Law and Ethics MIDTERM and FINAL
Unconditional
"I will pay you on Tuesday." is an example of this type of promise to pay
Board of Directors
A body of persons elected by the stockholders to define and establish corporate policy
Corporation
A business entity created by statutory law and owned by individuals known as stockholders
Sole Proprietorship
A business owned and carried on by one person
Sole Proprietorship
A business owned by one person who is subject to claims of creditors
Bailor
A case of someone finding and taking possession of lost property is a bailment for the sole benefit of this party
Cashier's Check
A check drawn on a bank's own funds and signed by a responsible bank official
Certified Check
A check for which the bank assures that the drawer has sufficient funds to make a payment
Life Insurance
A contract by which the insurer agrees to pay a beneficiary a specified sum upon the death of the insured
Executory Contract
A contract in which the terms have not been fully carried out by all parties
Insurance
A contract whereby a party transfers a risk of financial loss to a risk bearer for a fee
Private Corporation
A corporation formed by individuals to carry out some non-governmental function
Public Corporation
A corporation formed to carry out government functions
Domestic Corporation
A corporation in the state in which it received its initial charter
Alien Corporation
A corporation that is incorporated in another country
Domestic Corporation
A corporation that operates in the state that granted the charter
Precedent
A court decision that determines the decision in a subsequent, similar case
Subchapter S Corporation
A creation of the tax codes; shareholders elect to be taxed as a partnership (no double taxation) without losing corporation status
Quitclaim Deed
A deed that transfers whatever interest a grantor has in a property, but makes no claims as to what that interest may be
General Warranty
A deed that warrants that a grantor has good title to a real property and further warrants that the grantor will defend the grantee against all claims by third parties
Close Corporation
A designation which applies to a corporation in which outstanding share of stock and managerial control are held by a limited number of people (often members of the same family)
Bill of Sale
A document that conveys or evidences title to tangible personal property
Duress
A means of destroying another's free will by one party obtaining consent to a contract as a result of a wrongful threat to do the other person or family members some harm
Assignment
A means whereby one party in a contract conveys rights to another party, who is not a party to the original contract
Promissory Note
A negotiable instrument containing a promise to pay
Silent Partner
A partner has all the rights and liabilities of a general partner but does not want to be actively engaged in the day to day operations
Secret Partner
A partner that has all the rights of a general partner and is actively engaged but is not disclosed as being a partner and has unlimited liability when discovered by the public
General Partner
A partner that has unlimited liability and are actively engaged in management and operation of the business while sharing the profits and losses of the business
Limited Partner
A partner that is created by the partnership itself obtaining the status of a limited partnership and the amount of liability is limited by the amount of investment
Dormant Partner
A partner that is not actively engaged in the business and is not disclosed as a partner that has unlimited liability when discovered by the public
Nominal Partner
A partner that is not legally a partner but may be a paid consultant that has some interest in the business succeeding (i.e. held out as a partner)
Principal
A party who appoints a second party to serve as an agent
Bearer
A person in possession of an instrument
Endorsee
A person who becomes the holder of a negotiable instrument by endorsement which names him or her as the person to whom the instrument is negotiated
Promoter
A person who takes the initial steps to form a corporation
Term Insurance Policy
A policy where the company assumes, for a specified period of time, the risk of death of the insured
Mutual Benefit
A private carrier's contract for transporting goods is an example of this type of bailment
Valid Consideration
A promise to refrain from doing an act that can be lawfully done
Legal Rate of Interest
A rate that is applied when no rate is specified
Bill of Lading
A receipt and contract between the shipper of a particular good and a carrier
Endorsement
A signature on the back of an instrument along with any directions or limitations regarding use of or liability for the instrument
Insurable
A type of interest in the nonoccurence of the risk insured against`
Concealment
A willful failure to disclose pertinent information by the insured
Commercial Paper/Negotiable Instrument
A writing drawn in a special form which can be transferred from person to person as a substitute for money or as an instrument of credit
Bill of Exchange
A written order by one person directing another to pay a sum of money to a third person
Complaint/Petition
A written request to a court to settle a dispute
Officers
Agents of the corporation
Personal Property
All property that is not real property
Bailment
An act of delivering goods (mainly personal property) for a particular purpose without the transfer of ownership
Power Over Business Practices
An agency's power to determine whether the activity of a regulated entity is acceptable or not is an example of this type of power
Special Agent
An agent who is authorized to carry out all of the principal's business of a particular kind
