary to navigate the complex regulatory landscape, mitigate risk, and uphold ethical standards in their accounting careers.
Recommended Textbook
Business Law and the Legal Environment Standard Volume 23rd Edition by David P. Twomey
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Chapter 1: The Nature and Sources of Law
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Q1) _______ law creates, defines, and regulates rights and liabilities.
A)Statutory
B)Constitutional
C)Substantive
D)Procedural
Answer: C
Q2) A new state law mandates that all employers must prohibit smoking on employer premises.The law further provides that any employer who allows an employee or a client/ customer to smoke on its premises is subject to a court order requiring the employer to enforce the law.Describe this statute in terms of all possible classification methods.
Answer: The law is substantive because it defines rights and liabilities of business owners. The law is also equitable, based on the remedy of specific performance, since it subjects the employer to a court order requiring the employer to actually do something; i.e., forbid smoking on its premises.
Q3) Administrative regulations generally do not have the force of law.
A)True
B)False
Answer: False
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Chapter 2: The Court System and Dispute Resolution
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Q1) State supreme courts generally hear all cases appealed to them.
A)True
B)False
Answer: False
Q2) An en banc decision within a U.S.Court of Appeal only requires a panel of three judges.
A)True
B)False
Answer: False
Q3) The answer to the complaint is filed by the:
A)defendant.
B)prosecutor.
C)plaintiff.
D)judge.
Answer: A
Q4) All courts have general jurisdiction.
A)True
B)False
Answer: False
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Chapter 3: Business Ethics, Social Forces, and the Law
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Sample Questions
Q1) According to the book Building and Growing a Business Through Good Times and Bad, companies with 100 years of consistent dividends:
A)use positive laws as a guide for ethical decisions.
B)have a goal of profitability no matter what the cost.
C)have a strong commitment to values.
D)value social responsibility above all other factors.
Answer: C
Q2) The passage of federal securities disclosure laws occurred largely as the result of:
A)voluntary self-regulation by ethics experts in the securities industry.
B)the stock market crash of 1929.
C)changes in the international market for securities and negotiable instruments.
D)legislative changes protecting debtors and creditors.
Answer: B
Q3) Civil disobedience is the remedy natural law proponents use to change positive laws.
A)True
B)False
Answer: True
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5
Chapter 4: The Constitution As the Foundation of the Legal Environment
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Q1) For the past century, the United States Supreme Court has generally followed the "living document" view in interpreting the Constitution.
A)True
B)False
Q2) Ex post facto laws can be adopted by either the states or the national government.
A)True
B)False
Q3) A hearing before an administrative law judge is considered a quasi-judicial proceeding.
A)True
B)False
Q4) In a federal system, a central government is given power to act nationally, while states administer to local concerns.
A)True
B)False
Q5) Administrative agencies are, in effect, a fourth branch of the government.
A)True
B)False
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Chapter 5: Government Regulation of Competition and Prices
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Q1) The Clayton Act prohibits:
A)all unfair methods of competition.
B)conspiracies in restraint of trade.
C)attempts to monopolize.
D)price discrimination between buyers of like commodities.
Q2) The Clayton Act prohibits price discrimination between different buyers of like commodities when the effect may be to substantially lessen competition.
A)True
B)False
Q3) A(n) _________occurs when the seller makes a buyer who wants to purchase one product buy an additional product that he or she does not want.
A)Resale price maintenance.
B)Tying arrangement.
C)Price discriminations.
D)Divestiture order.
Q4) The Federal Trade Commission administers the law prohibiting unfair methods of competition.
A)True
B)False
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Chapter 6: Administrative Agencies
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Q1) To satisfy the requirements of due process, an agency handling a complaint must generally _______, although there is no right to _________.
A)give specific recommendations to the director of the agency, cross-examine witnesses.
B)give notice and hold a hearing, remain silent.
C)give notice and hold a hearing, trial by jury before an agency.
