Adv Bus Law, Midterm

Gus Parker owned a race horse that had not made a good showing in the last 10 races. Disgusted with the horse, Parker stated that he would sell the horse for $25. Sam Hood immediately said that he would accept the horse for $25. Parker agreed to accept $2 after the afternoon;s race in which Parker was obligated to participate. The horse won the race, and Parker decided that he did not really want to sell the horse. Which of the following is true?

$25 constitutes sufficient consideration

D, E, F, and G formed a general partnership. Their written partnership agreement provides that the profits will be divided so that D will receive 40%, e,30%; F,20% and G 10%. There will be no provision for allocating losses, At the end of its first year, the partnership has losses of $200000. Before allocating losses, the partners' capital account balances are D, $120000, E,$100,000....After losses are allocated to the partners' capital accounts and all liabilities are paid, the partnership's sole asset is $106,000 in cash. how much will E receive on dissolution of the partnership?

$37000

To be successful in civil action under Section 11 of Securities Act of 1933 concerning liability for a misleading registration statement, the plaintiff must prove the

**Doesn't have to prove the defendant's intent to deceive or the plaintiff's reliance on the registration statement

Sales

16-25

The UCC provides rules of construction that allow unclear contracts to be read in the context of commercial practices and other surrounding circumstances. When the application of these rules results in a conflict, what hierarchy does the UCC establish with regard to the following? 1. Course of performance 2. Course of dealing 3. Usage of trade 4. Express terms

4,1,2,3

Which of the following securities is exempt from registration under the Securities Act of 1933

A class of stock given in exchange for another class by the issuer to its existing shareholders without the issuer's payment of a commission

Cookie Co. offered to sell Distrib Markets 20,000 pounds of cookies at $1.00 per pound, subject to certain specified terms for delivery. Distrib replied in writing as follows: "We accept your offer for 20,000 pounds of cookies at $1.00 per pound, weighing scale to have valid city certificate." Under the UCC,

A contract was formed between

Allen, Burton, and Carter were equal partners for the purpose of buying and selling real estate for profit. FOr convenience, title to all property purchased was taken in the name of Allen. Allen died with partnership real estate and partnership personal property valued at $250,000 and $5000, respectively, standing in his name. The partnership had no debts. Allen had bequeathed all his personal property to his children. In this situation,

Allen's estate is entitled to settlement for the value of his partnership interest

Delegation of the powers of the board of directors is generally

Allowed except with regard to specified important transactions

During the winding-up of a general partnership, what is the order of distribution in satisfaction of the following claims?

Amounts owed to nonpartner creditors and amounts owed partners for loans to the partnership share first priority

The Revised Uniform Partnership Act provides for a limited liability partnership Under the act

An LLP's failure to file an annual report may result in revocation of LLP status, but, if an application for reinstatement is granted, the reinstatement relates back to the revocation date

Rey Corp.'s management intends to solicit proxies relating to its annual meeting at which directors will be elected. Rey is subject to the registration and reporting requirements of the Securities Exchange act of 1934. As a result, Rey must furnish its shareholders with

An annual report containing its audited balance sheets for the 2 most recent years

A joint venture is

An association of persons engaged as co-owners in a single undertaking for profit

When a client accepts the services of an accountant without an agreement concerning payment, the result is

An implied-in-fact contract

Which of the following statements concerning the effectiveness of an offeree's rejection and an offeror's revocation of an offer are ordinarily true?

An offeree's rejection is effective when it is received by the offeror; an offeror's revocation is effective when it is received by offeree

Which of the following persons is not an insider of a corporation subject to the Securities Exchange Act of 1934 registration and reporting requirements?

An owner of 15% of the total face value of the corporation's outstanding debentures

Corporations that are exempt from registration under the Securities Exchange Act of 1934 are subject to the act's

Antifraud provisions

When no-par shares are issued by a corporation in a state that requires it to maintain a stated capital, the amount that must be allocated to capital surplus as distinct from stated capital is

Any portion of the proceeds so directed by the board of directors

The SEC's antifraud Rule 10b-5 prohibits trading on the basis of inside information of a business corporation's stock by

Anyone who bases his or her trading activities on the inside information

A corporate shareholder is entitled to which of the following rights?

Approve dissolution

Unless prohibited by the documents creating the organization, a shareholder in a publicly held corporation or the owner of a limited partnership interest has the right to

Assign his or her interest in the business

Fundamental corporate changes require shareholder approval. Under the RMBCA, which of the following is false?

At least a majority of each class must approve even though the rights of a class may not be affected

On day 1, Jackson, a merchant, mailed Sandy a signed letter that contained an offer to sell Sandy 500 electric fans at $10 per fan . The letter was received by Sandy on day 3. The letter contained a promise not to revoke the offer but no expiration date. On day 4, Jackson mailed Sandy a revocation of the offer to sell the fans. Sandy received the revocation on day 6. On day 7, Sandy mailed Jackson an acceptance of the offer, Jackson received the acceptance on day . Under the SAles Article of the UCC, was a contract formed?

A contract was formed on the day Sandy mailed the acceptance to Jackson

The following conversation took place between Mary and Ed : "Ed, if you wanted to sell your table, what would you ask for it?" Ed: "I suppose'$400 would be a fair price." Mary: "I'Il take it, it you have it refurbished." Ed: "Sold." Thus,

A contract was formed when Ed said "Sold"

Which of the following statements is true regarding the proxy solicitation requirements of Section 14(a) of the Securities Exchange Act of 1934?

A corporation must file its proxy statements with the SEC if it is a reporting company under the Securities Exchange Act of 1934

In which of the following situations does the first promise serve as valid consideration for the second promise

A debtor's promise to pay $500 for a creditor's promise to forgive the balance of a $600 disputed debt

For which of the following is a principal liable for damages caused by an independent contractor acting on behalf of the principal?

A dynamite explosion

Absent any contrary provisions in the agreement, under which of the following circumstances will a limited partnership be dissolved?

A general partner retires and all the remaining general partners do not consent to continue

Under the Uniform Limited Liability Company Act (ULLCA), the members of an LLC may determine in their operating agreement how their business will be conducted. In the absence of a provision in the operating agreement, the act provides that

A majority of the managers may exclusively decide most business matters

Which of the following statements is true regarding the fiduciary duty?

A majority shareholder as such may owe a fiduciary duty to fellow shareholders

A general partner will not be personally liable for which the following acts or transactions>

A personal mortgage loan obtained by one of the other partners on his residence to which that partner, without authority, signed the partnership name on the note

Which of the following statements is true about corporations subject to the reporting requirements of the Securities Exchange Act of 1934?

A report (Form 8-K) must be filed with the SEC after a material important event occurs

Traditional concepts applicable to large publicly held corporations often do not meet the needs of closely held ones. Accordingly, the RMBCA addresses these needs. Under the RMBCA,

A shareholder may have power to dissolve a close corporation that is similar to a partner's

Spring agreed to buy Summer's car. Because the actual purchase was not to occur for several months, they drafted a lengthy agreement that specified all of the rights and obligations of each of the parties. They hired an attorney to review this two-page, single-spaced document. After the attorney suggested a few changes, the document was retyped and signed. The contract is

A simple contract

Jenni Jones, a clerk in a lumber yard, decided to take a lunch break. Bob Smith came in to buy some nails. Not seeing anyone around, Smith sat down on the counter to wait. Walter Proctor came in to buy some lumber. Thinking Smith worked there, Proctor asked Smith if the lumber could be delivered that afternoon. Smith assured Proctor that it would be done. Proctor paid Smith and left. Smith kept the money and also left. Which statement is false? A) Smith had apparent authority to sell the lumber or agree to deliver it. B) Jones was in violation of her fiduciary duty to the principal for neglecting her duty. C) Proctor cannot hold the lumber company liable for not delivering the lumber. D) Proctor can hold Smith liable.

A) Smith had apparent authority to sell the lumber or agree to deliver it.

B approached L and proposed they form a partnership to exploit a profitable idea of B's. L declined, citing the risk of unlimited liability. B then proposed that L lend B $50,000 and that B go into the business as a sole proprietor. L would receive half the profits and the right to veto any of B's decisions. The debt would have a long-term maturity date to facilitate operation of the business during its development stage. If L accepts the above proposition, the likely result is that

B and L have formed a partnership even if they did not intend to

Generally, officers of a corporation: A) Are elected by the shareholders. B) Are agents and fiduciaries of the corporation having actual and apparent authority to manage the business. C) May be removed by the board of directors without cause only if the removal is approved by a majority vote of the shareholders. D) May declare dividends or other distributions to shareholders as they deem appropriate.

B) Are agents and fiduciaries of the corporation having actual and apparent authority to manage the business.

Jill Jackson engaged Tod Taylor to purchase 1,000 shares of XYZ stock on her behalf. Jackson did not know Taylor owned 1,000 shares of XYZ stock that he wished to sell. Taylor sold these 1,000 shares of XYZ stock to Jackson at the current market price. Taylor's purchase of his stock on behalf of Jackson was A. Unethical only if Taylor made a profit. B. A breach of a fiduciary duty. C. Not unethical unless Taylor could have found a better deal elsewhere. D. An act that terminated the agency relationship.

B. A breach of a fiduciary duty.

Modern corporations wield a wide variety of powers. A corporation

Can do anything permitted by the incorporation statute

Marshall formed a limited partnership for the purpose of engaging in the export-import business. Marshall obtained additional working capital from Franklin and Lee by selling them each a limited partnership interest. Under these circumstances, the limited partnership

Can exist as such only if it is formed under the authority of a state statute

Under Regulation D of the Securities Act of 1933, which of the following conditions apply to private placement offerings? The securities

Cannot be the subject of an immediate unregistered reoffering to the public

Nix sent Castor a letter offering to employ Castor as controller of Nix's automobile dealership. Castor received the letter on February 19. The letter provided that Castor would have until February 23 to consider the offer and, in the meantime, Nix would not withdraw it. On February 20, Nix, after reconsidering the offer to Castor, decided to offer the job to Vick, who accepted immediately. That same day, Nix called Castor and revoked the offer. Castor told Nix that an acceptance of Nix's offer was mailed on February 19. Under the circumstances,

Castor's acceptance was effective when mailed

A corporation is a separate legal entity for most purposes. A significant issue is whether it is also separate from its owners for tax purposes. Which of the following is true?

Certain for-profit corporations may elect to avoid federal income taxation

The Acme Corporation is having a "Happy Holiday Giveaway". To win a person must guess the number of marbles in a large jar. No purchase is necessary. This contest is probably not illegal because what element is lacking?

Consideration

Under the Revised Model Business Corporation Act, a dissenting shareholder's appraisal right generally applies to which of the following corporate actions?

