2003 Business Law Page 1

Indicate whether the sentence or statement is true or false. Mark “A” if the answer is True or “B” if the answer is False.
1. A contract stated in oral or written words is an express a. True b. False
contract.
2. In order to bring suit for fraud, the party who was wronged a. True b. False
must suffer damages.
3. It is illegal for a minor to enter into a contract. a. True b. False
4. A promise to make a gift is not enforceable. a. True b. False
5. Forbearance is legally sufficient consideration to create a a. True b. False
binding contract.
6. For a contract to be valid, each party must receive a. True b. False
something of equal value.
7. Corporations are the most numerous form of business a. True b. False
ownership.
8. Preferred stockholders do not have voting rights. a. True b. False
9. Tortious bailees are fully and unconditionally responsible a. True b. False
for all damage that results to property in their position,
regardless of the degree of care that they might exercise.
10. Most bailments in business transactions are based on a. True b. False
contracts, but many bailments in personal relationships are
not based on contracts.
11. The phrase that guides consumer transactions today is a. True b. False
caveat emptor.
12. Drawers are responsible for altered or forged checks if a. True b. False
their negligence contributed to the alteration or forgery.
13. The Federal Trade Commission has adopted the rule that a. True b. False
all agreements that restrain trade are illegal.
14. It is desirable, but not essential, to have one of the a. True b. False
beneficiaries witness the will.
15. State laws specify the number of witnesses who must be a. True b. False
present at the signing of a will.
16. Since agents act for their principals, anyone including a. True b. False
minors can be appointed an agent.
17. As part of the “fresh start” policy of the bankruptcy act, a. True b. False
many assets may be kept by debtors.
18. Comprehensive coverage protects you when other people a. True b. False
bring claims against you for bodily injuries caused by the
negligent operation of your motor vehicle.
19. In order to recover from the injury or property damage a. True b. False
from a defective product, it must be proved that the
defective condition existed at the time it left the hands of
the manufacturer or seller.
20. In general, all persons, including minors, are responsible a. True b. False
for their conduct and are therefore liable for their torts.
2003 Business Law Page 2
21. In property insurance, the insurable interest must exist a. True b. False
when the policy is purchased; for life insurance, the
insurable interest must exist at the time of the loss.
22. For an agreement to be a sale, title must pass at the time a. True b. False
the agreement is made.
23. The Uniform Commercial Code is now the law, at least in a. True b. False
part, in every state.
24. The Uniform Commercial Code provides that special a. True b. False
business standards should be imposed on merchants that
do not apply to the casual seller.
Mark the correct answer on your scantron sheet for each of the following questions.
25. A doctrine under which no consideration is needed in a a. unconscionable. b. promissory estoppel. c. forbearance. d. eminent domain.
contract is called
26. A contract that includes a promise in exchange of an act is a. bilateral contract. b. void contract. c. unilateral contract. d. quasi contract.
27. To be valid, an acceptance must be a. in writing. b. revocable. c. reasonable. d. unconditional.
28. Most newspaper advertisements are considered a. invitations to negotiate. b. contracts. c. offers. d. bargains.
29. Failure of one of the parties of a contract to do what he or a. mitigation of a b. breach of a contract. c. disaffirming a contract. d. ratifying a contract.
she agreed to do is contract.
30. The withdrawal of an offer by the offeror is called a. novation. b. revocation. c. rejection. d. estoppel.
31. Joannie Manon agreed to go to the prom with Jared White. a. Yes. An oral b. Yes. If an offer is c. No. This was a moral d. No. Both parties are
Later Steve Whitman, the captain of the debate team, agreement involving no accepted, the contract is or social obligation. No minors, therefore, the
asked Joannie to be his date for the prom. Joannie broke money is considered a binding as soon as the consideration, therefore, contract is not valid.
her date with Jared to go to the prom with Steve. Does legal contract. acceptance is sent. no valid contract existed.
Jared have a legal claim against Joannie?