D)give sufficient notice only, remain silent.
Q2) The United States constitution places the most significant limitations on administrative investigation in the area of:
A)search and seizure of the person.
B)aerial inspection.
C)search and seizure of papers and records.
D)guarantee against self-incrimination.
Q3) Regulations properly adopted by agencies are important, but they do not have the full force of law, as do statutes.
A)True
B)False
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Chapter 7: Crimes
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Q1) A crime generally consists of:
A)an act or omission.
B)a mental state.
C)a mental state and an act or omission.
D)a mental state, an act or omission, and harm.
Q2) A crime consists of three elements: the mental state, the intent, and the act.
A)True
B)False
Q3) Criminal penalties for corporations are based on a percentage of sales.
A)True
B)False
Q4) In some states, the taking of information from a computer without the consent of the owner is called _______.
A)unauthorized use of computers
B)diverted delivery by computer.
C)computer trespass.
D)economic espionage by computer.
Q5) Crimes are classified as common law or statutory according to their origin.
A)True
B)False
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Chapter 8: Torts
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Sample Questions
Q1) There are several defenses available when the standard of strict liability is applied.
A)True
B)False
Q2) Trespass to personal property requires:
A)the personal property to be connected to real property.
B)destroying the personal property.
C)the invasion of personal property regardless of whether the owner grants permission.
D)the invasion of personal property without the permission of the owner.
Q3) A business may lose the shopkeeper's privilege if:
A)the customer is kept an unreasonable amount of time.
B)the shopkeeper acted with reasonable suspicion.
C)the shopkeeper acted with necessary force.
D)the shopkeeper kept the customer over 1 hour.
Q4) A trespass to personal property is any unpermitted entry below, on, across, or above the land of another.
A)True
B)False
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Chapter 9: Intellectual Property Rights and the Internet
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Sample Questions
Q1) Smarts and Then Some, Inc.developed a software program after several years of research and development.The particular software program was then test-marketed, at which point a competitor filed suit claiming that the Smarts and Then Some program violated the competitor's copyright on a program they too were test-marketing.What is the test to determine whether a copyright has been violated?
Q2) Three types of patents available under U.S.law are:
A)utility, product, design.
B)design, packaging, invention.
C)design, plant, utility.
D)utility, regulatory, common law.
Q3) All types of patents available under U.S.law are entitled to the same quality and duration of protection once initial filing is perfected with the Patent and Trademark Office in Washington, D.C.
A)True
B)False
Q4) Once approved by the U.S.Patent and Trademark Office, a patent is presumed valid after a public comment period of 90 days.
A)True
B)False
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Chapter 10: The Legal Environment of International Trade
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Sample Questions
Q1) In antidumping cases:
A)The International Trade Administration determines whether foreign goods are being sold in the United States at less than fair value (LTFV).
B)The International Trade Commission determines if there is an injury to a U.S. industry as a result of such sales.
C)Remedial action will be taken only if findings of both LTFV sales and injury are present.
D)All of these
Q2) Under the General Agreement on Tariffs and Trade (GATT), the principle of trade without discrimination is embodied in the most favored nation clause.
A)True
B)False
Q3) The goal of the North American Free Trade Agreement (NAFTA) is to eliminate all tariffs between the United States and Europe.
A)True
B)False
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Chapter 11: Nature and Classes of Contracts: Contracting
on the Internet
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Q1) In a quasi contract the court seeks to enforce the intentions of the parties contained in the agreement.
A)True
B)False
Q2) When purchasing from a website, the website terms generally become the contract of the parties and are legally enforceable.
A)True
B)False
Q3) The law requires parties to be fair and reasonable in the making of a contract. A)True
B)False
Q4) A contract under which one or both parties have not yet fully performed is termed a(n):
A)void agreement.
B)executory contract.
C)executive contract.
D)executed contract.