Consolidations and Short-Term Mergers

To which of the following transactions does the common law statute of frauds not apply?

Contract that can be performed within 1 year

Bill Daniels, Jess Beal and Sydney Wade formed a DBW partnership. Daniels contributed $20000, Beal $15000, and Wade $5000. They also agreed that all losses exceeding capital contributed would be assumed by Daniels, and he would hold his fellow partners harmless from any additional amounts lst. IF the partnership becomes insolvent and the partnership debts exceed assets by $15000, which of the following is true?

Each Partner is jointly and severally liable to firm creditors

Which of the following statements is true concerning the similarities between a limited partnership and a corporation?

Each is created under a statute and must file a copy of its organizational document with the proper state authorities

A partnership agreement provides that upon death or dissociation, a partner is entitled to the carrying amount of his or her partnership interest and the partnership shall continue. This provision

Eliminates the need to wind up upon dissociation of a partner by express will

Generally, a disclosed principal will be liable to third parties for its agent's unauthorized misrepresentations if the agent is an

Employee, yes; Independent Contractor, no

On the first day of the month, Thomas and Moore orally agreed that Thomas was to deliver to Moore's place of business a case of fruit on each monday of the current month. Moore was to pay the $100 price on the first of the following month. On the 15th of the month, the agreement should be classified as

Executory

Kirk Corp, sold Nix an Ajal freezer, Model 24, for $490. The contract required delivery to be made by June 23. On June 12, Kirk delivered an Ajax freezer, Model 52, to Nix. Nix immediately notified Kirk that the wrong freezer had been delivered and indicated that the delivery of a correct freezer would not be acceptable. Kirk wishes to deliver an Ajax freezer, Model 24, on June 23. Which of the following statements is true?

Kirk may deliver the freezer on June 23 without further notice to Nix

Ann Agent is acting on behalf of a disclosed principal. She will not be liable to a third party if she

Lacks specific express authority but is acting within the scope of her implied authority

Which of the following statements is true about financing a for-profit corporation is true?

Large corporations usually have a blend of debt and equity financing

Lydia promised to pay Lavinia $10,000 if she stopped smoking for 1 year. Lavinia stopped and brought suit when Lydia failed to pay. Who will win?

Lavinia will win because Lydia received a legal benefit

In determining whether the consideration requirement to form a contract has been satisfied, the consideration exchanged by the parties to the contract must be

Legally sufficient

Wichita Properties is a limited partnership created in accordance with the provisions of the Uniform Limited Partnership Act. The partners have voted to dissolve and settle the partnership's accounts. Which of the following will be the last to be paid?

Limited and general partners in respect to their undistributed profits

The XYZ Limited Partnership has two general partners, Smith and Jones. A provision in the partnership agreement allows the removal of a general partner by a majority vote of the limited partners. The limited partners vote to remove Jones as a general partner. Which of the following statements is true?

Limited partners may vote to remove a general partner without losing their status as limited partners

Sklar, CPA, purchased two computers from Wiz Corp. Sklar discovered material defects in the computers 10 months after taking delivery. Sklar commenced an action for breach of warranty against Wiz 3 years later. Wiz has raised the statute of limitations as a defense. The original contract between Wiz and Sklar contained a conspicuous clause providing that the statute of limitations for breach of warranty actions would be limited to 18 months. Under the circumstances, Sklar will

Lose because the clause providing that the statute of limitations would be limited to 18 months is enforceable

Bird Corp. made a $5 mil exempt common stock offering under Rule 505 of Regulation D of the Securities Act of 1933. Thus, the shares were restricted securities. As the issuer of restricted securities, Bird must

Make a reasonable effort to determine that purchasers are buying for themselves and not for others

Corporations generally may

Make contributions to charitable, scientific, or educational purposes

Young was a purchasing agent for Wilson, a sole proprietor. Young had the express authority to place purchase orders with Wilson's suppliers. Young conducted business through the mail and had little contact with Wilson. Young placed an order with Vanguard, Inc. on behalf of Wilson, Wilson was declared incompetent in a judicial proceeding. Young was aware of Wilson's incapacity. With regard to the contract withVanguard, Wilson will

Not be liable because Young did not have authority to enter into the contract.

Pursuant to Regulation D of the Securities Act of 1933, Pate Corp. is offering $3mil of its securities solely to accredited investors. Under Regulation D, Pate is

Not required to provide any specified information to the accredited investors

In general, which of the following must be contained in articles of incorporation?

Number of shares of stock authorized to be issued by the corporation

A major characteristic of the corporation is its recognition as a separate legal entity. As such, it is capable of withstanding attempts to "pierce the corporate veil". The corporation that is least likely to resist such attempts successfully is one that

Onely holds assets to defraud creditors

Limited liability of shareholders is one of the advantages of incorporation. Generally, a shareholder is personally liable

Only for his or her investment in the corporation

Under common law, an acceptance of an offer for a bilateral contract is effective

Only if it is the mirror image of the offer

Portavoy and Bredstock are the major shareholders of an active participants in the management of Port-a-Stock Corporation. Mann is an investor who owns 10% of the shares but is otherwise uninvolved. Kalik is a promoter and 5% shareholder who has no voice in management. Unfortunately, Port-a-Stock was defectively formed and does not even qualify as a de facto corporation. The RMBCA would impose personal liability

Only on those purporting to act on behalf of Port-a-Stock

Which of the following represents the basic distinction between a bilateral contract and a unilateral contract

Only one promise is involved if the contract is unilateral, but two are involved if it is bilateral

A shareholder of a professional corp has committed malpractice. Which of the following is the rule least likely to be adopted by a state regarding personal liability?

Only the corporation will be liable

Parks furnished specifications and ordered 1,000 specially constructed folding tables from Metal Manufacturing Company, Inc. The tables were unique in design and had not appeared in the local market. Metal completed the job and delivered the order to Parks. Parks sold about 600 of the tables when Unusual Tables, Inc., sued both Parks and Metal for patent infringement. If Unusual wins, what is the status of Parks and Metal?

Parks is liable to Metal for damages resulting from an infringement claim

Joe Perone was a member of Caddy, Shack & Perone, a general trading partnership. He died and the partnership is being liquidated in a bankruptcy proceeding, but Perone's estate is substantial. The creditors of the partnership are seeking to collect on their claims from Perone's estate. Which of the following statements is true insofar as their claims are concerned?

Partnership creditors and Perone's personal creditors are on an equal footing regarding the assets of Perone's estate.

Unless the partnership agreement prohibits it, a partner in a general partnership may validly assign rights to: Partnership property Partnership distributions a. Yes Yes b. Yes No c. No Yes d. No No

Partnership property, no; Partnership Distributions, yes

Which of the following must take place before a corporation may be voluntarily dissolved?

Passage by the board of directors of resolution to dissolve

A partner has the power to dissociate from a partnership but may not have the right. In some circumstances, the dissociation may be wrongful. One consequence that does not follow from a wrongful dissociation from a partnership at will is the loss of the

Payment for the partnership interest

Pell is the principal and Astor is the agent in an agency coupled with an interest. In the absence of a contractual provision relating to the duration of the agency, who has the right to terminate the agency before the interest has expired?

Pell, no; Astor, yes.

Which of the following rights will a third party be entitled to after validly contracting with an agent representing an undisclosed principal?

Performance of the contract by the agent

After dissolution, the only actual authority of a partner who is winding up is that needed to liquidate the partnership's affairs. The apparent authority of a winding-up partner continues with regard to which of the following persons?

Persons who had not previously extended credit, knew of the partnership and had no knowledge or notice of dissolution

Smith contracted in writing to sell Peters a used personal computer for $600. The contract did not specifically address the time for payment, place of delivery, or Peters' right to inspect the computer. Which of the following statements is true?

Peters is entitled to inspect the computer before paying for it.

Carson Corp., a retail chain, asked Alto Construction to fix a broken window at one of Carson's stores. Alto offered to make the repairs within 3 days at a price to be agreed on after the work was completed. A contract based on Alto's offer would fail because of indefiniteness as to the

Price involved

Pure Food Company packed and sold quality food products to wholesalers and fancy food retailers. One of its most popular items was "southern style" baked beans. Charles purchased a can of the beans from the Superior Quality Grocery. When Joan, the mother of Charles, bit into a heaping spoonful of the beans at a family outing, her teeth were damaged. Evidence revealed that the beans contained a brown stone. In a subsequent lawsuit by Joan, which of the following is true?

Privity will not be a bar in a lawsuit against either Pure Food or Superior Quality

Laser Corporation lent $5000 to Mr. Jacskon, a member of its board of directors. Mr. Jackson was also vice-president of operations. The board of directors, but not the shareholders, of Laser authorized the loan on the basis that the loan would benefit the corporation. THe loan made Mr. Jackson is

Proper

The distinction between specific partnership property and a partner's property is important not only to the partners and the partnership but also to creditors, heirs, and others. Which of the following is true?

Property held in the partnership name is presumed to be partnership property

given evidence of a violation of the federal securities laws, the SEC lacks the power to

Prosecute criminal cases

A corporation formed by a political unit to achieve a governmental purpose is best described as

Public

Pulse Corp. maintained a warehouse where it stored its manufactured goods. Pulse received an order from Star. Shortly after Pulse identified the goods to be shipped to Star, but before moving them to the loading dock, a fire destroyed the warehouse and its contents. With respect to the goods, which of the following statements is true?

Pulse has title and an insurable interest

Simpson, Ogden Corp.'s agent, needs a written agency agreement to

Purchase an interest in undeveloped land for Ogden

An owner of common stock will not have any liability beyond actual investment if the owner

Purchased treasury shares for less than par value

A proper tender of delivery requires that the seller

Put and hold conforming goods at the buyer's disposition and give any necessary notice

Contracts

Q 1-15

Agency

Q's 26-35

Partnerships

Q's 36 - 50

Corporations

Q's 51 - 65

Securities Regulation

Q's 66-75

Denise Smolen hired david Vause to construct an exercise center in her home. After completing the job, Vause sent her a bill for $3000. Based on the cost of similar work done for several of her neighbors, Smolen stated that $2000 was a fair price. Vause said that the market rate for quality work was $3000 but that he would accept $2500 check in full payment of the debt. The parties have

Reached an accord and satisfaction

Adhesion contracts are sometimes held to be unconscionable, bit their use is often justified. An adhesion contract is most appropriate if a seller

Realizes efficiencies that reduce transaction costs

Which of the following statements is true with respect to criminal prosecution under the securities act?

