2001 Business Law Page 1

1) When parties exchange goods for goods, it is defined a) True b) False

as a barter.
2) Patents are classified as tangible personal property. a) True b) False
3) A sale and a contract to sell are synonymous terms. a) True b) False
4) The donor cannot recover property actually a) True b) False
transferred by gift.
5) A promise to give someone a gift may be a) True b) False
enforceable.
6) A change in a contract after the agreement is made is a) True b) False
called a counteroffer.
7) An unconscionable contract is a contract that is a) True b) False.
grossly unfair to one party
8) An offer that cannot be withdrawn until a specific a) True b) False
time is called a firm offer.
9) The statute of limitations states that all contracts for a) True b) False
personal property must be evidenced in writing.
10) Usury is the practice of charging excessively high a) True b) False
interest rates.
11) Ratification is the process a minor uses to honor a a) True b) False
contract.
12) The act of the parties giving and receiving in a a) True b) False
contract is called consideration.
13) Withdrawal of an offer prior to acceptance is called a) True b) False
revocation.
14) A woman who makes a will is called a testator. a) True b) False
15) A will entirely in the handwriting of the one writing a) True b) False
it is a holographic will.
16) Wills are validated in federal district court. a) True b) False
17) Dying without a will is called testamentary. a) True b) False
18) The party who orders the check to be paid is the a) True b) False
drawee.
19) A stale check is a draft that is over three months old. a) True b) False
20) A personal check that is guaranteed by the bank is a a) True b) False
certified check.
21) Drawers can be held responsible for altered checks if a) True b) False
their negligence contributed to the forgery.
22) A contract offer must be definite, be communicated, a) True b) False
and be intended to create a legal obligation.
23) Children may be held responsible for their own torts. a) True b) False
24) Past consideration may not be used as consideration a) True b) False
for a present contractual promise.
25) A delegation of a duty is the same as an assignment. a) True b) False
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26) In the eyes of the law, a legal entity or artificial a) sole proprietorship b) partnership c) corporation d) cooperative
person is called a __________.
27) A corporation chartered in a particular state is a/an a) alien b) domestic c) foreign d) native
__________ corporation in that state.
28) Written evidence of a shareholder’s ownership and a) certificate of title b) bill of sale c) stock certificate d) bill of lading
rights in a business is called a __________.
29) Fixed dividends are guaranteed if the stock is a) preferred b) arbitrary c) common d) directed
__________.
30) A business partner known to the public but not active a) limited b) silent c) dormant d) secret
in its management is known as a __________
partner.
31) When two corporations cease to exist and a new a) merger b) consolidation c) takeover d) reorganization
corporation is formed, it is called a __________.
32) When a partner ceases association with the a) dissolution b) disaffirmance c) special partnership d) partnership in tenancy
organization due to his/her death, it is called a
__________.
33) Which of the following is NOT a duty of a partner? a) Always use your best b) Refrain from any non- c) Always act in good faith d) Put the firm’s interests
skill and judgment in partnership business. and in the best interest of ahead of self-interests.
handling the firm’s affairs. the partnership.
34) Farmers would use __________ bankruptcy plans to a) Chapter 7 b) Chapter 11 c) Chapter 12 d) Chapter 13
reorganize their debts.
35) Another name for “straight bankruptcy” is a) Chapter 7 b) Chapter 11 c) Chapter 12 d) Chapter 13
__________ bankruptcy.
36) Which of the following obligations would NOT be a) Child support b) Alimony c) Taxes d) All of the above
affected by a bankruptcy discharge?
37) To file for bankruptcy, a city or town would file for a) Chapter 7 b) Chapter 9 c) Chapter 12 d) Chapter 13
__________.
38) When an agency is created by circumstance, it is a) ratification b) agency by estoppel c) power of attorney d) an express agency
called __________.
39) When an agent is lawfully appointed by another a) general agent b) agent’s agent c) subagent d) special agent
agent, he/she is called a/an __________.
40) When serving as a discretionary agent, one is classed a) agent’s agent b) subagent c) general agent d) special agent
as a/an __________.
41) Which law gives one the opportunity to ask for an a) Equal Employment b) Fair Credit Reporting c) Fair Debt Collection d) Truth In Lending Act
explanation of a credit report? Opportunity Act Act Practices Act
42) Claude Brown took out an insurance policy on his a) Co-insurance will cover b) Inland marine insurance c) His policy will be d) His policy will be valid
home. He purposely did not tell the insurance agent the damage. will cover the damage. void. for this special loss.
that he was beginning a new business in his garage.
Soon after he started his auto repair business, a fire
caused massive damage to his entire home. Which of
the following statements will probably apply?
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43) Jacob Burman took out a $100,000 life insurance a) principal b) dividend c) premium d) face value
policy on himself and named his wife as beneficiary.
