Practice Exam 4

For a workplace​ injury, workers' compensation is usually​ a(n) _____ remedy. A. supplemental B. exclusive C. punitive D. ​non-exclusive E. ​fault-based

B. exclusive

To be classified as a certain​ grade, goods must meet the​ _____ range of quality of that grade. A. minimum B. excellent C. ​above-average D. superior E. average

E. average

The piercing the corporate veil doctrine is also called the​ _____ doctrine. A. alter ego B. frustration of purpose C. promissory estoppel D. substantial performance E. commercial impracticability

A. alter ego

Which of the following is NOT covered by comprehensive​ insurance? A. collision B. fire C. hail D. earthquake E. explosion

A. collision

Two or more persons may own a piece of real property. This is called​ _____ ownership. A. concurrent B. restrictive C. unqualified D. unconditional E. conditional

A. concurrent

The doctrine of​ _____ rests on the principle that if someone expects to derive certain benefits from acting through​ others, that person should also bear the liability for injuries caused to third persons by the negligent conduct of an agent who is acting within his or her scope of employment. A. contributory negligence B. negligence C. strict liability D. absolute liability E. assumption of the risk

B. negligence

A​ _____ indorsement would be created if Betsy McKenny indorsed her check and then wrote​ "pay to Dan​ Jones" above her signature. A. restrictive B. special C. qualified D. blank E. primary

B. special

Which of the following is NOT one of the categories of​ indorsement? A. special B. testamentary C. restrictive D. qualified E. blank

B. testamentary

A​ ___________________ is a draft payable at a designated future​ date, while a​ ____________________ is a draft payable on sight. A. future​ draft; trade acceptance B. time​ draft; sight draft C. demand​ draft; future draft D. trade​ acceptance; sight draft E. sight​ draft; time draft

B. time​ draft; sight draft

In​ a(n) _____​ agency, a contracting third party does not know of either the existence of the agency or the​ principal's identity. A. statutory B. undisclosed C. common law D. constructive E. symbolic

B. undisclosed

​A(n) _____ is a holder who takes a negotiable instrument for​ value, in good​ faith, and without notice that it is defective or overdue. A. MPC B. SPC C. HDC D. CNC E. DRC

C. HDC

The goals of the​ Sarbanes-Oxley Act​ (SOX) of 2002 include all EXCEPT which of the​ following? A. replace independent corporate audits with internal audits B. improve corporate governance rules C. eliminate conflicts of interest D. instill confidence in the public that management will run public companies in the best interests of all constituents E. instill confidence in investors that management will run public companies in the best interests of all constituents

A. replace independent corporate audits with internal audits

What remedy is available to both lessees and​ lessors? A. the right to cancel a contract B. the right to cease manufacturing unfinished goods C. the right to reject nonconforming goods or improperly tendered goods D. the right to dispose of goods E. the right to obtain specific performance

A. the right to cancel a contract

​_____ are the most dominant form of business organization in the United​ States, generating more than 85 percent of the​ country's gross business receipts. A. General partnerships B. Limited partnerships C. Sole proprietorships D. Corporations E. Limited liability limited partnerships

D. Corporations

Lars draws a check made​ "pay to the order of Yasmin​ Aslan." Yasmin signs the back of the check and cashes the check at the grocery store. Has the check been​ negotiated? A. ​no, Yasmin must indorse it to a third party B. ​no, it has not been delivered C. ​no, Yasmin must take the check to the bank D. ​no, it was not indorsed E. ​yes, Yasmin indorsed and delivered it

E. ​yes, Yasmin indorsed and delivered it

​_____ is a situation in which a creditor has an enforceable security interest against a debtor and can satisfy the debt out of the designated collateral. A. Attachment B. Abasement C. Denouement D. Rapprochement E. Detachment

A. Attachment

​_____ is a​ seller's commendation of goods that does not create an express warranty. A. Puffing B. Stipulating C. Guaranteeing D. Grifting E. Qualifying

A. Puffing

​_____ insurance is a form of insurance that insures an automobile from loss or damage due to causes other than collision. A. Casualty B. Comprehensive C. Cooperative D. Liability E. Conglomerate

B. Comprehensive

The Ford Motor​ Company, a major manufacturer of automobiles and other​ vehicles, is incorporated in Delaware. It distributes vehicles in​ Delaware, as well as the other 49 states. The Ford Motor Company is​ a(n) _____ corporation in the other 49 states. A. domestic B. foreign C. private D. ​government-owned E. alien