Reckless disregard for the truth may be a sufficient basis for a criminal conviction

The antifraud provisions of Rule 10b-5 of the Securities Exchange Act of 1934

Require that the wrongful act be accomplished through the mail, any other use of interstate commerce, or through a national securities exchange

The formation of a sole proproetorship

Requires a formal "doing business as" filing under state law if the proprietor will be conducting business under a fictitious name

An agreement is an essential element of a contract Ordinarily, the required mutual assent in achieved by means of an offer and an acceptance. Acceptance

Requires an indication of an intent to accept

Under the law of agency, the ratification doctrine

Requires the principal to ratify the entire act of the agent, and the ratification is retroactive.

A basic purpose of the securities laws in the US is to regulate the issuance of investment securities by

Requiring disclosure of all relevant information so that investors can make informed decisions

A limited partner's capital contribution to the limited partnership

Results in the limited partner's having an intangible personal property right

On May 2, Lace Corp., an appliance wholesaler, offered to sell appliances worth $3,000 to Parco, Inc., a household appliances retailer. The offer was signed by Lace's president and provided that it would not be withdrawn before June 1. It also included the shipping terms: "FOB-- Parco's warehouse." Parco accepted Lace's offer. If Lace inadvertently ships the wrong appliances to Parco and Parco rejects them 2 days after the receipt, title to the goods will

Revert to Lace when they are rejected by Parco

Which of the following statements applies to a sale on approval under UCC Article 2?

Risk of loss for the goods passes to the buyer when the goods are accepted after the trial period

If a contract for the sale of goods includes a C&F shipping term and the seller has fulfilled all of its obligations, the

Risk of loss will pass to the buyer upon delivery of the goods to the carrier

Which one of the following laws addresses the issue of insider trading?

Securities Exchange Act

Which of the following acts can a principal employ an agent to preform?

Sell real property

The articles of incorporation of Divy Co. prohibit dividends in any yr in which the corp has not earned an after-tax profit. For the yr just ended, Divy has a net loss. Nevertheless, the board declared a dividend because it has a substantial surplus from prior years. Which of the following is true?

Shareholders who knew that the dividend was improper will be liable

If a corporation wishes to issue securities to the public, it must comply with the applicable securities laws. Which of the following statements is true>

Some states have statutes permitting regulators to pass on the merits of securities

Paul employed Terry as his agent to purchase a tract of real property, to sell some bonds owned by Paul, and to investigate a potential investment in a city 1,000 miles away. Terry is a

Special Agent

Bonnie was a very bright and mature 16yr old who invented a new wangle. She persuaded the following persons to meet one afternoon: her rich aunt (mentally ill) to contribute money, her uncle who was a very good salesperson when sober and the president of Ultra Corp, which had the capability to manufacture the wangles. These 4 decided to form a partnership to manufacture and sell the wangles. They all signed a partnership agreement, although the uncle was extremely intoxicated at the time and the president signed on behalf of the Ultra Corp. Which of the following could become a partner?

Ultra Corp

Iago and Des are the sole directors, officers and shareholders of the ID corporation, a theoretical group incorporated in Florida, They regularly hold board mtgs outside FL or by videoconferencing. Recently, without a mtg, Des increased compensation of the directors and declared the regular dividend. Iago later filed in the minutes as signed, written consent t the actions taken. If the articles and bylaws are silent on these matters,

Unanimous written consent of all directors may substitute for a meeting

I.M. Cruck sold refrigerators door to door. Cruck called on Ms. Kalik, a welfare recipient with four small children. Convinced by the sales talk, Kalik signed a form contract that clearly stated the term of the agreement. After adding credit charges, insurance, and tax, the total price came to more than $1200. The retail value of the appliance was $300. After paying $600, Ms. Kalik defaulted. Ms. Kalik then sued and prevailed on the theory of

Unconscionability

Marco Limited Partnership intends to sell $6mil of its limited partnership interests. The state in which it carries on all of its business activities. If Marco intends to offer the limited partnership interests in reliance on Rule 147, the intrastate registration exception under Securities Act of 1933, which one of the following statements is true?

Under Rule 147, certain restrictions apply to resales of the limited partnership interests by purchasers

Which of the following statements about the directors of a corporation is true?

Under the Revised Model Business Corporation Act, a corporation may dispense with a board of directors in certain circumstances

Tim Carlton was swimming at the beach when he happened to see Fay Hudson struggling in the water. Carlton saved Hudson's life. Hudson was so grateful that she promised Carlton a job for the rest of his life Carlton went to work for Hudson, but a few months later Hudson found that she did not get along with Carlton's resignation. The contract is

Unenforceable because Carlton did not give consideration

Vick bought a used boat from Ocean Marina that disclaimed "any and all warranties" in connection with the sale. Ocean was unaware the boat had been stolen from Kidd. Vick surrendered it to Kidd when confronted with proof of the theft. Vick sued Ocean. Who is likely to prevail and why?

Vick, because the warranty of the title has been breached

Certain contracts have absolutely no effect and are not recognized under law. If two or more parties enter into such an agreement, it is

Void

All of the following are legal rights of shareholders in U.S. publicly traded companies except the right to

Vote on major management changes

A shareholder's right to inspect books and records of a corporation will be properly denied if the shareholder

Wants to use corporate shareholder records for a personal business

William Gladstone has been engaged as sales agent for the Doremus Corporation. Under which of the following circumstances may gladstone delegate his duties to another?

When emergency arises and the delegation is necessary to meet the emergency

When a buyer is in breach of a contract for the sale of goods, the seller may withhold delivery. Which of the following is true?

When the breach regarding one installment substantially impairs the value of the whole contract, all undelivered goods may be withheld

The apparent authority of a partner to bind the partnership in dealing with third parties

Will be effectively limited by the filing of a statement of partnership authority

Bill Cratchett leased an apartment from Grendel. Cratchett was a person of limited means in a locality where low-income housing was scarce. Shortly after signing the agreement, he fell in an unlit stairwell when a step unexpectedly gave way. In a suit for damages, Grendel relied on a clause in the lease stating, ''Tenant agrees to hold Owner harmless from any claims for damages no matter how caused." Cratchett should

Win because the exculpatory clause was unenforceable as a violation of public policy

The age of majority in the State of Gibraldi is 21. At the age of 20, Carol decided to leave school to seek employment sufficient to support herself. She therefore concluded an agreement with The Employment Agency to pay a fee of it located a job for her. The Agency found her a job, but Carol was still 20. In an action against Carol the Agency will most likely

Win, because Carol is liable for necessaries

In September, Cobb Company contracted with Thrifty Oil Company for the delivery of the 100,000 gallons of heating oil at the price of $.75 per gallon at regular specified intervals during the forthcoming winter. Because of an unreasonably warm winter, Cobb took delivery of only 70,000 gallons. In a suit against Cobb for breach of contract, Thrifty will

Win, because the change of circumstances could have been contemplated by the parties

Buck Dent is an agent for George Wein pursuant to a written agreement with a 3-year term. After 2 years of the term, Wein decides that he would like to terminate the relationship with Dent. Wein may terminate the relationship

Without cause but may be held liable for breach of contract.

A sheep rancher agreed, in writing, to sell all the wool shorn during the shearing season to a weaver. The contract failed to establish the price and a minimum quantity of wool. After the shearing season, therancher refused to deliver the wool. The weaver sued the rancher for the breach of contract. Under Article 2 of the UCC, will the weaver win?

Yes because this was an output contract

A state statute establishes a max interest rate of 10% for loans or forbearance of money when the debtor is not a corporation. Arrears and Buck, a large retailer, effectively charges consumers an annual rate of 18% on the unpaid balances of their purchases

the time-price doctrine may apply

The registration provisions of the Securities Exchange Act of 1934 require disclosure of all of the following information except the

names of owners of at least 5% of any class of nonexempt equity security

A main provision of the Securities Act of 1933, as amended in 1934, is the requirement that

new securities offered for sale in interstate commerce be registered with the SEC

An offer may be accepted

only by the designated offeree.

Which of the following corporations are subject to the accounting requirements for the Foreign Corrupt Practices Act? (FCPA)

All corporations whose securities are registered pursuant to the Securities Exchange Act of 1934

Carol dictated an offer she intended to make to Deanna. Irvin, her secretary, drafted an email based on Carol's dictation. During lunch and before the offer had been sent, Irvin saw Deanna and told her about it. Deanna promptly sent an acceptance to Carol. What was the effect of this attempted acceptance? A. No contract was formed because the offer was not communicated to the offeree. B. No contract was formed because the offer was not communicated to the offeree by the means chosen by the offeror. C. A contract was formed because Irvin was Carol's agent. D. A contract was formed because Carol intended to make an offer and Deanna learned of the offer in time to make a valid acceptance.

A) no contract was formed because the offer was not communicated to the offeree

Alice Able, on behalf of Pix Corp., entered into a contract with Sky Corp. by which Sky agreed to sell computer equipment to Pix. Able disclosed to Sky that she was acting on behalf of Pix. However, Able had exceeded her actual authority by entering into the contract with Sky. If Pix does not want to honor the contract, it will nonetheless be held liable if Sky can prove that A. Able had apparent authority to bind Pix. B. Able believed she was acting within the scope of her authority. C. Able was an employee of Pix and not an independent contractor. D. The agency relationship between Pix and Able was formalized in a signed writing.

A. Able had apparent authority to bind Pix.

Jackson paid Brady $100 for a 90-day option to purchase Brady's 160-acre farm for $32,000. The option agreement was in writing and signed by both parties. The agreement referred only to the option its period, a legal description of the farm, and the purchase price. Jackson wrote Brady 30 days later: "I hereby exercise my option to purchase your farm for $32,000 subject to closing details to be worked out by you and my attorney." Jackson's letter

Accepts Brady's offer. leaving customary details to be worked out during formaliation of the contract

Bea Barnes held an annual auction at her farm to sell tools, animals, and leftover crops. Ana Adam bid $50 for a plow, and no one bid against her. The auctioneer did not accept Adam's bid and stated that the plow would not be sold for such a low price. What is the legal effect of the bid and its rejection?

Adam's bid was only an offer

Adele borrowed $1000 from Beatrice and signed a promissory note due on Jan 1. On dec 1, Beatrivce agreed to accept immediate payment of $800 in full satisfaction of the debt. In January, Beatrice sought to receive the $200 unpaid balance. What will be the result?

Adele will win because she provided consideration for Beatrice's new promise

Under the RMBCA, which of the following statements about involuntary dissolution of a corporation is true?

Administrative dissolution by the secretary of state may result from failure to pay franchise taxes or to deliver an annual report

In a general partnership, which of the following acts must be approved by all the partners?

Admission of a partner

Green was adjudicated incompetent by a court having proper jurisdiction. Which of the following statements is correct regarding contracts subsequently entered into by Green?

