BUS 201 Final Exam

According to the Uniform Commercial Code, what is a change, without consent, that modifies the obligation of a party to the instrument? A) An alteration B) An accord C) An accord and satisfaction D) A unilateral modification E) A reformation

A) An alteration

Typically, how are corporate directors chosen? A) By a majority vote of the shareholders. B) By a majority vote of the officers. C) By a two-thirds vote of the shareholders. D) The president appoints them, subject to the advice and consent of the shareholders. E) By a unanimous vote of the shareholders.

A) By a majority vote of the shareholders.

Which of the following types of contracts does not fall within the statute of frauds? A) Contracts not performed within eight months B) Promises made in consideration of marriage C) Contracts for one party to pay the debt of another party if the initial party fails to pay D) Agreements related to an interest in land E) Contracts for the sale of goods totaling more than $500

A) Contracts not performed within eight months

Which of the following is true regarding the tort liability of employers for the actions of their employees and independent contractors? A) Employers are generally liable in tort for the actions of their employees, while they are generally not liable for the actions of independent contractors. B) Employers are generally liable in tort for the actions of independent contractors, while they are generally not liable for the actions of their employees. C) Employers are not generally liable in tort for the actions of independent contractors or for the actions of their employees. D) Employers are generally liable in tort for the actions of independent contractors and their employees. E) Employers are generally liable in tort for the actions of independent contractors and their employees, but only if the employer has agreed to assume liability in a written contract with the employee or independent contractor.

A) Employers are generally liable in tort for the actions of their employees, while they are generally not liable for the actions of independent contractors

Which of the following is the most common type of agency? A) Expressed agency B) Implied agency C) Apparent agency D) Agency by ratification E) Agency by estoppel

A) Expressed agency

What doctrine arose from cases in England in which parties, who had contracted for rooms along a parade route for the king's coronation, received their money back when the coronation was canceled because the king became ill? A) Frustration of purpose B) Commercial impracticability C) Substantial performance D) Anticipatory repudiation E) Impossibility of performance

A) Frustration of purpose

In a limited partnership, who assumes unlimited personal liability for the debts of the partnership? A) General partners B) Limited partners C) Special partners D) General partners, limited partners, and special partners E) General partners and special partners, but not limited partners

A) General partners

What do Uniform Commercial Code Sections 2-601 and 2A-509 indicate regarding the perfect tender rule? A) If goods or tender of delivery fails in any respect to conform to the contract, the buyer has the right to accept the goods, reject the entire shipment, or accept part and reject part. B) If goods or tender of delivery fails in any material respect to conform to the contract, the buyer has the right to accept the goods, reject the entire shipment, or accept part and reject part. C) If goods or tender of delivery fails in any respect to conform to the contract, the buyer has the right to accept all of the goods or reject the entire shipment, but not the right to accept part and reject part. D) If goods or tender of delivery fails in any material respect to conform to the contract, the buyer has the right to accept all of the goods or reject the entire shipment, but not the right to accept part and reject part. E) If goods or tender of delivery fails in any respect to conform to the contract, the buyer only has the right to accept the entire shipment and sue for damages.

A) If goods or tender of delivery fails in any respect to conform to the contract, the buyer has the right to accept the goods, reject the entire shipment, or accept part and reject part.

Which of the following is defined as the series of legal steps a secured party takes to protect its rights and collateral from other creditors who wish to have their debts satisfied through the same collateral? A) Perfection B) Procedural due process C) Novation D) Strategic credit management E) Substantive due process

A) Perfection

. ________ is the legal enforcement of an otherwise unenforceable contract due to a party's detrimental reliance on the contract. A) Promissory estoppel B) Substantial estoppel C) Substantial performance D) Frustration of purpose E) Commercial impracticability

A) Promissory estoppel

Which of the following is a term for a requirement that a minimum number of directors be present at a meeting for decisions made at the meeting to be valid? A) Quorum B) Simple majority C) Electorate D) Super-majority E) Base

A) Quorum

In which of the following situations would a court likely to pierce the corporate veil? A) Shareholders attempt to commit fraud through a corporation. B) A corporation followed statutory mandates regarding corporate business. C) Shareholders' personal interests and corporate interests are separate. D) A corporation had adequate capital when it initially formed. E) None of the above; because a corporation is a legal entity separate from its owners (i.e., its shareholders), a court cannot pierce the corporate veil in order to impose personal liability on shareholders.

