ACCT 340 Practice Exam 1

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Revised Article 9 governs what type of​ transactions?

Secured transactions of personal property

If a principal files for​ bankruptcy, the agency is terminated​ ________.

by operation of law

There are at least two parties in each credit​ transaction, which may include any of the following parties​ EXCEPT?

collateral

Which type of bankruptcy involves​ liquidation?

Chapter 7

​A(n) _____ is an instrument that gives the creditor a security interest in the​ debtor's property that is pledged as collateral.

Deed of trusst

Which of the following is included in a Chapter 13​ estate?

nonexempt property of the debtor at the commencement of the case

Independent contractors usually​ ________.

work for a number of clients

Assume that Jason files a petition for chapter 7 liquidation bankruptcy. He owns a principal residence worth​ $600,000 that is subject to a​ $400,000 mortgage and the trustee sells the home for​ $600,000. How much money can Jason keep from the sale if the federal homestead exemption is​ applied?

$22,975

Which of the following is NOT part of the bankruptcy​ estate?

Alimony Received

Personal property that is subject to a security agreement is known as​ __________.

Collateral

When an unsecured debtor defaults on a​ loan, the creditor may​ ________.

bring legal action against the debtor

All things that are movable when a security interest attaches are called​ _____ property.

tangible personal

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 gives the bankruptcy court the power to void certain fraudulent transfers of a​ debtor's property made by the debtor within​ _____ prior to filing a petition for bankruptcy.

2 years

In Chapter​ _____ bankruptcy, also called​ _____ bankruptcy, the debtor is permitted to keep a substantial portion of his or her assets. The​ debtor's non-exempt property is sold for​ cash, and the cash is distributed to the creditors. Any of the​ debtor's unpaid debts are​ _____.

7; straight; discharged

Revised Article​ _____ of the​ _____ contains provisions that recognize the importance of electronic​ records, providing rules for the​ creation, filing, and enforcement of electronic secured transactions in personal property.

9; Uniform Commercial Code

Which of the following is an INCORRECT statement regarding the filing of a Chapter 13​ petition?

A Chapter 13 proceeding can be initiated only through the involuntary filing of a petition by an individual debtor with sporadic​ (i.e., irregular) income.

Which of the following statements regarding the UCC rule for establishing priority of claims is NOT​ true?

A creditor who has the only unsecured interest in the​ debtor's collateral has priority over secured interests.

​_______________ is a security interest in property that was not in the possession of the debtor when the security agreement was​ executed; this includes after-acquired ​property, future​ advances, and sale proceeds.

A floating lien

Which of the following is an INCORRECT statement regarding​ after-acquired property, sales​ proceeds, and future​ advances?

A floating lien cannot attach to​ after-acquired property, sale​ proceeds, or future advances.

When two or more creditors claim an interest in the same collateral or​ property, which of the following statements is​ true?

A secured creditor has priority over an unsecured creditor.

Which of the following statements regarding surety and guaranty arrangement is​ true?

A surety is primarily liable and a guarantor is secondarily liable

​______________ is a postjudgment order that permits the seizure of the​ debtor's property that is in the possession of the debtor.

A write of execution

An agency that occurs when a person misrepresents him- or herself as​ another's agent when they are not and the purported principal ratifies the unauthorized act is known as​ ________.

Agency by ratification

Principal and third party are not bound to the contract unless the principal ratifies the contract in which type of​ agency

Agency by ratification

A​ debtor-in-_____ is a debtor who is left in place to operate the business during the reorganization proceeding.

Possession

Which of the following is an INCORRECT statement regarding electronic financing statements and​ records?

An encoding is information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

Article 9 of the UCC defines the​ rights, duties, and remedies of the secured party and the debtor in the event of default. The UCC categorizes the term default as​ _______.

An undefined term

Agency that arises when a principal creates the appearance of an agency that in actuality does not exist is called​ ________.

Apparent Agency

Authority that is created when the principal leads a third party to believe that the agency has authority is called​ ________.

Apparent agency

If two or more secured parties claim an interest in the same collateral but neither has a perfected​ claim, the first to​ _____ has priority.

Attach

​_______________ is a situation in which the creditor has an enforceable security interest against a debtor and can satisfy the debt out of the designated collateral.

Attachment

The 2005 act requires​ a(n) ___________ whereby an attorney who represents a client in bankruptcy must certify the accuracy of the information contained in the bankruptcy petition and the​ schedules, under penalty of perjury.