All contracts are void

Harry, Harriet, and Horance operate the Triple H used car lot as a general partnership. Pursuant to their agreement, each drives a Triple H vehicle to and from work, makes various business trips about the city either from home or the lot, and keeps a "for sale" sign displayed in the vehicle's windshield. Each car is for sale at all times of the day and night and at any location. One afternoon, Harriet was driving on a business trip when her car collided with one driven by Paine, who was seriously injured. Harriet's conduct was found to be criminally negligent. In a tort action by Paine against Harry, Harriet, and Horance, both as individuals and as the Triple H partnership, who is liable?

All defendants because Harriet was acting within the ordinary course of the partnership business

Golden Enterprises, Inc., entered into a contract with Hidalgo Corporation for the sale of its mineral holdings. The transaction proved to be ultra vires. Which of the following parties may properly assert the ultra vires doctrine and why? A. Golden Enterprises to avoid performance. B. A shareholder of Golden Enterprises to enjoin the sale. C. Hidalgo Corporation to avoid performance. D. Golden Enterprises to rescind the consummated sale.

B. A shareholder of Golden Enterprises to enjoin the sale.

Seymore was recently invited to become a director of Buckley Industries, Inc. If Seymore accepts and becomes a director, Seymore, along with the other directors, will not be personally liable for A. Lack of reasonable care. B. Honest errors of judgment. C. Declaration of a dividend that the directors know will impair legal capital. D. Diversion of corporate opportunities to themselves.

B. Honest errors of judgment.

Johns owns 400 shares of Abco Corp. cumulative preferred stock. In the absence of any specific contrary provisions in Abco's articles of incorporation, which of the following statements is true? A. Johns is entitled to convert the 400 shares of preferred stock to a like number of shares of common stock. B. If Abco declares a cash dividend on its preferred stock, Johns becomes an unsecured creditor of Abco. C. If Abco declares a dividend on its common stock, Johns will be entitled to participate with the common shareholders in any dividend distribution made after preferred dividends are paid. D. Johns will be entitled to vote if dividend payments are in arrears.

B. If Abco declares a cash dividend on its preferred stock, Johns becomes an unsecured creditor of Abco.

James Fisk recently acquired Valiant Corporation by purchasing all of its outstanding stock pursuant to a tender offer. Fisk demanded and obtained the resignation of the existing board of directors and replaced it with his own slate of nominees. Under these circumstances, A. Fisk had no right to demand the resignation of the existing board members; their resignations are legally ineffective, and they remain as directors. B. If Valiant is listed on a national stock exchange, Fisk must file his tender offer with the SEC. C. The former shareholders of Valiant are parties to a tax-free reorganization. Hence, they are not subject to federal income tax on their gain, if any, on transferring their stock to Fisk. D. If Valiant is engaged in interstate commerce, the acquisition is exempt under the antitrust laws because the SEC has jurisdiction.

B. If Valiant is listed on a national stock exchange, Fisk must file his tender offer with the SEC.

Integral Corp., with assets in excess of $4 million, has issued common and preferred stock and has 350 shareholders. Its stock is sold on the New York Stock Exchange. Under the Securities Exchange Act of 1934, Integral must be registered with the SEC because A. It issues both common and preferred stock. B. Its shares are listed on a national stock exchange. C. It has more than 300 shareholders. D. Its shares are traded in interstate commerce.

B. Its shares are listed on a national stock exchange.

Hobson, Jones, Carter, and Wolff are medical doctors who have worked together for several years. Their attorney formed a typical professional corporation for them. Which of the following is true? A. Such a corporation will not be recognized for federal tax purposes. B. The state in which they incorporated must have enacted professional corporation statutes. C. Upon incorporation, the doctor-shareholder is insulated from personal liability beyond his or her capital contribution. D. The majority of states prohibit the formation of professional corporations by physicians.

B. The state in which they incorporated must have enacted professional corporation statutes.

. Lazur Corp. entered into a contract with Baker Suppliers, Inc. to purchase a used word processor from Baker. Lazur is engaged in the business of selling new and used word processors to the general public. The contract required Baker to ship the goods to Lazur by common carrier pursuant to the following provision in the contract: "FOB Baker Suppliers, Inc. loading dock." Baker also represented in the contract that the word processor had been used for only ten hours by its previous owner. The contract included the provision that the word processor was being sold "as is" and this provision was in a larger and different type style than the remainder of the contract. Assume that Lazur refused to accept the word processor even though it was in all respects conforming to the contract and that the contract is otherwise silent. Under the UCC Sales Article 2,

Baker may resell the word processor to another buyer

The distinction between contracts that are covered by the UCC and those that are not is

Basically dependent upon whether the subject matter of the contact involves the purchase or sale of goods

Egan, a minor purchased Baker's used computer for Egan's personal use. Egan paid $200 down on delivery and was to pay $200 thirty days later. Twenty days later, the computer was damaged seriously as a result of Egan;s negligence. Five days after the damage occured and 1 day after Egan reached the age of majority. Egan attempted to disaffirm the contract with Baker. Egan will

Be able to disaffirm even though Egan was not a minor at the time of the disaffirmation

For an offer to confer the power to form a contract by acceptance, it must have all of the following elements except

Be communicated by words to the offeree by the offeror

Under UCC Article 2, a plaintiff who proves fraud in the formation of a contract may

Be entitled to rescind the contract and sue for damages resulting from the fraud

Shares of stock without par value may be issues for such consideration (in dollars) as may be fixed by a corporation's

Board of directors

Boyle, as a promoter of Delaney Corp., signed a 9-month contract with Austin, a CPA. Prior to the incorporation, Austin rendered accounting services for an additional period of 6 months pursuant to the contract, Austin was discharged without cause by the board of directors of Delany. Absent agreements o the contrary, who will be liable to Auston for breach of contract?

Both Boyle and Delaney

Which of the following statements is (are) true regarding the relationship between an agent and an undisclosed principal? I. The principal is required to indemnify the agent for any contract entered into by the agent within the scope of the agency agreement. The agent has the same actual authority as if the principal had been disclosed. II. The agent has the same actual authority as if the principal had been disclosed

Both I and II

The Larkin Corporation is contemplating a 2-for -1 stock split of its common stock. It's $4 par value common stock will be reduced to $2 after the split. It has a 2 million shares issued and outstanding out of a total of 3mil authorized. The distribution of the additional shares to the shareholders requires

Both authorization by the board of directors and approval by the shareholders

Which of the following statements, if any, is(are) true regarding the methods a target corporation may use to ward off a takeover attempt?

Both: The target corporation may make an offer to acquire stock from its own shareholders; and the target corporation may seek an injunction against the acquiring corporation on the grounds that the attempted takeover violates federal antitrust law

Unless otherwise agreed in a contract for the sale of goods, the buyer is obligated to pay at the time and place at which the buyer receives the goods. The duty of the buyer, however, is subject to a right of inspection. If the sale is a documentary sale, the

Buyer has no right of inspection prior to payment

Bush Hardware ordered 300 Ram hammers from Ajax Hardware. Ajax accepted the order in writing. On the final date allowed for delivery, Ajax discovered it did not have enough Ram hammers to fill the order. Instead, Ajax sent 300 Strong hammers. Ajax stated on the invoice that the shipment was sent only as an accommodation. Which of the following statements is true? A) Ajax's note of accommodation cancels the contract between Bush and Ajax. B) Bush's order can be accepted only by Ajax's shipment of the goods ordered. C) Ajax's shipment of Strong hammers is a breach of contract. D) Ajax's shipment of Strong hammers is a counteroffer, and no contract exists between Bush and Ajax.

C) Ajax's shipment of Strong hammers is a breach of contract.

If a person is induced to enter into a contract by another person because of the close relationship between the parties, the contract may be voidable under which of the following defenses? A) Fraud in the inducement. B) Unconscionability. C) Undue influence. D) Duress.

C) Undue influence.

Skip & Trip decide to start a boutique selling preppy clothing. They sign a partnership agreement providing that Skip will contribute $6,000 toward the necessary $10,000 in start-up capital, and Trip will contribute $4,000. If the agreement is silent as to management and profits, Skip should receive A. 60% of the profits and share management equally with Trip. B. 60% of the profits and control 60% of the management functions. C. 50% of the profits and share management equally with Trip. D. 50% of the profits and control 60% of the management functions.

C. 50% of the profits and share management equally with Trip.

Blue, a used car dealer, appointed Gage as an agent to sell Blue's cars. Gage was authorized by Blue to appoint subagents to assist in the sale of the cars. Vond was appointed as a subagent. To whom does Vond owe a fiduciary duty? A. Gage only. B. Blue only. C. Both Blue and Gage. D. Neither Blue nor Gage.

C. Both Blue and Gage.

Blanche was vice president of the Jupiter Corporation, a major weapons dealer. She used corporate funds to bribe a government official of a small European country. Blanche also caused advertisements to be published in the U.S. press that defamed Jupiter's chief competitor. What is the legal effect of Blanche's actions? A. Jupiter cannot be found guilty of a crime because a corporation cannot form the requisite intent. B. Jupiter will prevail on a defense of ultra vires. C. Both Jupiter and Blanche are liable in tort and guilty of a crime. D. Blanche is guilty of a crime but is not liable in tort.

C. Both Jupiter and Blanche are liable in tort and guilty of a crime.

Integral Corp. is subject to the reporting provisions of the Securities Exchange Act of 1934. For its current fiscal year, Integral filed the following with the SEC: quarterly reports, an annual report, and a periodic report listing newly appointed officers of the corporation. Integral did not notify the SEC of shareholder "short-swing" profits, report that a competitor made a tender offer to Integral's shareholders, and report changes in the price of its stock as sold on the New York Stock Exchange. Under the SEC reporting requirements, which of the following was Integral required to do? A. Report the tender offer to the SEC. B. Notify the SEC of shareholder "short-swing" profits. C. File the periodic report listing newly appointed officers. D. Report the changes in the market price of its stock.

C. File the periodic report listing newly appointed officers.

Lee repairs high-speed looms for Sew Corp., a clothing manufacturer. Which of the following circumstances best indicates that Lee is an employee of Sew and not an independent contractor? A. Lee's work is not supervised by Sew personnel. B. Lee's tools are owned by Lee. C. Lee is paid weekly by Sew. D. Lee's work requires a high degree of technical skill

C. Lee is paid weekly by Sew.

Joe Minorca purchased a motorcycle from Big Rig Company on May 1. Joe's birthday is June 17, at which time he will have attained his majority. Which of the following actions is ineffective as a ratification of the contract of purchase? A. On June 21, Joe gave property to his sister. B. On June 20, Joe made an oral promise to honor the contract. C. On June 16, Joe remitted an installment payment. D. As of November 17, Joe was still using the vehicle.