Q5) A contract can only involve two parties: the promisor and the obligor. A)True
B)False
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Chapter 12: Formation of Contracts: Offer and Acceptance
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Sample Questions
Q1) An offer is effective only if it is communicated by the offeror in person.
A)True
B)False
Q2) Frank is drunk and while laughing hysterically says to Hal "I'll sell you my truck for a buck". Frank has made a valid offer.
A)True
B)False
Q3) If an offer is indefinite or vague or if an essential provision is lacking, no contract arises from an attempt to accept it.
A)True
B)False
Q4) Under the Uniform Commercial Code (UCC), a firm offer applies to:
A)a written, signed offer by a merchant to buy or sell goods.
B)an unwritten but definite offer to buy or sell goods.
C)a written, signed offer by anyone to buy or sell goods.
D)an unlimited, stipulated period of time.
Q5) A "best efforts" clause is always deemed too indefinite to be enforceable.
A)True
B)False
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Chapter 13: Capacity and Genuine Assent
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Q1) A young stockbroker was rather overwhelmed by a flood of new clients.Assunta, one of his clients, had purchased XYZ Corp.stock through the broker at a price of $35 per share.The price had gone down to $29 by the time Assunta telephoned the broker.Assunta told the broker that she wanted to sell the stock if it went below $30 and inquired as to the price.The broker did not check the price, but thinking it could not have fallen below the $30 threshold, simply reassured Assunta that it was still "in the low 30s." Marta, Assunta's cousin, also had purchased XYZ stock at $35 per share and made a similar call to the broker and received the same response.Marta, however, coincidentally saw the price on a stock ticker tape when she hung up and realized the broker had made an error.Both Assunta and Marta held the stock and did not sell.?Later that same day, the stock price fell an additional $7 per share.Facing sizable losses, both Assunta and Martha decided to sue for fraud when Marta told Assunta of the broker's misstatement.Discuss the probable outcome of the lawsuits.
Q2) Factual incapacity is imposed because of the class or group to which a person belongs.
A)True
B)False
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Chapter 14: Consideration
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Q1) Gerwin's daughter Mary was seeking a position as an associate attorney with Baker, Charles & Dixon, a large metropolitan law firm.The firm, after several meetings with Mary over a two-month period, made Mary an offer of employment on January 15.Mary accepted the offer that day and immediately left for Cape Cod to celebrate without telling Gerwin or anyone else about her new job.?On January 17, two days after Mary had accepted the offer, Gerwin sent Baker, Charles & Dixon a letter in which she offered to give Baker all of her legal business (approximately $40,000 per year) if the law firm would hire Mary.The law firm accepted.?After Gerwin learned that Mary already had been hired by Baker, Charles & Dixon, Gerwin refused to transfer her business to the law firm.The law firm has brought suit against Gerwin on the grounds that a valid contract exists between them.How will the case be decided?
Q2) An illusory promise creates a bilateral contract.
A)True
B)False
Q3) If one party's promise contains no real obligation, then the promise is merely an illusory promise and the contract will fail for lack of mutuality.
A)True
B)False
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Chapter 16: Writing, Electronic Forms, and Interpretation of Contracts
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Sample Questions
Q1) The parol evidence rule generally precludes testimony that would contradict a complete written contract.
A)True
B)False
Q2) The writing required by the statute of frauds in the case of a contract for the sale of land must:
A)be addressed to the other party to the contract.
B)be made with the intent to create a writing to satisfy the statute of frauds.
C)be signed at the end of the writing.
D)describe the land to be sold.
Q3) A person who is prevented from enforcing a contract because of the statute of frauds also is prevented from recovering the value of services, property, or money furnished the other party to the oral contract.
A)True
B)False
Q4) An oral agreement to supply a line of credit for two (2) years cannot be enforced because of the statute of frauds.
A)True
B)False
Page 18
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Chapter 17: Third Persons and Contracts
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Q1) An assignment, if otherwise valid, takes effect the moment it is made.