B. foreign

The number of shares provided for in the articles of incorporation are called​ ________. A. unissued shares B. the par value of stock C. authorized shares D. issued shares E. participating preferred stock

C. authorized shares

Bearer paper is negotiated by​ _____. A. indorsement B. an agent C. assignment and delegation D. a principal E. delivery

E. delivery

When does an umbrella policy make a pay​ out? A. when primary policy limits on other insurance policies have been exceeded B. when an accident is due to stormy conditions C. only when rain and wind contribute to the loss D. when a claim is due to rain damage E. when no other insurance exists to cover the claims

A. when primary policy limits on other insurance policies have been exceeded

A person borrows money from a bank to purchase a house. The loan is a​ 30-year loan, with interest and principal to be paid in equal monthly installments. If the at the end of 5 years the borrow can add another 2 years onto the​ loan, the loan agreement contains​ a(n) _______. A. extension clause B. acceleration clause C. prepayment clause D. prepayment penalty E. maker clause

A. extension clause

Goods that are affixed to real estate and thus become part of it are known as​ _____. A. fixtures B. easements C. licenses D. abandoned property E. personal property

A. fixtures

A(n) _____ lien is a security interest in property that was not in the possession of the debtor when the security agreement was executed. A. floating B. ​non-collateralized C. unsecured D. intangible E. elusive

A. floating

​A(n) _____ makes the indorsee the​ indorser's collecting agent. A. indorsement for deposit or collection B. indorsement in trust C. qualified indorsement D. special indorsement E. agency indorsement

A. indorsement for deposit or collection

All things that are nonphysical property when a security attaches are called​ _____ property. A. intangible personal B. tangible intellectual C. tangible personal D. tangible personal E. intangible real

A. intangible personal

In a lease​ contract, the​ _____ is the person who transfers the right of possession and use of goods under the lease. A. lessor B. lessee C. consignee D. consignor E. bailee

A. lessor

If the​ _________________ of a nonnegotiable contract fails to pay​ it, the​ ___________ of the contract can sue the nonperforming party for breach of contract. A. maker or​ drawer; holder B. ​holder; maker or drawer C. ​drawer; maker D. maker or​ holder; drawer E. ​maker; drawer or holder

A. maker or​ drawer; holder

Under the​ UCC, value has been given if the holder does all EXCEPT which of the​ following? A. makes an illusory promise B. acquires a security interest in or lien on the instrument C. performs the​ agreed-on promise D. takes the instrument in payment of or as security for an antecedent claim E. gives a negotiable instrument as payment

A. makes an illusory promise

A disclaimer of an implied warranty of merchantability must specifically mention the term​ __________________ in the disclaimer. A. merchantability B. a particular purpose C. express warranty D. implied warranty E. fitness for human consumption

A. merchantability

With respect to nonnegotiable​ instruments, because​ _______________ apply, the​ ____________ acquires only the rights that the​ ____________ possessed. A. normal contract​ principles; assignee; assignor B. the rules of the​ UCC; assignor; assignee C. the rules of the​ UCC; assignee; assignor D. normal contract​ principles; holder; assignor E. the rules of the​ UCC; holder; assignor

A. normal contract​ principles; assignee; assignor

In​ a(n) _____​ agency, a contracting third party knows that the agent is acting for a principal but does not know the identity of the principal. A. partially disclosed B. common law C. fully disclosed D. statutory E. undisclosed

A. partially disclosed

A​ _____ is an unconditional written promise by one party to pay money to another party. A. promissory note B. sight draft C. check D. bill of attainder E. time draft

A. promissory note

Which of the following is NOT a requirement for HDC status​ (as determined at the taking of the​ instrument)? A. proper assignment or delegation B. for value C. without notice that the instrument is defective D. without notice that the instrument is overdue E. in good faith

A. proper assignment or delegation

A right of first​ _____ is an agreement that requires a selling shareholder to offer his or her shares for sale to the other parties to the agreement before selling them to anyone else. A. refusal B. inspection C. revocation D. rejoinder E. review

A. refusal

If the right of possession returns to a third party on the expiration of a limited or contingent​ estate, it is called a​ _____. A. remainder B. revocation C. reversion D. rescission E. ratification

A. remainder

The board of directors authorizes an action to be taken on behalf of the corporation by adopting​ ________. A. resolutions B. corporate goals C. preemptive rights D. laws E. rules and guidelines

