Business Law Part 2
A partner may engage in one or more competing businesses.
False
A partner's right to participate in the management of the partnership depends upon the size of that partner's capital contribution.
False
A patent lasts for the same period of time as a copyright.
False
A person who engages an independent contractor to do a specific job has a right to control the conduct and activities of the independent contractor in the performance of the contract.
False
A principal may not be held liable for the wrongful acts of his agent if the agent acted in disobedience of the principal's instructions.
False
A reversion is held by a person other than the grantor or his successors.
False
All agency contracts must be in writing.
False
All amendments to the Articles of Incorporation require shareholder approval.
False
An incoming partner has unlimited personal liability for the antecedent debts of the partnership.
False
An oral agreement for the sale of land is enforceable under the Statute of Frauds.
False
An undisclosed principal is one whose existence is known but whose identity is not known.
False
Changes which alter the basic structure of the corporation require only board approval.
False
Electronic surveillance for the purpose of acquiring trade secrets is permissible under the law of unfair competition.
False
Generally, proxies need not be in writing to be effective.
False
The bylaws of a corporation may not be changed without shareholder approval.
False
The finder of lost property is entitled to possession of it, even against the true owner.
False
The relationship of principal and agent exists only when one party exercises the right of control over the actions of another.
False
Unless otherwise agreed, partners bear losses equally even if profits are shared.
False
A life tenant may do anything with the land that is legal.
False - Can't commit waste
The "Good Housekeeping Seal of Approval" is an example of a service mark.
False - Certification mark
Mark finds a camera on a park bench at Disneyland. Mark can keep the camera if the true owner cannot be found, because it is lost property.
False - Disneyland keeps it because it is mislaid property
The transfer of real estate requires consideration to be valid.
False - Not if it is a gift
Any recovery in a shareholder's direct suit usually goes to the corporate treasury so that all shareholders can benefit proportionately.
False - derivative
A promoter is one who agrees to purchase the initial stock in a corporation.
False - subscriber
Infringement of a mark is the authorized use of an identical or substantially indistinguishable mark that is likely to cause confusion, to cause mistake or to deceive.
False - unauthorized
As in general partnerships, limited partnerships are governed primarily by state and common law.
False- state statutes
A corporation is an entity apart from its shareholders, with entirely distinct rights and liabilities.
True
A corporation may be liable for crimes committed by its employees within the scope of their employment.
True
A corporation may be liable for torts committed by its employees within the scope of their employment.
True
A furnace would often be classified as a "fixture."
True
A limited partner is liable for the partnership debt only to the extent of her capital contribution.
True
A limited partnership is a general partnership that, by making the statutorily required filing, limits the liability of its partners for some or all of the partnership's obligations.
True
A partnership is an association of two or more persons to carry on as co-owners of a business for profit.
True
A principal is under no duty to reimburse his agent for unauthorized expenses the agent incurs.
True
A principal may be held liable to a third party based upon an agent's apparent authority even though the agent had no actual authority.
True
A principal may revoke an agent's authority at any time, but if he does, he may be in breach of his contract with the agent.
True
A warranty deed by Jeff to Paula includes Jeff's promise that he will be liable to Paula for any defects in title.
True
An agent is under a duty to keep her principal's property separate from her own.
True
An employee may quit and then use information he learned at the company to compete with the company, unless there was some unfair competition or trade secret involved.
True
An uncommon but possible way to obtain title to property is by adverse possession.
True
Any one partner may be held liable for the entire indebtedness of the partnership.
True
Clara receives a telephone call from her Aunt Mary in which Mary says she has decided to give Clara her pet python as a gift. Clara may refuse to accept the gift.
True
Generally, any person has the capacity to be an agent.
True
If an agent is acting on behalf of a disclosed principal and is acting with authority, then the principal and the third party will be bound by a contract that the agent negotiates with the third party on behalf of the principal.
True
In a consolidation of two corporations, each of the constituent corporations ceases to exist.
True
It is legal for a board of directors to issue bonds or other obligations in the corporate name without shareholder approval.
True
Most contracts or business transactions can be created or conducted through an agent.
True
Partners may agree that losses will be shared differently than profits are shared.
True
Shares without par value may be issued for any amount set by the board of directors.
True
The creditors of the corporation may start involuntary dissolution by judicial proceedings.
True
The principal's right to control the conduct of the agent is the most significant factor in determining whether an employment relationship exists.
True
The principal-agent relationship is a fiduciary relationship.
True
A corporation: a. May sue or be sued by one of its shareholders b. Is dissolved by a transfer of its stock from one individual to another c. May not own or deal in real property d. All of the above
a.
The fraudulent marketing of one person's goods as those of another is referred to as a. Palming off b. Trade secrets c. Dilution d. A tying arrangement
a.