32. Damages which are token awards given when a person’s a. compensatory b. nominal damages. c. consequentiall d. actual damages.
rights are violated but no harm occurs are damages. damages.
33. Two months before reaching the age of majority, David a. Yes. Minors must b. No. David may return c. No. The agreements of d. No. Minors may
Lowery buys a motorcycle for $5000. Three years later he positively disaffirm their the motorcycle, disaffirm a minor are void; they are always void contracts for
seeks to void the contract. Is he legally bound by the contracts within a the contract, and demand not binding on either purchases other than
contract? reasonable time after the return of his money party. necessaries.
reaching the age of because he was a minor
majority or the contracts when he purchased the
become binding. motorcycle.
34. If an offer is mailed, the acceptance takes effect a. when a letter of b. in ten days. c. when the offeree d. when the acceptance is
acceptance is mailed. agrees. received.
2003 Business Law
35. The Reynolds’ placed their empty office complex on the a. No. An offeror is not
market for $1,500,000. Ackerman, a developer, was obliged to keep an offer
interested in buying it, but he needed time to persuade a open for a specified time,
group of investors to join him in a syndicate to purchase even if the offeror has
the complex. Ackerman offered $20,000 to the Reynolds’ promised to do so.
to keep the offer open, to him alone, for sixty days. The
Reynolds’ accepted the money. Are they now legally
bound to keep the offer open to Ackerman even if
someone else offers a much higher price?
36. A false statement will be the basis of fraud if it is a. given as an opinion
only.
37. A type of contract that is fully enforceable if it is oral is a a. in consideration of
contract marriage.
38. The usury statute a. is a statute that protects
people by voiding
contracts that take away
the right to make a living
and do business in a
market economy.
39. The Statute of Limitation a. is a statute that
specifies the length of
time within which a legal
action may be brought on
a contract.
40. Which of the following contracts generally do not have to a. Contracts for the sale
be in writing? of real property
41. Dane Deloy, 17, buys an electric guitar. She tells the a. Yes. Deloy was a
owner of the shop that she is 19. She returns the guitar and minor and can void the
demands the return of her money two months later. The contract. In most states,
owner refuses to comply. Can Deloy void the contract? minors’ rights to void
contracts for purchases
other than necessaries are
not affected by false
statements of age.
42. Which of the following is not a necessary element of a a. Offer
contract?
43. Contractual duties may be discharged because of actual a. Hardships caused by
impossibilities. Which of the following would not be fire, floods, or strikes
grounds to discharge a contract?
44. Which of the following is not true of a Sole a. Unlimited liability
Proprietorship?
b. No. There was no
consideration given by
the Reynolds’ to keep the
offer open; therefore,
there is no valid contract.
b. a statement of a
material fact.
b. to pay the debt of
another.
b. is a statute that
prevents competitors
from agreeing to sell a
particular product or
service at an agreed price.
b. is a statute that
specifies the monetary
limit that a person can
obtain in a contract
dispute.
b. Contracts in
consideration of marriage
b. Yes. Deloy was a
minor and either party to
the contract can void the
contract.
b. Acceptance
b. The subject matter is
destroyed
b. Easier to obtain credit
and raise money
c. Yes. If the offeree
gives the offeror
something of value in
return for a promise to
keep the offer open, this
underlying agreement
itself is a binding
contract.
c. not relied upon by the
injured party.
c. to sell an interest in real
property.
c. is a statute that allows
people to carry on a
certain trade or
profession.
c. is a statute that
specifies which debts can
be discharged under the
bankruptcy laws.
c. Contracts to pay the
debts of others
c. No. Deloy committed
fraud claiming to be over
the age of majority and
cannot void the contract.
c. Genuine agreement
c. A change in the law
makes performance
illegal
c. Business ends when the
owner dies
Page 3
d. The Reynolds’ can
reject the offer any time
during the sixty-day
period.
d. not made to the party
relying on it.
d. requiring less than a
year to perform.