A)True
B)False
Q2) If a municipality contracts with a contractor to pave a street, the homeowners on that street are third-party beneficiaries of the contract.
A)True
B)False
Q3) In a contract in which a tenant borrowed money from a bank for the purpose of adding a bathroom to her apartment, the landlord is:
A)a direct beneficiary.
B)in privity of contract with the tenant.
C)a third-party beneficiary.
D)an incidental beneficiary.
Q4) An assignment is valid only if:
A)it is in a particular form.
B)it is written.
C)there is a manifestation of the intent to assign.
D)the assignment is paid for by the assignee.
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Page 19
Chapter 18: Discharge of Contracts
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Q1) When a building contractor has substantially performed a contract to construct a building, the contractor is entitled to recover the full contract price.
A)True
B)False
Q2) Bankruptcy results in a discharge of contractual obligations by __________.
A)default
B)equity
C)operation of law
D)oath or affirmation
Q3) The death or disability of a party to a contract discharges the contract when:
A)personal services requiring peculiar skill are involved.
B)the payment of money is involved.
C)a house is to be painted.
D)all of these.
Q4) The time for performance is typically essential in a contract for the sale of perishable property.
A)True
B)False
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Chapter 19: Breach of Contract and Remedies
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Q1) If a plaintiff's loss involves damaged property, it is described as liquidated damages. A)True
B)False
Q2) Cyril made two contracts.The first was to have his house painted one month from the date of the written contract.The second was for his neighbor's 1957 Ford Thunderbird.Each contract was definite and clear in all respects.As to the house painting, Cyril inquired with the painter as to when the work could begin.The painter explained that he was extremely busy and was not sure if he could fulfill the contract.Cyril flew into a rage and immediately hired someone else who painted the house, but at a higher price.Cyril then sued the painter, claiming that there was an anticipatory repudiation of the contract by the painter.?With regard to the automobile purchase contract, after signing the contract, the neighbor decided that she did not wish to sell her car and refused to complete the transaction.Cyril attempted to purchase a similar car elsewhere, but the car was a vintage automobile which was not available on the open market.Cyril sued the neighbor for specific performance of the contract.Discuss the probable outcomes of the lawsuits.
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21
Chapter 20: Personal Property and Bailments
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Q1) A right in a thing is considered property.
A)True
B)False
Q2) In a bailment, the bailee does not necessarily have to be aware that the bailed goods were placed within the Bailee's exclusive possession or control.
A)True
B)False
Q3) In a(n) ___________, the bailor has a legal duty to make a reasonable investigation for defects and inform the bailee if any are known or found
A)mutual benefit bailment
B)bailment for the sole benefit of the bailee.
C)constructive bailment
D)gratuitous bailment
Q4) Most courts consider an engagement ring to be a conditional gift.
A)True
B)False
Q5) Personal property is tangible and immovable.
A)True
B)False
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Chapter 21: Legal Aspects of Supply Chain Management
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Q1) A common carrier is absolutely liable for loss or damage to goods in all of the following situations except:
A)incidents arising from the inherent nature of the goods.
B)incidents involving a public enemy.
C)incidents involving acts of God
D)incidents involving mechanical breakdown of the vehicle.
Q2) A negotiable warehouse receipt that provides for delivery of the goods to the order of Jill Jones may be negotiated by delivery of the document to the purchaser.
A)True
B)False
Q3) The rights of a transferee of a negotiable bill of lading are defeated if the goods have been stopped in transit.
A)True
B)False
Q4) The rights of a holder of a warehouse receipt depend on whether the receipt is:
A)negotiable.
B)rescissory.
C)notarized as a document of title.
D)notarized as a bill of lading.
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Chapter 22: Nature and Form of Sales
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Q1) The UCC has adopted the common law 'mirror image' rule.
A)True
B)False
Q2) Sales law includes special rules that apply to merchants.
