Commercial Law II Practice Questions

An S corporation cannot have more than ___ shareholders.

100

Jones acted as Blake's agent for 12 years before this contract of agency was dissolved by Blake. However, Blake failed to convey this fact to those vendors with whom Jones contracted in the past. Which of the following is likely to occur if Jones negotiates future contracts with these vendors on Blake's behalf?

Blake is bound by those contracts and must pay necessary costs.

Cody believes that Delta Corporation has discriminated against him on the basis of gender. Cody files a suit against Delta under Title VII. To establish a prima facie case of employment discrimination, Cody must show that:

Cody is a member of a protected class

Frank enters into a contract with Sally believing that Sally is acting on her own behalf when in fact she is acting as an agent for Derek on his express instructions. Sally did not make it known to Frank that she was actually acting on Derek's behalf. In the event of a breach of contract who can Frank take action against?

Derek or Sally

Eller, Fort, and Owens do business as Venture Associates, a general partnership. Trent Corp. brought a breach of contract suit against Venture and Eller individually. Trent won the suit and filed a judgment against both Venture and Eller. Venture then entered bankruptcy. Under the RUPA, Trent will generally be able to collect the judgment in full from

Eller's personal assets only after partnership assets are exhausted

Jill owns a retail business by herself and was sued by a customer who fell in the store. The customer claimed the business was negligent in caring for its floors. Which statement best describes Jill's potential liability?

Jill can be held personally liable to the customer since she is the owner

Fern and Gray want to form a limited partnership to manage two restaurants: Café Latte and Deli Delite. In most states, a limited partnership will be created when:

a certificate of limited partnership is filed

Omega Corporation and Precision, Inc., two software firms, wish to combine their research and development capabilities to make a special, one time only, limited edition computer game. The most appropriate legal entity for this one time project might be

a joint venture

Fay is a member of Pine Groves LLC. Like other members of limited liability companies, Fay's liability for Pine Grove's obligations resembles the liability of:

a shareholder of a corporation

A patent may not be issued for:

a theory

Which of the following is correct?

a trademark can be renewed as long as the mark is still in use

Which of the following does not constitute an express warranty?

all of the above are express warranties: "This computer system is accessible by a PB2400 modem" "This computer system is IBM-compatible" "This computer system has a built-in battery back-up system that gives you two minutes to save files in the event of a power interruption."

Ozzy is an officer of Prudent Financial Corporation. Ozzy serves in a representative capacity for Prudent Financial's owners. With respect to binding Prudent Financial to contracts, Ozzy is

an agent and has the authority

"These cartons will hold up to 100 pounds of books" is an example of:

an express warranty

Greta is a member of Hovercraft LLC. As a member, Greta is

an owner

Barbara, a purchasing agent for UTA, was fired for good reason. Being angry about her dismissal, she calls one of UTA's suppliers and orders 1,000 purple widgets UTA does not need. If UTA, the principal, is held liable for this transaction, it is because Barbara had:

apparent authority

Otto is considering forms of business organization for the Pro Tree Service, his landscaping firm. Like most states, Otto's state requires that to form a limited liability company, he must file with a central state agency

articles of organization

A principal-agency relationship may be used for

both personal and business purposes

In Delaware, lawsuits involving corporations are tried in a special court called

chancery court, or a court of equity

For federal income tax purposes, a partnership is

considered to be a nontaxable entity but which requires each partner to pay taxes individually on the profits

Jeanette decides to form a corporation. She needs to:

create and file articles of incorporation with the proper state official

Under the Revised Uniform Partnership Act, when a partner leaves the partnership, whether it be voluntary or by expulsion, death or bankruptcy, it is called:

disassociation

Employment practices that appear to apply neutrally to all employees but result in a less favorable effect for one group may give rise to a claim of:

disparate impact

Which of the following statements is correct concerning liability when a partner in a general partnership commits a tort while engaged in partnership business under RUPA?

