Missed Practice Test Questions

Liability insurance is a type of social insurance that indemnifies against personal injury and property damage claims for which the insured is legally responsible.

False (type of casualty insurance)

Persons who have drafted, enlisted, or called to active duty must be re-employed by their former employer after honorable discharge.

True

Persons who wish to pay others by check but do not have a checking account of their own may purchase a cashier's check from the bank.

True

Our existence as a truly united country began in

1789: Congress declared the Constitution effective

Consequential money damages may be granted

All of these (the forseeable injuries caused by a breach, a major breach, a minor breach)

Which of the following is not limited defense?

Alteration

The ownership of real property is transferred through a will

By inheritance

The name of the international trade organization that adopted rules regarding electronic bills of lading and import-export papers is known as the:

CMI

The bankruptcy law designed to give relief to family farm owners is

Chapter 12

Which of the following statements is untrue?

Commercial paper collectible in the US, but in which the money is expressed in an acceptable foreign currency, is non-negotiable

Whatever is earned, inherited, or received as a gift during the marriage remains the property of the spouse who earned it or received it in a divorce according to

English common law

A contract to sell is a contract in which ownership of (title to) goods transfers immediately from the seller to the buyer for a price.

False

An executory contract in violence of the statute of frauds is an illegal contract

False

An indorsement is a signature on the face of an instrument to transfer the paper.

False

Any contract that requires the violation of the law is voidable.

False

Articles of Incorporation must be filed in the appropriate state to form a limited liability corporation (LLC).

False

Credit cards are convenient and more economical than checks

False

Credit cards offer convenience and protection from loss for the consumer as well as a significant decrease in the cost of goods and services purchased.

False

Electronic fund transfers by businesses are governed by the EFTA, while electronic fund transfers by consumers are governed by Article 4A of the UCC.

False

Even though the shares may be unequal, there is a right of survivorship in the tenancy in common.

False

If a minor fathers a child, his parents are obligated to pay his child support for him.

False

If the debtor defaults, the secured creditor who does not have possession of the collateral may take possession of it but only by legal proceedings

False

It is the possessor's duty to the trespasser to keep the land in a reasonably safe condition.

False

The debt is always paid in full in a secured transaction because the creditor has collateral and the legal right of possession.

False

The indorsement is a signature on the face of an instrument

False

The purpose of punishment is to remedy the wrong.

False

The right of contribution is when a third party agrees to be primarily liable for the debt if payment becomes overdue.

False

The test of intention will cause certain items to be classified as realty because they are truly essential to the functioning of realty

False

There is no restitution for an illegal act even if the party rescinds before the illegal act occurs.

False

To be negotiable, commercial paper intending to create a legal obligation may be either oral or written.

False

Unconscionable contracts must be criminal.

False (need not be criminal nor violate a statue; unethical)

President Franklin D. Roosevelt created administrative agencies and delegated a portion of congressional power in a specific area of commerce to each agency.

False (p. 543)

Pledged property may be repledged to a third party on terms that do not prevent the pledgor from getting the property back when the debt is paid.

True

The consolidation of vast economic power has been identified as one of the main factors in causing the Great Depression

True

The minimum wage and overtime requirements of the law do not apply to executives, administrators, and professional workers

True

The three elements of most crimes are the duty, the breach of duty, and criminal intent.

True

A draft drawn by a bank on funds that it has on deposit at another bank is

a teller's check

In order for Berto to win a workers' compensation award he must

attend a hearing conducted by a state administrative agency

Under the UCC, some exceptions to the statute of frauds occur when

goods have been received and accepted by the buyer

An injured worker can recover from the employer for negligence

if the employer commits an intentional tort, if the employer fails to provide required workers' compensation insurance, if workers' compensation insurance was not required

Which of the following is a protection for the creditor?

laws allowing secured debts

Change in a party's legal position as a result of a contract is known as

legal value

Ordinary duress

limited defense

Prior payment

limited defense

Temporary incapacity to contract

limited defense

In which type of business organization can an owner lose his status and become liable if that owner participates in any managerial decisions?

limited partnership

To resolve a dispute in court means to

litigate

If a buyer of a bulk transfer fails to notify the seller's creditors of the forthcoming transfer, the creditors may

make claims against the inventory and equipment after the buyer takes possession

S corporation earnings are

only taxed at the individual owner's income level

A method of contract interpretation focused on the main objective of the parties involved in the contract is

parties' principal objective

People who lack capacity have the right to

pay a fair price instead of the contract price for contracts for necessaries

If a contract requires the seller to ship the goods but does not obligate the seller to deliver them, title passes to the buyer when

possession is transferred to the carrier

An offer can be terminated by the OFFEROR by

revocation

When a person has the authority to bind an organization to a contract, they are said to have

scope of authority

An agent is liable to the third person when

the agent acts outside his scope of his or her authority, the principal lacks contractual capacity