C. On June 16, Joe remitted an installment payment.

Davis, a director of Active Corp., is entitled to A. Serve on the board of a competing business. B. Take sole advantage of a business opportunity that would benefit Active. C. Rely on information provided by a corporate officer. D. Unilaterally grant a corporate loan to one of Active's shareholders.

C. Rely on information provided by a corporate officer.

John Watson entered into an agreement to purchase 1,000 shares of the Marvel Corporation, a corporation to be organized. Watson has since had second thoughts. Applying the RMBCA, which of the following is true? A. A written notice of withdrawal prior to incorporation will be valid. B. A transfer of the agreement to another party will eliminate his liability. C. Watson may not revoke the agreement for a period of 6 months. D. Watson may avoid liability if a majority of the other subscribers release him.

C. Watson may not revoke the agreement for a period of 6 months.

Which of the following securities are corporate debt securities?

Convertible Bonds and Debenture Bonds

Which of the following statements is true?

Corporations and limited partnerships must be formed pursuant to a state statute. A copy of thee organisational document must be filed with the proper state agency

Under the Foreign Corrupt Practices Act (FCPA), an action may be brought that seeks

Criminal sanctions against both the corporation and its officers by the Department of Justice

Acorn Corp. wants to acquire the entire business of Trend Corp. Which of the following methods of business combination will best satisfy Acorn's objectives without requiring the approval of the shareholders of either corporation? A. A merger of Trend into Acorn, whereby Trend shareholders receive cash or Acorn shares. B. A sale of all the assets of Trend, outside the regular course of business, to Acorn, for cash. C. An acquisition of all the shares of Trend through a compulsory share exchange for Acorn shares. D. A cash tender offer, whereby Acorn acquires at least 90% of Trend's shares, followed by a short-form merger of Trend into Acorn.

D. A cash tender offer, whereby Acorn acquires at least 90% of Trend's shares, followed by a short-form merger of Trend into Acorn.

Culler Construction Company agreed with the City of Orange Key to build a road. The project was to begin on December 1. One week after work began, a hurricane struck the site, washing away so much land that the construction would be twice as expensive. As a result, Culler refused to continue the job unless Orange Key paid a large sum in addition to the initial contract price. A promise by Orange Key to pay more than the original price is A. Unenforceable because Orange Key received no additional legal benefit. B. Unenforceable because Culler incurred no additional legal detriment. C. Unenforceable because of the pre-existing contractual obligation. D. Enforceable because Culler encountered unforeseeable difficulties.

D. Enforceable because Culler encountered unforeseeable difficulties.

Stanton exceeded her actual authority when she concluded an agreement with Nilworth Corp. on behalf of Lax Corp. If Lax wishes to ratify the contract with Nilworth, which of the following statements is true? A. Lax must notify Nilworth that Lax intends to ratify the contract. B. Stanton must have acted reasonably and in Lax's best interest. C. Stanton must be a general agent of Lax. D. Lax must have knowledge of all material facts relating to the contract at the time it is ratified.

D. Lax must have knowledge of all material facts relating to the contract at the time it is ratified.

Case Corp. is incorporated in State A. Under the Revised Model Business Corporation Act, which of the following activities engaged in by Case requires that Case obtain a certificate of authority to do business in State B? A. Maintaining bank accounts in State B. B. Collecting corporate debts in State B. C. Hiring employees who are residents of State B. D. Maintaining an office in State B to conduct intrastate business.

D. Maintaining an office in State B to conduct intrastate business.

Jeri Fairwell is executive vice-president and treasurer of Wonder Corporation. She was named as a party in a shareholder derivative action in connection with certain activities she engaged in as a corporate officer. In the lawsuit, she was held liable for negligence in performance of her duties. Fairwell seeks indemnity from the corporation. The board of directors would like to indemnify her, but the articles of incorporation do not contain any provisions regarding indemnification of officers and directors. Indemnification A. Is not permitted because the articles of incorporation do not so provide. B. Is permitted only if Fairwell is found not to have been grossly negligent. C. Cannot include attorney's fees because Fairwell was found to have been negligent. D. May be permitted by court order although Fairwell was found to be negligent.

D. May be permitted by court order although Fairwell was found to be negligent.

Partners have a fiduciary relationship with each other. Accordingly, a partner A. May engage in a business that competes with the partnership if it is operated with his or her own resources. B. May take advantage of a business opportunity within the scope of the partnership enterprise if the partnership agreement will terminate before the benefit will be received. C. Must exercise a degree of care and skill as a professional. D. May not earn a secret profit in dealings with the partnership or partners.

D. May not earn a secret profit in dealings with the partnership or partners.

Spiffy Manufacturing plans to offer a new issue of voting stock to the investing public. Assuming that it properly uses an exemption from registration under the Securities Act of 1933, Spiffy A. Is also exempt from the antifraud rules of the federal securities laws. B. Need not supply any offerees and purchasers with any material information about itself or the stock being sold. C. Need not register with any state securities regulators. D. Must adhere to both federal antifraud rules and state law.

D. Must adhere to both federal antifraud rules and state law.

Dee is the owner of 12% of the shares of common stock of D&M Corporation that she acquired in Year 1. She is the treasurer and a director of D&M. The corporation registered its securities in Year 2 and made a public offering pursuant to the Securities Act of 1933. If Dee decides to sell part of her holdings in Year 9, the shares A. Would be exempt from registration because the corporation previously registered them within 3 years. B. Must be registered regardless of the amount sold or manner in which they are sold. C. Would be exempt from registration because she is not an issuer. D. Must be registered if Dee sells 50% of her shares through her broker to the public.

D. Must be registered if Dee sells 50% of her shares through her broker to the public.

The shares actually held by shareholders are best described as A. Authorized shares. B. Issued shares. C. Treasury shares. D. Outstanding shares.

D. Outstanding shares.

Patch, a frequent shopper at Soon-Shop Stores, received a rain check for an advertised sale item after Soon-Shop's supply of the product ran out. The rain check was in writing and stated that the item would be offered to the customer at the advertised sale price for an unspecified period of time. A Soon-Shop employee signed the rain check. When Patch returned to the store one month later to purchase the item, the store refused to honor the rain check. Under UCC Article 2, will Patch win a suit to enforce the rain check? A. No, because one month is too long a period of time for a rain check to be effective. B. No, because the rain check did not state the effective time period necessary to keep the offer open. C. Yes, because Soon-Shop is required to have sufficient supplies of the sale item to satisfy all customers. D. Yes, because the rain check met the requirements of the merchant's firm offer even though no effective time period was stated.

D. Yes, because the rain check met the requirements of the merchant's firm offer even though no effective time period was stated.

Dara bought an automobile needing repairs from Chevalier Motors, Inc. (CMI). CMI promised to repair it but 1 month later had not yet completed the repairs. Dara was using the car anyway when a fire in the dashboard rendered the vehicle inoperable. Dara returned the automobile immediately and orally informed a rep of CMO that she was demanding the purchase price. Dara sent a written notice of rescission 3 months later and filed suit 3 months after that. Who will most likely prevail, and what is the legal theory that best supports the result?

Dara, because she made a justifiable revocation of acceptance.

To prevail in an action for fraud in the inducement, a plaintiff must prove that the

Defendant made the misrepresentations with knowledge of their falsity and with an intention to deceive

Acme Corp. is incorporated in Deleware. Its principal place of businesss is Miami, FL and it deos business in all 50 states. For purposes of diversity of citizenship, Acme Corp. is considered to be a citizen of

Delaware and Fl

Delta sent its agent, Otto Bismark, to purchase some equipment. Bismark was instructed to charge the purchase to Delta's account. However, Bismark charged it to a personal account and did not indicate it was for Delta. Upon returning to Delta, Bismark showed Delta the personal charge and Delta reimbursed Bismark. Later Bismark disappeared and the store seeks to hold Delta liable.

Delta is liable because Bismark was instructed to make the purchase.

All of the following are functions of the Securities and Exchange Commission except the

Determination of fair trading prices for the common stock of large public companies

Dexter Inc., incorporated in its home state, does 20% of its business in neighboring state in which it maintains a permanent facility, It has not filed any papers in the neighboring state. which of the following statements is false?

Dexter cannot defend against a suit brought against it in the neighboring state's courts

With regard to an agreement for the sale of real estate, the statute of frauds:

Does not required that the agreement be signed by all parties

Which of the following types of mistakes ordinarily will not allow a contract to the rescinded

Duress through physical compulsion

In which of the following instances may silence by the offeree constitute acceptance?

During the course of prior business dealing the offeree has always sent a rejection if the items were not wanted. The offeror always shipped the items if such a rejection was not received

Dye sent Hill a written offer to sell a tract of land for $60,000. They were engaged in a separate dispute. The offer stated that it would be irrevocable for 60 days if Hill would promise to refrain from suing Dye during this time." Hill promptly delivered a promise not to sue during the term of the offer. Dye subsequently decided that the possible suit by Hill was groundless. Dye did not reply. Under the circumstances,

Dye's offer was supported by consideration and was not revocable when accepted

Farley Farms, Inc., shipped 100 bales of hops to Burton Brewing Corporation. Burton asserted that the hops did not conform to the contract. Farley's general sales agent who made the sale to Burton agreed to relieve Burton of liability and to have the hops shipped elsewhere. This was done, and the hops were sold at a price less than Burton was to have paid. Farley sued Burton for the amount of its loss. Under these circumstances a. Farley is bound because its agent expressly, impliedly, or apparently had the authority to make such an adjustment. b. Because the hops were sold at a loss in respect to the price Burton had agreed to pay, Burton would be liable for the loss involved. c. Even if Farley's agent had authority to make such an adjustment, it would not be enforceable against Farley unless ratified in writing by Farley. d. Farley will prevail only if the action by its agent was expressly authorized.

Farley is bound because its agent expressly, impliedly, or apparently had the authority to make such an adjustment.

An officer-shareholder of a corporation could be held personally liable for which one of the following debts

Federal payroll taxes that were withheld from the employees' wages but never remitted to the IRS

An offering made under the provisions of Regulation A of the Securities Act of 1933 requires that the issuer

File an offering circular with the SEC

The UCC implies a warranty of merchantability to protect buyers of goods. To be subject to this warranty, the goods need not be

Fit for all the purposes for which the buyer intends to use the goods

JBR Corp. was organized in the US and incorporated in State Q. It wishes to do business in State R. The shareholders all reside in State X. From State R's perspective, the corporation is best described as

Foreign

What type of conduct generally will make a contract voidable?

Fraud in the inducement

Casassa, a merchant in San Francisco, under the terms of a nonshipment contract, agrees to sell 50 cases of packaged macaroni to Paoli, a restaurant owner whose business is in San Jose. At the time of contracting for the sale, both parties are aware that these identified goods are in a warehouse in Fresno. The place for delivery is not specified in the agreement. On the basis of these facts, the place for delivery is

Fresno

Which of the following is least likely to be considered a security under the Securities Act of 1933?