Implied Authority
An agent's authority to do things not specifically authorized in order to carry out express authority
Corporation
An artificial being, existing only in contemplation of law
Restrictive
An endorsement that attempts to prevent the use of instrument for anything except the stated use
Special Endorsement
An endorsement which designates the particular person to whom payment is to be made
Qualified Endorsement
An endorsement which limits the liability of the endorser
Restrictive Endorsement
An endorsement which prevents the use of the instrument for anything except the stated use
Silent Partner
An individual who takes no active part in the management of a partnership, but has capital invested in the business
Universal Life Policy
An insurance product combining features of both whole life and term life policies
Check
An order by a depositor on the bank to pay a sum of money to a payee
Ultra Vires Contract
Any contract entered into by a corporation that goes beyond its powers
Bailee
Any loss or damage to bailed property due to no fault of the bailee falls on the owner is an example of a bailment for the sole benefit of this party
Shares
Certificates that represent ownership in a stock corporation
Order Paper
Commercial paper made payable to the order of some named party; the word order or its equivalent must be used
Bearer Paper
Commercial paper made payable to whoever has possession of it
Bearer Paper
Commercial paper payable to bearer; i.e. to the person having possession of such
Precedents
Common law cases are decided on the basis of ____
Bill of Rights
Consists of ten amendments to the U.S. constitution specifically designed to protect the civil rights and liberties of citizens and the states
Term Life Policy
Contract whereby insurer assumes risk of death of insured for a specific time with no cash surrender value
Voidable
Contracts that are made by people who have become so intoxicated that they cannot understand the meaning of their acts are considered ____
Binding Contract
Created when an offeree accepts an offer that has been properly communicated
Foreign Corporation
Designation that applies when a corporation operates in any state other than where it is chartered
Deed
Document conveying title to real property
Blank Endorsement
Having no words other than the signature of the endorser
Void
If a contract is not for a lawful purpose that must be achieved in a lawful manner then the contract is ____
Quasicontract
If a minor contracts for necessaries, the minor is not required to play the contract price but will e required to pay a reasonable amount to avoid unjust enrichment. This makes the contract a ____
Consideration
Indicates what the promisor demands and receives as the price for a promise
Whole Life Policy
Insurance that covers an insured for life and accumulates cash surrender value
Life Estate
Interest in real property for duration of a person's life
Qualified
James wants to endorse a check to Janice but wishes to rid himself from all further liabilities - what type of endorsement is this?
Real Property
Land and those objects permanently attached to land
Suicide
Life insurance contracts are commonly not claimable in cases involving this
Limited Liability Company
Newest from of business ownership recognized in the U.S. combines features of both the corporation and partnership
Fixture
Objects permanently attached to land
Tenancy at Sufferance
Occurs when a tenant holds over the tenancy after the expiration of the lease without the permission of the landlord
Special Agent
One authorized by the principal to execute specific act(s)
General Agent
One authorized to carry out all of the principal's business of a particular kind
Holder
One in possession of commercial paper
Independent Contractor
One who contracts to perform certain tasks for a set fee, but who is independent of the control of the contracting party as to a means by which the contract is executed, except for specifications established in the contract
General Agent
One who is authorized to execute the principal's business of a particular kind, or all the principals business at a particular place, if not all of one kind
Consignee
One who receives goods shipped by common carrier
Consignor
One who ships goofs by common carrier
Title
Ownership; evidence of ownership of property
Limited Partner
Partners who have their liability for the firm's debts limited to the amount of their investment
Fixture
Personal property attached to land or building that becomes part of the land
Intangible Personal Property
Personal property that lacks a physical presence
Antitrust Laws
Purpose of these is to promote competition among businesses
Beneficiary
Recipient of the proceeds of a life insurance policy
Undue Influence
Refers to a person in a special relationship causing another's action contrary to free will
Mental Capacity
Required as a prerequisite for any agreement to be legally enforceable
Contract
Results when the parties intend to be legally obligated by the terms of the agreement
Agreement
Results whenever two people's minds meed on a subject
Bailor
Sally leaving her car in a neighbor's carage while Sally's carport is getting a new roof is an example of a bailment for the sole benefit of this party
True
T/F: A bailment can be created by the unspoken conduct of the parties
True
T/F: A bailment may exist when the recipient does not return the actual goods
True
T/F: A close corporation has a small number of stockholders
False
T/F: A common carrier is liable for a loss if it is transporting goods that pose a menace to health which are seized by a public authority
False
T/F: A common carrier may refuse service that is unprofitable
True