A. resolutions

Insurance is a contract whereby one party​ (the insurer or​ _____________) indemnifies another against the​ loss, damage, or liability that may arise from some​ event, distributing the risk of this loss between the parties to the contract. A. underwriter B. insured C. bank D. endorsement E. ​key-person

A. underwriter

In​ a(n) _____​ agency, a contracting third party does not know of either the existence of the agency or the​ principal's identity. A. undisclosed B. constructive C. common law D. statutory E. symbolic

A. undisclosed

With the​ _____, the seller warrants that he or she has valid title to the goods he or she is selling and that the transfer of title is rightful. A. warranty of good title B. full warranty C. warranty of no interference D. limited warranty E. express warranty

A. warranty of good title

When sellers of goods warrant that the goods they sell are delivered free from any​ third-party security​ interests, liens, or encumbrances that are unknown to the buyer it is known as a​ ________. A. warranty of no security interest B. warranty of good title C. ​Magnuson-Moss warranty D. warranty of no interference E. warranty against infringement

A. warranty of no security interest

The​ _________________________ stipulates that sellers or lessors who make​ _____________ warranties related to consumer products are forbidden from disclaiming or modifying the implied warranties of merchantability and fitness for a particular purpose. A. ​Magnuson-Moss Warranty​ Act; express written B. UCC​ 2.313; express written C. ​Magnuson-Moss Warranty​ Act; implied D. UCC​ 2.313; implied E. UCC​ 2A.210; express written

A. ​Magnuson-Moss Warranty​ Act; express written

The implied warranty of merchantability​ _____________ to the sale of a coffee pot that is sold by a merchant who is in the business of selling kitchen appliances. The implied warranty of merchantability​ _______________ when someone sells a coffee pot at her garage sale. A. ​applies; does not apply B. ​applies; applies C. does not​ apply; applies D. sometimes​ applies; always applies E. does not​ apply; does not apply

A. ​applies; does not apply

The most common forms of implied warranties are the implied warranty​ of________________, the implied warranty​ of__________________, and the implied warranty of​ _______________________. A. fitness for human​ consumption; fitness for a particular​ purpose; affirmation of fact B. ​merchantability; fitness for human​ consumption; fitness for a particular purpose C. ​merchantability; fitness for human​ consumption; description D. fitness for human​ consumption; fitness for a particular​ purpose; description E. ​merchantability; fitness for human​ consumption; affirmation of fact

B. ​merchantability; fitness for human​ consumption; fitness for a particular purpose

An owner of an automobile may purchase​ _____ insurance that insures his or her car against risk of loss or damage. This form of property insurance pays for damage caused if the car is struck by another car. A. liability B. collision C. contingency D. ​co-pay E. comprehensive

B. collision

Which of the following is NOT covered by comprehensive​ insurance? A. hail B. collision C. explosion D. earthquake E. fire

B. collision

An agent works as a salesperson for a principal who owns an automotive parts business. The​ agent's job is to sell the​ principal's automotive parts to auto repair shops and other purchasers. While doing​ so, the agent also works as a salesperson for a competing seller of automotive parts. This is a violation of the duty of loyalty known as​ __________________. A. usurping an opportunity B. competing with the principal C. misuse of confidential information D. ​self-dealing E. dual agency

B. competing with the principal

Two or more persons may own a piece of real property. This is called​ _____ ownership. A. parallel B. concurrent C. mutually exclusive D. conglomerate E. divergent

B. concurrent

Suppose that a thief steals a negotiable instrument and transfers it to Harry. Harry does not know that the instrument is stolen. Harry meets the​ _____ test and can therefore qualify as a holder in due course​ (HDC). A. reasonable person B. good faith C. due diligence D. objectivity E. materiality

B. good faith

If the holder takes the instrument with noticeable evidence of​ forgery, the holder would not qualify as​ a(n) ________. A. unqualified indorser B. holder in due course C. indorsee D. indorser E. qualified indorser

B. holder in due course

A warranty that arises where a seller or lessor warrants that the goods will meet the​ buyer's or​ lessee's expressed needs is known as​ a(n) ________. A. express warranty B. implied warranty of fitness for a particular purpose C. warranty disclaimer D. implied warranty of fitness for human consumption E. implied warranty of merchantability

B. implied warranty of fitness for a particular purpose

According to UCC​ 1-203, modification of a sales or lease contract must be made​ _____. A. within 30 days of the initial​ contract's formation B. in good faith C. in kind D. in earnest E. within 90 days of the initial​ contract's execution