d. is a statute that
prevents people from
being charged more than
the maximum legal
interest rate.
d. is a statute that
determines the remedy if
a contract is not
performed in a certain
amount of time.
d. Contracts that must be
performed out of state
d. No. Deloy did not
return the guitar within 24
hours and therefore
ratified the contract.
d. Adequate consideration
d. Either party dies or
becomes disabled if the
contract require the
personal services of the
individual
d. The owner is taxed
only once
2003 Business Law Page 4
45. John Dunn is a general partner in the construction firm of a. Yes, they are correct. b. No, they are not c. Yes, they are correct. d. Yes, they are correct.
Dunn, Briggs, and Yates. While operating a tractor at a Each partner is protected correct. The firm and all The partners can be held No one can be held liable
construction site, Dunn collides with a car owned by the by the Limited partners can be held liable liable for the acts of for the actions of others.
Mayor. The Mayor sues not only Dunn, but also Yates and Partnership Act for acts for a tort committed by others only if negligence
Briggs. Yates and Briggs argue that Dunn was at fault, so committed by other one of the partners who is can be proved.
the Mayor has no cause of action against them. Are they partners in the firm. acting within the scope of
correct? Which of the following is true? the business.
46. Which partner does not have unlimited liability for debts a. General partner b. Secret partner c. Limited partner d. Silent partner
of a firm?
47. If a partnership is dissolved, who is the first to receive a. Money lent by partners b. Debts to creditors, c. Surplus owed to the d. The original money
payment for liabilities? to the firm other than partners partners paid by each partner
48. Which of the following is not true of a Corporation? a. Each shareholder’s b. A corporation c. Corporations must face d. Since shareholders are
liability is limited to the continues to exist, extensive government the owners of the
amount of money he or regardless of the life regulations. business, the profits of a
she invested. spans of its founders, corporation are taxed only
shareholders, managers, once.
and directors.
49. Which of the following statements about common stock is a. Holders of common b. Holders of common c. Common stock pays d. Common stock is the
not true? stock are the first stock have voting rights dividends, or profits, to basic form of corporate
shareholders to be paid. in a corporation. the shareholders based on ownership.
the corporation’s
performance.
50. Par Value a. is the value of stock as b. is the average market c. is the value printed on d. is the amount paid to
listed on a stock value of the stock for a the stock certificate. the stockholder each
exchange. 12-month period. quarter.
51. A consolidation occurs a. when one corporation b. when two or more c. when two corporations d. when two or more
absorbs the other. corporations set prices or cease to exist and a new partnerships draft an
allocate exclusive corporation is formed. Article of Incorporation
marketing areas. and submit it to the
proper state officials.
52. Shannon Banks and Billie Brown met at an expensive a. Valet parking is usually b. Self-parking is not c. A bailment of the coat d. A bailment of the
restaurant for dinner. When she arrived at the restaurant, a bailment. usually a bailment. at the restaurant exists. necklace at the restaurant
Shannon turned over her car to the valet parking attendant, exists.
who parked the car. Billie parked her car herself in
another lot. When Shannon entered the restaurant, she
checked her coat. In the pocket of the coat was her
mother’s $4,000 diamond necklace. Which of the
following statements is not true?
53. Some goods in a bailment are fungible. This means a. the bailee must return b. the bailee need only c. both possession of the d. the bailee must
the identical goods. return the same quantity goods and control of the exercise reasonable care
as received, not the exact goods must shift from the to protect the goods.
unit of goods. bailor to the bailee.
2003 Business Law Page 5
54. A common carrier is strictly liable for injury to bailed a. ordinary care. b. minimal care. c. extraordinary care. d. relaxed care.
goods. Thus, a common carrier must exercise
55. Although consumer protection state laws differ, all of them a. Sherman Antitrust Act. b. Federal Trade c. National Consumer d. Clayton Antitrust of
are more or less similar to the Commission Act of 1914. Safety Laws of 1965. 1914.