T/F: A common carrier may refuse to provide transport for goods if it does not have proper equipment
True
T/F: A common carrier of people is required to assist passengers when necessary for alighting
False
T/F: A contract is void if parties to a contract are mutually mistaken about their expectations
True
T/F: A contract negotiated by an agent usually involves at least three parties
True
T/F: A depository bank receiving a check with a restrictive endorsement, such as "for deposit" must always honor the restriction
True
T/F: A false statement made in belief that it is true is known as innocent misrepresentation
True
T/F: A finder has title to and absolute right to possession of abandoned property
True
T/F: A finder of lost property has the right of possession against all but the true owner, as long as the finder has not committed a wrong of some kind
True
T/F: A foreign corporation who has authority to do business in the state is allowed to form contracts
True
T/F: A grantor and grantee must be identified in a deed
True
T/F: A holder who takes a negotiable instrument in good faith and for value, is a holder in due course
True
T/F: A minor, upon reaching the age of majority, must ratify none or all parts of a contract
True
T/F: A partner who commits a tort has liability for indemnifying the partnership for any loss it sustains
False
T/F: A person who sells alcoholic beverages to a minor when such a sale is prohibited can recover on the contract
True
T/F: A principal may ratify an authorized contract and thus be bound on it
True
T/F: A principal must reimburse the agent for expenses incurred during the agency
False
T/F: A principal ordinarily does not have liability to third parties for contracts made within the actual or the apparent scope of an agent's authority
False
T/F: A promise to steal a valuable piece of art is valid consideration to support a contract
False
T/F: A qualified endorser makes no warranties regarding the instrument
True
T/F: A sole proprietor has ultimate responsibility for all business decisions
True
T/F: A sole proprietor has unlimited liability and high financial risk
False
T/F: A sole proprietor has very limited flexibility in managing the business
False
T/F: A special endorsement is having no words other than the name of the endorser
False
T/F: A special warranty deed warrants that a grantor has the right to sell a personal property
False
T/F: A state administrative agency affects businesses throughout the country
False
T/F: A tenancy for years is a tenancy for an indefinite period of time
True
T/F: Administrative agencies primarily set policy through the issuance of rules and regulations
True
T/F: Advertisements and catalogs are examples of general invitations
True
T/F: Agents have a duty to keep principals informed of all facts pertinent to the agency
False
T/F: All agreements are contracts
False
T/F: All partners of a limited partnership have limited liability
True
T/F: All people legally competent to act for themselves may act through an agent
True
T/F: An LLC can be dissolved with the written consent of all members
True
T/F: An LLC can be sued by third-parties as a separate entity
False
T/F: An agent does not incur liability for any losses caused by disobeying a principal's instructions
False
T/F: An agent does not incur personal liability for fraud or any other wrongdoing caused by disobedience
False
T/F: An antitrust violation occurs when a business firm seeks to have cooperation within its firm to diminish competition
False
T/F: An easement gives an exclusive right to possession
False
T/F: An instrument made payable to more than one person is not negotiable
False
T/F: An insurer is a party who purchases insurance to provide protection from a loss
True
T/F: An offer expresses the willingness of the offeror to enter into a contractual agreement
False
T/F: An offer made in jest that does not appear to be seriously intended to an offeree is considered to be a valid offer
True
T/F: An offer that does not specify a particular manner of acceptance may be accepted in any manner reasonable under the circumstances
False
T/F: An order or promise in a negotiable instrument must be conditional
True
T/F: Any expense incurred as a result of an agent's unlawful act must be borne by the agent
True
T/F: Appellate courts include courts of appeals and supreme courts
False
T/F: As a general rule, a unilateral mistake made at the time of contracting has an effect on the validity of a contract
False
T/F: Common stockholders do not possess the right to a share of the assets of a corporation on dissolution
True
T/F: Consideration distinguishes mere agreements from legally enforceable obligations
False
T/F: Contracts which are designed to limit competition are acceptable by law
False
T/F: Dissolution of a partnership relieves the partners of their duties to each other
True
T/F: Dividends paid to shareholders can be paid with stock in a corporation owns in another company
True
T/F: Each state is part of the federal court system and has a state court system
False
T/F: For a promise to constitute consideration, the promise must not impose an obligation on the person making it
True
T/F: Generally, a part payment of a past-due debt is not consideration to support the creditor's promise to cancel the balance of the debt
True
T/F: Generally, a promise must be supported by consideration
False
T/F: If a decision of an administrative agency conflicts with a statute enacted enacted by a higher legislative body, the agency decision will prevail
False
T/F: If a druggist sells morphine to one who does not have a prescription, a suit to collect the price would be successful
False
T/F: If an adult purchases personal property from a minor, the minor has only a voidable title to the property
