ACCT 340 Bus Law Hemker Exam 4 Final
Margaret, Jack, and Brooke form CPB Inc., and each contributes $10,000 capital. The corporation borrows $100,000 from Community Bank. One year later, CPB goes bankrupt and defaults on the loan owed to Community Bank. At that time, CPB's only asset is $15,000 cash, which Community Bank recovers. Under the shareholder limited liability rule, how much will each of these shareholders have to pay Community Bank?
$0
What section of the UCC governs sales contracts?
Article 2
If not otherwise specified, domestic letters of credit are usually governed by________.
Article 5 of the Uniform Commercial Code (UCC)
________ must be filed at the secretary of state's office of the state of organization of a limited liability company (LLC) to form the LLC.
Articles of organization
The 2005 act requires a(n) ___________ whereby an attorney who represents a client in bankruptcy must certify the accuracy of the information contained in the bankruptcy petition and the schedules, under penalty of perjury.
Attorney Certification
John purchases restaurant equipment from Mary, a restaurant equipment wholesaler. John agrees to pick up the equipment in Mary's warehouse within a week. Ten days after the purchase, the warehouse is damaged by fire and the equipment is destroyed. Who bears the risk of loss and why?
Mary bears the risk of loss because this is a non-carrier situation and she is a merchant.
_____________ is an automobile insurance system used by some states in which the driver's insurance company pays for injuries or death the driver suffers in an accident, no matter who caused the accident.
No-fault coverage
________ is the land itself as well as buildings, trees, soil, minerals, timber, plants, and other items permanently affixed to the land.
Real property
Congress enacted the _________________ to allow the shareholders of some corporations to avoid double taxation.
Subchapter S Revision Act
All of the following are examples of transfer warranties made by any person who transfers a negotiable instrument for consideration, EXCEPT?
That there are no defenses of any party that are good against the transferee.
Which of the following statements is true regarding limited liability partnerships (LLP)?
The LLP is a domestic LLP in the state in which it is organized.
Insurance that compensates employees for work-related injuries is known as ______ insurance.
Workers' compensation
Who can transfer good title to a good faith purchaser for value?
a person with voidable title
From whom can an original owner reclaim his or her goods?
a person with who purchased stolen goods
What is an insurance contract called?
a policy
Nathan provides a life estate in property to his friend Eddie. When Eddie dies, the interest in the property will go to Scott. What sort of future interest does Scott hold?
a remainder
Nathan provides a life estate in property to his friend Eddie. When Eddie dies, the interest comes back to Nathan or Nathan's estate. What sort of future interest is present in this situation?
a reversion
The passing of title for real property from a seller to a buyer for a price is known as ________.
a sale
Which is the true statement regarding bankruptcy law?
Bankruptcy judges are appointed for 14-year terms.
A corporation that does not qualify for or has not elected be taxed as an S corporation is a ________.
C corporation
A corporation with more than 100 shareholders would automatically be considered a(n) ________.
C corporation
Which of the following statements about a Chapter 11 bankruptcy is true?
Chapter 11 is available to individuals, partnerships, corporations, and other business entities.
Which of the following statements is NOT true regarding property that is exempt from the bankruptcy estate?
Federal exemptions are adjusted every 5 years.
Which of the following statements about a life insurance contract is true?
If no beneficiary is named, the proceeds go to the insured's estate.
Bob (a merchant) offers Jim (also a merchant) a sales contract. Jim accepts Bob's offer but adds additional terms to the contract. Under common law this would be considered a counteroffer; but under the UCC Jim's acceptance and addition of terms is still considered part of Bob's original offer. This is because of the___________ rule.
additional terms
In order to amend the articles of organization for New Navy, LLC, ________.
all members must vote to amend the articles of organization
Marshall, Ted, and Susan contribute $1,000, $7,000 and $20,000 respectively to New Navy LLC. Which member will receive the greatest number of votes?
all of them will receive the same number of votes
Yijun and Zichu are both members of a limited liability company (LLC). The document that governs the relationship among the members and the company is known as ________.
an operating agreement
Which of the following is NOT covered by personal liability insurance?
any injuries the insured sustains off the property of the insured
Who below would NOT be a party to a life insurance contract?
any witnesses who sign the contract
Brooke's next-door neighbor allows Brooke to run a driveway over his land. This sort of easement is known as an easement _____________.
appurtenant
The articles of incorporation ________.