A) Shareholders attempt to commit fraud through a corporation

Which principle states that if an item is transferred from one person to another, the transferee acquires all the rights that the transferor had in the item? A) Shelter B) Holder C) Holder-in-due-course D) Assignee E) Third-party-beneficiary

A) Shelter

In a dispute between two secured parties with unperfected security interests, which of the following is true? A) The party who attached its interest first will prevail. B) The party who attached its interest second will prevail. C) The parties must divide the proceeds evenly between them. D) The party who loaned the most money on the collateral has priority. E) The party who loaned the least money on the collateral has priority.

A) The party who attached its interest first will prevail

In a destination contract, who bears the risk of loss while the goods are in transit? A) The seller B) The buyer C) Both the buyer and seller, with the loss being apportioned 50% to the buyer and 50% to the seller D) Both the buyer and seller, with the loss being apportioned 75% to the buyer and 25% to the seller E) Both the buyer and seller, with the loss being apportioned 25% to the buyer and 75% to the seller

A) The seller

A holder in due course must take the negotiable instrument in good faith. A) True B) False

A) True

A limited liability company (LLC) is an unincorporated business that is taxed like a partnership with the limited liability of a corporation. A) True B) False

A) True

A negligent misrepresentation results when the party making the statement would have known the truth about the fact had he used reasonable care to discover or reveal it. A) True B) False

A) True

A power of attorney is a document that gives an agent the authority to sign legal documents on behalf of the principal. A) True B) False

A) True

Check 21 allows banks to forgo sending original checks as part of the collection or return process and instead send a truncated version. A) True B) False

A) True

Emancipation occurs when a minor's parents or legal guardians give up their right to exercise legal control over the minor. A) True B) False

A) True

If a farmer agrees to sell all the grain his fields will produce but is unable to determine a specific amount, then the "quantity" element has been satisfied under the Uniform Commercial Code. A) True B) False

A) True

Instruments payable to "cash" are considered bearer instruments. A) True B) False

A) True

Lack of genuine assent is a defense to the enforcement of a contract. A) True B) False

A) True

Suretyship refers to an agreement in which a third party agrees to pay the debt owed by another party if that other party fails to pay his or her debt. A) True B) False

A) True

The Uniform Commercial Code defines a negotiable instrument as a written document that is signed by the maker or drawer with an unconditional promise or order to pay a sum certain in money on demand or at a time certain to bearer or to order. A) True B) False

A) True

The Uniform Commercial Code imposes liability if the party, or the party's agent, signs the instrument. A) True B) False

A) True

When one of the parties to an agreement wants to substitute a different performance for his original duty under the contract, he is seeking a(n) ________. A) accord and satisfaction B) novation C) substituted contract D) mutual rescission E) addendum

A) accord and satisfaction

Suppose that Eduardo agrees to purchase Caleah's car for $10,000. Eduardo's payment of $10,000 is the ________ Caleah will receive for her car. A) consideration B) offer C) conditional offer D) invitation to negotiate E) forbearance

A) consideration

. A corporation is a ________ corporation in the state in which it is incorporated. A) domestic B) foreign C) multinational D) closely held E) public

A) domestic

. An agency relationship that arises when an individual misrepresents herself as an agent for another party and that party accepts the unauthorized act is an agency by _________. A) ratification B) implication C) estoppel D) default E) agreement

A) ratification

Sam offers Betty his bicycle for $75. Which of the following is an example of an illusory promise on the part of Betty? A) "I'll take it." B) "I'll take it if I decide to do so." C) "I won't pay $75, but I will pay $50." D) "I'll take it if you will let me try it out first and the brakes work well." E) "I'll take it if you will put new tires on it first."

B) "I'll take it if I decide to do so."