General Partnership Interests

A shareholder of a corporation

Generally has preemptive right to the extent permitted by the articles

Gillie, Taft, and Dall are partners in an architectural firm. THe partnership agreement is silent about the payment of salaries and the division of profits and losses. Gillie works full time in the firm, and Taft and DAll each work half-time. taft invested $120000 in the firm, and Gillie and Dall invested $60,000 each. dall is responsible for bringing in 50% of the business, and Gillie and Taft 25% each. How should profits of $120000 for the year be divided

Gillie: $40,000; Taft: $40,000; Dail $40,000

Ms. Wall is a limited partner of the Amalgamated limited Partnership. She is insolvent and her debts exceed her assets by $28000. Goldsmith, one of Wall's largest creditors, is resorting to legal process to obtain the payment of Wall's debt to him. goldsmith has obtained a charging order against Wall's limited partnership interest for the unsatisfied amount of the debt. As a result of Foldsmith's action, which of the following will happen?

Goldsmith becomes in effect of Wall's partnership

Tiffany Grandiose secured an option to puchase a tract of land for $100,000. She then organized the Dunbar Company and subscribed to 51% of the stock of the corporation. It was issued for her 3-month promissory note for $100,000. As the controlling director, she had the corporation authorize the purchase of the land for $200,000. She then promptly redeemed the promissory note. A disgruntled shareholder subsequently brought suit against Grandiose on the corporation's behalf. Whihc of the following is a true statement?

Grandiose breached a fiduciary duty to the corporation

Unless otherwise provided in the certificate of limited partnership, which of the following is true if Grey, one of the limited partners, dies?

Grey's personal representative will have all of the rights of a limited partner for the purpose of settling the estate

Gudrun owned a 2000-acre country estate. She signed a written agreement with Johann, selling the house on the property and "a sufficient amount of land surrounding the house to create a park." The price was stated to be $200,000. When gudrun refused to honor the agreement, Johann sued. Who will prevail and why?

Gudrun will win because the agreement is not reasonably definite

Opal Corp. declared 9% stock dividend on its common stock. The dividend

Has no effect on Opal's earnings and profits for federal income tax purposes

Amanda Blake, a partner in QVM, a general partnership, wishes to withdraw from the partnership and sell her interest to Dick Nolan. All of the other partners of QVM have agreed to admit Nolan as a partner and to hold Blake harmless for the past, present, and future liabilities of QVM. As a result of Blake's withdrawal and Nolan's admission to the partnership, Nolam

Has the right to participate in QVM's Management

Many states require partnerships to file the partnership name under laws known as fictitious name statutes. These statutes

Have little effect on the creation or operation of a partnership other than to the imposition of a fine or other minor penalty for noncompliance

Stanley and Martin formed a partnership to engage in the trucking business. Stanley contributed the capital and Martin was to contribute the labor. However, Stanley did not want his name associated with the partnership due to interests in other trucking businesses. Martin was involved in an accident while carrying goods on behalf of the partnership. Which of the following would Stanley not be liable for as a result of the accident?

Illegal drug activities when the police discovered their business was transporting illegal drugs

Rocco Pierre was an 80% shareholder of La Bos Company, which was formed with his contribution of $2000 of assets. His sister Petra provided $500 worth of assets and held the remaining stock. As the need for operating capital arose, Rocco and Petra advanced funds to the company. These advances eventually totaled $250,000. Annual sales averaged $300000. When La Bos when into receivership, Rocco nd Petra asserted their position as creditors of equal dignity with the other general creditors for the purpose of distribution of assets. They cited the existence of promissory notes signed by the corporate officers as evidence of their standing. The most likely result is that Rocco and Petra

Have no standing as creditors under the Deep Rock doctrine

Under UCC Article 2, and unless otherwise agreed to, the seller's obligation to the buyer is to

Hold conforming goods and give the buyer whatever notification is reasonably necessary to enable the buyer to take delivery

Shareholder action on the fundamental changes in a large publicly held corporation generally requires that a meeting be convened. Under the RMBCA, and unless the articles or bylaws stipulate otherwise,

Holders of not less than 10% of the voting shares may call a special meeting

Stanley Kowalski is a well-known retired movie personality who purchased a limited partnership interest in Terrific Movie Productions upon its initial syndication. Which of the following is true?

If Stanley permits his name to be used in connection with the business and is held out as a participant in the management of the venture, he will be liable as a general partner.

Wanamaker, Inc., engaged Adolph Anderson as its agent to purchase original oil paintings for resale by Wanamaker. Anderson's express authority was specifically limited to a maximum purchase price of $25,000 for any collection provided it contained a minimum of five oil paintings. Anderson purchased a seven-picture collection on Wanamaker's behalf for $30,000. Based upon these facts, which of the following is a correct legal conclusion?

If Wanamaker rightfully disaffirms the unauthorized contract, Anderson is personally liable for the seller.

Badger Corporation sold goods to Watson. Watson has arbitrarily refused to pay the purchase price. Under what circumstances will Badger not be able to recover the price if it seeks this remedy instead of other possible remedies?

If Watson refused to accept delivery and the goods were resold in the ordinary course of business

Ann Mayer wrote Tom Jackson and offered to sell Jackson a building for $200,000. The offer stated it would expire 30 days from July 1. Mayer changed her mind and does not wish to be bound by the offer. If a legal dispute arises between the parties regarding whether there has been a valid acceptance of the offer, which of the following is true?

If jackson categorically rejects the offer on July 10, Jackson cannot validly accept within the remaining stated period of time

Which of the following is a true statement concerning a contract for the sale of goods which contains no express provision on passage of title?

If the contract requires the seller to deliver the goods at a named destination, title will pass to the buyer on tender there

Cey Crop. entered into a contract to sell parts to Deck, Ltd. The contract provided that the goods would be shipped "FOB Cey's warehouse." Cey shipped parts different from those specified in the contract. Deck rejected the parts. A few hours after Deck informed Cey that the parts were rejected, they were destroyed by fire in Deck's warehouse. Cey believed that the parts were conforming to the contract. Which of the following statements is true?

If the parts were nonconforming, Cey will bear the risk of loss, even though the contract was shipment contract.

The buyer's general obligation under a contract for the sale of goods is to accept and pay according to the contract. Unless the parties have agreed otherwise, the UCC states that

If the seller demands payment in cash, they must give any reasonably necessary extension of time

Assuming no agreement on the matter between the buyer and seller of stock, who is entitled to a declared dividend?

If the stock is listed on a stock exchange, the buyer if the purchase was 6 days before the record date

Which of the following statements is true with regard to an auction of goods?

The auctioneer may withdraw the goods at any time prior to completion of the sale unless the goods are put up without reserve

Parr is the vice president of research of Lynx, Inc. When hired, Parr signed an employment contract prohibiting Parr from competing with Lynx during and after employment. While employed, Parr acquired knowledge of many of Lynx's trade secrets. If Parr wishes to compete with Lynx and Lynx refuses to give Parr permission, which of the following statements is true?

In determining whether Parr may compete with Lynx, the court should consider, among other factors, whether the agreement is necessary to protect Lynx's legitimate business interests

To satisfy the UCC statute of frauds, a written agreement for the sale of goods must

Indicate that a contract for sale has been made

A partnership may be dissolved by a judicial determination sought by a partner. Which of the following is least likely to be a reason for such a dissolution?

Insolvency of a partner if the partnership is at will

Which of the following is excluded from the UCC's definition of goods?

Investment Securities

A provision in a contract for the sale of goods providing that the seller may accelerate payment at will when he deems himself insecure

Is enforceable subject to the food faith belief of the seller

Yost Corp., a computer manufacturer, contracted to sell 15 computers to Ivor Corp., a computer retailer. The contract specified that delivery was to be made by truck to Ivor's warehouse. Instead, Yost shipped the computers by rail. When Ivor claimed that Yost did not comply with the contract, Yost told Ivor that there had been a trucker's strike when the goods were shipped. Ivor refused to pay for the computers. Under these circumstances, Ivor

Is obligated to pay for the computers because Yost made a valid substituted performance

A director of a corporation

Is often removable for cause by the other directors

Under the Securities Exchange Act of 1934, a corporation whose common stock is listed on a national stock exchange

Is subject to having the registration of the securities suspended or revoked

Olsen purchased a used van from Super Sales Co. for $350. A clause in the written contract in boldface type provided that the van was being sold "as is." Another clause provided that the contract was intended as the final expression of the parties' agreement. After driving the van for 1 week, Olsen realized that the engine was burning oil. Olsen telephoned Super and requested a refund. Super refused but orally gave Olsen a warranty on the engine for 6 months. The engine exploded 3 weeks later. Super's oral warranty

Is valid and enforceable

Shareholders representing a majority of the voting shares of Nadier, Inc. hve transferred their shares to Thomasina Trusty to hold and vote irrevocably for 10 years. Trusty has issued certificates to the shareholders and pays over to them the dividends received. The agreement

Is valid if entered into pursuant to a written voting trust agreement

Which of the following statements about the form of general partnership agreement is true?

It must be in writing if the partnership is to last for longer than 1 year

A major impact of the Foreign Corrupt Practices Act of 1977 is that registrants subject to the Securities Exchange Act of 1934 are now required to

Keep records that reflect the transactions and dispositions of assets and to maintain a system of internal accounting controls

Basil Hardheart is the majority shareholder and chairman of the board of Close Corporation. Carrie Carter and Gina Kelly are respectively a minority common shareholder and a holder of nonvoting preferred stock. Basil has diverted corporate assets to personal use. Basil has also caused the board to declare and pay common stock dividends without paying preferred dividends. Under these circumstances

Kelly may bring a representative action against corporation for withholding the preferred dividends

State incorporation statutes prescribe certain formalities as conditions precedent to the forming of a corporation. Which of the following statements best describes the effect of defective formation?

The significance of the de facto incorporation doctrine has been reduced

On January 1, Lemon wrote Cina Martin offering to sell Martin a ranch for $80000 cash. Lemon;s letter indicated that the offer would remain open until February 1 if Martin mailed $100 by Jan 10. on Jan 5 Martin mailed $100 to Lemon. on Jan 30 Martin called Lemon stating that she would be willing to pay $60,000 for the ranch. Lemon refused to sell at that price and immediately placed the ranch on the open market. On February 6 Martin mailed Lemon a letter accepting the original offer to buy the ranch at $80000. The following day Lemon received Martin's acceptance. At that time the ranch was on the market for $100,000. which of the following is true

Martin's letter of feb 6 formed a binding contract based on the original terms of Lemon's Jan 1 letter.

