Law Test

Front 1

Fred starts up, and assumes the financial risk of, Graphic Ads, a new enterprise. Fred is a:

Back 1

d. a sole proprietor

Front 2

Jody owns Kuppa-Java Kiosks, a sole proprietorship. Jody's liability is:

Back 2

d. unlimited

Front 3

Jim organizes, and owns and operates, Jim's landscaping Service in the simplest form of business organization:

Back 3

d. a sole proprietorship

Front 4

Chicago Coca-Cola bottling Company is:

Back 4

c. a manufacturing franchise

Front 5

Bret buys a franchise from Comida Mexicano Ltd. If their agreement is like most franchise agreements, it will specify that Comida can terminate the franchise:

Back 5

c. for cause only

Front 6

Jack buys a Kitchens, Inc franchise, which the franchisor later terminates. In determining whether the termination was proper a court will generally:

Back 6

a. balance the rights of both parties

Front 7

Guy and Hanna do business as G-H associates. If G-H is a partnership, it is governed by the Uniform Partnership Act:

Back 7

a. in the absence of an express agreement

Front 8

Sabin and Tyler agree to form a partnership. Their partnership agreement is legally binding:

Back 8

d. without more

Front 9

Rona and Stiv do business as Treasure Island Traders. In acting on the firm's behalf in a deal with Unlimited Potential, Inc., Rona makes an honest error in overestimating the profit. To her firm, Rona is:

Back 9

d. not liable

Front 10

Mabel and Nicol do business as One World Realty. In acting on the firm's behalf in a deal with Property Acquisition Co., Mabel fails to account for the profit. To her firm Mabel is:

Back 10

c. liable for breach of duty of loyalty

Front 11

Fay is admitted to Global Associates, an existing partnership. A partnership debt incurred before the date of her admission comes due. Fay is:

Back 11

b. only liable for the debt up to the amount of his capital contribution

Front 12

Jim and Kyle are partners in J&K Sales, which exports technical equipment under a three-year partnership agreement. The US government declares that the equipment can no longer be exported. J&K:

Back 12

c. dissolves immediately unless the partners change its business

Front 13

Quikbooks LLC is a limited liability company. Like any other LLC, unless Quikbooks chooses otherwise, the firm will be taxed as:

Back 13

c. a partnership

Front 14

Bee Hive Honey, LLC's members include Chad. For purposes of suing and being sued, Bee hive honey is:

Back 14

c. a legal entity apart from the owners

Front 15

Location Realty LLC is a limited liability company. Like other LLC's, for federal jurisdictional purposes, Locations Realty is most likely a citizen of:

Back 15

b. every state in which its members are citizens

Front 16

Jay is a member of Kappa, LLC, a limited liability company. Jay is liable for Kappa's debt:

Back 16

b. to the extent of his capital contributions

Front 17

Build-Rite Construction Corporation and Deals-R-Us, Inc., combine their efforts to build an office and retail complex. Their form of business organization is:

Back 17

c. a joint venture

Front 18

Vala and other farmers in Washington county form a business organization to provide, without profit, an economic service to its members. This is:

Back 18

b. a cooperative

Front 19

Genetic Seed Company hires Howie to work on Genetic's shipping dock, accepting deliveries and dealing with other company's drivers. With respect to Genetic, Howie is most likely:

Back 19

a. an agent

Front 20

Home Development Company employs Ilya to buy property for a future residential development. Ilya secretly buys some of the property and sells it to Home Development at a profit. Ilya has breached:

Back 20

c. the duty of loyalty

Front 21

Internet Services, Inc. employs Joe as an agent. During the agency, Joe acquires new skills. After the termination of the relationship, Joe uses those skills in a new job. Joe has breached:

Back 21

a. no duty

Front 22

Beta Distribution Company grants its agent Cathy an exclusive territory in which to sell Beta products. Beta cannot compete with Cathy in that territory under the principal's duty of:

Back 22

b. cooperation

Front 23

Pam is an agent for Refined Chemicals Corporation. Refined Chemicals owes Pam the duty of:

Back 23

d. safe working conditions

Front 24

Glen is an agent for Hi-Flite, Inc. On Hi-Flite's behalf and at its request Glen pays Ian for certain plane maintenance and repair services. Glen's right to obtain the amount of those payments for Hi-Flite arises under the principal's duty of:

Back 24

d. reinbursement

Front 25

Reginal Products, Inc. hires Sam to act as its Agent. Tina sues Regional for Sam's negligent conduct. Regional's right to sue Sam for an equal amount of damages is the right of:

Back 25

c. indemnification

Front 26

American Goods Inc. is a corporation. Responsibility for the overall management of American Goods is entrusted to:

Back 26

a. the board of directors

Front 27

Federal Home Products, Inc. is a corporation. The implied powers of the corporation are powers necessary to:

Back 27

d. perform all acts reasonably necessary and appropriate to accomplish its corporate purposes

Front 28

Digitech is a foreign corporation, which means that Digitech:

Back 28

c. may be required to obtain a certificate of authority to do business in states where it is not chartered

Front 29

To qualify as a professional corporation, Smith & Jones, P.C.:

Back 29

a. must be a corporation formed by professionals

Front 30

Beth and Cody want to form a corporation to market MP3 players and products. The first step in the incorporation procedure is to:

Back 30

d. select a state in which to incorporate

Front 31

Stan is a registered agent for Transport, Inc. which incorporated in Utah. As a registered agent, Stan:

Back 31

d. receives legal documents on behalf of Transport

Front 32

Cody and Dina form Eagle Corporation. Eagle has a board of directors, a chief executive officer, a chief operating officer, and fifty-two shareholders. Eagle is governed by its:

Back 32

a. board of directors

Front 33

Lou and Mary act as the incorporators for National Corporation. After the first board of directors are chosen, subsequent directors are elected by a majority vote of National's:

Back 33

d. shareholders

Front 34

Rosa and Sam are directors of Tech, Inc. The right of Rosa and Sam to be notified of special meetings of the board is the right to:

Back 34

c. participation

Front 35

Frosty Corporation distributes beverages in the greater northwest. Frosty's board of directors can delegate some of its functions to:

Back 35

b. Frosty's officers

Front 36

Irma, Jim, and Kelly are the directors of Liberty, Inc. Liberty has nine officers and firty-six shareholders. Dividends are ordered by the firm's:

Back 36

a. board of directors

Front 37

Ace Tool Corporation and Best Hardware Company combine so that all that remains after the papers have been signed is Ace Tool Corporation. This is:

Back 37

b. a merger

Front 38

AAA Apartments, Inc. merges with Better Rentals, Inc. Only AAA remains. Better Rentals, Inc. held rights in certain real property. After the merger, AAA acquires the rights:

Back 38

a. automatically

Front 39

Ada files a suit against Brand Name Company. While the suit is pending, Brand Name Company merges with Conglomerate Corporation, with Conglomerate absorbing Brand Name. Now, liability in the suit, if any, rests with:

Back 39

c. Conglomerate

Front 40

Applied Services Company and Big Brand Products Corporation plan to merge. The plan must be approved by:

Back 40

b. their boards and their shareholders

Front 41

Hugh is a shareholder of Interstate, Inc. Hugh could normally exercise appraisal rights if Interstate participated in:

Back 41

c. a sale of substantially all the corporate assets or a short-form merger

Front 42

Cal employs Daily Employment Agency as an agent under a written agreement that described the rights and duties of both parties. This is:

Back 42

c. express authority

Front 43

Quick Supplies Company requires its customers to pay by check. Ron, a QSC driver, tells customers on his route that they can pay him with cash. When QSC learn's of Ron's collections, it takes no actions to stop him. Ron steals some of the cash. QSC may suffer the loss under the doctrine of:

Back 43

a. apparent authority

Front 44

Elin, an agent for First Credit Corporation (FC) enters into an unauthorized contract with Great Expectations, Inc. purportedly on FC's behalf. This contract will be enforceable if it is ratified by:

Back 44

c. Federal Credit Corporation

Front 45

Adam indicates that he is acting as an agent on behalf of an unidentified client when he enters into a contract with Beth. The unidentified client is:

Back 45

d. a partially disclosed principal

Front 46

Adam indicates that he is acting as an agent on behalf of an unidentified client when he enters into a contract with Beth. Liability to Beth for nonperformance of the contract may be imposed on:

Back 46

c. adam and the unidentified client

Front 47

Aron, an agent for Bright Sales, Inc. enters into an unauthorized contract with Consolidated Corporation purportedly on behalf of Bright Sales, Inc., which refuses to perform. Aron is liable to:

Back 47

c. Consolidated Corporation for misrepresentation

Front 48

Karen orders Tad, her real estate agent, to tell prospective buyers that there is a sparkling water spring beneath her land, even though she knows there is no spring. Tad tells prospective purchasers Larry and Helga about the Spring. Helga buys the property. Karen is liable for any damages arising from her misrepresentation to:

Back 48

c. Helga

Front 49

Elle is an agent for Fresh Food Corporation. Elle makes an innocent misrepresentation when entering into a contract on behalf of Fresh with Gala Grocery Stores, Inc. Gala:

Back 49

b. may rescind the contract

Front 50

AAA Auto Sales, Inc. employs BBB Collection Company as a collection agent. While repossessing goods from Cathy, one of AAA's customers, BBB causes an accident in which Cathy is injured. Cathy can recover from:

Back 50

b. AAA or BBB

Front 51

Buyer is located in Des Moines, Iowa and seller is located in Sacramento, CA. The contract specified F.O.B. Des Moines. This contract is a:

Back 51

a. destination contract

Front 52

George's Grocery orders two dozen live lobsters from Sea Food Flyers. George is to keep the lobsters happy by keeping them in a tank following certain instructions to keep the water at the right temperature, etc. The sale is made on a trial basis and George may return all unsold lobsters at the end of 10 days. This contract is a:

Back 52

c. sale or return

Front 53

In January, Eddie contracts to sell 100 bushels of soybeans that fall. this contract:

Back 53

c. can be valid; but title to the soybeans cannot pass until the soybeans exist

Front 54

In a consignment contract, the consignee:

Back 54

b. takes the goods intending to resell them, and the goods are subject to the claims of the creditors of the consignee

Front 55

Graham, an adult, purchases a car from a minor, and subsequently sells it to Harlow, another adult. Harlow paid full value for the car and had no reason to know that Graham had purchased the car from a minor. Which of the following best describes this situation?:

Back 55

c. Graham had voidable title and Harlow gets good title

Front 56

the identification of goods permits the buyer to:

Back 56

d. both a and b

Front 57

The statute of limitations for breach of warranty under the UCC is:

Back 57

d. 4 years

Front 58

Which of the following warranties provides that the goods will be fit for the ordinary purposes for which they are used?:

Back 58

c. merchantability

Front 59

An express warranty can be created by which of the following:

Back 59

d. all of the above

Front 60

Which of the following statements could create an express warranty?