Which of the following is a characteristic of a limited partnership under most statutes? a. A filing must be made with the secretary of state b. The firm's name must contain the full words "limited liability partnership" c. Under recent statutes, liability is typically limited only for negligent acts of partners d. All of the above
a.
the names of all limited partners should be included in: a. The certificate of limited partnership b. The name of the partnership c. Each partner's income tax return d. All of the above
a.
(CPA) A principal will NOT be responsible to a third party for a tort committed by an agent: a. Unless the principal instructed the agent to commit the tort b. Unless the tort was committed within the scope of the agency relationship c. If the agency agreement limits the principal's liability for the agent's torts d. If the tort is also regarded as a criminal act
a. or b.
(CPA) All of the following distributions to stockholders are considered asset or capital distributions EXCEPT: a. Liquidating dividends b. Stock splits c. Property distributions d. Cash dividends
b.
(CPA) In general, which of the following must be contained in the Articles of Incorporation? a. The names of states in which the corporation will be doing business b. The name of the registered agent c. The names of the initial officers and their terms of office d. The powers of the corporation
b.
A suit brought by a shareholder to enforce a right belonging to the corporation is a: a. Direct suit b. Derivative suit c. Suit to pierce the corporate veil d. None of the above
b.
An agency terminates by operation of law upon the occurrence of any of the following EXCEPT: a. Bankruptcy b. Fulfillment of purpose c. Death of the principal d. Disloyalty of the agent
b.
Ann is authorized to sell her principal's property for $10,000. If Ann sells the property for $11,000, then: a. She may pocket the additional $1,000 b. She has a duty to account to the principal for the additional $1,000 c. She must give the $1,000 back to the third party d. None of the above
b.
Any contract resulting from the appointment of an agent by a minor are: a. Void b. Voidable c. Unenforceable d. None of the above
b.
Don asked Karen to marry him and gave her a 1/2 carat diamond engagement ring. Three months later, Karen broke the engagement because she decided she was not ready for marriage yet. According to most courts, Don may a. Not recover the ring because it was a gift b. Recover the ring because he did not break the engagement and the gift was conditional c. Not recover the ring even if the marriage does not take place because gifts cannot be conditional d. Not recover the ring unless the reason the marriage was called off was Karen's death
b.
Piercing the corporate veil: a. Invalidates the contracts of the corporation b. Imposes personal liability upon the shareholders for the corporate obligations c. Denies the corporation access to the state's courts d. B and c, but not a
b.
The liability of an incoming partner for antecedent debts and obligations of the firm is: a. Unlimited b. Limited to his capital contribution c. Limited to his accrued and unpaid share of the profits d. None of the above
b.
When a partner commits a crime in the course of partnership business: a. The partner is not criminally liable for his or her conduct b. The partner is criminally liable for his or her conduct c. The partnership cannot be held criminally liable for partner's conduct d. A and c
b.
Which of the following is correct regarding the role of the shareholders of a corporation? a. They have no voice in policy matters b. They exercise control over policy by electing directors c. They are consulted regularly by management when decisions must be made on broad policy matters d. Contracts which they make on behalf of the corporation are binding on it
b.
P writes a letter to A authorizing her to sell his car. A tries to sell the car to C, telling him that although it is not her car, she has the authority to sell it. In this case, P would be a: a. Disclosed principal b. Unidentified principal c. Undisclosed principal d. None of the above
b. partially disclosed
(CPA) A partnership agreement must be in writing if: a. Any partner contributes more than $500 in capital b. The partners reside in different states c. The partnership's purpose cannot be completed within one year of formation d. The partnership intends to own real estate
c.
(CPA) A principal and agent relationship requires a: a. Written agreement b. Power of attorney c. Meeting of minds and consent to act d. Specified consideration
c.
(CPA) Orr gives North a power of attorney. In general, the power of attorney: a. Will be valid only if North is a licensed attorney at law b. May continue in existence after Orr's death c. May limit North's authority to specific transactions d. Must be signed by both Orr and North
c.
(CPA) Simpson, Ogden Corp's agent, needs a written agency agreement to: a. Enter into a series of sales contracts on Ogden's behalf b. Hire an attorney to collect a business debt owed by Ogden c. Purchase an interest in undeveloped land for Ogden d. Retain an independent general contract to renovate Ogden's office building
c.
(CPA) When an agent acts for an undisclosed principal, the principal will NOT be liable to a third party if the: a. Principal ratifies a contract entered into by the agent b. Agent acts within an implied grant of authority c. Agent acts outside the grant of actual authority d. Principal seeks to conceal the agency relationship
c.
(CPA) Which of the following statements is correct with respect to a limited partnership? a. A limited partner may NOT be an unsecured creditor of the limited partnership b. A general partner may also be a limited partner at the same time c. A general partner may be a secured creditor of the limited partnership d. A limited partnership can be formed with limited liability for all partners
c.
A corporation ceases to exist as a separate entity when: a. All or substantially all of its assets are purchased by another company b. A controlling interest in its stock is purchased by another corporation c. It is merged into another corporation d. All of the above
c.