Under the Uniform Commercial Code, contracts for the sale of goods must be in writing in order to be enforceable if they are priced at ________. A) $100 or more B) $500 or more C) $1,000 or more D) $1,000 or less E) $500 or less

B) $500 or more

Which of the following is an agreement by which the debtor agrees to pay a debt even though it could be discharged? A) An admission against interest B) A reaffirmation agreement C) A compromise agreement D) An accord and satisfaction E) A novation

B) A reaffirmation agreement

Which of the following is a document a corporation files with the state explaining its organization? A) Certificate of organization B) Articles of incorporation C) Corporate prospectus D) Certificate of institutionalization E) Corporate filing statement

B) Articles of incorporation

Belinda orders a certain type of hybrid rose for her wedding. A disease sweeps through that type of rose and the florist could only obtain the roses at great cost, if at all. Which of the following is the appropriate term for the florist's best defense? A) Frustration of purpose B) Commercial impracticability C) Substantial performance D) Unforeseen circumstances E) Substantial impairment

B) Commercial impracticability

. Agency is generally defined as a relationship between a principal and a third-party beneficiary. A) True B) False

B) False

. Creditors can attempt to repossess property during bankruptcy proceedings. A) True B) False

B) False

A bilateral contract is commonly defined as a promise in exchange for an act. A) True B) False

B) False

According to the "responsible person" doctrine, directors and officers are not liable for decisions that harm the corporation if they were acting in good faith at the time of the decision. A) True B) False

B) False

According to the Magnuson-Moss Act, if a written warranty is silent regarding whether it is a full or limited warranty, it is presumed to be a limited warranty. A) True B) False

B) False

An ordinary IOU satisfies the "unconditional promise or order to pay" requirement for a negotiable instrument. A) True B) False

B) False

If a demand instrument is a check, the Uniform Commercial Code states that the check is overdue 30 days after its date. A) True B) False

B) False

If an owner entrusts the possession of goods to a merchant who deals in goods of that kind, the merchant cannot transfer ownership rights in the good to a buyer in the ordinary course of business. A) True B) False

B) False

Members of the board of directors of a corporation are appointed by the chief executive officer of the corporation. A) True B) False

B) False

Once a contract has been anticipatorily repudiated, the nonbreaching party must wait until the other party's contractually specified time period for performance has expired to sue for breach of contract and take other remedial measures. A) True B) False

B) False

The mailbox rule provides that an acceptance is valid when it is received by the offeror. A) True B) False

B) False

The parol evidence rule is a common law rule that specifically addresses the admissibility of written evidence as it relates to oral contracts. A) True B) False

B) False

Uniform Commercial Code prohibits bank customers from postdating checks. A) True B) False

B) False

When a creditor sells a consumer good to a debtor on a credit basis or a creditor extends a loan to a debtor for the purchase of a consumer goods, the security interest does not perfect automatically; instead, the secured party must file a financing statement in order for the security interest to perfect. A) True B) False

B) False

When express authority is granted for an agent to enter into a contract that is legally required to be in writing, most states require the grant of authority also to be in writing. This requirement is known as the "equitable parity rule." A) True B) False

B) False

Which of the following occurs when the parties to the agreement wish to replace one of the parties with a third party? A) Accord and satisfaction B) Novation C) Substituted contract D) Mutual rescission E) Abeyance

B) Novation

________ is the legal enforcement of an otherwise unenforceable contract due to a party's detrimental reliance on the contract. A) Forbearance B) Promissory estoppel C) Res ipsa loquitur D) Res judicata E) Mutual exclusivity

B) Promissory estoppel

. Which of the following modifies the mirror-image rule? A) The Uniform Contracts Code. B) The Uniform Commercial Code. C) The Restatement of Contracts, Second. D) The International Business Code. E) The International Commercial Code.

B) The Uniform Commercial Code.

Which of the following is true regarding the mirror-image rule and the Uniform Commercial Code? A) The mirror-image rule applies under the UCC the same as it applies under common law. B) The mirror-image rule that applies under common law does not apply under the UCC. C) The mirror-image rule that applies under the common law applies under the UCC only if a lease is involved. D) The mirror-image rule that applies under the common law applies under the UCC only if a sale of goods is involved. E) The mirror-image rule does not apply under the UCC

B) The mirror-image rule that applies under common law does not apply under the UCC

Which of the following refers to a special relationship in which one person has taken advantage of his or her dominant position in a relationship to unduly persuade the other person? A) Fraudulent misrepresentation B) Undue influence C) Economic duress D) Physical duress E) Conscionability

B) Undue influence

When a contracting party refuses to complete the contract before the actual time of performance, it is called a(n) ________. A) preemptive strike B) anticipatory repudiation C) ante-breach D) advance renunciation E) executory renunciation