B. in good faith

​A(n) _____ is the signature​ (and other​ directions) written by or on behalf of the holder somewhere on an instrument. A. delegation B. indorsement C. execution D. assignment E. allonge

B. indorsement

An owner of real estate who makes a conveyance of real property​ "to Anna for her​ life" creates a​ _____. A. fee simple defeasible B. life estate C. fee simple D. qualified fee E. fee simple absolute

B. life estate

Suppose an insured purchases​ $1 million of life insurance and names his spouse as the beneficiary. The policy contains a​ two-year suicide clause. Twenty months after purchasing the​ insurance, the insured commits suicide. The beneficiary​ _____. A. may not recover the insurance proceeds since death to the insured resulting from​ first-degree murder is typically excluded from life insurance coverage B. may not recover the insurance proceeds because the​ insured's suicide occurred within two years of issuance of the life insurance policy C. may recover the insurance​ proceeds, assuming the beneficiary​ (the wife) had no involvement in the death of the insured​ (the husband) D. may not recover the insurance proceeds because the taking of​ one' own life is against established public policy E. may recover the insurance​ proceeds, assuming premiums were paid according to the requirements of the life insurance contract

B. may not recover the insurance proceeds because the​ insured's suicide occurred within two years of issuance of the life insurance policy

An instrument that is​ "payable in​ $10,000 U.S.​ currency" is a​ _____ instrument. A. hypothetical B. negotiable C. situational D. conditional E. theoretical

B. negotiable

Which of the following is NOT a requirement for HDC status​ (as determined at the taking of the​ instrument)? A. for value B. proper assignment or delegation C. without notice that the instrument is overdue D. in good faith E. without notice that the instrument is defective

B. proper assignment or delegation

If someone is suing a​ corporation, the complaint and summons is typically served on the​ corporation's _____. A. secretary of state B. registered agent C. chief executive officer D. chief financial officer E. chief operations officer

B. registered agent

All of the following are types of indorsements​ EXCEPT? A. restrictive B. retroactive C. special D. qualified E. blank

B. retroactive

Which of the following is NOT a major provision of the​ Sarbanes-Oxley Act? A. reimbursement of bonuses B. shareholder liability C. penalties for tampering with evidence D. CEO certification E. prohibition on personal loans

B. shareholder liability

Most software licenses contain​ __________________ and​ _______________clauses that limit the​ licensor's liability if the software malfunctions. A. implied warranties of​ merchantability; limited warranty B. warranty​ disclaimer; limitation on liability C. limited​ warranty; full warranty D. implied warranty of fitness for a particular​ purpose; full warranty E. implied warranty of fitness for a particular​ purpose; limited warranty

B. warranty​ disclaimer; limitation on liability

Sarah gets into an automobile accident and her car suffers​ $5,000 of damage. She has automobile insurance for​ $10,000 dollars with a​ $1,000 dollar deductible. How much does Sarah have to pay to get her car​ fixed? A. ​$5,000 B. ​$1,000 C. ​$10,000 D. ​$2,500 E. 0 dollars

B. ​$1,000

In​ 2013, Target​ Corporation, the​ third-largest retailer in the United​ States, was subject to a cyberattack when hackers breached​ Target's firewalls and obtained information on more than​ _________________ million credit and debit cards used by Target customers. Target had cyber insurance that covered about​ _____________ of the​ company's liability caused by the security breach. A. ​10; two-thirds B. ​40; two-thirds C. ​20; half D. ​30; one-third E. ​50; one-third

B. ​40; two-thirds

​________ insurance is insurance that protects directors and officers from liability for decisions and actions they take on behalf of the corporation. A. ​Key-person life B. ​Directors' and​ officers' C. Product liability D. ​Workers' compensation E. Business interruption

B. ​Directors' and​ officers'

​_____ of collateral is a secured​ creditor's repossession of collateral on a​ debtor's default and​ selling, leasing, or otherwise disposing of it in a​ _____ manner. A. ​Deposition; commercially reasonable B. ​Disposition; commercially reasonable C. ​Defalcation; commercially reasonable D. ​Disposition; personally convenient E. ​Defalcation; personally convenient

B. ​Disposition; commercially reasonable

​_____ of a security interest is a process that establishes the right of​ a(n) _____ creditor against other creditors who claim an interest in the collateral. A. ​Perfection; unsecured B. ​Perfection; secured C. ​Detachment; secured D. ​Separation; secured E. ​Detachment; unsecured