When payment for goods takes place at a later date, the transfer of title takes place when

the buyer selects and agrees to buy the goods in the seller's store

A new partner who joins the firm is liable for

the existing debts of the business and the new debts incurred after joining

Some Constitutional rights to due process are:

the right to cross-examine; the right to not testify against oneself; the right to be represented by a lawyer

Certificates of deposits and promissory notes are

unconditional promises to pay money

A person would need to be a member of the union in order to be represented by that union in the following:

union shop (p. 442)

What is the limitation on the number of members or stockholders for an LLC?

unlimited

Which of the following statements regarding unsecured debts is true?

An unsecured debt is based solely on oral or written promise to pay.

Which of the following adequately describes a cashier's check?

Banks use these checks to pay their own obligations, an individual may purchase a cashier's check

Which employee duty obligates the employee to look out for the employer's best self interest?

Duty of loyalty and self honesty (p.423)

The act requiring information in federal agency records to be made available if properly requested is the

Freedom of Information Act

Alfonse, acting as Hope's agent, enters Hope into a modeling agreement that is outside of his scope of authority. Which of the following statements is true?

Hope is not bound.

Joley transfers ownership of her home to her sister, Doris. The document states, " I convey my home at 1530 Yarbrough Blvd. to my sister, Doris McKibbon, for life." What type of estate has this conveyance created?

Life estate

Parties to a contract sometimes agree that if a certain breach occurs, there will be an award of

Liquidated damages

Although Julie is a minor and generally lacks capacity, some contracts for non-necessaries are exceptions that she cannot disaffirm. Which of the following is not one of those exceptions?

None of the above (court approved contracts, certain life insurance contracts, deposit in a saving's account)

An eligibility requirement for an S corporation would be

None of these (2 or more classes of stock *1, unlimited number of shareholders <100*)

When personal property as well as all of the business property may be seized to pay damages awarded by the court in the event of a breach of contract or a tort, the business is

Sole proprietorship

The primary difference between a suretyship and a guarantorship is _____.

The guarantor is only secondarily liable for the debtor's obligations.

A security interest under the UCC can be created only with the consent of the debtor.

True

All persons, including minors, are liable for their torts.

True

An S corporation's earnings are treated the same as a partnership.

True

Classifications of corporations in terms of purpose would be either public or private.

True

Corporate officers are legally accountable to the corporation for willful or negligent acts that cause loss to it.

True

Crimes are classified as felonies or misdemeanors.

True

In order for a bailment to arise, both possession and control of the goods must shift from the bailor to the bailee.

True

In some states, a debtor is not required to pay a debt unless a receipt is given

True

OSHA does not allocate loss based on fault or provide money for medical expenses without regard to fault.

True

Oral evidence may be used to show failure of consideration

True

The first state to allow an LLC was

Wyoming

An example of an unconditional promise to pay is

a certificate of deposit

A type of draft written by which a bank depositor orders the bank to pay money, usually to a third party is

a check

The type of commercial paper used in international transactions is

a letter of credit

The general requirement is than an agent must be

able to understand the transaction

Remedies for fraud are

agreement, impossibility of performance, operation of law

Creditors may force dissolution of a corporation because of

bankruptcy (not consolidation or merger)

The major requirements that must be satisfied before courts will treat transactions as contracts are offer and acceptance, genuine assent, legality, consideration,

capacity and writing

Injuries not covered by workers' compensation are injuries occurring

from traveling to and from work

Harrison gives his property to his city for the sole purpose of constructing a senior citizen's recreational facility. Which of the following terms can be associated with his transaction?

dedication, conditional estate (p. 336)

The normal sequence of steps in ending a partnership is

dissolution, winding-up period, termination

When Marty agrees to take possession of her uncle's gift to her, she becomes a(n)

donee

Easements that do not benefit neighboring land, but benefit a person or business are called

easement in gross

If a buyer selects and agrees to buy the goods in the seller's store the title passes

even if the payment and delivery take place later

Such expressions as "with all faults" or "as is" will

exclude all implied warranties

In misrepresentation, the statement must be one of

fact

Which of the following is not a universal defense?

fraud by inducement

Commercial paper can be discharged by

fraudulent alterations