Attorney Certification

Which of the following​ is/are exempt from the Consumer Financial Protection​ Bureau?

Automobile industry

Which is the true statement regarding bankruptcy​ law?

Bankruptcy judges are appointed for​ 14-year terms.

If a client authorizes an attorney to settle a case within a certain dollar amount and the attorney does​ so, the settlement agreement is​ _____.

Binding

In a partially disclosed​ agency, who would be liable to the third​ party?

Both the principal and the agent

In an undisclosed​ agency, who has liability to the third​ party?

Both the principal and the agent

Assume that a car salesperson is employed to sell the​ principal's car. The principal tells the agent that the car was repaired after it was involved in a major accident. If the agent intentionally tells the buyer that the car was never involved in an​ accident, the agent has made an intentional misrepresentation. Which of the following statements is​ true?

Both the principal and the agent are liable for this misrepresentation.

When an unsecured debtor defaults on a​ loan, the creditor may​ ________.

Bring legal action against the debtor

The Consumer Financial Protection Bureau has all of the following powers​ EXCEPT?

Bringing criminal charges

An agency contract can be terminated in all of the following ways​ EXCEPT?

By the third party involved in the transaction

Suppose Sarah purchases an automobile from a car dealership. She borrows part of the purchase price from a lender. The lender requires Sarah to give it a security interest in the automobile to secure the loan. This is a secured​ transaction, with the automobile being​ _____ for the loan.

Collateral

Which of the following statements about a Chapter 11 bankruptcy is​ true?

Chapter 11 is available to​ individuals, partnerships,​ corporations, and other business entities.

What is the difference between Chapter 7 and Chapter 13​ bankruptcy?

Chapter 13 requires debtors to pay some of their future income to pay off prepetition​ debts, while Chapter 7 does not require it.

Under a Chapter 13​ petition, the debts of the individual debtor must be primarily​ ________________ debt.

Consumer

With regard to a credit​ transaction, all of the following are true​ EXCEPT?

Credit must be extended on a secured basis

When an instrument gives a creditor security interest in a​ debtor's real property that is pledged as collateral for a​ loan, this is known as a​ ________.

Deed of trust

In the court case In re​ Hoang, the debtor was ordered by the bankruptcy court to turn over​ ______________ as a result of a fraudulent transfer.

Diamonds

Which of the following is NOT an important question to answer in determining whether an​ agent's conduct occurred within the scope of his or her​ employment?

Did the agent possess the required professional​ licensure(s)?

An example of an independent contractor is a​ ________.

Doctor

Which of the following is NOT a duty of the​ agent?`

Duty to Indemnify

The principal owes certain duties to an agent and independent contractor. These duties include all of the following​ EXCEPT?

Duty to subrogate

​______________ means chattel paper evidenced by a record or records consisting of information stored in an electronic medium.

Electronic chattel paper

Which of the following is an example of tangible personal​ property?

Equipment

Apparent​ agency, or agency by​ _____, arises when a principal creates the appearance of an agency that in actuality does not exist.

Estoppel

Which of the following is the most common form of​ agency?

Express

​________, the most common form of​ agency, gives the agent the authority to contract or otherwise act on the​ principal's behalf, as stated in the agency agreement.

Express Agency

Which type of agency exists when there is a written agency agreement between the​ parties?

Express agency

Which of the following statements is NOT true regarding property that is exempt from the bankruptcy​ estate?

Federal exemptions are adjusted every 5 years.

Which of the following is an INCORRECT statement regarding perfection by filing a financing​ statement?

Federal law specifies where a financing statement must be filed.

The Restatement​ (Second) of Agency defines agency as​ a(n) _____ relationship​ "which results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his​ control, and consent by the other so to​ act."

Fiduciary

​______________ means a record composed of an initial financing statement and any filed record related to the initial financing statement.

Financing statement

If the retail dealer​ (the secured​ creditor) files a​ _________________, it has given public notice of its​ __________________ in the collateral. This form is also known as a​ ___________.

Financing statement;secured interest;UCC-1

How long are financing statements effective if a continuation statement is not​ filed?

Five Years

A​ _____ lien is a security interest in property that was not in the possession of the debtor when the security agreement was executed.

Floating

​__________________ occurs when​ (1) a debtor transfers property to a third person within two year of the filing of a petition in​ bankruptcy, and​ (2) the transfer was made by the debtor with an intent to​ hinder, delay, or defraud creditors.