A)True
B)False
Q3) Goods physically existing and owned by a seller at the time of a transaction are called existing goods.
A)True
B)False
Q4) Harvested crops would be an example of ______.
A)existing goods.
B)tangible goods.
C)future goods.
D)intangible goods.
Q5) Suppose a merchant is about to transfer his entire inventory as part of an annual clearance action.This transfer is called a bulk transfer.
A)True
B)False
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Chapter 23: Title and Risk of Loss
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Q1) Anne Robertson obtained telescopes from the See-Well Optics Company at dealer prices on the pretense of being a dealer in optical equipment.See-Well later determined that Robertson was not, had never been, and did not plan to be a dealer in optics.By the time these facts emerged, Robertson had succeeded in selling the telescopes to several individuals located throughout the country.These buyers had responded to advertisements placed by Robertson, who again had represented herself as a dealer in optical equipment.The buyers had purchased the telescopes in good faith at prices consistent with comparable equipment.See-Well located these buyers and demanded that the telescopes be returned as property obtained through fraud.Do the buyers of these telescopes have to return their purchases?
Q2) A document of title is not sufficient for a creditor to take an interest in goods.
A)True
B)False
Q3) If shipped goods are damaged or destroyed after risk of loss passes:
A)the contract is avoided
B)the seller has breached the contract
C)the buyer has the option to accept or not accept the goods
D)it is the buyer's loss
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Chapter 24: Product Liability: Warranties and Torts
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Q1) Sal was at home going through his normal workout when he bent his barbell bar.Sal is a professional bodybuilder, and this fact is obvious from his appearance.Sal went to his local sporting-goods store and was approached by a clerk wishing to assist him.Sal told the clerk about his problem and the clerk asked Sal to wait while an appropriate bar was located.The clerk presented Sal with a bar that the clerk said "is just what you need for your type of weight requirements." Sal paid for the bar and was returning home when he stopped at a health food restaurant.The drink that he ordered had an unusual taste, but the food establishment refused a refund.Sal became ill from the drink, which, as it turned out, had a toxic substance in it.Sal had to be hospitalized.When Sal was able to work out again, he attached the weights to the new bar and lifted the bar under his chin.The bar snapped in the middle and severely cut Sal.Sal is angry about the drink and the barbell.What are the applicable warranties involved? Does Sal have a cause of action?
Q2) Under the concept of ______, only the original parties to a sales contract could sue each other.
A)exclusivity of contract.
B)privity of contract.
C)privacy of contract.
D)priority of contract.
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Page 26
Chapter 25: Obligations and Performance
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Q1) The person on whom a demand for assurance is made, must reply in writing for the assurance to be deemed "adequate."
A)True
B)False
Q2) A buyer has a right to insist that all the goods be delivered at one time.
A)True
B)False
Q3) In a cash sale that does not require the physical moving of the goods, the: A)parties are required to perform concurrently.
B)seller is required to tender the goods before the buyer must pay for them.
C)buyer must pay for the goods in advance.
D)buyer must actually receive the goods before he or she is required to pay for them.
Q4) The seller's right to cure a defective tender means that the seller will be given a second chance to make a proper tender of conforming goods.
A)True
B)False
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Chapter 26: Remedies for Breach of Sales Contracts
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Q1) A buyer may revoke acceptance because of a seller's failure to complete promised repairs.
A)True B)False
Q2) If goods are specially manufactured, unique, or rare, a buyer may have the right to specific performance.
A)True B)False
Q3) A defrauded buyer may avoid the contract and recover damages.
A)True B)False
Q4) Consequential damages are available to the buyer but not to the seller. A)True B)False
Q5) If a buyer materially breaches the contract, the seller may not cancel the contract until it notifies the buyer.
A)True B)False
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Chapter 27: Kinds of Negotiable Instruments and Negotiability
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Q1) To be negotiable, an instrument must include all of the following, except:
A)a writing.