False
T/F: If commercial paper is made payable to whoever has possession of it, it is called order paper
True
T/F: If parties want to mutually cancel an old contract and place it with a new one, there must be added features in the new contract benefiting both parties to be enforceable
False
T/F: If the choice of whether an instrument is payable in either cash or goods is left up to the holder, the instrument is not negotiable
True
T/F: If the intended acceptance varies or qualifies an offer, the counteroffer rejects the original offer under the common law
True
T/F: If the supposed consideration consists merely of a promise to do what one is already legally obligated to do, consideration is invalid
True
T/F: If, after an offer has been made, the performance of the contract becomes illegal, the offer is terminated
True
T/F: In a situation where an injured party in an accident is partly to blame for the accident, the injured party cannot recover any damages because it is partially negligent in the case
True
T/F: In the legal system of the United States, it is possible for identically worded laws to have different consequences in different states
True
T/F: Insurance contracts must specify the particular risks being transferred from one party to another
False
T/F: Mistakes such as duress and undue influence render contracts void
True
T/F: One attempting to ratify must have been capable of authorizing the act at the time the act was done
True
T/F: One may have rights and obligations imposed by law even when no real contract exists
False
T/F: One who contracts with an independent contractor has more control over the performance of the work than does an employer
True
T/F: Ordinarily, for a mistake to invalidate a contract, the mistake must be a mutual one about a material fact
False
T/F: Performing or promising to perform what one is already obligated to do is a valid consideration
False
T/F: Ratification to a contract can be made any time before reaching majority
True
T/F: Silence constitutes acceptance to an offer if it is reasonable in consideration of previous dealings that the offeree to notify the offeror of non-acceptance
True
T/F: Silent partners take no part in the management of the business
True
T/F: Statutes are easier to amend than constitutions
False
T/F: Stockholders, by virtue of their investment in a corporation, have the right to act as its agent
False
T/F: The "mailbox rule" does not apply in situations where the offeror does not receive the acceptance
True
T/F: The U.S. Supreme Court is the highest tribunal in the land and its decisions are binding on all other courts
True
T/F: The articles of incorporation constitutes a contract between the corporation and the state
False
T/F: The courts will generally still allow a wrongdoer to enforce a contract against an innocent party
True
T/F: The decision of appellate court is binding on lower courts
True
T/F: The delivery of the deed to the purchaser transfers the title to real estate
True
T/F: The doctrine of strict liability can make the manufacturer of a dangerously defective product liable, even if there's no proof of negligence
False
T/F: The grace period refers to the period of time in which an insurance company may investigate a death before paying the face
False
T/F: The law considers everyone under the age of 21 to be a minor
False
T/F: The law states that a unilateral contract can be formed when performance is started
True
T/F: The legal term for one party benefiting unfairly at the expense of another is unjust enrichment
True
T/F: The liability of a common carrier of people begins when the passenger enters the waiting platform
False
T/F: The maker executes a note by signing on the back of the instrument
False
T/F: The most common type of relief that courts of equity provide is monetary damages
True
T/F: The principal may terminate the agency by taking actions that are inconsistent with the continuation of the agency
True
T/F: The promise or obligation of each party to a contract must be supported by consideration in order for the contract to be valid
True
T/F: The sum payable in a negotiable instrument cannot be dependent on future profits
True
T/F: To bind the principal and not the agent, the agent should sign the contract as "agent for the principal"
False
T/F: To recover damages for an intentional tort, the plaintiff is required to prove that there was a breach of duty by the tortfeasor to the plaintiff
True
T/F: Unlimited personal liability of each general partner for partnership debts is a disadvantage of the partnership form of business
False
T/F: When a bailment is for the sole benefit of a bailor, a bailee may receive benefits of ownership during the bailment
True
T/F: When a contract is required to be sealed, a substitute for an actual seal may be used
True
T/F: When a corporation terminates its existence, it must surrender its articles of incorporation
True
T/F: When a partner makes an honest mistake without negligence while working on behalf of the partnership, both the partner and the partnership are excused from liability
False
T/F: When one party wrongly threatens to injure another person physically in order to get agreement to a contract, economic duress occurs
True
T/F: When there is a contract of agency, the law imposes duties not specified in the contract on both the agent and principal
True
T/F: With regards to negotiability, the instrument must be in writing and signed by the party executing it
Certificate of Deposit
The acknowledgement by a bank of a receipt of money with an agreement of repayment
Negotiation
The act of transferring ownership of a negotiable instrument to another party
Negotiation
