Business Law Test 3 Set 2

27. During the course of a partnership's winding-up process, the partners owe each other: a. a duty to disclose all finances of the partnership b. a duty to compete fully c. a duty to refrain from termination d. a duty of discounting e. a duty to mitigate

a

30. A reason the corporate status is often chosen is: a. corporations have the status of a legal person b. the Civil Rights Act of 1964 does not apply to corporations c. shareholders have the right to instruct management d. directors are immune from liability suits e. none of the other choices are true

a

36. Martha and Mary agree to buy a certain piece of property together, develop it, and try to sell it at a profit. This business enterprise would most likely be a: a. joint venture b. corporation c. limited partnership d. cooperative e. public company

a

37. A cooperative is: a. an association organized to provide economic service without profit to its members b. an organization that involves a unique mix of partnership and corporation characteristics c. a general partnership for a limited time and purpose d. a group of persons who join together to finance a specific project e. none of the other choices

a

41. A person designated by a principal to do all acts that can be legally delegated to an agent is a: a. universal agent b. special agent c. gratuitous agent d. general agent e. none of the other choices

a

44. In Hardcore Concrete v. Fortner Insurance Hardcore ordered theft insurance from Fortner, which got a policy from Med James, which ordered the coverage from Lloyd's. Med James ordered the wrong kind of policy from Lloyd's, so when a theft occurred, Hardcore was not covered. Hardcore sued Fortner and Med James for the loss. The appeals court held that: a. Med James was an agent of Lloyd's; it owed no duty to Hardcore b. Med James was Fortner's principal, so both are liable to Hardcore c. by the application of the doctrine of estoppel, Med James was an agent of Hardcore, so it was liable for the loss d. Lloyd's would be held liable for selecting the wrong policy for the other parties e. none of the other choices

a

31. A corporation consists of legally distinct groups, not including: a. shareholders b. stakeholders c. directors d. managers e. all of the other choices are included

b

49. The law of agency places its primary emphasis on the duties: a. the principal owes to the agent b. the agent owes to the principal c. the agent owes to the subagent d. the universal agent owes to the general agent e. all of the other choices have equal standing

b

50. If an agency agreement did not specify how much an agent would be paid for his work, the principal has a ____ the "customary" amount. a. duty to cooperate b. duty to compensate c. duty of obedience to d. duty to indemnify e. none of the other choices would apply

b

26. Dissolution of a partnership takes place, unless otherwise provided for by contract, in the following instances except: a. bankruptcy of a partner b. withdrawal of a partner c. change in financial condition of a partner d. death of a partner e. all of the other choices would require dissolution

c

33. The shareholders of a corporation generally have the right(s) to: a. instruct top management on corporate operations b. hire managers of the corporation c. give a third party the right to vote their shares by proxy d. instruct top management on corporate operations and hire managers of the corporation e. instruct top management on corporate operations and hire managers of the corporation and give a third party the right to vote their shares by proxy

c

39. Refer to Fact Pattern 14-1. Meg was negligent in allowing her dog to run wild at the Emporium, but Emile had never objected to the dog being around. If Meg's negligence is the cause of Phil's harms, then: a. Meg is personally liable for compensating Phil; Emile could not be held liable b. Phil may not collect from Meg or Emile because he assumed the risk of working for Emile c. Emile is liable for compensating Phil under the doctrine of respondeat superior d. Meg is personally liable for compensating Phil under the doctrine of vicarious liability e. Emile is not liable for compensating Phil under the doctrine of non-indemnification

c

40. An agency relationship normally involves the use of an agent to represent a principal in dealing with which of the following: a. shareholders b. representatives c. third parties d. attorneys e. ratifications