B) anticipatory repudiation

A person who has legal ________ to contract is one who has the mental ability to understand his or her rights and obligations under a contract. A) affirmance B) capacity C) ratification D) construction E) assent

B) capacity

Frequently, real estate contracts are conditioned on an event such as the buyer's ability to sell his current home by a certain date. If the home does not sell, the condition does not arise, and the parties have no duty to perform and are thus discharged from the contract. This is an example of a contract that is subject to a ________. A) condition subsequent B) condition precedent C) concurrent condition D) real condition E) fixed condition

B) condition precedent

A legal entity formed by issuing stock to investors is a ________. A) cooperative B) corporation C) limited partnership D) limited liability partnership E) general partnership

B) corporation

When a holder presents an instrument in a timely and proper manner but acceptance or payment is refused, the instrument has been ________. A) annulled B) dishonored C) converted D) rescinded E) executed

B) dishonored

A person who contracts with another to do something for him but who is not controlled by the other nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking is an ________. A) employee B) independent contractor C) employee contractor D) agent by estoppel E) agent by ratification

B) independent contractor

. A false statement about a fact material to an agreement that the person making the statement believed to be true is considered a(n) ________. A) commercial disparagement B) innocent misrepresentation C) fraudulent misrepresentation D) scienter-based misrepresentation E) criminal misrepresentation

B) innocent misrepresentation

By filing a(n) ________ petition under Chapter 7, creditors can attempt to force into bankruptcy a debtor who is not paying debts as they become due. A) voluntary B) involuntary C) declaratory D) injunctive E) interlocutory

B) involuntary

The statute of frauds is intended to prevent unreliable ________ evidence from interfering with a contractual relationship. A) hearsay B) oral C) documentary D) relevant E) written

B) oral

An agent is authorized to act for and on behalf of the ________. A) fiduciary B) principal C) independent contractor D) third-party beneficiary E) incidental beneficiary

B) principal

Which of the following is a doctrine used in the context of the principal/employer-agent/employee relationship? A) post hoc ergo propter hoc B) respondeat superior C) stare decisis D) res judicata E) res ipsa loquitur

B) respondeat superior

. A party who is ________ liable is responsible for paying the amount designated on an instrument if the primarily liable party defaults. A) primarily B) secondarily C) customarily D) statutorily E) strictly

B) secondarily

When a person decides to go into business on his or her own and is solely responsible for management and profits, a(n) ________ is formed A) S corporation B) sole proprietorship C) single-entity partnership D) sole entrepreneurship E) limited liability company

B) sole proprietorship

Which of the following is a group that comes together for the explicit purpose of financing a specific large project? A) A business trust B) A joint venture C) A syndicate D) A franchise E) An enterprise

C) A syndicate

Which of the following types of paper requires delivery and an endorsement by the holder? A) A bearer instrument B) A qualified instrument C) An order instrument D) A conditional instrument E) A certified instrument

C) An order instrument

. Which of the following is a way that a corporation can avoid double taxation? A) By forming a C corporation B) By forming a D corporation C) By forming an S corporation D) By forming an F corporation E) By forming a traditional corporation

C) By forming an S corporation

________ corporations generally do not offer stock to the public. A) Alien B) Foreign C) Closely held D) Multinational E) Domestic

C) Closely held

. ________ is/are responsible for running the day-to-day business of a corporation. A) Investors B) Shareholders C) Officers D) Incorporators E) The board of directors

C) Officers

Which of the following rights give preference to shareholders to purchase shares of a new issue of stock? A) Subrogation B) Primary C) Preemptive D) Selective E) Subscription

C) Preemptive

How can an offer terminate? A) Only through the offeror's revocation of the offer. B) Only through the offeror's revocation of the offer, the offeree's rejection of the offer, or the offeree's counteroffer. C) Through the offeror's revocation of the offer, the offeree's rejection of the offer, or destruction of the subject matter of the offer. D) Through the offeror's revocation of the offer, but not before the offer is held open for five days. E) Through the offeror's revocation of the offer, but not before the offer is held open for seven days.

C) Through the offeror's revocation of the offer, the offeree's rejection of the offer, or destruction of the subject matter of the offer.