A limited partnership is dissolved upon: a. The death of a limited partner b. The bankruptcy of a limited partner c. The withdrawal of the only general partner d. All of the above
c.
A shareholder may maintain an action at law against the corporation to recover a dividend whenever: a. Unreserved and unrestricted earned surplus is available for payment of the dividend b. The dividend may be paid out of capital surplus without impairing stated capital c. The dividend has been formally declared by resolution of the board of directors d. All of the above
c.
An agent may be appointed to perform which of the following? a. Perform a contract for personal services b. Commit an illegal act c. Buy or sell goods d. More than one of the above
c.
Marutzky Corporation issued bonds that provided the bondholder could exchange the bond for twenty shares of common stock. This bond is referred to as a: a. Callable bond b. Secured bond c. Convertible bond d. None of the above
c.
One who contracts with another to do a job but who is not subject to the control of the other is known as a: a. Agent b. Principal c. Independent contractor d. Employee
c.
Page & Co. hires Ed to deliver merchandise to Page's customers. After making the scheduled deliveries, Ed drives the company's truck to a nearby city to visit his girlfriend. while in the city, Ed negligently causes the truck to hit Tony's car and injure Tony. a. Page is not liable to tony because Ed is an independent contractor b. Page is liable to Tony because Ed was acting within the scope of employment c. Page is not liable to Tony because Ed was not acting within the scope of employment d. None of the above
c.
The officers of a corporation: a. Must be shareholders of the corporation b. Are elected by the shareholders c. Are appointed by the board of directors d. A and c, but not b
c.
Treasury shares may be: a. Voted b. Paid dividends c. Sold at less than par value d. None of the above
c.
In classifying directors with regard to their relationship to the corporation, they would probably best be classified as: a. Trustees b. Agents c. Fiduciaries d. None of the above
c. Officers are agents
A design patent a. Has a duration of 14 years b. Refers to ornamental designs for manufactured products c. Requires a showing of novelty, ornamentality and nonobviousness d. All of the above
d.
A limited partnership may be composed of: a. One general partner and one limited partner b. Two limited partners c. One general partner and two limited partners d. A and c, but not b
d.
A person who is entitled to participate in the management of a partnership is generally: a. A individual partner's assignee b. An individual partner's judgement creditor c. A receiver of an individual partner's interest d. None of the above
d.
Charles hires Eileen, an attorney, to represent him in a lawsuit. The relationship between Charles and Eileen is an example of: a. Employer and independent contractor only b. Employer and employee only c. Principal and agent only d. Both employer and independent contractor, as well as principal and agent
d.
How long does a copyright last? a. Exactly 25 years b. 17 years c. Exactly 50 years d. The author's life plus 70 years
d.
Mel owns a retail store. Elizabeth is a salesclerk for Mel in the store. The relationship between Elizabeth and Mel is an example of: a. Employer and independent contractor only b. Employer and employee only c. Principal and agent only d. Both employer and employee, as well as principal and agent
d.
No person may become the member of a partnership without the consent of: a. At least one partner b. Two or more partners c. A majority of the partners d. All of the partners
d.
Peter listed his real estate with Ron, a realtor, pursuant to a listing agreement, which was good for 90 days. Two months later, Peter decides NOT to sell the property and revokes Ron's authority. a. Peter cannot revoke Ron's authority. b. Peter has the power to revoke Ron's authority, but does not have the right to revoke it c. Peter may be liable to Ron for damages for breach of contract d. Two of the above are correct, b. and c.
d.
Ratification by a principal of an unauthorized act may occur by: a. Silence that indicates consent b. Express statements c. Acceptance of the benefits of the contract d. All of the above
d.
Wanda has an idea for a novel, but she will not have time to write it until next year. She may protect it by means of a. A patent b. A copyright c. Registration of the idea d. An idea that has not yet been developed into a tangible form cannot be protected
d.
Which of the following is NOT a duty owed by an agent to her principal? a. Obedience b. Accounting c. Information d. All of the above are duties of an agent
d.
Which of the following is a requirement of a valid gift? a. An adult donor b. Payment of money c. A writing d. Delivery
d.
Which of the following will NOT terminate an agency? a. Lapse of time b. Revocation of authority c. Renunciation by the agent d. All of the above will terminate an agency
d.
Assume that P and P's agent A, conspire to and actually injure C so that C cannot run in the big race. Which of the following is true? a. P has committed both a crime and a tort b. P has committed a tort but not a crime c. A has committed a tort and a crime d. Two of the above
d. (a and c)
Ratification of an unauthorized contract is effective to bind the principal and a third person to the contract unless: a. The principal ratifies only a portion of the contract b. The principal does not manifest an intent to ratify the contract c. The principal only manifests an intent to ratify the contract by his conduct d. A and b, but not c
d. This question sucks.