Fraudulent transfer

When an agent runs personal errands while on the​ job, this is known as​ __________, which would release the principal from liability.

Frolic and detour

​__________________ are funds advanced to a debtor from a line of credit secured by collateral.

Future advance

A power of attorney where a principal confers broad powers on the agent to act in any matters on the​ principal's behalf is known as​ a(n) ________.

General Power of attorney

Suppose Qixia hires​ Harold, a lawyer and an independent​ contractor, to represent her in a court case. While driving to the courthouse to represent Qixia at​ trial, Harold negligently causes an automobile accident in which Mildred is severely injured. Which of the following is an accurate statement regarding the liability of Qixia​ and/or Harold for​ Mildred's injuries?

Harold is liable for Mildred's injuries, but quixia is not liable

Texas Car​ Sales, Inc., a new car​ dealership, finances all its inventory of new automobiles at Horns Bank. Horns Bank takes a security interest in the​ dealership's inventory of cars and perfects this security interest.​ Tyrone, a buyer in the ordinary course of​ business, purchases a car from the dealership for cash. If the dealership defaults on its payments to the​ bank, ________.

Horns Bank cannot recover the car Tyrone bought

Which of the following is NOT true about secured​ credit?

If the sale of the collateral is insufficient to repay the loan plus​ interest, the creditor may not bring a lawsuit against the debtor to recover the deficiency judgment.

Suppose a homeowner employs a real estate broker to sell his house. A water pipe breaks and begins to leak water into the house. If the homeowner cannot be​ contacted, the real estate broker has​ _____ authority to hire a plumber to repair the pipe to stop the water leak.

Implied

A type of agency that is formed when an agent does not have an express power but one can be inferred is best known as​ ________.

Implied agency

An agency that occurs when a principal and an agent do not expressly create an​ agency, but it is inferred from the conduct of the​ parties, is called​ ________.

Implied agency

When can the creditor seek payment from a surety or​ guarantor?

In a surety​ arrangement, the principal does not have to be in default of the payment in order for the creditor to seek payment against​ surety; in a guaranty​ arrangement, the principal does have to be in default of payment in order for the creditor to seek payment against the guarantor.

One can employ an outsider—that ​is, persons and businesses that are not employees—to perform certain tasks on their behalf. This outsider is​ a(n) ________.

Independent Contractor

Outsiders who are employed by principals to perform certain tasks on their behalf are called​ ________.

Independent contractors

Which of the following is NOT a requirement of a security agreement in personal​ property?

It must indicate the legal description of the property subject to the mortgage

What is the purpose of The Credit Card Accountability Responsibility and Disclosure Act of​ 2009?

It requires disclosures to consumers concerning credit card terms.

What is the purpose of The Mortgage Reform and​ Anti-Predatory Lending​ Act?

It requires disclosures to consumers concerning credit card terms.

What is the purpose of the Consumer Financial Protection Act of​ 2010?

It requires the disclosure of relevant information in plain language that permits consumers to understand the​ costs, benefits, and risks associated with the loan.

Which of the following about independent contractors is​ true?

Labeling someone an independent contractor is only one factor in determining status.

A person who uses their own real property as collateral for a loan is known as​ a(n) __________.

Mortgagor

The​ owner-debtor in a mortgage arrangement is known as the​ _____.

Mortgagor

A principal is liable under the doctrine of vicarious liability for intentional torts of agents and employees committed within the​ agent's scope of employment. The​ _________ tests are the two tests applied by courts to determine whether an​ agent's intentional torts were committed within the​ agent's scope of employment.

Motivation and work related

Sid hires​ Dina, a licensed real estate​ broker, to serve as a​ buyer's agent in a real estate transaction. Sid authorizes Dina to make an offer on a piece of real estate. While in the process of making the​ offer, Dina learns that a medical waste facility has just acquired adjoining land. If Dina fails to tell Sid about this neighboring​ acquisition, she has breached her duty to​ ______________.

Notify

Which of the following is an INCORRECT statement regarding the Bankruptcy​ Code?

Per the delegated powers set forth in the Tenth Amendment to the United States​ Constitution, the Bankruptcy Code is a matter of state law.

If two or more secured parties have perfected security interests in the same​ collateral, the first to​ _____ has priority.