The $100,000 is called the __________.
44) Coverage against loss to a rock band’s equipment a) fidelity insurance b) marine insurance c) inland marine d) indemnity insurance
while being transported is called __________. insurance
45) Rachel Jacobson spends time in two homes—one in a floater b) homeowner’s c) preferred provider d) binder
Florida and one in Utah. To provide insurance
protection for personal property used in both of these
homes, she would need a policy called a
__________.
46) When leaving your suit at the cleaners for dry a gratuitious bailment b) consignment bailment c) mutual benefit d) extraordinary bailment
cleaning, there is a/an __________ taking place. bailment
47) Micah Bivens went to Paoli Peaks for a ski trip and a) gratuitious bailment b) consignment bailment c) mutual benefit d) extraordinary bailment
rented skies at the local ski shop establishing a/an bailment
____.
48) Jacob Green’s act of borrowing neighbor Josh a) a bailment for the sole b) a bailment for the sole c) a bailment for the d) not a bailment but an
Brown’s car is benefit of the bailor. benefit of the bailee. mutual benefit of the bailor example of an agency
and bailee. contract.
49) A person who refuses to return property at the end of a) Thief b) tortuous bailor c) tortuous bailee d) assignee
the bailment period is called a/an __________.
50) Wilbur Walters ordered a set of cookbooks from a a) Two b) three c) five d) ten
door-to-door salesperson. The cooling off period for
Wilbur to cancel his purchase is __________
business days.
51) Jeffrey Alan went to Cost Plus to purchase a new a) express advertising b) telemarketing fraud c) a standard sales practice d) bait and switch
stereo system for the advertised price of $295. Upon
Jeffrey’s arrival, the clerk described all the
shortcomings of this model and encouraged Jeffrey to
buy the deluxe model for $695. Cost Plus is
practicing __________.
52) When two parties reach a binding agreement to avoid a) Negotiation b) arbitration c) mediation d) litigation
going to court, it is called __________.
53) The Bay Shore Shop received a binding order to stop a) cease and desist order b) cancellation order c) revocation order d) prohibition order
a false advertising practice. This is called a/an
_____.
54) An oral or written guarantee by a manufacturer is a) implied warranty b) encumbrances warranty c) merchantability d) express warranty
known as a/an __________. warranty
55) Warranty of merchantability is made by a) Circuit City selling a b) Tom Wade selling his c) Easy Pawn selling a d) All of the above
television. television. television.
56) Handy Market is advertising a gallon of milk for a) bait and switch b) a loss leader c) absorption d) clever advertising
$1.01 (which is below their cost) to attract customers
to their market is __________.
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57) A class action suit is brought on behalf of a/an a) individual b) a class of students c) a specific group d) community of
__________. similarly affected neighbors
58) Unfair methods of competition are prohibited by the a) Department of Revenue. b) Federal Trade c) Federal Reserve Board. d) Department of Unfair
Commission. Trades.
59) Laws enacted by both the state and federal a) antitrust laws b) competition laws c) sales restriction acts d) monopoly statutes
governments to prevent monopolies are known as
__________.
60) Orally repeating malicious untruths about someone is a) Gossip b) slander c) libel d) extortion
categorized as __________.
61) While a guest in your home, a person takes one of a) Extortion b) Fraud c) Embezzlement d) Conversion
your valuable pieces of jewelry. What type of tort
action is involved?
62) __________ means being denied the right to recover a) Comparative negligence b) Contributory c) Negligence d) The reasonable man
damages in a tort action because the person was negligence rule
partly responsible for his/her own injuries.
63) To have the capacity to contract means that the a) is at least 18 years of b) can read and write c) is capable of d) meets all of the these
individual age. English. understanding his/her three requirements.
contractual decisions.
64) Luke found the perfect used car at a great price. To a) Counteroffer b) option c) finder’s fee d) quasi-contract
keep the offer for the sale of the car open for a week,
Luke paid the owner $50. This agreement is called
a/an __________.
65) A life insurance policy that is in effect for a definite a) endowment policy b) universal policy c) term policy d) whole life policy
period of time and then expires is called a/an
________.
66) __________ is the failure to complete the terms of a a) Cancellation b) Revocation c) Restitution d) Breach
contract as previously agreed.
67) In tort actions, the damages agreed to in the original a) liquidated damages b) mitigated damages c) compensatory damages d) punitive damages
contract are referred to as __________.
68) An agreement to accept less consideration than stipulateda) nominal consideration b) forbearance c) past consideration d) token consideration
in the contract is called __________.
69) Contracts can be discharged by impossibility of a) a person dies and his/her b) subject matter of the c) the person obligated on d) Either A or B occurs.
performance when personal service was contract is destroyed. the contract goes into
required. bankruptcy.