are the basic governing documents of a corporation
The duration of a limited liability company (LLC) is ________.
at-will
The number of shares provided for in the articles of incorporation are called ________.
authorized shares
What is a finance lease?
a three-party transaction consisting of a lessor, a lessee, and a supplier
Sina is in a car accident while on business for Limo Lime, LLC. As a result of the accident, Tom is injured. If Sina were negligent in causing the accident, Tom can recover damages for his injury from ________.
both Sina and the LLC
Insurance that reimburses a business for loss of revenue incurred when the business has been damaged or destroyed by fire or some other peril is known as ____________ insurance.
business interruption
Accumulated Capital Corporation and Business Funds, Inc., form a corporation. The ownership of the corporation is represented by ________.
certificates of stock
If all of the elements of adverse possession are met, the adverse possessor may acquire ______________ title to the property, so long as there are no defenses which are meritorious proffered by the current owner.
clear
Insurance that insures one's car against risk of loss or damage caused by another car hitting it is known as ________ insurance.
collision
The Uniform Commercial Code, a model law, governs contracts in all of the following situations EXCEPT?
commercial transactions involving the sale of services
Property insurance that insures an automobile from loss or damage due to causes other than collision is known as ________ insurance.
comprehensive
A situation in which two or more persons own a piece of real property is known as ________.
concurrent ownership
The special court that hears and decides business cases in Delaware known as the ________.
court of chancery
In a winding up of a corporation, which of the following claimants will have highest priority?
creditors
Which of the following is NOT a way in which a corporation may be dissolved and terminated?
criminal dissolution
Cyberattacks and cyber crimes have led to the development of _________ insurance for purchase by businesses.
cyber
If a customer's data is stolen electronically from a business, the business will file a claim against their _______.
cyber insurance policy
A member of a limited liability company (LLC) is personally liable for ________.
debts and obligations of an LLC up to the amount of their capital contribution
An instrument that describes a person's ownership interest in a piece of real property is known as a ________.
deed
Medical health insurance plans usually cover all of the following EXCEPT?
dental care
Which of the following is NOT one of the methods to discharge a negotiable instrument?
destruction of the instrument by accident
In order to select a name for a new corporation, the organizer should ________.
determine whether the name is federally trademarked
There are three methods of _______________: (1) payment of the instrument, (2) cancellation, and (3) impairment of the right of recourse.
discharge
The right to receive a fixed dividend at set periods during the year is known as ________.
dividend preference
Darren and Carly are members of Cool Cars LLC. When deciding whether to engage in reckless conduct, they should consider their ________.
duty of care
A person's ownership right in real property is called a(n) ________.
estate in land
In the context of a limited liability partnership (LLP), a continuation agreement ________.
expressly sets forth the events that allow for extension of the limited liability partnership upon dissociation and dissolution
A type of ownership of real property that grants the owner the fullest bundle of legal rights that a person can hold in real property is known as a(n) ________.
fee simple absolute
A type of ownership of real property that grants the owner all the incidents of a fee simple absolute except that it may be taken away if a specified condition occurs or does not occur is known as ________.
fee simple defeasible
A holder in due course is a holder who takes a negotiable instrument ___________________.
free of all claims and most defenses that can be asserted against the transferor
What business organization that is owned by two or members is taxed like an LLC?
general partnership
The ________ is the party to whom an interest in real property is transferred.
grantee
To qualify as a professional corporation, Medical Clinic, P.C., must meet all of the following qualifications EXCEPT?
have at least thirty-five shareholders
If Nancy is a manager of a manager-managed limited liability company, and she is approached with opportunity to purchase a valuable asset for the company, Nancy must consider ________.
her duty of loyalty
A(n) ___________ is a person who is in possession of a negotiable instrument that is drawn, issued, or indorsed to him or his order, or to bearer, or in blank.
holder
If the holder takes the instrument with noticeable evidence of forgery, the holder would not qualify as a(n) ________.
holder in due course
Which defenses may be asserted against a holder in due course?
illegality
Ryan enters into a contract with ABC Appliance Center to purchase new kitchen and laundry appliances for his newly constructed apartment complex. A week after signing the contract, Ryan notices a "Going Out of Business" sign in ABC's window. Ryan should __________.
immediately request an adequate assurance of performance
A limited liability company can conduct business ________.
in any state
If a holder takes an instrument from a shady looking character in a dark alley, it could be inferred that the holder did not take the instrument ________.