Perfect

After a​ debtor's default, if the proceeds from the disposition of collateral are not sufficient to satisfy the debt to the secured​ party, the debtor has​ _________ liability to the secured party for the payment of the deficiency.

Personal

A party who employs another person to act on his or her behalf is called​ a(n) __________.

Principal

Rani decides to sell her house and hires​ Mark, a real estate​ broker, to list and sell the house for a price of​ $1 million. They agree that Mark will disclose the existence of the agency and the identity of the principal to interested third parties. Mark shows the house to​ Heather, a prospective​ buyer, and does not disclose to Heather that he is acting as an agent for Rani. Heather agrees to buy the​ house, and Mark signs the contract on behalf of Rani. Which of the following statements is​ true?

Rani, the​ principal, and​ Mark, the​ agent, both are liable.

Security interests may be taken in​ ________.

Real, personal, intangible, or other property

When a mortgage or deed of trust is paid​ off, the lender files​ a(n) _____________ with the county recorder.

Reconveyance

​______________ means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

Record

While scouting out real estate for his​ principal, Nick incurs travel expenses. Nick seeks to collect these sums from his​ principal, invoking the​ principal's duty to​ ___________.

Reimburse

A Chapter 11 bankruptcy is known as​ a(n)______________.

Reorganization

​______________ provides for the​ creation, filing, and enforcement of electronic secured transactions.

Revised Article 9

​_______________ are the resulting assets from the​ sale, exchange, or disposal of collateral subject to a security agreement.

Sale proceeds

In​ a(n) _______________ transaction the lender may repossess the collateral on which the loan was given.

Secured credit

What is the main difference between unsecured credit and secured​ credit?

Secured credit requires collateral of the debt amount.

​A(n) __________________ is when a creditor extends credit to a debtor and takes a security interest in some personal property of the debtor.

Secured transaction

The Consumer Financial Protection Bureau does NOT have the authority to enforce which of the​ following?

Securities Exchange Act of 1934

Because lenders are sometimes reluctant to lend large sums of money simply on the​ borrower's promise to​ repay, many lenders take a​ ______________ in the property purchased or some other property of the debtor. The property in which the security interest is taken is called​ ______________. If the debtor does not pay the​ debt, the creditor can​ _____________ on and recover the collateral.

Security interest; collateral; foreclose

Which of the following is an INCORRECT statement regarding unsecured​ credit?

Since no security interest is associated with the​ transaction, unsecured credit requires collateral to protect the payment of the debt.

Under the standard for the​ __________________, an employer—the ​______________—can be liable if an​ employee, who is motivated by​ jealousy, injures someone during work hours on the premises. Under this​ standard, the​ employee's motivation is immaterial for liability purposes.

work realted test; principal

Suppose a principal hires a lawyer to represent her in a lawsuit until the lawsuit is resolved. If the principal and the lawyer voluntarily agree to terminate the relationship prior to the resolution of the case by trial or​ settlement, the agency is​ _____.

Terminated by an act of the parties

Which of the following is an accurate statement regarding the Bankruptcy Abuse Prevention and Consumer Protection Act of​ 2005?

The Act made it much more difficult for debtors to escape unwanted debt through bankruptcy.

​_________________ established a new median income test and a means test to determine whether a debtor should be granted relief under Chapter 7.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

​________________________ made it more difficult for debtors to relieve themselves of unwanted debt through bankruptcy proceedings.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

Which of the following is an INCORRECT statement regarding the Consumer Financial Protection Bureau​ (CFPB)?

The CFPB has no authority to enforce federal consumer financial protection​ laws, as that authority is exclusively within the province of the Federal Trade Commission​ (FTC).

The​ _______________________ requires the disclosure of relevant information to consumers in plain language that permits the consumers to understand the​ costs, benefits, and the risks associated with consumer financial products and services.

The Consumer Financial Protection Act of 2010

In a meeting with the​ creditors, which of the following is NOT​ true?

The bankruptcy judge must attend the meeting.

Who is liable for the torts of an independent​ contractor?

The independent contractor only

Who is liable if an independent contractor enters into a contract without authority from the​ principal?

The independent contractor only

In​ general, when does the obligation of an accommodation party​ begin?

The obligation of the accommodation party begins at the beginning of the contract.

Who is liable for the injury caused by inherently dangerous activities that a principal assigns to an independent​ contractor?

The principal only

Who is liable if an independent contractor enters into a contract with authority from the​ principal?