c

48. In Town Center Shopping Center v. Premier Mortgage, where Town Center rented space to a lending company despite the fact that the local manager who signed the lease did not have authority to bind the company to the lease, and the company sued to get out of the lease. The appeals court held that: a. the company was not obligated to the lease because real estate deals must be in writing with the principal of the company agreeing to the lease b. the company was not obligated to the lease because its employee did not have authority to sign a lease; Town Center should have known to get approval from the parent company c. the company was obligated on the lease as its employee had apparent authority d. the company was not obligated on the lease, but its employee was obligated, since she exceeded her authority, so she was personally liable to Town Center e. all of the other choices have equal standing

c

28. Which of the following is not true about the termination of a limited partnership? a. the bankruptcy of a limited partner does not force termination b. the business may continue to operate during dissolution c. creditors' rights come before partners' rights to funds d. limited and general partners share assets equally at the same time after the creditors are paid e. all of the other choices are true

d

32. Shareholders of a corporation: a. manage the corporation b. delegate responsibility for management to hired managers c. elect all vice presidents of the corporation d. vote on matters that may effect a change in the corporation's structure e. issue the employment rules of a corporation

d

35. A limited liability company: a. is taxed like a partnership b. has the liability of a corporation c. is taxed like a corporation d. is taxed like a partnership and has the liability of a corporation e. is taxed like a corporation and has the liability of a corporation

d

46. Suppose a hurricane is going to hit South Florida; there are two days to prepare for it and the owner of a house is on a raft trip in Brazil and cannot be reached. The next door neighbors spend $800 on plywood and other materials to protect the house from the hurricane. Legally, this expenditure is likely to be: a. is a gift from the neighbors, nothing more b. is the responsibility of the homeowner; there is an agency by estoppel c. is the responsibility of the homeowner; there is implied ratification of the agency d. is the responsibility of the homeowner; there is agency by operation of law e. none of the other choices

d

47. The agent's ability to transact business on behalf of and for the principal depends on whether the agent possesses: a. actual authority b. apparent authority c. quasi-authority d. actual or apparent authority e. actual or apparent authority or quasi-authority

d

Emile owns Emile's Used Car Emporium. Several people work for him at the Emporium. When Emile is gone, he leaves one of his best salespersons, Meg, in charge. Over the years, Emile has given Meg the authority to contract with vendors, negotiate sales, and conclude car sales contracts in his name. One August, Emile takes a long vacation, leaving Meg in charge. While he is gone a hurricane hits Florida where the Emporium is located, causing severe damage. Because Emile is floating down the Amazon, Meg cannot reach him for instructions. She decides that rather than leave the place in shambles, she will hire people to repair the Emporium. Meg hires a carpenter to rebuild a wall that was blown down by the storm. Phil, the carpenter, is busy at work on his scaffold when Meg's Scottish terrier Adam, who she keeps with her at work, plows into the scaffolding while chasing a cat. Phil is knocked off the scaffold and falls ten feet to the ground, suffering a broken leg. 38. Refer to Fact Pattern 14-1. Emile gives Sally authority to execute all normal transactions connected with his business. In this case, Meg is: a. a special agent b. a gratuitous agent c. a committed agent d. a general agent e. an interested agent

d

29. To create a corporation: a. articles of incorporation and an application must first be filed with the federal government b. the federal government issues a certificate of incorporation, which must be filed with an application to do business in the relevant states c. the incorporators must hold a public organization meeting, then file articles of incorporation d. the federal government issues a certificate of incorporation, which must be filed with an application to do business in the relevant states, and the incorporators must hold a public organization meeting, then file articles of incorporation e. none of the other choices

e

34. The board of directors of a corporation are elected by: a. top managers b. the president c. current board members d. the president and current board members jointly e. none of the other choices

e

42. Persons appointed by an agent delegated some authority are known as: a. minor agents b. pseudo-agents c. principal agents d. delegated agents e. none of the other choices

e

43. A legal document that establishes some agency relationships is known as: a. articles of incorporation b. motion to represent c. partnership agreement d. decree of business guardianship e. none of the other choices

e

45. An agency through operation of law is established: a. by a written contractual agreement of the parties b. by ratification of the agent's activities by the principal c. by the application of the doctrine of estoppel d. when the legislature authorizes an agency e. none of the other choices

e