Business law - Contemporary

Which of the following is an accurate description of wrongful dishonor of a check?

A bank refuses to honor a properly payable check when there are sufficient funds in the drawer's account.

Which of the following is true of capital contribution to an LLC?

A member's obligation to contribute capital is not excused by the member's death.

Which of the following is true of patents?

A patent number is assigned to a patent that is granted.

Darrel, Smith, Keith and Aaron are claimants to a collateral interest. All four have secured their interests on the collateral. Aaron takes physical possession of the collateral. Keith files a financing statement some time later. Who among the four would have highest priority of claim to the collateral?

Aaron

Roger, a certified lawyer, borrows money from Jax to start a business. He executes a promissory note stating that he will pay the money back within the next five years. However, Roger also requests for a specific clause to be added that will allow faster repayment of the loan if he inherits any money within the five years. In this scenario, Roger is requesting for a(n) ________ clause.

Acceleration

Which of the following is true of a debtor's bankruptcy estate?

All interests of a debtor's spouse are included in the bankruptcy estate.

Which of the following is a similarity of a flip-over rights plan and a flip-in rights plans with respect to a target company?

Both make it expensive for an acquiring firm to take over the target corporation.

A(n) ________ provides for the reduction of a debtor's debts.

Composition

The ________ Act provides for the creation of a government fund to finance the cleanup of hazardous waste sites.

Comprehensive Environmental Response, Compensation, and Liability

A(n) ________ provision is a provision whereby the court confirms a plan of reorganization over an objecting class of creditors if certain requirements are met.

Cram-down

Which of the following is true about dividends?

Dividends are paid at the discretion of the board of directors.

The ________ is a federal law that mandates the president of the United States to suspend the acquisition of U.S. businesses by foreign investors if there is credible evidence that the foreign investor might take action that threatens to impair the "national security."

Exon-Florio Foreign Investment Provision

Stanley, who owes Milton money, indorses a draft to him with the term "without recourse." The instrument later is dishonored. What liability does Stanley have on the instrument?

He has no liabilities on the instrument.

________ are powers beyond express powers that allow a corporation to accomplish its corporate purpose.

Implied powers

Which of the following is true of impairments under the Americans with Disabilities Act (ADA)?

Injuries resulting from pregnancy are considered as disabilities under the ADA.

________ is a requirement that a person who purchases insurance have a personal stake in the insured item or person.

Insurable interest

Intellectual property falls into a category of property known as ________ property.

Intangible

Which of the following statements is true of Title VII of the Civil Rights Act of 1964?

It does not apply to Native American tribes.

Which of the following statements is true of national origin discrimination?

It forbids discrimination against persons because of their accents.

For debtors, which of the following is an advantage of Chapter 13 over Chapter 7?

It helps debtors retain more property than is exempt under Chapter 7.

Roger, a certified lawyer, borrows money from Jax to start a business. He executes a promissory note stating that he will repay the money within the next five years if he inherits any money from his parents. Which of the following is true of the negotiability of the promissory note executed by Roger?

It is a nonnegotiable instrument.

Which of the following is a provision of Section 8(a) of the NLRA?

It makes it an unfair labor practice for an employer to restrain employees from forming and joining unions.

Which of the following is true of Chapter 13 plan of payment?

It must be filed not later than 90 days after the order for relief.

John writes out a check for $100 on his account at the Sacred Heart Bank to repay the $100 he owes Perry. He gives the check to Eliot and tells her to hand it over to Perry. However, Eliot loses the check before she can hand it to Perry. Later, John realizes that he had not written Perry's name on the lost check. According to the provisions of the UCC, the risk of loss of the check should be placed on ________.

John

______ is a form of co-ownership that includes the right of survivorship.

Joint tenancy

Which of the following does Article 2A of the Uniform Commercial Code govern?

Leases

A(n) ________ is a document that grants a person the right to enter upon another's property for a specified and usually short period of time.

License

Which of the following statements is true of profits and losses in a general partnership?

Losses are shared in the same proportion as profits by all general partners.

Mary, Harold, Harvey, and William form an LLC by contributing $20,000, $50,000, $55,000, and $150,000 respectively. The LLC is designated to be member-managed. When a decision regarding the LLC's business is put to vote, Mary, Harvey, and Harold vote "yes" and William votes "no." Which of the following is true in this context?

Mary, Harvey, and Harold's decision prevails due to simple majority.

Which of the following is true of LLPs?

Nonprofessionals cannot use the LLP form of partnership.

The ________ is a federal statute passed in 1990 that requires food manufacturers and processors to provide nutrition information on many foods and prohibits them from making scientifically unsubstantiated health claims.