56. Joe Yablo orders a computer through the mail. He waits a. No. The general rule is b. No. The FTC has c. Yes. The FTC has d. No. In today’s
40 days and does not receive the computer or hear from the that the company must established rules that established rules that consumer environment,
company. Yablo asks for his money back. Must the ship all goods within a protect consumers who protect consumers who people must abide by the
company return his money if they are ready to ship the reasonable amount of order goods by mail. order goods by mail. phrase caveat emptor.
computer? time and 40 days falls Buyers have the right to Buyers have the right to
within a reasonable cancel orders and have cancel orders and have
amount of time. their money returned if their money returned if
the goods are not shipped the goods are not shipped
within 60 days of receipt within 30 days of receipt
of the order. of the order.
57. To help consumers make better decisions when buying a. that each used car be b. that all used car dealers c. that each used car is d. that the dealer gives an
used cars, the FTC established the Used Car Rule in 1984. inspected by a licensed place a large sticker, sold with a 30-day implied warranty that the
The rule requires mechanic before it is called a Buyer’s Guide, in warranty for parts and car is merchantable and
offered for sale. the window of each used labor. that this warranty cannot
vehicle they offer for sale. be excluded or disclaimed
by the dealer.
58. Sara Marsh buys a used car from a private party. No a. No. The implied b. Yes. There was a c. Yes. There is an d. Yes. Under the
statements are made by the seller about the quality of the warranty of breach of an express implied warranty of “Lemon Law,” which was
vehicle. That night, Sara discovers the car’s engine has a merchantability is not warranty and Sara has the merchantability on the designed to protect
cracked block. Does she have any legal recourse against given by a private party legal right to return the part of the seller. Sara consumers when they buy
the seller? who sells a car or other car and receive a refund. has the legal right to both new and used cars,
items. This means that return the car and receive Sara has the legal right to
Sara bought the car “as a refund. return the car and receive
is.” a refund.
59. The law of negotiable instruments is also known as the law a. bearer paper. b. contracts. c. bearer instruments. d. commercial paper.
of
60. A special endorsement a. is one in which words b. is the act of writing on c. is the simple act of d. is one in which words
have been added, in the back of the instrument signing an order have been added to the
addition to the signature an order to pay to a instrument on the back. signature that limit or
of the of the transferor, specified person and then qualify the liability of the
that limit the use of the signing the instrument. endorser.
instrument.
61. A check that has been written but not yet returned to the a. a cashier’s check. b. a cancelled check. c. a certified check. d. an outstanding check.
bank is
62. Which of the following is not a real defense against a. Infancy of the maker or b. Issued in connection c. Lack of consideration d. Fraud in the execution
payment of a negotiable instrument? drawer with illegal conduct by the maker or drawer of the paper or as to the
essential terms
2003 Business Law Page 6
63. To protect consumers, the federal and state governments a. Federal Frauds and b. Unfair Trade Practice c. Federal Trade d. United States Enforcer
have enacted numerous laws prohibiting unfair trade Illegal Practice Act. Act. Commission Act. Act.
practices. These laws fall under the
64. In interpreting a commercial agreement, the court will look a. Course of dealing b. Usage of trade is a c. Course of payment is d. Course of performance
to typical commercial practices and to the circumstances includes the actions and practice or method of whether the payment is a is the way the parties
surrounding the particular contract and the parties. Which communications that took dealing followed fair and comparable conduct themselves
of the following is not a practice or circumstance that the place between the parties regularly in a particular payment made by other toward each other after
courts would consider in interpreting a commercial before the agreement in place, vocation, or trade. businesses in the trade. the contract is created.
agreement? question was made.