in good faith
A limited liability company has the same powers as a(n) ______________ to do all things necessary or convenient to carry on its business or affairs.
individual
Incontestability clauses generally protect the position(s) of the ____________.
insureds
A(n) ________ is a person who has been expressly or impliedly invited to a landowner's or tenant's premises for the economic benefit of the owner or tenant.
invitee
A form of co-ownership that includes the right of survivorship is known as ________.
joint tenancy
In a lease contract, who is the person(s) who transfers the right of possession and use of goods under the lease?
lessor
A(n) ________ is a person who is on someone's real property legally and with the express or implied permission of the landowner or tenant and is not there to convey an economic benefit to the landowner or tenant.
licensee
An interest in real property for a person's lifetime is known as a(n) _________.
life estate
An unincorporated business entity that combines the most favorable attributes of general partnerships, limited partnerships, and corporations is known as a ________.
limited liability company
In a ___________ managed limited liability company (LLC), the managers have the authority to bind the LLC to contracts.
manager-
Under the UCC a(n) ____________ is a person who deals in the goods of the kind involved in a transaction, or by his or her occupation holds himself or herself out as having knowledge or skill peculiar to the goods involved in the transaction.
merchant
Lars draws a check made "pay to the order of Yasmin Aslan." Yasmin signs the back of the check and leaves it on the counter at the grocery store. Ross picks it up and cashes it. Can Yasmin obtain a new check from Lars?
no, Yasmin converted the order paper to bearer paper and has no recourse
When a property already exists in a zoned area that does not fit within a new zoning use established for the area, it is known as a(n) ________.
nonconforming use
To obtain property via adverse possession, all of the following are needed EXCEPT?
permission of the property owner
A holder in due course takes the negotiable instrument free from ______ defenses.
personal
The owner of a car may choose to expand his or her automobile liability policy through all of the following EXCEPT?
personal articles floater
What is an addition to a home owners' policy that covers specific valuable items known as?
personal articles floater
A person who organizes and starts a corporation is a ________.
promoter
Which of the following is NOT needed by an insurance company to create a personal articles floater?
proof of purchase of all items to be covered
Google, Inc. is an example of a ________________ corporation.
publicly held
Which of the following is NOT a measure of damages for a buyer when the seller fails to deliver the goods or repudiates the contract?
punitive damages
Which of the following is NOT a measure of damages for a lessee when the lessor fails to deliver the goods or repudiates the contract?
punitive damages
Buildings constructed on land are ________.
real property
Land is the most common form of ________.
real property
Plant life and vegetation growing on the surface of land are considered ______.
real property
To void a transfer or an obligation, the court must find that (1) the transfer was made or the obligation was incurred by the debtor with the actual intent to hinder, delay, or defraud a creditor or (2) the debtor _____________________.
received less than a reasonable equivalent in value
A Chapter 11 bankruptcy is known as a(n)______________.
reorganization
The lessor has all of the following remedies when the lessee repudiates or breaches the sales contract EXCEPT?
replevy the goods
The seller has all of the following remedies when the buyer repudiates or breaches the sales contract EXCEPT?
replevying the goods
Common stock represents the ________.
residual value of a corporation
All of the following are types of indorsements EXCEPT?
retroactive
In a _________, the seller delivers the goods to a buyer with an understanding that the buyer may return them if they are not used or sold within a stated period of time.
sale or return contract
Who bears the risk of loss during shipment in a destination contract?
seller
Who bears the risk of loss during shipment in a sale on approval?
seller
Who bears the risk of loss during shipment in a sale or return contract?
seller
Brooke's next-door neighbor allows Brooke to run a driveway over his land. The grantor-neighbor's land is now a ______________ estate with regard to the easement.
servient
A nonmanager member of a manager-managed limited liability company (LLC) is treated equally to a ________.
shareholder
Owners of a corporation who elect the board of directors are ________.
shareholders
In a member-managed limited liability company (LLC), each member has the right to ________.
sign contracts on behalf of the LLC
A(n) ___________ on a negotiable instrument can be any symbol that is (1) handwritten, typed, printed, stamped, or made in almost any other manner and (2) executed or adopted by a party to authenticate a writing.
signature
Groups of laws that regulate the formation, operation and dissolution of a corporation are called ________.
state corporation codes
A form of co-ownership of real property that can be used only by married couples is known as which of the following?