Back 60

c. "These tires have 10,000 miles on them"

Front 61

A sales representative at Oxtren, Inc. orally told the purchasing agent at Wety, Inc. that its industrial saw is exceptional. Which statement is correct concerning the claim that the saw is exceptional?:

Back 61

d. the claim is not a warranty because it is sales puffery

Front 62

Bill is injured while standing on the corner of Hollyhock and Vine when Mia's new Hog speeds out of control because of a defective part. In most jurisdictions, Bill:

Back 62

a. can sue the motorcycle manufacturer even though he was only a bystander

Front 63

Which of the following is a major function of commercial paper?:

Back 63

d. both a an c are major functions of commercial paper

Front 64

Francine has a checking account at Corner Bank. She wants tickets to an upcoming concert. She writes a check to ticketmaster for the cost of two tickets. In this scenario:

Back 64

c. Francine is the drawer, corner bank is the drawee, and ticketmaster is the payee

Front 65

George's Wholesaling agrees to purchase 1000 pounds of bananas from Chickadee Exports at 39 cents per pound. George's does not have the money now, but promises to pay in two months. Chickadee Exports wants George's business but he needs the money now. Chickadee (as drawer) prepares an instrument ordering George's (as drawee) to pay $390 to Primary Bank (the payee), This is an example of a:

Back 65

b. trade acceptance

Front 66

Sophie issues a promissory note made "payable to the order of Molly." Molly indorses the note by signing her name and gives the note to Dana. Which of the following is correct?:

Back 66

b. Sophie issued an order instrument, but Molly changed it to bearer form

Front 67

To be negotiable, a check must be in writing. Under the UCC, a check:

Back 67

c. need not be on any official form

Front 68

The section of the UCC that governs negotiable instruments is:

Back 68

a. article 3

Front 69

Vince has possession of a draft that has been validly negotiated to him. His payment process includes:

Back 69

b. exhibiting the instrument, showing reasonable identification, and surrendering the draft if it is paid in full

Front 70

When a negotiable instrument is transferred, the transferor warrants all except:

Back 70

a. that the transferor is a holder in due course of the instrument

Front 71

All but which of the following serves as a discharge of a negotiable instrument:

Back 71

d. presentation

Front 72

Tom indorsed a check made payable to the order of Tom Jones as follows: Pay Ray Berry X
Ray negotiated the check to his landlord, without recourse. X
With regards to TOm's indorsement, which is correct:

Back 72

a. Tom has secondary contractual liability on the check as an indorser

Front 73

Which of the following will discharge an instrument?

Back 73

d. all of the above

Front 74

Check kiting is defined as:

Back 74

c. a scheme of overdrawing account A by depositing a check in account B, then overdrawing account B to cover the insufficient funds in account A

Front 75

Cecilia made a check out to Gideon for $15. Gideon fraudulently changed the check to read $150, and cashed it at Corner Bank. Is Cecelia discharged from liability on the check?

Back 75

d. Yes, Cecelia owes nothing unless Corner Bank is a holder in due course in which case she owes the original $15.

Front 76

Bill transfers an instrument to Harry by assigning his rights in the instrument to Harry. This transfer is governed by:

Back 76

b. contract law

Front 77

Dina signs a check payable to Evan, who indorses the back, gives it to first state bank, and receives cash. The transfer of the check from Evan to the bank is:

Back 77

c. a negotiation

Front 78

Gina writes and signs a check payable to Happy Market. Irma, Happy's manager, indorses the check "for deposit only" this is:

Back 78

c. a restrictive endorsement

Front 79

To pay for investment advice from financial consultants Smith and Jones, Tony signs a check payable to "Smith or Jones" A proper indorsement of the check is:

Back 79

d. "smith" only, or "jones" only, or "smith" and "jones"

Front 80

At international credit corporation, jay indorses and cashes a check payable to "jay or kelly" kelly has:

Back 80

d. no further claim to payment

Front 81

Ada is the maker of a note, on which Bart is secondarily liable. Cash & Credit Company (C&C) is the current holder of the note. Bart will be obligated to pay the note if:

Back 81

a. Ada defaults on the note

Front 82

Holly writes a check on her account at Investment Bank to Jerry to pay a debt. Jerry negotiates the check be indorsement to Kelly, who negotiates the check by indorsement to Lisa, who presents it for payment to Interstate Bank. Holly is:

Back 82

c. secondarily liable

Front 83

Aaron, an employee of Beta company, forges the signature of chloe, beta's president, on a beta check and cashes it at delta bank. chloe would ratify aaron's actions by:

Back 83

c. entering into a repayment agreement with aaron

Front 84

Opal asks Paolo, who does not speak english, to sign what opal says is an application to open a bank account. in fact, the application is a note. if sued on the note by a holder in due course, paolo's best defense would be:

Back 84

b. fraud in the execution

Front 85

Chris convinces Dion, who does not understand english, to sign a $1,000 NOTE THAT DION believes is an application for a credit card. chris negotiates the note to EZ finance company. Dion:

Back 85

a. can avoid payment on the note even if EZ is a holder in due course

Front 86

Ruth hires standard carpenters, inc. to build a fence around her property. when the fence is finished, ruth does not pay standard carpeter's for the work. to collect the debt, standard carpeters may place on ruth's property:

Back 86

b. mechanic's lien

Front 87

Dan owes Sally $10,000. With a writ of attachment or execution, Sally satisfy the debt from Dan's:

Back 87

b. non-exempt property

Front 88

First State Bank holds a mortgage on Gigi's property. Gigi defaults on the debt. The bank forecloses. If the proceeds of the foreclosure sale are insufficient to pay the costs of the sale and the debt, the back can:

Back 88

a. obtain a deficiency judgment against gigi

Front 89

Ross and Sally agree to guarantee tim's debt. ross's maximum liability is $30,000 and sally's is $20,000. tim owes $20,000 and is in default. ross pays the creditor the entire amount. in the absence of an agreement to the contrary, ross can recover from sally:

Back 89

a. $8,000

Front 90

Britney defaults on a loan owed to City Bank. As a creditor, City Bank may attempt to place liens on all of Britney's property except:

Back 90

a. motor vehicles that Britney uses to commute to work

Front 91

Bob, a forest-service engineer, buys a four-wheeler to use only for offroad recreational use. Under the UCC article 9, this vehicle would likely be characterized as:

Back 91

a. a consumer good

Front 92

A-1 capital company and first national bank are secured parties with security interests in property owned by interstate commercial corporation. the first security interest to be filed or perfected has priority over another filed or perfected security interest in:

Back 92

a. all circumstances

Front 93

fred, a debtor, wishes to know the amount of his outstanding secured debt with genuine credit corporation. fred may submit a written statement for approval to genuine credit, without paying a fee:

Back 93

d. once every six months

Front 94

ron does not make a payment on his car loan for several months. the dealer, star auto, repossesses the car by towing it from a public parking lot. ron sues star for breach of the peace. ron will probs:

Back 94

c. not prevail b/c the repossession was not a breach of peace

Front 95

hal's hardware store defaults on a debt to intrastate bank, which takes possession of the collateral securing the debt. intrastate sells the collateral. the proceeds from the sale are applied first to:

Back 95

c. intrastate's fees for the sale

Front 96

eve sells her motorcycle to her brother floyd for $1,000. 12 days later, eve files for bankruptcy under chapter 7. regarding the sale of the cycle, the trustee may:

Back 96

a.cancel it as a fraudulent transfer

Front 97

sally files for bankruptcy. on behalf of sally's estate, a trustee could reclaim sally's recent payment of:

Back 97

c. a year-old restaurant tab

Front 98

AAA auto repair receives a discharge in bankruptcy, even though some creditors hold judgments on overdue debts against it and others filed actions to collect on overdue debts bfr the bankruptcy. AAA's discharge will:

Back 98

d. stop actions and void judgments regarding overdue debts

Front 99

tony believes that he needs to obtain a chapter 13 discharge in bankruptcy. a chapter 13 bankruptcy proceeding can be initiated by a filing of a petition by:

Back 99

c. a debtor only

Front 100

gus files a petition for bankruptcy under chapter 13. gus is granted a discharge. debts that will not be discharged include claims for:

Back 100

a. domestic support, fraudulently incurred debt, and student loans