B)signature of the maker or drawer.
C)unconditional promise or order to pay.
D)holder in due course.
Q2) Order instruments are negotiated by:
A)delivery with the necessary indorsement.
B)word of mouth.
C)constructive recovery.
D)an unconditional promise.
Q3) If instrument is negotiable, it can be:
A)paid on demand.
B)cancelled by the maker.
C)assigned by contract.
D)transferred by negotiation.
Q4) Which of the following terms would make an instrument nonnegotiable?
A)It is dependent upon an event.
B)It is undated.
C)It is payable in foreign money.
D)It gives the holder the right to receive interest.
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Chapter 28: Transfers of Negotiable Instruments and
Warranties of Parties
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Q1) A transferor may be able to set aside a negotiation obtained by fraud or duress unless:
A)a minor is involved.
B)the negotiation was part of an illegal transaction.
C)the negotiation was beyond the powers of the corporation.
D)the instrument has been acquired in the meantime by a holder in due course who did not know of the misconduct.
Q2) A qualified indorsement is given by using the phrase __________.
A)"as is"
B)"without recourse"
C)"with all faults"
D)"buyer beware"
Q3) If a negotiable order instrument is transferred to another party without an indorsement, the instrument has been:
A)assigned.
B)negotiated.
C)obtained by fraud, and is therefore invalid.
D)obtained by fraud, but may be ratified.
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Chapter 29: Liability of the Parties Under Negotiable Instruments
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Q1) A taker of a negotiable instrument may be denied the status and protection of a holder in due course if:
A)one party is a consumer.
B)the close-connection doctrine applies.
C)the instrument is bearer paper.
D)the presentment is not made in a commercially reasonable manner.
Q2) A holder in due course must meet all of the following conditions except:
A)giving value for the instrument.
B)taking the instrument when it is overdue.
C)acting in good faith.
D)being ignorant of defenses and adverse claims.
Q3) Generally, defenses that could be raised in a breach of contact claim cannot be raised against a holder in due course.
A)True
B)False
Q4) Fraud as to the nature or essential terms of an instrument is a limited defense not available against a holder in due course.
A)True
B)False
31
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Chapter 30: Checks and Funds Transfers
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Q1) A tender occurs when the holder of a check or other consumer transaction authorization demands payment.
A)True B)False
Q2) When a bank certifies a check, the amount involved in the certification will be debited in the depositor's account until payment of the certified check.
A)True B)False
Q3) A buyer may stop payment on a certified check issued to a seller if the goods are defective when received.
A)True
B)False
Q4) In theory, a valid check can be written on a cocktail napkin.
A)True
B)False
Q5) A bank must be given a reasonable amount of time to put a stop payment order into effect.
A)True B)False
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Chapter 31: Nature of the Debtor-Creditor Relationship
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Q1) A surety that has made payment of a claim for which it was liable as a surety is entitled to which of the following from the principal?
A)Indemnity
B)Exoneration
C)Assignment
D)Subrogation
Q2) Indemnity is the right of a co-obligator to demand that other obligators pay their fair share of the debt.
A)True
B)False
Q3) A surety is liable from the moment the principal is in default.
A)True
B)False
Q4) Bud is unable to obtain a loan without some form of additional reassurances.Bud comes to you for assistance.You are willing to help Bud, but you wish to protect yourself from liability as much as possible.Would you prefer a surety or a guaranty? The bank issuing the loan also wishes to protect itself as much as possible.Would the bank prefer a surety or guaranty? If your oral assurances are enough to solidify the loan, has a surety or guaranty been formed?
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Chapter 32: Consumer Protection
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Q1) Antitrust statutes that prohibit anticompetitive behavior give consumers the right to collect treble punitive damages for a violation.
A)True
B)False
Q2) What is not a correct statement concerning consumer protection legislation?
A)It prohibits the consumer from suing in his or her own right and gives the right to sue solely to an agency or to the attorney general.