The principal only

​_____ created the Consumer Financial Protection Bureau.

The united states congress

Which of the following statements regarding chapter 7 liquidation is NOT​ true?

The​ debtor's unpaid debts will be paid by the​ debtor's future income

The Bankruptcy Code permits states to enact their own exemptions. States that do so may​ (1) give debtors the option of choosing between federal and state exemptions or​ (2) _____________. The exemptions available under state law are often​ ___________ vis a vis the debtor than those provided by federal law.

require debtors to follow state​ law; more liberal

The bankruptcy court has the power to void certain fraudulent transfers of a​ debtor's property made by the debtor within​ ______ year(s) prior to filing a petition for bankruptcy.

Two

When two or more creditors claim an interest in the same collateral or​ property, which of the following statements is​ true?

When there are two unperfected​ claims, the first to attach has priority.

Hamed wins a​ $25,000 judgment against Dema. Dema refuses to pay the amount of the judgment to Hamed. Hamed can obtain a postjudgment relief from the court whereby the court directs the sheriff to seize​ Dema's automobile and other property and have them sold at public auction to satisfy the judgment she owes Hamed. This is known as a​ ________.

Writ of execution

Methods used by creditors to obtain property of a debtor in order to satisfy a debt or a judgment include all of the following​ EXCEPT?

Writ of indenture

Title​ _____ of the​ _____ Act is also called the Consumer Financial Protection Act of 2010.

X; Dodd-Frank

Which of the following is NOT one of the main provisions of the Credit CARD Act of​ 2009?

requires that the terms of the​ credit-card agreement must be written in legal terminology and in no less than​ 10-point font

Suppose Georgia​ Pacific, Inc. interviews Albert Iorio for a sales representative position.​ Iorio, accompanied by Jane​ Franklin, the national sales​ manager, visits retail stores located in the open sales territory. While visiting one​ store, Franklin tells the store​ manager, "I wish I had more sales reps like​ Albert." Nevertheless, Iorio is not hired. If Iorio later enters into contracts with the store on behalf of Georgia Pacific and Franklin has not controverted the impression of Iorio that she left with the store​ manager, the company will​ ______.

be bound to the​ contract, based on​ Iorio's apparent authority

Prima Company goes to Urban Bank and borrows​ $100,000. In this​ case, Prima Company is the​ _________________, and Urban Bank is the​ _________________.

borrower-debtor; lender-creditor

Who does the Consumer Financial Protection Bureau​ oversee?

all the parties participating in the consumer finance and mortgage area

An agent who enters into a contract on behalf of another party impliedly warrants that he has the authority to do so. This is called the​ agent's implied warranty of​ _____.

authority

Under apparent​ agency, if Luke tells his agent Isaac that he no longer has authority to enter into contracts on his​ behalf, but fails to notify a third party who then enters into a contract with​ Isaac, Luke will​ ________.

be bound to the contract

If a contract indicates that the agency agreement terminates on July​ 27, 2020, it is terminated​ ________.

by an act of the parties

A termination of agency where a situation arises that makes the fulfillment of the agency not possible is known as a termination​ ________.

by impossibility of performance

Suppose that at the time that Jerome is granted Chapter 7​ relief, he still owes​ $50,000 of unsecured debt and that there is no money in the bankruptcy estate to pay these liabilities. This debt is composed of credit card​ debt, an unsecured loan from a​ friend, and unsecured credit from a department store. This​ $50,000 of unsecured credit is​ _______________. This means that Jerome​ _______________________________________.

discharged; is relieved of this debt and is not legally liable for its repayment

Which of the following is NOT exempt from the bankruptcy​ estate?

dividend earnings

If an agent acts for two or more different principals in the same​ transaction, this is known as​ ________.

dual agency

An agent enters an authorized contract with a third party on the​ principal's behalf, The principal fails to perform on the​ contract, and the third party recovers a judgment against the agent. The agent can recover this amount from the principal because of the

duty to indemnify

Which of the following is NOT a duty of the​ principal?

duty to perform

Sally hires James to work as an employee at her firm. James does not have the ability to enter into contracts on behalf of Sally. This is called​ a(n) ________.

employer-employee relationship

Which of the following is NOT an example of intangible personal​ property?

equipment

Which of the following creditor actions are NOT stayed by the filing of a voluntary or an involuntary bankruptcy​ petition?