65. Which of the following is true of the term “f.o.b. shipping a. “Free on board b. “Free on board c. “Free on board d. “Free on board
point”? shipping point” indicates shipping point” indicates shipping point” indicates shipping point” indicates
that the buyer must pay that the seller assumes the that there is no charge for the buyer must pay the
the freight charges, and shipping charges and the shipping and the carrier freight charges from the
the goods are the goods are the of the goods assumes full shipping point to the
responsibility of the seller responsibility of the seller responsibility of the destination, and the goods
until the goods reach the until the goods reach the goods in transit. become the responsibility
destination. destination. of the buyer at the
shipping point.
66. Which one of the following is not an exception to the rule a. Executed oral contracts b. Oral contracts between c. Oral contracts for d. Oral contracts made
that contracts for the sale of goods of $500 or more must two merchants when a specially manufactured between two merchants
be in writing? confirmation is sent and goods when both merchants
no objection is made perform business
operations in the same
state
67. A woman representing the estate of a deceased person who a. administratrix. b. testatrix. c. executrix. d. lawyer.
did not leave a will is called a(n)
68. A court procedure for proving the validity of a will is a. probate. b. execution. c. nuncupation. d. intestate.
called
69. Mrs. Thomas was fatally injured in an automobile accident a. holographic will. b. nuncupative will. c. testamentary will. d. codicil.
one evening. As she lay dying, she told three witnesses
that she was making a will and that she wanted her
valuable collection of paintings to go to her good friend
Anne. This is an example of a
70. An agency relationship can be created in all of the a. agency authority is b. agent authority is c. agent authority is d. agency authority is
following ways, except created when a principal created when the created when a principal created through mutual
authorizes an agent to authority is authorizes an agent to agreement known as
represent the principal communicated by the represent the principal eminent domain.
and agrees to pay the principal to the agent. even though there is no
agent. The communication may consideration.
be written or oral.
2003 Business Law Page 7
71. Newman authorized his agent, Smith, to sell his car at the a. No. Smith followed b. Yes. Smith violated c. No. The court will not d. Yes. The sale is void
highest price possible, but for not less than $2,800. Smith Newman’s instructions to the duty of loyalty and become involved in the because Smith violated
received an offer of $3,000 from Hack. Nevertheless, sell the car for not less this caused Newman to be amount of the sale only the instructions given by
Smith sold the car to his buddy Glenn for $2,800. When than $2,800, therefore, injured in the amount of whether the parties acted Newman. Newman can
Newman learned of this, he attempted to collect $200 from Smith is not entitled to $200. within the scope of the recover the car and be
Smith. Will he succeed? any remedy. law. able to sell it to Hack for
$3000.
72. Which of the following is not an element necessary to a. The manufacturer or b. The product was c. The manufacturer or d. The consumer
prove to recover damages for a defective product using the seller sold the product in unreasonably dangerous seller was negligent in the sustained physical harm
requirements of strict liability? a defective condition. to the user or consumer. care, preparation, or sale or property damage by
of the product. use or consumption of the
product.
73. A document authorizing a person to act and make a. power of attorney. b. apparent power of c. principal power of d. durable power of
decisions for another, including decisions about health care attorney. attorney. attorney.
if the person becomes incapacitated, is known as
74. Chapter 11 of the Bankruptcy Code a. deals with a b. provides for c. helps to relieve d. deals with liquidation
reorganization plan “adjustment of debts of economic pressure on of assets and distribution
created by the creditors an individual with regular small farmers. of proceeds to creditors.
and a debtor. income.”
75. Bankruptcy law establishes an order or priority, for classes a. Unsecured claims for b. Certain taxes and c. Claims of general d. Claims for wages,
of debts owed to unsecured creditors. Which of the contributions to employee penalties legally due and creditors salaries, and commissions
following has the lowest priority? benefit plans arising owed to various up to a certain dollar
under services rendered government units amount of $2,000 per
within 180 days before claimant
the filing of the petition
76. Which of the following is not an exception to the discharge a. Alimony and child b. Claims for back taxes c. Claims by creditors d. All costs and expenses
of debt under the bankruptcy laws? support due within three years who were not notified of for preserving and
before bankruptcy the bankruptcy administering the estate
77. Chapter 7 of the Bankruptcy Code a. provides for b. helps to relieve c. deals with liquidation d. deals with a
“adjustment of debts of economic pressure on of assets and distribution reorganization plan
an individual with regular small farmers. of proceeds to creditors. created by the creditors
income.” and a debtor.