B)It recognizes that the theoretical right of the consumer to sue may be of little practical value.
C)It provides special remedies.
D)It provides certain agencies to police statutes passed to aid consumers.
Q3) Consumer protection statutes and regulations do not protect against:
A)deceptive advertising.
B)the consumer's own negligence.
C)unsolicited credit cards sent to creditworthy consumers.
D)unreasonable methods of debt collection by debt collection agencies.
Q4) The Fair Credit Reporting Act applies only to consumer credit.
A)True
B)False
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Chapter 33: Secured Transactions in Personal Property
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Q1) King Electronics, a retailer of video equipment, sold two DVRs to Larson, a psychologist, for use in her professional practice, which was located in her home.The sale to Larson was made on credit.King retained a security interest in the DVRs sold but did not file a financing statement.Mills, another creditor of Larson, has asserted that his lien on the two DVRs is superior to King's security interest.Is he right? As you decide, remember to classify the DVRs as collateral in the hands of King and Larson.
Q2) Self-help repossession of collateral upon a buyer's default is contrary to public policy and is never allowed.
A)True
B)False
Q3) What is the purpose of a financing statement?
A)to meet UCC accounting requirements under Article 9
B)to create a security interest
C)to amend a security agreement
D)to alert third persons that a creditor has a security interest in the collateral described
Q4) A debtor must have rights in the collateral for a security interest to attach.
A)True
B)False
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Chapter 34: Bankruptcy
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Q1) Arthur was involuntarily petitioned into bankruptcy by three of his creditors.When the trustee reviewed Arthur's books and records, the trustee discovered the following transactions: (a) Three weeks before the filing of the petition, Arthur paid cash for $17,000 worth of inventory for his store; and (b) Twelve days before the filing of the petition, Arthur paid $300 in full satisfaction of his store's most recent electric bill.?The trustee is considering attempting to set aside both of these transfers as preferential transfers.Discuss the advisability of the trustee's attempt to set aside these transfers.
Q2) An involuntary bankruptcy case is commenced by creditors filing a petition with a bankruptcy court.
A)True B)False
Q3) Nonprofit corporations are exempt from involuntary bankruptcy proceedings. A)True B)False
Q4) Jurisdiction over bankruptcy proceedings is vested in the federal district courts. A)True B)False
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Chapter 35: Insurance
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Q1) A professor knew a colleague who was quite ill.The professor applied for life insurance on the colleague's life and named himself as beneficiary.Because of a similarity in the names of the professor and the colleague, an error was made and the policy was issued.?The professor also sold his car to a student.When the student drove away, it was clear that the student was an extremely reckless driver.The professor decided not to cancel his property insurance policy that he had maintained on the vehicle that he sold to the student.Shortly thereafter, the colleague died and the student demolished the car.The professor applied for insurance benefits under both policies and each of the insurers resisted payment.Decide both cases.
Q2) An insurer may cancel any contract of insurance by the insurer's unilateral act as long as the insurer gives advance written notice.
A)True
B)False
Q3) Homeowner's insurance is a combination of the standard fire insurance policy and comprehensive personal liability insurance.
A)True
B)False
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Chapter 36: Agency
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Q1) A(n) ______ is bound by a contract to produce a certain result, with performance of the work controlled by the ______.
A)agent, principal.
B)employee, employer.
C)independent contractor, employer
D)independent contractor, contractor
Q2) Notification to a principal may be implied when the principal does not object to a contract and accepts its benefits.
A)True
B)False
Q3) John's son was not his agent but contracted to purchase a computer in John's name.When John learned of this, John sternly rebuked his son but continued to use the computer for several weeks.After losing interest in the computer, John offered to return it, saying that the purchase was unauthorized.John:
A)is not liable on the purchase.
B)expressly ratified the purchase.
C)is liable because all children have the apparent authority to contract for their parents.
D)ratified the purchase by John's conduct.
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