extending credit to business affiliates of the debtor

In bankruptcy​ proceedings, a discharge of unsatisfied debts is denied if the debtor did any of the following​ EXCEPT?

filed a voluntary petition rather than an involuntary petition​ (assuming the bankruptcy trustee can establish that the debtor incurred the majority of his or her debt due to financial​ irresponsibility)

When a creditor files a​ UCC-1 with the appropriate government office to obtain a security interest in the goods this is known as perfection by​ ________.

filing a financing statement

Which of the following is the most common method of perfecting a​ creditor's security interest in​ collateral?

filing a financing statement in the appropriate government office

To obtain a writ of​ attachment, a creditor must​ ________.

follow the procedures of state​ law, give the other creditors​ notice, and post a bond with the court

Which of the following is NOT a recognized advantage of Chapter 13​ bankruptcy?

for the​ debtor, receiving a discharge from all​ pre-petition debts

Kyla owes her unsecured creditors​ $100,000. On February​ 9, Kyla knows that she is insolvent. Kyla owns a​ Mercedes-Benz automobile that is worth​ $55,000. On February​ 9, Kyla sells her​ Mercedes-Benz automobile to her​ friend, Wei, for​ $30,000. Wei is a bona fide purchaser who does not know of​ Kyla's financial situation. On July​ 1, Kyla files for Chapter 7 liquidation bankruptcy while still owing the​ $100,000 to her unsecured creditors. The court can void​ Kyla's sale of her automobile to Wei as​ a(n) __________________ because it occurred within​ _____________ of the petition and Kyla received less than a reasonable equivalent in value.

fraudulent​ transfer; 2 years

What is it called when a person goes to Europe to teach for a year and signs a document giving her brother the ability to make decisions on her behalf while she is overseas​ (including the power to purchase or sell stocks or real​ estate, pursue or defend​ lawsuits, and to make all other relevant​ decisions)?

general power of attorney

​Sonia, who owns a piece of vacant real​ estate, hires​ Matthew, a licensed real estate​ broker, to list the property for sale.​ Leonard, an adjacent property owner to​ Sonia's property, tells Matthew that a chemical plant has polluted his property and probably​ Sonia's property. Sonia does not know this​ fact, and Matthew does not tell Sonia this information. Sonia sells the property to Macy. It is later discovered that the property Macy bought from Sonia is polluted. In this​ Example, the information that Matthew was told about the possible pollution of the property is imputed to Sonia. Sonia will be held liable to Macy because of the legal rule of

imputed knowledge

Principals often employee outsiders—that ​is, persons and businesses that are not employees—to perform certain tasks on their behalf. These persons and businesses are called​ _____.

independent contractors

A principal is liable for an​ agent's ________.

intentional and innocent misrepresentations made within the scope of his or her authority

A major benefit of Chapter 11 bankruptcy is that the debtor​ ________.

is given the opportunity to accept or reject certain executory contracts and unexpired leases

the term respondeat superior literally means​ "_____," and is based on the legal theory of vicarious​ liability, which is liability​ _____.

let the master​ answer; without fault

If an agent acquires confidential information during the course of the agency and uses it to his or her​ advantage, this is known as​ ________.

misuse of confidential information

Under the standard for the​ __________________, an employer—​the______________—is not liable if an​ employee, who is motivated by​ jealousy, injures someone during work hours on the premises who dated the​ employee's boyfriend. In this​ standard, the​ employee's personal motivation is important to the standard.

motivation test; principal

Agents owe a duty​ _______________ to the principal.

of loyalty

A​ principal, Nigel​ Jones, and an​ agent, Marcia​ McKee, agree that the agent will represent the principal to purchase a business and that the agent will disclose the existence of the agency and identity of the principal to third parties. The agent finds a suitable business and contracts to purchase the business on behalf of the​ principal, but the agent mistakenly signs the contract​ "Marcia McKee,​ agent." This is​ a(n) _____ agency that occurs because of​ _____.

partially disclosed; mistake

A security interest can be obtained by the creditor in the goods without filing a financing statement when the creditor has​ ________.

possession of collateral

Most states permit foreclosure through​ _________________.

power of sale

Suppose Big Oil Company owns a manufacturing plant and has borrowed​ $50 million from a bank and used the plant as collateral for the loan. If Big Oil Company files for Chapter 11​ bankruptcy, an automatic stay​ _____.