78. Wilma bought a life insurance policy on the life of her a. She can collect on the b. She can collect on both c. She can collect on the d. She cannot collect on
husband Jeff. She also purchased a fire insurance policy life insurance policy, but policies. fire insurance policy, but either policy.
on the couple’s home. Unfortunately, Wilma and Jeff got she cannot collect on the she cannot collect on the
a divorce. In the property settlement between the couple, fire insurance policy. life insurance policy.
Jeff took sole ownership and responsibility for the house,
and Wilma took other unrelated property. A fire occurred
at the house, and Jeff died from smoke inhalation. Will
Wilma be able to collect on either insurance policy?
2003 Business Law
79. Which of the following best describes an incontestability a. A clause that provides
clause in an insurance contract? the policy does not
automatically lapse if no
payment is made on the
due date. The insurer
cannot contest the
contract if the payment is
late
80. Which of the following best describes automobile liability a. Liability insurance
insurance? compensates the insured
for losses for bodily
injury and property
damage occurring as the
result of the negligence of
the insured or other
covered drivers.
81. Which of the following best describes the Magnuson-Moss a. A federal statute that
Warranty Act? states “the seller of goods
must warrant that he or
she has the right to pass
good and rightful title,
and that the goods are
free from unstated leans”
82. An adulterated food or drug is one that a. is designed and
marketed for the adult
population and should not
be used by anyone under
the age of 21.
83. Which of the following is not a method used by the a. Advocating the phrase
government to discourage the sale of goods considered “caveat emptor”
harmful to the public health?
84. Barry is told by his father to chip out a small hole in the a. Because Barry actually
family’s cement patio. He goes to the family tool chest. suffered physical harm
He could not find a heavy-duty chisel, so he picks out a while using the product,
Phillips screwdriver. With a hammer and screwdriver, he the manufacturer has no
begins to chip out the cement. After fifteen minutes, the defense.
screwdriver shatters, and a sliver of metal lodges in
Barry’s eye. Does the manufacturer of the screwdriver
have a defense to a strict liability claim for the harm to
Barry’s eye? Which of the following is correct?
Page 8
b. A clause that requires c. A clause that provides d. A clause that provides
an insurance company to that after a policy has for arbitration of disputes
give advance written existed for a specified between the insurer and
notice of its intent to time—usually two or the insured concerning
cancel three years—the insurer the settlement of claims.
cannot challenge Neither the insured nor
statements made in the the insurer can contest the
application findings of the arbitrator
b. Liability insurance c. Liability insurance d. Liability insurance
compensates the insured covers losses if the compensates the insured
for losses for bodily vehicle is stolen, for damage to the
injury and property vandalized, or otherwise insured’s car in any type
damage in an accident, damaged (as by fire, of collision, no matter
unless the insured or earthquake, flood, or who is a fault and no
other covered drivers sandstorm). matter who is driving.
were negligent
b. A federal statute that c. A federal statute d. A federal statute that
states “a merchant who designed to prevent states “a warranty of
deals in goods of the kind deception in warranties fitness for a particular
sold must warrant that by making them easier to purpose is implied on all
goods are reasonably fit understand by requiring consumer goods”
for the ordinary purposes that, if a warranty is
for which such goods are made, the warranty must
used” be labeled
b. must clearly state on c. the federal government d. contains any substance
the label that the product has removed it from the mixed or packed with it to
should not be used while market because it is reduce its quality or
driving an automobile or shown or believed to strength below the
heavy equipment. cause cancer in humans prescribed minimum
or animals. standards.
b. Instituting unusually c. Regulating labeling and d. Outright prohibition
high taxes on those goods packaging standards
b. The screwdriver was c. Barry misused the d. Because Barry was not
not substantially changed screwdriver. This misuse aware of the potential risk
from the time it was sold should be a defense for in using the screwdriver,
to the time Barry the manufacturer and the manufacturer has no
sustained his injuries, seller of the screwdriver. defense.
therefore, the
manufacturer has no
defense.