A seller's right to provide conforming goods when nonconforming goods were initially delivered is known as ________. A) substantial performance B) usage of trade C) cure D) parlay E) course of dealing

C) cure

A corporation may distribute its income to shareholders through ________. A) allocations B) grants C) dividends D) provisions E) allowances

C) dividends

In order to disaffirm a contract, a minor must ________. A) petition the court B) express in writing the intention to disaffirm C) express an intention by words or actions D) have his parents confirm in writing their consent to the disaffirmance E) select a portion of the contract to disaffirm, because a minor cannot disaffirm an entire contract

C) express an intention by words or actions

A person in a position of trust and confidence is known as a(n) ________. A) third-party beneficiary B) principal C) fiduciary D) independent contractor E) employer

C) fiduciary

A written document containing the signature of the creator that makes an unconditional promise or order to pay a sum certain in money at either a time certain or on demand is called a ________. A) negated instrument B) promised instrument C) negotiable instrument D) promissory agreement E) negotiable agreement

C) negotiable instrument

The term ________ refers to the fact that an agreement is so unfair that it is void of conscience. A) unreasonable B) outrageous C) unconscionable D) unrealistic E) unbelievable

C) unconscionable

Which of the following is an exception to the preexisting-duty rule? A) Foreseeable circumstances B) Contracts not covered by the Uniform Commercial Code (UCC) C) Service contracts D) Additional work E) Contracts that do not involve a sale of goods

D) Additional work

Which of the following are recognized exceptions to the statute of frauds? A) Admission, preliminary performance, and promissory estoppel B) Denial, preliminary performance, and promissory estoppel C) Denial, partial performance, and beneficial reliance D) Admission, partial performance, and promissory estoppel E) Admission, partial performance, and beneficial reliance

D) Admission, partial performance, and promissory estoppel

Which of the following is not a form of authority upon which an agency relationship can be created? A) Expressed agency B) Implied agency C) Apparent agency D) Agency by rescission E) Agency by ratification

D) Agency by rescission

In which of the following ways may an offeree accept a unilateral contract? A) By making a counteroffer. B) By a signed writing only. C) By either an oral acceptance or a signed writing. D) By performance only. E) By performance, by an oral acceptance, or by a signed writing.

D) By performance only

Which of the following are the two primary kinds of performance? A) Partial and significant B) Partial and complete C) Partial and substantial D) Complete and substantial E) Complete and significant

D) Complete and substantial

Which of the following are types of conditions that affect the performance obligations of the parties? A) Conditions precedent and subordinate conditions B) Conditions subsequent and executory conditions C) Concurrent conditions and conditions subsequent D) Conditions precedent, conditions subsequent, and concurrent conditions E) Conditions precedent and executed conditions

D) Conditions precedent, conditions subsequent, and concurrent conditions

Decisions of courts in ________ have a significant impact on issues involving matters such as shareholder rights because more than one-half of all publicly traded corporations in the United States are incorporated there. A) New York B) California C) Florida D) Delaware E) New Jersey

D) Delaware

Which of the following is a correct statement regarding law governing the incorporation process and corporate taxation? A) Federal law exclusively governs the incorporation process and corporate taxation. B) Federal law exclusively governs the incorporation process while state law exclusively governs corporate taxation. C) Federal and state law jointly address the incorporation process while federal law exclusively governs corporate taxation. D) Each state has different laws governing the incorporation process and different corporate tax rates. E) All fifty states have adopted uniform laws governing the incorporation process and corporate taxation.

D) Each state has different laws governing the incorporation process and different corporate tax rates.

Which of the following are damages identified before the breach occurs? A) Nominal B) Compensatory C) Reliance D) Liquidated E) Consequential

D) Liquidated

Which of the following is generally true regarding the management of a corporation? A) Shareholders do not participate in corporate management. B) Shareholders elect a board of directors. C) The board of directors selects officers to manage the day-to-day business of the corporation. D) Shareholders do not participate in corporate management, shareholders elect a board of directors, and the board of directors selects officers to manage the day-to-day business of the corporation. E) Shareholders participate in corporate management, elect a board of directors, and select officers to manage the day-to-day business of the corporation.

D) Shareholders do not participate in corporate management, shareholders elect a board of directors, and the board of directors selects officers to manage the day-to-day business of the corporation.