70) Examples of intangible property are __________. a) Automobiles b) houses c) promissory notes d) boats
71) When a price is quoted for goods “FOB destination,” a) the buyer must pay the b) the shipper must pay c) freight is not charged. d) freight charges occur
freight. the freight. only if shipped aboard a
plane.
72) Risk of loss remains with the seller when products a) FOB destination b) FOB shipping point c) bulk transfer d) as attachments
are shipped __________.
73) Shares of stock with a stated value are known as a) option stock b) common stock c) par stock d) no par stock
__________.
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74) The legal transfer of the possession of property but a) bailment b) sale c) gift d) assignment
not the title is a/an __________.
75) The purpose of a bankruptcy proceeding is to a) discharge all debts of all b) allow persons to borrow c) protect certain rights d) allow persons to
creditors. and spend with no of debtors and creditors. purchase out of business
obligation to repay. bargains.
76) Although no consideration is involved, a promise a) promissory estoppel b) past consideration c) nominal consideration d) caveat venditor
may still be enforced under certain conditions under
the doctrine of __________.
77) Signing only the endorser’s name on the back of a a) qualified endorsement b) blank endorsement c) special endorsement d) restrictive endorsement
check or draft is called a __________.
78) A business partner unknown to the public is called a a) limited partner b) silent partner c) dormant partner d) secret partner
__________.
79) Which of the following is NOT classed as tangible a) Clothing b) Car c) Land d) Television
personal property?
80) If a court rules that a clause in a contract is a) refuse to enforce the b) enforce the contract c) limit the application of d) enforce the complete
unconscionable, it may do any of the following contract. without the the unconscionable clause. contract with both
EXCEPT unconscionable clause. parties.
81) In a sales contract, the vendee is also known as the a) seller b) buyer c) merchant d) contractor
__________.
82) One who sells goods only occasionally is classed as a a) merchant b) vendor c) casual seller d) wholesaler
__________.
83) A receipt that serves as written evidence of the transfer ofa) bill of lading b) bill of particulars c) bill of sale d) bill of attainment
ownership of goods is a __________.
84) Under the statute of frauds, sales of goods for a) $300 b) $500 c) $700 d) $900
__________ or more must have written evidence to
be enforceable.
85) Which of the following would NOT be classified as a) Automobile b) Crude oil c) Wheat d) Canned fruit
a fungible good?
86) In a COD sale, the COD means __________. a) cash on delivery b) collect on delivery c) call on delivery d) credit on delivery
87) The Latin term for “let the buyer beware” is a) Caveat Venditor b) Caveat Emptor c) Caveat Puffing d) Caveat Warranty
__________.
88) Which of the following sale of goods’ warranties is a) Warranty of title b) Warranty of fitness for c) Warranty of d) Warranty against
NOT implied by law in all sales? purpose conformity to seller’s encumbrances
statement
89) Which of the following is NOT one of the basic a) Ordinary b) Warranted c) Voluntary d) Involuntary
types of bailments?
90) Mary Sue Smith is persuaded by one of her nephews a) undue influence b) duress c) senility d) incompetence
to make her will directing that the bulk of her estate
go to him at her death. Upon Mary Sue’s death, the
other family members could possibly get the will
declared void based on __________.
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91) A minor disaffirms a contract for necessaries. The a) not required to pay b) required to pay the sales c) required to pay the d) required to pay the
minor is anything to the seller. price to the seller. reasonable value of the reasonable value to the
goods to the seller. parents.
92) In most states, a minor is one who is under the age of a) 12 b) 16 c) 18 d) 21
_____.
93) A contract that requires the performance of an act a) Void b) voidable c) valid d) enforceable
prohibited by law is __________.
94) Tom and Jerry may create an agency relationship for a) any purpose b) a business purpose only c) any legal purpose d) any legal purpose so
__________. long as it is evidenced in
writing
95) George orders a quantity of materials from Xavier a) Nullification b) termination c) cancellation d) revocation
Products and accepts them when they are delivered.
George’s later withdrawal of his acceptance is called
__________.
96) Except for goods that are shipped COD, a buyer is a) Inspection b) rejection c) acceptance d) accommodation
entitled to the right of __________.
97) Which of the following warranties does NOT arise in a) Warranty of title b) Warranty of c) Implied warranty of d) Implied warranty of
a sales contract? habitability merchantability fitness for a particular
purpose
98) The U.S. Constitution gave Congress the power to set a) Division of Weights and b) National Bureau of c) Division of Scales and d) National Board of
standards of weights and measures, and Congress in Measures. Standards. Measurement. Measurement.
turn created the
99) The law concerned with the power and actions of a) historical law b) common law c) statute law d) administrative law
governmental agencies and their regulations is
________.
100) An order to produce a witness or an object such a) summons b) subpoena c) request d) injunction
as a document is a/an __________.