2003 Business Law
85. Which of the following is not true of torts? a. Tort lawsuits are
brought against a person
by the injured person.
86. Sorensen and some friends went hunting on Laker’s a. No. Sorenson and his
private ranch without her permission. Can Laker bring a friends did not actually
lawsuit for damages against Sorenson and the others? damage the property, so
no damages were
sustained and a tort has
not been committed.
87. Which of the following is not an element needed to a. The defendant failed to
succeed in a tort suit for negligence? act as a reasonable
person.
88. Betty was at a baseball game seated one row behind a a. Betty did not intend to
famous movie star. When she stood up to cheer, she was put the movie star in fear,
bumped by the person beside her. She lost her balance and nor did she cause the
fell into the lap of the movie star. Which of the following touching, therefore, no
is correct? tort was committed.
89. Goods include all except a. tangible personal
property.
90. Intangible property includes all except a. promissory notes.
91. Which of the following is true of a sales contract? a. No consideration is
necessary to modify a
contract for the sale of
goods.
92. Brian buys a camcorder and receives his bill of sale. The a. Yes. Under the UCC, a
next day Brian gives the camcorder to his sister, Heidi, as a person who presents a bill
birthday present. Six months later Brian tries to sell the of sale along with the
camcorder to Jodie showing her the bill of sale as evidence goods is proof that he is
of his title to the camcorder. Can Jodie rely on this the legal owner of the
evidence? goods.
b. Tort lawsuits are
brought about by the state
in order to punish
wrongdoers.
b. No. Sorenson and his
friends did not
intentionally trespass on
the property: therefore, no
tort was committed.
b. The defendant owed
the plaintiff a duty of
care.
b. Betty put the movie
start in a state of fear,
therefore, the tort of
assault has been
committed.
b. the unborn young of
animals.
b. bank accounts.
b. The modification of the
contract for the sale of
goods must be written.
b. Yes. Brian is still the
owner of record. Brian’s
gift to his sister is not a
legally binding transfer of
title.
c. Under the law, all
people are entitled to
certain rights.
c. Yes. Laker can file a
lawsuit for the tort of
invasion of privacy.
c. The defendant did not
know that risk was
involved.
c. Betty invaded the
movie star’s personal
space, therefore, the tort
of invasion of privacy has
been committed.
c. growing crops.
c. stocks and bonds.
c. A contract for the sale
of goods is valid only
when the price of the
goods is settled.
c. No. The bill of sale
proves only that Brian
once had title. It does not
prove that he still owns
the camcorder.
Page 9
d. In some cases a wrong
is both a tort and a crime.
d. Yes. Tort law presumes
an injury from someone’s
unwelcome presence on
the property of another.
d. The plaintiff suffered
some actual harm or
injury.
d. A person has the right
to be free from harmful or
offensive touching,
therefore, Betty
committed the tort of
battery against the movie
star.
d. intangible personal
property.
d. the unborn young of
animals.
d. A merchant’s written
promise to hold an offer
open for the sale of goods
needs consideration to be
binding.
d. No. The Demurrage
Act specifically states the
value of a bill of sale.
2003 Business Law
93. Clifton orally agreed to buy an imported camera from a. Under the Statute of
Libby Camera Shop for $750.00. The camera she wanted frauds, both parties are
was not in stock, but a shipment was expected any day. bound by the oral
Therefore the salesclerk prepared a memorandum of the agreement.
sale, signed it, and gave Clifton a copy. A week later the
clerk phoned and said, “your camera is ready.” Clifton
replied that she did not want it because she had learned
that the identical model could be purchased for much less
by mail from the New York City discount store. Which of
the following is true?