Nutrition Labeling and Education Act

Which of the following is one of the provisions of the Electronic Funds Transfer Act and Regulation E of the Federal Reserve Board?

Other than for a telephone transaction, a bank must provide a customer with a written receipt of a transaction made through a computer terminal.

________ are defensive strategies that are built into the target corporation's articles of incorporation, corporate bylaws, or contracts and leases.

Poison pills

Norwing LLC is looking to fill its chief executive officer position as its current CEO will soon be retiring. Norwing receives applications for this position from many persons, including Henry, an African-American. Henry is the best-qualified applicant for the job. If Norwing does not hire him because he is an African-American, the company has engaged in ________ discrimination.

Race

A marketing campaign makes unsubstantiated claims for the product it is promoting. Under ________, such advertisements would be considered false and deceptive.

Section 5 of the FTC Act

________ prohibits unions from engaging in unfair labor practices that interfere with a union election.

Section 8(b) of the NLRA

________ is a symbol that designates an owner's legal claim to an unregistered mark that is associated with a product.

TM

Parris Boutique decides to lease a new property of Green Floor Company. To finance the acquisition, Parris goes to a local bank. The bank purchases the property from Green Floor and leases it to Parris Boutiques. Which of the following is true about this scenario?

The lessee is liable to make payments to the lessor.

Mr. Davidson, who owns 17 percent of his company's shares, is displeased with the six incumbent directors of the corporation. He proposes a slate of directors consisting of five other persons and himself to become members of the board of directors of the corporation and replace the incumbent directors. In the proxy contest, Mr. Davidson manages to acquire proxies from shareholders who control only 35 percent of the company's shares. Which of the following is true in this context?

The slate of directors proposed by Mr. Davidson will form the new board of directors

Which of the following is true about fixtures?

They are categorized as real property.

Which of the following is true of vertical mergers?

They do not create an increase in market share.

Shawn draws a bearer check that is payable on January 2, 2014. This check is an example of a(n) ________ instrument.

Time

The ________, as amended, requires creditors to make certain disclosures to debtors in consumer transactions.

Truth-in-Lending Act

The ________ is a model act passed in 1949 that includes comprehensive laws that cover most aspects of commercial transactions.

Uniform Commercial Code

An arrangement in which the shareholders transfer their stock certificates to a trustee is known as ________ trust.

Voting

Which of the following can be claimed by merely having possession of the instrument?

a bearer instrument

Who among the following is a good faith purchaser for value?

a person who pays sufficient consideration for the goods

A(n) ________ is the chronological history of the chain of title and encumbrances affecting the property.

abstract of title

Involuntary dissolution of a corporation that is ordered by the secretary of state if a corporation has failed to comply with certain procedures required by law is known as

administrative dissolution

A(n) ________ is property that a debtor acquires post the execution of a security agreement.

after-acquired property

The rule of reason is characterized by ________.

an evaluation of the company's market share, power, and other facets

A group of employees that a union is seeking to represent is known as a(n) ________.

appropriate bargaining unit

Which of the following is a similarity between real and personal property?

both properties can be owned concurrently by two or more persons

Dean, a director of a business consultancy firm, holds a meeting of the board of directors of the company. During the voting process over a critical issue, Dean unscrupulously casts two votes instead of the one that he is entitled to. Dean's conduct is an example of a ________.

breach in the duty of obedience

In which of the following ways does the FDA regulate cosmetics?

by adding warnings for potential carcinogens

If a court judicially dissolves a corporation, it enters a(n) ________ that specifies the date of dissolution.

decree of dissolution

The bank where the payee or holder of a check has an account is known as the ________

depository bank

The term ________ refers to a secured creditor's repossession of collateral upon a debtor's default and selling, leasing, or otherwise disposing of it in a commercially reasonable manner.

disposition of collateral

A(n) ________ refers to an actual piece of paper, such as a warehouse receipt or bill of lading, which is required in some transactions of pickup and delivery of sold goods.

document of title

A ________ is the obligation partners owe to use the same level of caution and skill that a reasonable person in the same position would use in the same circumstances.

duty of care

A legal procedure by which a secured creditor causes the judicial sale of a secured real estate property to pay a defaulted loan is known as ________.

foreclosure sale

Which of the following is considered a constructive delivery of a gift?

giving the key to a safe-deposit box where the gift is kept

Which of the following clauses protects the insurers from intentional or unintentional material or informative misrepresentation from an insurance applicant?

incontestability clause

A contract between a corporation and a holder that contains the terms of a debt security is known as a(n)

indenture

A sole proprietorship does not pay taxes at the business level because ________.

it does not have a separate legal personality.