prevents the bank from foreclosing and taking the property

Sally hires James to work as an employee at her firm. James has the ability to enter into contracts on behalf on Sally. This is called​ a(n) ________.

principal-agent relationship

When a creditor extends credit to a consumer to purchase consumer goods and obtains a security interest in the​ goods, this is known as perfection by​ ________.

purchase money security interest

To void a transfer or an​ obligation, the court must find that​ (1) the transfer was made or the obligation was incurred by the debtor with the actual intent to​ hinder, delay, or defraud a creditor or​ (2) the debtor​ _____________________.

received less than a reasonable equivalent in value

If a debtor defaults in his security​ agreement, the secured party may do any of the following​ EXCEPT?

repossess and dispose of the collateral in a commercially unreasonable manner

Sarah purchases an automobile from a car dealership. She borrows part of the purchase price from a lender. The lender requires Sarah to give it a security interest in the automobile to secure the loan. This is​ a(n) __________________ with the automobile being​ _____________ for the loan. If Sarah defaults and fails to make the required​ payments, the lender can​ ___________________.

secured credit​ transaction; collateral; repossess the automobile

Most​ _____________ seek to cure a default by​ ______________.

secured​ parties; taking possession of the collateral

A real estate agent who is employed to purchase real estate for a principal cannot secretly sell his or her own property to the principal. This is because agents are generally prohibited from undisclosed​ _____ with the principal.

self dealing

Suppose a principal employs an agent to trap alligators. If a law is passed that makes trapping alligators​ illegal, the agency contract​ _____.

terminates due to impossibility of performance

When an agent exceeds the scope of his or her​ authority, who is liable to the third​ party?

the agent only

All of the following are requirements in order for the court to confirm a Chapter 13 plan of payment​ EXCEPT?

the plan must require payments for at least ten years

In a fully disclosed​ agency, who is liable to the third​ party?

the principal only

Types of debt that can be discharged in a Chapter 7 bankruptcy include​ ________.

the remaining unpaid debt after Chapter 7 liquidation

All of the following statements are true regarding imputed knowledge​ EXCEPT?

there is no recourse for a principal if the agent fails to notify him of material information regarding the agency.

if an agent is offered a business opportunity that is meant for the principal and the agent takes advantage of​ it, this is known as​ ________.

usurping an opportunity

Suppose that an agent works for a principal that is in the business of real estate development. The principal is looking for vacant land to purchase to develop. A third party who owns and wants to sell his vacant land tells an agent of the principal of the availability of the land. The​ agent, without informing the​ principal, purchases the land for her own use. The agent is wrongfully​ _____ an​ opportunity, and thereby violating the​ agent's duty of​ _____.

usurping;loyalty

A principal is liable for an​ agent's actions​ _________________.

when the agent is negligent when acting within the scope of his or her authority

In determining the degree of control that the principal has over the​ party, the courts will look at all of the following​ EXCEPT?

whether or not the agent has a college degree

Which of the following is NOT a critical factor in determining independent contractor​ status?

whether the worker is employed in an​ "employment-at-will" jurisdiction

Which of the following is NOT a critical factor in determining independent contractor​ status?

whether the​ employer's form of business ownership is sole​ proprietorship, partnership, traditional corporation​ (C-corp), Subchapter S corporation​ (S-corp), or limited liability company​ (LLC)

the bankruptcy court will confirm a plan of reorganization under the acceptance method if​ ________.

​(1) the plan is in the best interests of the creditors because the creditors would receive at least what they would receive in a Chapter 7 liquidation​ bankruptcy, (2) the plan is​ feasible, and​ (3) each class of creditors accepts the plan

Which of the following is an accurate statement regarding the liability of a principal for an independent​ contractor's torts?

​Generally, a principal is not liable for the torts of its independent contractors.

Rani decides to sell her house and hires​ Mark, a real estate​ broker, to list and sell the house for a price of​ $1 million. They agree that Mark will disclose the existence of the agency and the identity of the principal to interested third parties. Mark shows the house to​ Heather, a prospective​ buyer, and discloses to Heather that he is acting as an agent for Rani. Heather agrees to buy the​ house, and Mark signs the contract on behalf of Rani. Which of the following statements is​ true?

​Rani, the​ principal, is liable on the​ contract, but​ Mark, the​ agent, is not.

A party who employs another person to act on his or her behalf is called​ a(n) _____, while a party who agrees to act on behalf of another is called​ a(n) _____.

​principal; agent


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