94. Which of the following are considered goods by the UCC? a. Money (except rare
currency or rare coins)
95. Under the UCC, a buyer can accept goods in a number of a. After a reasonable
ways. Which of the following is not an acceptance under opportunity to inspect the
the code? goods, the buyer signifies
to the seller that the goods
conform to the contract,
or will be retained in spite
of their nonconformity.
96. In an oral contract, Lane ordered a $750 customized silver- a. Lane is liable to Martin
plated trophy from Martin’s Trophy shop. The trophy was for breach of contract
to be awarded to the winner of the Metro Town Drag because the trophy was
Racing Competition. Martin had already completed a not suitable for sale to
three-dimensional racing car and mounted it on a black others in the ordinary
marble base. Then Lane cancelled the order saying the course of her business,
races had been cancelled. “We expected to sell 5,000 and she had made a
tickets,” he said, “but we’ve sold only 500.” Which of the substantial beginning in
following is correct? producing it.
97. Barter is the exchange a. of goods for money.
98. A bill of lading is a. a temporary right to
possess the personal
property of another.
99. The UCC includes a Statute of Frauds provision that a. If the price of goods in
applies to contracts for the sale of goods. Which of the a sales contract is $500 or
following is not included in the statute? more, there must be a
writing to enforce the
contract.
b. Under the Statute of
Frauds, Libby Camera
Shop is bound because its
clerk signed the contract.
Clifton is not bound
because she did not sign.
b. Intangible personal
property
b. The buyer acts
inconsistently with the
seller’s ownership (e.g.
uses, consumes, or resells
the goods).
b. Lane is not liable to
Martin for breach of
contract. According to
the Statute of Frauds, all
goods over $500 must be
in writing to be
enforceable.
b. of intangible goods for
tangible goods.
b. a receipt for goods
signed by a carrier, such
as a trucker, that serves as
a contract for the
transportation of goods.
b. A writing or a
memorandum is sufficient
if it shows that the parties
intended to form a
contract.
c. Because the goods
were more than $500 and
must be in writing and
signed by both parties,
neither party is liable.
c. Patent and copyrights
c. The buyer does not
reject the goods within 24
hours after receiving the
goods.
c. Lane is not liable to
Martin for breach of
contract because the
exception to the Statute of
Frauds states that a sales
agreement may be
cancelled by either party
anytime before the
completion of the
manufacture of the goods.
c. of goods for goods.
c. a receipt given to a
person who has made
improvements and added
value to another person’s
personal property.
c. The contract is not
enforceable for more
goods that the quantity
shown in the writing.
Page 10
d. Clifton could not
enforce the agreement
because she did not sign
the written agreement.
d. Personal pets (dog,
cats, birds, etc)
d. The buyer fails to make
an effective rejection after
having a reasonable
opportunity to inspect the
goods.
d. Lane is liable to Martin
because the oral contract
was for goods under
$1000, which is required
by the UCC.
d. of intangible goods for
intangible goods.
d. a formal evidence of
ownership.
d. There must be a
writing to enforce a
contract for the sale of
intangible goods when the
value is $1000 or more.
2003 Business Law Page 11
100.Every two weeks, Eric held a garage sale to resell items he a. No. Eric has, by the b. Yes. He is not c. Yes. According to the d. Yes. Eric does not
had purchased at other such sales. Then the city and state regularity of his conduct considered a merchant, UCC code, sellers must have to pay taxes because
governments tried to tax his sales. Eric claimed that he and nature of his one “who deals regularly have obtained a valid he is considered a casual
was merely a casual seller and did not have to pay a business, transformed in a particular kind of business license before seller who sells only
sales tax. Was he correct? himself into a merchant goods or claims to have payment of taxes can be occasionally and
and must pay the sales special knowledge or skill required by the otherwise does not meet
tax. in a certain type of government. the definition of
transaction.” merchant.