tenancy by the entirety
A form of co-ownership in which the interest of a surviving tenant in common passes to the deceased tenant's estate and not to the co-tenants is known as ________.
tenancy in common
Express powers of a corporation are granted by all of the following sources of law EXCEPT?
the Revised Model Business Corporation Act (RMBCA)
The United Nations Convention on Contracts for the International Sale of Goods (CISG) applies to contracts for the international sale of goods when ________.
the buyer and seller have their places of business in different nations and both nations are signatories of the CISG
Who is liable for a corporation's debts and obligations?
the corporation
Monthly benefits under disability insurance policies are usually based upon _________.
the degree of disability incurred by the insured
If an owner entrusts possession of his or her goods to a merchant who deals in goods of that kind, the merchant has the power to transfer all rights (including title) in the goods to a buyer in the ordinary course of business. This is known as ___________.
the entrustment rule
Which of the following is a seller's obligation?
to deliver conforming goods
Transferors of negotiable instruments can be held liable for ________.
transfer warranties only
A(n) ________ is a person who is on a landowner's or tenant's real property but has no invitation, permission, or legal right to be there.
trespasser
ABC Corporation's Board of Directors votes to award a corporate procurement contract to Company A. However, the CEO signs a corporate procurement contract with Company B, without corporate authority to do so. This is an example of a(n) ____________.
ultra vires act
Insurance is a contract whereby one party (the insurer or _____________) indemnifies another against the loss, damage, or liability that may arise from some event, distributing the risk of this loss between the parties to the contract.
underwriter
Which of the following is NOT a universal defense?
undue influence
An exception that permits a type of building or use in an area that would not otherwise be allowed by a zoning ordinance is known as a(n) ________.
variance
When does the UCC apply to a mixed sale transaction?
when goods are the predominant part of the transaction
When does an umbrella policy make a pay out?
when primary policy limits on other insurance policies have been exceeded
When can a buyer obtain specific performance from a seller?
when the goods are unique
Bob and Jim (both merchants) orally agree to a lease contract for some heavy equipment. Shortly thereafter, Jim sends Bob a written confirmation of the lease they agreed to. Bob ignores the written notice and fails to perform his obligations under the lease a month later. Bob argues they do not have a valid contract under the statute of frauds because he did not sign anything. Jim prevails in a lawsuit under what UCC rule?
written confirmation rule
If a member withdraws from a term limited liability company prior to the expiration of the term, this is considered ________.
wrongful disassociation
A _______ usually formulates zoning ordinances, conducts public hearings, and makes recommendations to the city council, which must vote to enact an ordinance.
zoning commission
Local laws that are adopted by municipalities and local governments to regulate land use within their boundaries are known as ________.
zoning ordinances
Sarah gets into an automobile accident and her car suffers $5,000 of damage. She has automobile insurance for $10,000 dollars with a $1,000 dollar deductible. How much does Sarah have to pay to get her car fixed?
$1,000
________ insurance is insurance that protects directors and officers from liability for decisions and actions they take on behalf of the corporation.
Directors' and officers'
________ insurance is insurance that protects directors and officers from liability for decisions and actions they take on behalf of the corporation.
Directors' and officers'
________is title to real property that is free from any encumbrances or other defects that are not disclosed but would affect the value of the property.
Marketable title
More than ________ countries have signed the Convention on Contracts for the International Sale of Goods (CISG).
90
________ is issued by a land court that determines the rightful owner of real property.
A certificate of title
Regarding dissolution of a limited liability company (LLC), all of the following statements are true EXCEPT?
A disassociating member's duties of loyalty and care to the LLC do not terminate upon disassociation from the LLC.
In which of the following scenarios would a limited liability partnership (LLP) be liable for the tortious conduct of the partner?
A partner is on their way to deposit the LLP's monthly receipts at its bank and negligently causes an automobile accident that injures another person.
________ is a chronological history of the chain of title affecting the property, including recorded documents and public records relating prior ownership of the property.
An abstract of title
More than 50 percent of the publicly traded corporations in the United States are incorporated in ________.
Delaware
_________ means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
Electronic
__________ means a computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part, without review or action by an individual.
Electronic agent
What is the rule adopted by the Federal Trade Commission that eliminates holder in due course status with regard to negotiable instruments that arise out of certain consumer credit transactions?
FTC HDC Rule
Once the seller tenders delivery of the goods, what is the buyer's general obligation?
to accept and pay for the goods
An S corporation election is made by filing form 2553 with the ________.