The act of transferring ownership of commercial paper to another party
Apparent Authority
The authority an agent is believed by third parties to have because of the behavior of the principal
Express Authority
The authority of an agent stated in the document or agreement creating the agency
Survivorship
The automatic right of the remaining surviving owner(s) to own the entire property free of any interest of a deceased owner
Fee Simple Estate
The broadest form of ownership in real property
Dissolution
The change in the relation of the partners by ending the present legal entity
Bill of Lading
The contract existing between the consignor and the carrier
Peril
The danger of a loss of, or injury to, property, life, or anything else
Disaffirmation
The election to avoid a contract or set it aside
Breach of Contract
The failure of a party to perform the obligations assumed under a contract
Lessee
The individual who has a duty to pay rent on the lease
Fee Simple Estate
The largest and most complete right that one may possess in property
Face
The maximum amount that the insurer agrees to pay in case of a loss
Counteroffer
The offeree's response that rejects an offer by varying its terms
Lessor
The owner of leased property; the person giving possession of a leased property
Members
The owners or investors of a limited liability company
Agent
The party appointed by the principal to enter into a contract with a third party on behalf of the principal
Assignor
The party making the assignment
Payee
The party to whom any negotiable instrument is made payable
Assignee
The party to whom the assignment is made
Bailee
The party who acquires possession, but not the title, of personal property by one party to another, under agreement
Employer
The party who employs employees to do certain work
Bailor
The party who gives up possession, but not the title, of personal property in a bailment
Employee
The person hired to perform work and who is obligated both as to the work to be done and as to the manner in which it is to be done
Maker
The person who executes a promissory note
Drawer
The person who executes the draft
Drawee
The person who is ordered to pay a draft
Endorser
The person who writes his or her name on the back of an instrument
Drawee
The person, company or financial institution ordered to pay a draft
Authority
The power to act for someone else
Board of Directors
The primary policy-making body of the corporation
Title
The right of ownership of property or evidence of ownership
Endorsement
The signature or statement of purpose by the owner on the back of a negotiable instrument, which indicates the future control of the instrument
Courts
The sole purpose of these is to interpret and apply the law from whatever source to a given situation
Bailment
The transfer of possession, but not the title, of personal property by one party to another under agreement
Conversion
The unauthorized exercise of ownership rights over another's property
Share
The unit value of a company's total stock
Partnership
The voluntary association of two or more people who have combined their resources to carry on as co-owners of a lawful enterprise for their joint profit
Administrative Agencies
These can become specialists in a particular area of regulation
State Trial Courts
These courts handle cases that are first instituted in them
Regulatory Agencies
These use their licensing power to allow a business to enter the field being regulated
Supreme Court
This court has appellate jurisdiction in cases based on the U.S. Constitution
Obligation of Record
This is an exception to the idea that a promise must be supported by consideration
Automobile Accidents
This is the most likely case where there would be a tort based on negligence
Par Value Stock
This must equal the value of money, property, or services received by the corporation
Tenancy in Common
This occurs when two or more people own property such that when one owner dies, that owner's interest in the property passes to a person named in the deceased's will
Promissory Estoppel
This requires the promisor to reasonably expect the promise to induce action by the promisee
Quasicontract
This type of contract is not a true contract and has been imposed by law in order to prevent one party benefiting unfairly at another's expense
Executed Contract
This type of contract is when each party has completed performance of each part of the contract
Formal Contract
This type of contract must be in special form or be created in a certain way
Quasicontract
This type of contract prevents the unjust enrichment of a party
Special Federal Courts
This type of courts have jurisdiction limited by congress
Special
This type of endorsement designates the particular person to whom payment should be made
Insurable
This type of interest may arise when a party has sufficient economic interest in the transaction to entitle them to insure the property involved
Valid Offer
This type of offer is seriously intended
Stockholders
Those having title to one or more shares of stock in a corporation; combined, they represent ownership of the corporation
General Partner
Those individuals actively and openly engaged in the business and held to everyone as a partner
Cosigner
To obtain a cosigner is a good precaution to take when a business person is dealing with a ____
Breach of the Tortfeasor's Duty
To recover for a tort based on negligence, the plaintiff must show this to the injured party
Forbearance
When one refrains or promises to refrain from doing something
Merger
When two companies combine their board of directors
Commercial Paper
Writings drawn in a special form that can be transferred from person to person as a substitute for money or as an instrument of credit