A valid limited partnership

Mat have an unlimited number of partners

Which of the following requires consideration to be binding on the parties

Material modification of a contract involving the sale of real estate.

Which of the following is the true statement with regard to materiality under the antifraud provisions of federal securities law?

Materiality is a function of whether a reasonable person would attach importance to the information and includes the balancing of both the probability that the event may occur and its potential impact relative to the total company activities

Taylor signed and mailed a letter to Peel that stated: "ship promptly 600 dozen grade A eggs." Taylor's offer

May be accepted by either a prompt promise to ship or prompt shipment

Shareholder voting

May be by proxy, but a proxy may be revoked if the shareholder signs a later proxy

Under UCC Article 2, the implied warranty of merchantability

May be disclaimed by a seller's oral statement that mentions merchantability

The president of Deal Corp. wrote to Boyd, offering to sell the Deal factory for $300,000. The offer was sent by the Deal on June 5 and was received by Boyd on June 9. The offer stated that it would remain open until December 20. The offer

May be revoked by Deal any time prior to Boyd's acceptance

Woody WIlson and Garrett Levy entered into a partnership for a 5-year period to repair appliances. Wilson did the work in the store and Levy made the service calls. Wilson discovered that Levy has been pocketing some of the payments for the service calls and not turning them all in to the partnership. Wilson

May bring suit to demand a formal accounting and dissolution of the partnership

A limited partner

May not withdraw his or her capital contribution absent sufficient limited-partnership property to pay all general creditors.

The duty of an agent to a principal

May sometimes involve refusing to obey reasonable instructions.

Mayker, Inc., and Oylco contracted for Oylco to be the exclusive provider of Mayker's fuel oil for 3 months. The stated price was subject to increases of up to a total of 10% if the market price increased. The market price rose 25% and Mayker tripled its normal order. Oylco seeks to avoid performance. Oylco's best argument in support of its position is that

Mayker ordered amounts of oil unreasonably greater than its normal requirements

On February 15, Mazur Corp. Contracted to sell 1000 bushels of wheat to Good Bread, Inc., at $6 per bushel, with delivery to be made on June 23. on June 1, Good advised Mazur that it would not accept or pay for the wheat. On June 2, Mazur sold the wheat to another customer at the market price of $5 per bushel. Mazur had advised Good that it intended to resell the wheat. Which of the following statements is true?

Mazur can successfully sue Good for the difference between the resale price and the contract price

A principal and agent relationship requires a

Meeting of the minds and consent to act

Kent works as a welder for Might Manufacturing, Inc. He was specially trained in safety precautions applicable to installing replacement mufflers on automobiles, including a rule against installing a muffler on any auto that had heavily congealed oil or grease or that had any leaks. Kent disregarded this rule and a customer's auto caught fire, causing extensive property damage and injury to Kent. Which of the following is true?

Mighty was liable to the customer irrespective of its efforts to prevent such an occurrence and its exercise of reasonable care

Mildred saw a vase in a store. A tag on the vase said, "Genuine Crystal, $125." Mildred said to the owner of the shop, "I'll buy this vase for $125." Milford, the owner of the shop, refused to sell the vase. In a lawsuit brought by Mildred against Milford,

Milford will win because he rejected Mildred's offer.

An oral agreement concerning the sale of goods entered into without consideration is binding if the agreement

Modifies the price in an existing, enforceable contract from $525 to $475

Which of the following will not result in a dissolution of a partnership?

The transfer by a partner of his or her entire partnership interest

In deciding whether consideration necessary to form a contract exists, a court must determine whether

There is mutuality of consideration

James Quick was a partner in the Fastm Sure, and Quick Factors partnership. He subsequently died. His will left everything to his wife including a one-third interest in the land and building owned by Fast, Sure and Quick

Mrs. Quick has the right to receive a settlement for her husband's interest in the partnership

On May 1, Apel purchased 7% of Stork Corp.'s preferred stock traded on a national securities exchange. After the purchase, Apel owned 9% of the outstanding preferred stock. Stork is registered under the Securities Exchange Act of 1934. With respect to the purchase, Apel

Must file with the SEC, the issuer and the national securities exchange information concerning the purpose of the acquisition

Surplus of a corporation means

Net assets in excess of stated capital

Hill is an agent for Newman. On behalf of Newman, Hill contracts to purchase furniture from A&M Wholesalers. Hill has previously purchased furniture on behalf of Newman from A&M Wholesalers. This contract is voidable by Newman if

Newman is a minor

Baker Corporation sent a letter to Sampson Company in which Baker offered to purchase 10 acres of certain real estate from Sampson for $4,000. Sampson responded that it would sell 8 of these acres for that price. Baker and Sampson have created

No Contract via these communications

EG Door Co., a manufacturer of custom exterior doors, verbally contracted with Art Contractors to design and build a $2,000 custom door for a house that Art was restoring. After EG had completed substantial work on the door, Art advised EG that the house had been destroyed by fire and Art was canceling the contract. EG finished the door and shipped it to Art. Art refused to accept delivery. Art contends that the contract cannot be enforced because it violated the statute of frauds by not being in writing. Under UCC Article 2, is Art's contention correct?

No, because the goods were specifically manufactured for Art and cannot be resold in EG's regular course of business

Which of the following most accurately states an advantage or disadvantage of preferred shareholders?

They have less opportunity for benefitting from the growth of the corporation than common shareholders.

Blue-Sky laws are

State laws regulating the sale of securities

Steele, Inc., wanted to purchase Kalp's distribution business. On March 15, Year 2, Kalp provided Steele with copies of audited financial statements for the period ended December 31, Year 1. The financial statements reflected inventory in the amount of $1.2 million. On March 29, Year 2, Kalp discovered that the December 31 inventory was overstated by at least $400,000. On April 3, Year 2, Steele, relying on the financial statements, purchased all of Kalp's business. On April 29, Year 2, Steele discovered the inventory overstatement. Steele sued Kalp for fraud. Which of the following statements is true?

Steele will prevail because Kalp had a duty to disclose that the inventory value was overstated

The essential difference between a stock dividend and a stock split is

Stock dividend of newly issued shares will result in a decrease in retained earnings

All of the following distributions to shareholders are considered asset or capital distributions except

Stock splits

An offer is not terminated by operation of law solely because the

Subject matter is sold to a third party

The board of directors of Wilcox Inc. has noted a 7% drop in the market price of uts preferred stock and decides to purchase 100000 shares of the stock for an amount below the redemption price of the stock. Under these circumstances which of the following is a true statement

Such shares may be purchased by the corporation to the extent of unreserved and unrestricted retained earnings

The Securities and Exchange Commission is not empowered to

Sue for treble damages

. Under the UCC Sales Article, which of the following legal remedies would a buyer not have when a seller fails to transfer and deliver goods identified to the contract?

Suit for punitive damages

Mix Clothing shipped 300 custom suits to Tara Retailers. The suits arrived on Thursday, earlier than Tara had anticipated and on an exceptionally busy day for its receiving department. They were perfunctorily examined and sent to a nearby warehouse for storage until needed. On the following day, upon closer examination, it was discovered that the quality of the linings of the suits was inferior to that specified in the sales contract. Which of the following is true insofar as Tara's rights are concerned?

Tara had no rights if the linings were of merchantable quality

Which of the following events must be reported to the SEC under the reporting provision of the Securities Exchange Act of 1934?

Tender Offers, Insider Trading, Solicitation of Proxies

Which of the following is a true statement about the general obligations of the parties to a sale of goods?

Tender of delivery is a condition of the buyer's duty to accept the goods

Which of the following remedies is available to a principal when an agent fraudulently breaches a fiduciary duty

Termination of the Agency and Constructive Trust

What fiduciary duty, if any, exists in an agency relationship?

The agent owes a fiduciary duty to the principal

On Monday, Wolfe paid Aston Co., a furniture retailer, $500 for a table. On Thursday, Aston notified Wolfe that the table was ready to be picked up. On Saturday, while Aston was still in possession of the table, it was destroyed in a fire. Who bears the loss of the table?

The agreement of the parties

Which of the following is the most important in deciding who bears the risk of loss between merchants when goods are destroyed during shipment?

The agreement of the parties

Harry promised to sell his guitar to Harriet, who promised to pay him $1000. After Harriet tendered payment, Harry reneged on his promise so Harriet fled suit. Which of the following is true?

The consideration for Harry;s promise is both a legal detriment to Harriet and a legal benefit to Harry

Under the Securities Exchange Act of 1934, which of the following conditions generally will allow and issuer of securities to terminate the registration of a class of securities and suspend the duty to file periodic reports

The corporation has fewer than 300 shareholders, but the securities don't have to be listed on a national securities exchange

Business activity in interstate commerce often presents the question of when a corporation will be subject a suit in a state court. the personam jurisdiction of a state court will extend to a corporation only when

The corporation has sufficient min contracts with the state that suits would not be unfair to the defendant

Phil Fairbanks was approached by Nickle Corporation to write the history of Nickle for $15,000. The president of Nickle told Fairbanks the job was his if he would agree to cleverly defame Nickle's leading competitor, Mogul Corporation, using sly innuendo and clever distortion of the facts. Fairbanks wrote the history. It turned out that the Mogul passages were neither sly nor clever, although they were defamatory, and Mogul obtained a judgment against Nickle. Fairbanks is seeking to collect the final $5,000 installment of the contract. Nickle refuses to pay and seeks to recover the $10,000 it has paid. In the event of a lawsuit,

The court will deny relief to either Fairbanks of Nickle

Regarding the scope of Article 2 of the UCC, when a contract involves a mixed transaction, such a a sale of goods combined with the rendition of services, which of the following statements is true?

The courts ordinarily will apply Article 2 when the contract's focus or predominant feature is the sale of goods

One of the underlying purposes of the UCC is to permit the parties to exercise considerable contractual freedom. With regard to contractual modification or limitation of remedy, however, this freedom is circumscribed. Which is the true statement about the parties' ability to agree about remedies for breach of their contract for the sale of goods?

The damages for breach by either party may be liquidated in the agreement

Which of the following is not a characteristic of both a sole proprietorship and a general partnership?

The death of an owner causes the termination of the business

Which of the following actions is required to ensure the validity of a contract between a corporation and a director of the corporation?