Internal Revenue Service
Which of the following statements about standard fire insurance is true?
It can be expanded to cover damage from windstorms via a rider.
Which of the following is true about the Convention for the International Sale of Goods (CISG)?
It does not require a sales contract to be in writing.
What is the importance of the Menendez v. O'Niell to corporations?
It reinforced the general rule that a corporation is a distinct legal entity, separate from the individuals who comprise it, and individual shareholders are not liable for the debts of the corporation.
John's Equipment Rentals enters into a lease contract with ABC Construction for a backhoe to use in a yearlong excavation project. The backhoe is delivered to the construction site, but is a different size than that agreed to in the lease contract. During the night and before ABC can address the non-conformance, the backhoe is vandalized. Who bears the risk of loss for the damages?
John's Equipment Rentals, since the goods were non-conforming
Margaret owns a house that burned down. Who does NOT have insurable interest in the house?
Margaret's mother, to whom Margaret owes money
Hillary enters into a shipment contract with a dress manufacturer for fifty red dresses. The dress manufacturer sends fifty blue dresses. The dresses are damaged during shipment. Who bears the risk of loss and why?
The dress manufacturer, because the goods are non-conforming
Which of the following statements is NOT true regarding makers of notes?
The holder must take certain actions to give rise to the maker's obligation to pay.
When a nonnegotiable contract is transferred by assignment, which of the following is NOT true?
The nonnegotiable contract is converted into a negotiable instrument and is subsequently subject to Article 3 of the UCC.
Which of the following statements is false regarding forged indorsements?
There are no exceptions to the general rule that the loss falls on the party who first takes the forged instrument after the forgery.
What is the limited liability of shareholders?
They are only liable to the extent of their capital contributions to the corporation.
________ is bought by purchasers of real estate to ensure that they will be paid for losses suffered by defects in the title to the property that occurred prior to the purchase or loan.
Title insurance
________ is bought by purchasers of real estate to ensure that they will be paid for losses suffered by defects in the title to the property that occurred prior to the purchase or loan.
Title insurance
________ insurance is additional insurance that provides coverage in excess of the basic policy limits of other insurance policies.
Umbrella
In a limited liability partnership, who is liable for the debts of the partnership?
only the limited partners up to their capital contribution
Legal Grounds Café LLC, a limited liability company owned by two members, may be taxed as a _________.
partnership
Under article 2 of the Uniform Commercial Code, what is a sale?
passing of title of goods from a seller to a buyer for a price
A major advantage of a corporation is ________.
the free transferability of shares
The party who transfers an ownership interest in real property is known as ________.
the grantor
Grandma writes a check to her granddaughter, Christy. Another granddaughter, Devin, steals the check, forges Christy's signature, and cashes it at the local grocery store. Who is liable?
the grocery store
If the name of the payee or indorsee is misspelled in a negotiable instrument ________.
the indorsee can indorse the check using the misspelled name, the correct name, or both
Which of the following is NOT covered by home owners' insurance?
the items of a neighbor destroyed by the owner of the insurance
The Delaware corporation code benefits large corporations because ________.
the legislature keeps amending the code as the demands of big business warrant such changes
All of the following are requirements in order for the court to confirm a Chapter 13 plan of payment EXCEPT?
the plan must require payments for at least ten years
Types of debt that can be discharged in a Chapter 7 bankruptcy include ________.
the remaining unpaid debt after Chapter 7 liquidation
To prevail under the attractive nuisance doctrine, plaintiff must prove all of the following factors EXCEPT __________.
the utility of the defendant maintaining the condition and the burden of eliminating the danger were equal compared to the risk to children
A limited liability company can be liable for ________.
the wrongful act or omission of a member acting within the ordinary course of business
The chancery court in Delaware is an advantage for corporations because ________.
there are no juries
Who would NOT subject a limited liability partnership (LLP) to liability if they caused loss or injury to a third party while acting in the ordinary course of business for the LLP?
the LLP's landlord
John's Equipment Rentals enters into a lease contract with ABC Construction for a backhoe to use in a yearlong excavation project. Under the UCC, ___________.
this is considered an ordinary lease, with John's Equipment Rentals bearing the risk of loss until ABC actually receives the leased goods
Insurance that owners of real property purchase to ensure that they have clear title to the property is known as ________ insurance.
title
Legal tangible evidence of ownership of goods is called ________.
title