What is the legal significance in most states when a minor misrepresents his or her age? A) That if a competent party relies on a misrepresentation in good faith, the minor gives up the right to disaffirm the agreement. B) That the minor must restore the competent party to that party's pre-contract position before obtaining the disaffirmance. C) That the minor may disaffirm the contract, but the competent party has the right to sue the minor in tort and recover damages for fraud. D) That misrepresentation does not affect the minor's right to disaffirm the contract. E) That misrepresentation results in the minor receiving a return of only the monetary consideration (if any) he or she paid to the other contracting party.

D) That misrepresentation does not affect the minor's right to disaffirm the contract.

What was the result in the Lucy v. Zehmer case (referenced in the textbook) involving whether allegations of joking regarding the sale of land prevented the formation of a contract? A) The court ruled that the contract would not be enforced because one of the parties was subjectively joking. B) The court ruled that the contract would not be enforced because one of the parties was joking and a reasonable person should have known that. C) The court ruled that the contract would not be enforced because the parties had been consuming alcohol. D) The court ruled that the agreement would be enforced because of the outward manifestations of agreement. E) The court ruled that the contract would be enforced because of what the parties said, regardless of whether an objective person would have thought joking was involved.

D) The court ruled that the agreement would be enforced because of the outward manifestations of agreement.

Which of the following occurs when a party gives a loan at an interest rate exceeding the legal maximum? A) An implied-in-law contract B) Interest prohibition C) Principal reduction D) Usury E) Plenary

D) Usury

Checks are payable ________. A) three business days after they are issued B) three calendar days after they are issued C) forty-eight hours after they are issued D) as soon as they are issued E) at a definite time

D) as soon as they are issued

A(n) ________ contract is commonly defined as a promise in exchange for a promise. A) unilateral B) trilateral C) executed D) bilateral E) classified

D) bilateral

A ________ is a specific draft, drawn by the owner of a checking account, ordering the bank to pay the payee from that drawer's account. A) promissory contract B) certificate of deposit C) note D) check E) time instrument

D) check

If a person wishes to ensure that an offer will in fact be held open for a set period of time, the person may do so by entering into a(n) ________ contract with the offeror. A) quasiB) implied C) voidable D) option E) implied-in-law

D) option

A party's contractual obligations are terminated through ________. A) performance B) the failure of a condition to occur C) operation of law D) performance, the failure of a condition to occur, or operation of law E) performance and the failure of a condition to occur, but not by operation of law

D) performance, the failure of a condition to occur, or operation of law

Owners of ________ stock enjoy preferences with respect to assets and dividends. A) concentrated B) premium C) unconditional D) preferred E) common

D) preferred

If corporate directors fail to sue when the corporation has been harmed by an individual, another corporation, or a director, individual shareholders can file a ________ on behalf of the corporation. A) default judgment B) class action suit C) shareholder's direct suit D) shareholder's derivative suit E) shareholder's distributive suit

D) shareholder's derivative suit

A buyer may revoke acceptance of goods if the buyer can show that defects in the goods have caused their value to be ________. A) reduced preponderantly B) reduced by ten percent or more C) reduced by twenty-five percent or more D) substantially impaired E) compromised

D) substantially impaired

All contracts can be categorized as either ________ or ________ contracts. A) unilateral; equilateral B) equilateral; trilateral C) bilateral; trilateral D) unilateral; bilateral E) bilateral; equilateral

D) unilateral; bilateral

Because their contracts are ________, minors have the right, until a reasonable time after reaching the age of majority, to ________, or avoid, their contracts. A) void; disaffirm B) void; affirm C) void; rescind D) voidable; disaffirm E) voidable; remand

D) voidable; disaffirm

Which of the following is a false statement regarding a sole proprietorship? A) A sole proprietorship requires few legal formalities. B) A sole proprietor has complete control of the management of the business. C) The sole proprietor keeps all the profits from the business. D) Profits are taxed as the personal income of the sole proprietor. E) A sole proprietor is not personally liable for the obligations of the business.

E) A sole proprietor is not personally liable for the obligations of the business.

Which of the following are nondischargeable debts under a Chapter 7 bankruptcy filing? A) Claims of willful or malicious conduct by the debtor that caused injury to another person or property. B) Specific student loans, unless payment of the loans imposes undue hardship on the debtor. C) Debts not discharged in previous bankruptcies. D) Judgments against a debtor for claims resulting from the debtor's drinking and driving. E) All of the above.