The director must disclose the interest to the independent members of the board and refrain from voting

A corporate director commits a breach of duty if

The director's ation, prompted by confidential information, results in and abuse of corporate opportunity

the term watered stock refers to

The issuance of stock as fully paid in exchange for overvalued property of services

On September 10, Bell Corp. entered into contract to purchase 50 lamps from Glow Manufacturing. Bell prepaid 40% of the purchase price. Glow became insolvent on September 19 before segregating, in its inventory, the lamps to be delivered to Bell. bell will not be able to recover the lamps because

The lamps were not identified to the contract

To prevail in an action for innocent misrepresentation, the plaintiff must prove

The misrepresentations concerned material facts

Quick Corp. mailed a letter to Blue Co. on May 1. offering a 3-year franchise dealership. The offer stated the terms in detail and at the bottom stated that the offer would not be withdrawn prior to June 5. Which of the following is true?

The offer cannot be assigned to another party by Blue.

Filmore purchased a Miracle color television set from Allison Appliances, an authorized dealer, for $499. The written contract contained the usual 1-year warranty as to parts and labor as long as the set was returned to the manufacturer or one of its authorized dealers. The contract also contained an effective disclaimer of any express warranty protection, other than that included in the contract. It further provided that the contract represented the entire agreement and understanding of the parties. Filmore claims that during the bargaining process Surry, Allison's agent, orally promised to service the set at Filmore's residence if anything went wrong within the year. Which of the following would be Allison's best defense?

The parol evidence rule

Buster and Rover formed a partnership to invest in real estate. However, Buster also decided to sell TVs on the side. Buster went to Harold, a wholesaler, and purchased 20 TVs on credit in the name of the of the partnership was formed for the purpose of investing in in real estate because he had been solicited to be one of the partners. If Buster does not pay for the TVs.

The partnership is not liable because it is not a trading partnership

A requirement of a private action to recover damages for violation of the registration requirements of the Securities Act of 1933 is that

The plaintiff acquired the securities in question

Which of the following conditions must be met to form an agency?

The principal must possess contractual capacity

Which of the following disclosures must be contained in a securities registration statement filed under the Securities Act of 1933?

The principal purposes for which the offering proceeds will be used

Contract law has undergone considerable change in response to social, economic and political shifts since the 19th century. Which of the following is a characteristic of modern contract law?

The principles of caveat emptor and laissez-faire are less infulential

Doral, Inc., wished to obtain an adequate supply of lumber for its factory extension to be constructed in the spring. It contacted Ace Lumber Company to acquire a 75-day option written option (firm offer) to buy its estimated needs for the building. Doral supplied a form contract that included the option. Ace Lumber signed at the physical end of the contract but did not sign elsewhere. The price of lumber has risen drastically and Ace wants to avoid its obligation. Which of the following is best defense?

The promise of irrevocability was contained in a form supplied by Doral and was not separately signed by Ace

Which of the following statements concerning the prospectus required by the Securities Act of 1933 is true?

The prospectus is a part of the registration statement

Taso limited Partnership intends to offer $400000 of its limited partnership interests under Rule 504 of Regulation D of the Securities Act of 1933. These interests are registered under state law. Which of the following statements is true?

The resale of limited partnership interests by a purchaser generally will not be restricted

Which of the following facts will result in an offering of securities being exempt from registration under the Securities Act of 1933?

The sale or offer to sell the securities is made by a person other than an issuer, underwriter, or dealer

Which of the following agreements is unenforceable because of indefiniteness?

The seller agrees to supply a quantity of pears dependent upon the buyer's will.

Under the Sales Article of the UCC, which of the following circumstances best describes how the implied warranty of fitness for a particular purpose arises in a sale of goods transaction?

The seller knows the particular purpose for which the buyer will use the goods and knows the buyer is relying on the seller's skill or judgement to select suitable goods.

Under a contract governed by UCC Article 2, which of the following statements is true?

The seller may be excused from performance if the goods are accidentally destroyed before the risk of loss pases to the buyer.

Under UCC article 2, the warranty of title may be excluded by

The seller's statement that it is selling only such right or title as it has

Under U.C.C. Article 2, when a contract for the sale of goods stipulates that the seller ship the goods by common carrier, "FOB purchaser's loading dock," which of the parties bears the risk of loss during shipment

The seller, because risk of loss passes only when the goods reach the purchaser's loading dock

If the directors of the Garrett Co. wish to call a special meeting of the shareholders to consider a proposed merger,

The shareholders must be given specific notice of the meeting and the issues on the agenda

Assume that the parties have entered into a contract for the sale of goods. Which of the following is a false statement under the UCC?

Title of goods may pass under a contract for sale prior to identification to the contract

Which of the following rights would a limited partner not be entitled to assert?

To be elected as a general partner by a majority vote of the limited partners in number and amount

Smith has been engaged as a general sales agent for the Victory Medical Supply Company. Victory, as Smith's principal, owes Smith several duties that are implied as a matter of law. Which of the following duties is owed by Victory to Smith?

To identify Smith for liability for acts done in good faith upon Victory's orders

For what purpose will a shareholder of a publicly held corporation be permitted to file a shareholder derivative suit in the name of the corporation?

To recover damages from corporate management for an ultra vires management act

Alex Anderssen performed accounting services for carla hansen and sent her a bill for $500. She responded in good faith that the value of the service was $300 but that she was willing to pay $375 to avoid litigation. Accordingly. she sent Anderssen a check for that amount marked "payment in full". Anderssen received the check, crossed out the notation "payment in full", cashed it, and filed suit in small claims court for $125 and costs. If he desired to recover the full $500, Anderssen's best course of action was.

To return the check

In general, which of the statements concerning treasury stock is true?

Treasury stock may be distributed as a stock dividend

Cobb, Inc., a partner in TLC Partnership, assigns its partnership interest to Bean, who is not made a partner. After the assignment, Bean asserts the rights to I. Participate in the management of TLC. II. Cobb's share of TLC's partnership profits. Bean is correct as to which of these rights? a. I only. b. II only. c. I and II. d. Neither I nor II.

b. II only.

Payne entered into a written agreement to sell a parcel of land to Stevens. At the time the agreement was executed, Payne had consumed alcoholic beverages. Payne's ability to understand the nature and terms of the contract was not impaired. Stevens did not believe that Payne was intoxicated. The contract is a. void as a matter of law. b. legally binding on both parties. c. voidable at Payne's option. d. voidable at Steven's option.

b. legally binding on both parties.

Devold Manufacturing, Inc., contracted to sell to Hillary Company 3,000 CB radios at $30 each. After delivery of the first 500 radios, a minor defect was discovered, which Hillary incurred costs to correct. Hillary sent Devold a signed memorandum indicating that it would relinquish its right to recover the costs to correct the defect, provided that the remaining radios were in conformity with the terms of the contract and the delivery dates were strictly adhered to. Devold met these conditions. Shortly before the last shipment of radios arrived, Hillary notified Devold that it was not bound by the prior generous agreement and would sue Devold for damages. In the event of litigation, a. Devold will lose in that Hillary's relinquishment of its rights was not supported by a consideration. b. Devold will win in that the defect was minor and the substantial performance doctrine applies. c. Hillary will lose in that the memorandum constituted a waiver of Hillary's rights. d. Hillary will win in that there was a failure to perform the contract, and Hillary suffered damages as a result.

c. Hillary will lose in that the memorandum constituted a waiver of Hillary's rights.

Frey, Inc. intends to make $2,000,000 common stock offering under Rule 505 of Regulation D of the Securities Act of 1933, Frey a. May sell the stock to an unlimited number of investors b. May make the offering through a general advertising c. Must notify the SEC within 15 days after the first sale of the offering d. Must provide all investors with a prospectus

c. Must notify the SEC within 15 days after the first sale of the offering

North, Inc. hired Sutter as a purchasing agent. North gave Sutter written authorization to purchase, without limit, electronic appliances. Later, Sutter was told not to purchase more than 300 of each appliance. Sutter contracted with Orr Corp. to purchase 500 tape recorders. Which of the following statements is correct? a. Sutter will be liable to Orr because Sutter's actual authority was exceeded. b. Sutter will not be liable to reimburse North if North is liable to Orr. c. North will be liable to Orr because of Sutter's actual and apparent authority. d. North will not be liable to Orr because Sutter's actual authority was exceeded.

c. North will be liable to Orr because of Sutter's actual and apparent authority.

Which of the following is not a required element of a contract: a) Legality b) Consideration c) Legal Capacity d) A Writing

d) A Writing

Absent a specific provision in its articles of incorporation, a corporation's board of directors has the power to do all of the following except: a) repeal the bylaws b) declare the dividends c) fix compensation of directors d) amend the articles of incorporation without shareholder approval

d) amend the articles of incorporation without shareholder approval

Cara Fabricating Co. and Taso Corp. agreed orally that Taso would custom manufacture a compressor for Cara at a price of $120,000. After Taso completed the work at a cost of $90,000, Cara notified Taso that the compressor was no longer needed. Taso is holding the compressor and has requested payment from Cara. Taso has been unable to resell the compressor for any price. Taso incurred storage fees of $2,000. If Cara refused to pay Taso and Taso sues Cara, the most Taso will be entitled to recover is a. $92,000 b. $105,000 c. $120,000 d. $122,000

d. $122,000

Eagle Corporation solicited bids for various parts it uses in the manufacture of jet engines. Eagle received six offers and selected the offer of Sky Corporation. The written contract specified a price for 100,000 units, delivery on June 1 at Sky's plant, with payment on July 1. On June 1, Sky had completed a 200,000 unit run of parts similar to those under contract for Eagle and various other customers. Sky had not identified the parts to specific contracts. When Eagle's truck arrived to pick up the parts on June 1, Sky refused to deliver claiming the contract price was too low. Eagle was unable to cover in a reasonable time. Its production lines were in danger of shutdown because the parts were not delivered. Eagle would probably a. Have as its only remedy the right of replevin. b. Have the right of replevin only if Eagle tendered the purchase price on June 1. c. Have as its only remedy the right to recover dollar damages. d. Have the right to obtain specific performance.

d. Have the right to obtain specific performance.

Noll gives Carr a written power of attorney. Which of the following statements is correct regarding this power of attorney? a. It must be signed by both Noll and Carr. b. It must be for a definite period of time. c. It may continue in existence after Noll's death. d. It may limit Carr's authority to specific transactions.

d. It may limit Carr's authority to specific transactions.

Eli contracted to buy 600 balese of No. 1 quality cotton from Whitney. The contract provided that Eli would make payment prior to inspection. The 600 bales were shipped and Eli paid Whitney. Upon inspection Eli returned the cotton to Whitney and demanded return of the payment. Whitney refused on the ground that there is no difference between No 1 quality cotton and No 2 quality cotton. What is Eli's remedy for the nonconforming cotton?

damages measured by the price paid plus the difference between the contract price and the cost of buying substitute goods.

A warranty imposes upon the seller of goods a duty that the goods conform to the promise in the warranty. If they do not, the buyer has an action for breach of warranty. Under the UCC

express and implied warranties are treated separately from the warranty of title