each partner is jointly and severally liable

One of the advantages of the partnership form of organization is

ease of organization

The importance of distinguishing between an employee and an independent contractor is:

employers are responsible for the torts of its employees and not for the independent contractors they hire

Astrid and Razi formed a partnership in which they agree to share profits 60 percent to Astrid and 40 percent to Razi. Losses will be shared

equally, unless otherwise agreed

All of the following are true statements regarding the Family and Medical Leave Act, EXCEPT which of the following?

every personal or family emergency qualifies for FMLA leave

All of the following are requirements of a partnership except:

express agreement

All of the business forms listed below have limited liability except the:

general partnership

Double taxation means that the

government taxes both earnings to corporations and dividends to individuals

When a court "pierces the corporate veil" it:

holds shareholders personally liable for corporate debts

A person hired to add an extra room to your house would most likely be classified as a(n)

independent contractor

A joint venture:

is a partnership limited in scope

Mattel, Inc. had to recall 19 million toys because it learned that its manufacturer/supplier in China had used lead-based paint on the toys, a paint that is prohibited in the United States. Mattel:

is liable to purchasers as a manufacturer/seller of toys

All of the following describe important changes as a result of the Uniform Trade Secret Act EXCEPT:

it eliminated the requirement that owners of the respective trade secret must put forth a "reasonable effort" to maintain secrecy

Which of the following is true of the theory of respondeat superior?

it imposes liability on an employer for torts caused by employees

Which of the following best describes preemptive rights?

it is the right to purchase fresh capital stock in proportion to shares owned

All of the following are characteristics of a corporation except:

it is usually managed by its shareholders

Which of the following parties usually has the most management rights?

member of a limited liability company

Ernest invents a novel, useful, nonobvious product. He

must apply for patent within one year of selling the product commercially.

A principal-agent relationship may be terminated by

mutual agreement, operation of law, revocation of authority

A company is liable for a design defect in its product only if:

none of the above: it was aware of the design defect the design defect has caused a previous injury there was negligence in the product testing

Privity in negligence product liability cases is:

not required

Limited partners have liability

only for the amount of their contribution

The scope of an agent's authority is determined from the:

oral or written expressions of the principal or the principal's conduct

Bo and Clancy decide to do business as Marketing & Promotion Services. To be a partnership, this association can result from an agreement that is:

oral, written, or implied by conduct

Rick and Sandy are limited partners in Total Profit Enterprises, a limited partnership. To avoid personal liability for partnership obligations, they must not

participate in the firm's management

A written document appointing an agent is a

power of attorney

Paul tells Sally to mail a letter using regular mail delivery. Sally sends the mail using overnight rushed shipping with delivery confirmation. Paul approves of the mailing. This is:

ratification

When a partner assigns or gives his interest to another person, this interest entitles the person to:

receive the assignor's share of the profits during the term of the partnership and the assignor's share of proceeds received on dissolution

A limited partnership

requires at least one general partner

A corporation must be created according to:

state law

Hu believes that he is a victim of a form of employment discrimination that falls under Title VII of the Civil Rights Act. Compliance with this statute is monitored by

the Equal Employment Opportunity Commission

When a principal is partially disclosed to a third party:

the agent and principal will be jointly and severally liable on the contract

Which of the following is the basic governing document of a corporation?

the bylaws

_____ define the scope of protection granted by a patent, and define in technical terms, the extent of the protection sought in a patent application:

the claims

Which form of business entity was created primarily to shield innocent owners, particularly those in professions, from malpractice liability generated from other owners in the firm?

the limited liability partnership

Which of the following is an advantage of forming a limited liability company (LLC) as opposed to a partnership?

the owner may participate in management while limited personal liability

In what way do telematics pose a threat to employee privacy?

they enable employers to constantly monitor employees' movements and use of technology and equipment, revealing information such as when they take breaks and the internet websites they visit

The Lanham Act grants protection for:

trademarks