E) All of the above.

Express conditions are usually preceded by which words? A) Conditioned on or if B) If or when C) Provided that, if, or when D) When or provided that E) Conditioned on, if, when, or provided that

E) Conditioned on, if, when, or provided that

Which of the following is true regarding the implied warranty of fitness for a particular purpose? A) It applies in every case in which an express warranty arises. B) It applies in every case in which an implied warranty of merchantability arises. C) It applies in every case in which either an express warranty or an implied warranty of merchantability arises. D) It applies in every sales transaction involving a merchant. E) It applies when the seller knows why the buyer is purchasing the goods, and that the buyer is relying on him or her to make the selection.

E) It applies when the seller knows why the buyer is purchasing the goods, and that the buyer is relying on him or her to make the selection.

Which of the following are examples of people who do not have the capacity to enter into legally binding contracts? A) Those over the age of majority and those suffering from a mental illness. B) People suffering from physical illness and intoxicated persons. C) Intoxicated persons and those over the age of majority. D) Those under the age of 21 and those over the age of 70. E) People under the age of majority, people suffering from mental illness, and intoxicated persons.

E) People under the age of majority, people suffering from mental illness, and intoxicated persons.

. Forbearance is defined as: A) An invitation to negotiate. B) An offer. C) A counteroffer. D) A bilateral contract. E) Promising to refrain from doing something you are legally entitled to do.

E) Promising to refrain from doing something you are legally entitled to do

_______ is/are responsible for managing the business of a corporation. A) Investors B) Shareholders C) Incorporators D) Organizers E) The board of directors

E) The board of directors

George offers to sell Penelope a ring that George found in his yard. He and Penelope look at the ring and decide that they are not sure what it is, probably just a shiny stone. Penelope pays George $10 for the ring. The ring turns out to be a diamond worth much more than $10. George wants the ring back, and Penelope refuses. What is the most likely result? A) The ring will be returned to George because of mutual mistake. B) The ring will be returned to George because of unilateral mistake. C) The ring will be returned to George because of equity. D) The ring will remain with Penelope unless George can establish that she was negligent in not recognizing the ring's true value. E) The ring will remain with Penelope because the parties contracted on the assumption that they did not know the value of the ring.

E) The ring will remain with Penelope because the parties contracted on the assumption that they did not know the value of the ring.

Carl, without Eddie's knowledge, impersonates Eddie and thereby convinces Connie, who has never seen Eddie, to write a check to Eddie. Carl forges Eddie's name on the check and deposits it into his, Carl's, account. Which of the following is true regarding whether Connie will be liable for the amount of the check? A) Under the forgery rule, Connie will be held liable. B) Under the transferor rule, Connie will be held liable. C) Under the payee rule, Connie will be held liable. D) Under the imposter rule, Connie will be held liable. E) Under the fictitious payee rule, Connie will not be held liable.

E) Under the fictitious payee rule, Connie will not be held liable

In the absence of a time condition in an offer, the offer will expire ________. A) after twenty-four hours from the time the offeror made the offer B) after five business days from the time the offeror made the offer C) after thirty calendar days from the time the offeree received the offer D) after sixty calendar days from the time the offeree received the offer E) after the lapse of a reasonable period of time

E) after the lapse of a reasonable period of time

Farmers who want to pool certain crops together to ensure that they get a high market price for their crops should form a ________. A) business trust B) syndicate C) joint venture D) joint stock company E) cooperative

E) cooperative

A person who makes a misrepresentation but has no knowledge about the falsity of the statement does not have ________. A) information B) premeditation C) planning D) plotting E) scienter

E) scienter

A common law standard known as ________ requires that the seller deliver goods in conformity with the terms of the contract, right down to the last detail. A) substantial performance B) preponderant performance C) the principle of good faith D) the principle of good faith and reasonable commercial standards of fair dealing E) the perfect tender rule

E) the perfect tender rule

When contracts are against generally accepted public policy, these agreements are deemed ________. A) quasi-contracts B) voidable C) implied D) ratified E) unenforceable

E) unenforceable

Mistakes in contracts may be classified as either ________. A) void or voidable B) primary or secondary C) conditional or unconditional D) in rem or quasi in rem E) unilateral or mutual

E) unilateral or mutual