A derivative action is a(n) ________.

lawsuit that a shareholder brings against an offending party on behalf of a corporation

The ________ exemption applies to employees compensated on a salary or fee basis that perform work that is predominantly intellectual in character, who possess advanced knowledge in a field of science, and whose advanced knowledge was acquired through a prolonged course of specialized intellectual instruction.

learned professional

In banking terminology, a creditor-debtor relationship is created when a customer ________.

makes a deposit into a bank

Which of the following is a universal defense?

material alteration

According to the Department of Labor, children under the age of 14 can only be employed as ________.

newspaper deliverers

If the movement of goods is not required, and the seller is a nonmerchant, the risk of loss ________.

passes to the buyer upon "tender of delivery" of the goods

Absolute liability to pay a negotiable instrument, subject to certain universal or real defenses is known as ________.

primary liability

According to the parol evidence rule, ________ that alter, contradict, or are in addition to the terms of the written contract are inadmissible in court regarding a dispute over a written contract.

prior oral or written agreements

A(n) ________ is a person or persons who organize and start a corporation, negotiate and enter into contracts in advance of its formation, find the initial investors to finance the corporation, and so forth.

promoter

Which of the following is a vertical restraint of trade?

resale price maintenance

A lessor has the ________ if the lessee breaches the contract by repudiating all or any part of the contract.

right to cancel a contract

Pollard entered into a sales contract to purchase a specific Picasso painting from Jenson for $15 million. When Pollard tenders payment, Jenson refuses to sell the painting to the buyer. Which of the following legal rights to remedy can Pollard exercise to retrieve the Picasso painting from Jenson?

right to obtain specific performance

Calibrato Instruments contracts Stronghold Metals to purchase stainless steel in bulk to manufacture tachometers. Stronghold Metals fails to transport the goods to Calibrato Instruments on the delivery date. Which of the following rights can Calibrato Instruments exercise in order to gain legal recourse?

right to recover damages for nondelivery

Antarez Jewelers contracts RTR Mining to purchase rare polished diamonds. RTR fails to deliver the goods on the scheduled date. Antarez attempts to procure the diamonds from other sources but is unsuccessful in its pursuit due to the scarcity of polished diamonds. Which of the following rights can Antarez exercise in order to recover its goods from RTR?

right to replevy goods

Which of the following is a right to which every general partner is entitled?

right to return of capital

Under the ________, the court must examine the pro- and anticompetitive effects of a challenged restraint.

rule of reason

A ________ is a written document signed by a debtor that creates a security interest in personal property.

security agreement

Which of the following is a defense to a charge of discrimination under Title VII?

selecting and promoting employees based on merit

In states where an LLC may be organized by only one member, ________ can obtain the benefit of the limited liability shield of an LLC

sole proprietors

An indorsement that contains the signature of an indorser and specifies a person to whom the indorser intends the instrument to be payable is known as a(n) ________.

special indorsement

The ________ advocates that a greater than majority of shares constitutes a quorum of the vote of the shareholders.

supramajority requirement

Mark acquires an instrument from a stranger under suspicious circumstances and at a high discount. This disqualifies him from acquiring HDC status because he did not ________.

take the instrument in good faith

Which of the following best defines the duty of care a member of a member-managed LLC must adhere to?

the duty of not engaging in a known violation of law

The earnings and losses from a sole proprietorship are reported on ________.

the proprietor's personal income tax filing

Which of the following provisions protects the interest of a joint tenancy upon the death of a joint tenant?

the right of survivorship

What are surface rights in real property?

the right to occupy the land

In the case of a shipment contract, delivery occurs when ________.

the seller puts the goods in the carrier's possession

If the parties to a contract do not agree on payment terms, and a delivery is authorized and made by way of document of title, payment is due at the ________.

time and place at which the buyer receives the right of possession

Conscious parallelism is seen when ________.

two or more firms act the same but no concerted action is shown

Acceptance to the goods under a sale on approval can occur if the buyer ________.

uses the goods inconsistently with the purpose of the trial

A ________ protects the functionality of an invention.

utility patent

An employee stock ownership plan (ESOP) is expected to ________.

vote the shares it possesses against a potential acquirer in a proxy contest

Katie owns 100 pairs of shoes. All of Katie's shoes are present in a warehouse. Katie sells her 100 pairs of shoes to Jane. Jane agrees to pick up the shoes from the warehouse. Katie drives to Jane's house and drops off a warehouse receipt for the shoes. Jane then drives from her house to the warehouse to pick up the shoes. When does passage of title occur?

when Katie drops off the warehouse receipt to Jane