B. ​Perfection; secured

If an​ _____________warranty is​ made, it can be limited only if the​ _________________and the warranty can be reasonably construed with each other. A. ​implied; warranty disclaimer B. ​express; warranty disclaimer C. ​implied; limited warranty D. ​express; limited warranty E. ​express; implied warranty

B. ​express; warranty disclaimer

Under a system of​ _____ automobile​ insurance, a​ driver's insurance company pays for any injuries or death he or she suffered in an​ accident, no matter who caused the accident. A. comprehensive B. ​no-fault C. strict liability D. liability E. collision

B. ​no-fault

A​ _____ transaction occurs when a seller sells goods to a buyer who has obtained financing from a​ third-party lender who takes a security interest in the goods sold. A. ​two-party mortgage B. ​three-party secured C. ​two-party unsecured D. ​two-party secured E. ​three-party unsecured

B. ​three-party secured

The​ _________________________ stipulates that sellers or lessors who make​ _____________ warranties related to consumer products are forbidden from disclaiming or modifying the implied warranties of merchantability and fitness for a particular purpose. A. UCC​ 2A.210; express written B. UCC​ 2.313; express written C. ​Magnuson-Moss Warranty​ Act; express written D. ​Magnuson-Moss Warranty​ Act; implied E. UCC​ 2.313; implied

C. ​Magnuson-Moss Warranty​ Act; express written

An insurance​ _____ usually works exclusively for one insurance​ company, while an insurance​ _____ is an independent contractor who represents a number of insurance companies. A. ​wholesaler; retailer B. ​retailer; wholesaler C. ​agent; broker D. ​broker; agent E. ​broker; retailer

C. ​agent; broker

​A(n) _____ judgment is a judgment of a court that permits​ a(n) _____ lender to recover other property or income from a defaulting debtor if the collateral is insufficient to repay the unpaid loan. A. ​declaratory; commercial B. ​default; unsecured C. ​deficiency; secured D. ​executory; secured E. ​summary; non-commercial

C. ​deficiency; secured

The UCC statute of​ _____ provides that an action for breach of any written or oral sales or lease contract must commence within​ _____ year(s) after the legal claim accrues. A. ​repose; three B. ​limitations; one C. ​limitations; four D. ​limitations; three E. ​repose; two

C. ​limitations; four

Disability​ insurance, which provides​ a(n) _______________ income to an insured who is disabled and cannot​ work, may be purchased to protect the insured against such an eventuality. The benefits are usually based on​ the__________________. A. ​monthly; premium amount B. ​annual; degree of disability C. ​monthly; degree of disability D. ​quarterly; degree of disability E. ​monthly; actuary chart

C. ​monthly; degree of disability

Under the​ _____ test, if the​ agent's motivation for committing an intentional tort is to promote the​ _____ business, the principal is liable for any injury caused by the tort. A. ​captivation; agent's B. ​motivation; agent's C. ​motivation; principal's D. ​captivation; principal's E. ​motivation; third​ party's

C. ​motivation; principal's

Under a system of​ _____ automobile​ insurance, a​ driver's insurance company pays for any injuries or death he or she suffered in an​ accident, no matter who caused the accident. A. liability B. strict liability C. ​no-fault D. comprehensive E. collision

C. ​no-fault

The term electronic​ _____ recognizes that UCC contracts and other information may be sent or stored by electronic means rather than in​ _____ writings. A. ​agent; principle B. ​agent; intangible C. ​record; tangible D. ​record; intangible E. ​agent; tangible

C. ​record; tangible

A financing statement is a document filed by​ a(n) _____ creditor with the appropriate government office that constructively notifies the world of his or her security interest in​ _____ property. A. ​non-commercial; real B. ​secured; real C. ​secured; personal D. ​unsecured; personal E. ​unsecured; real

C. ​secured; personal

An HDC takes a negotiable instrument free of all claims and most defenses that can be asserted against the transferor of the instrument. Only​ ____________ defenses—and not​ ____________ defenses—may be asserted against an HDC. A. blank​ endorsement; special endorsement B. ​personal; special endorsement C. ​universal; personal D. ​universal; blank endorsement E. ​personal; universal

C. ​universal; personal

​______________ are not expressly stated in the sales or lease contract but instead are​ ______________. A. Express​ warranties; implied by trade usage B. Express​ warranties; implied by custom C. Implied​ warranties; written in the addendum D. Implied​ warranties; implied by law E. Express​ warranties; implied by law

D. Implied​ warranties; implied by law

Which of the following is a correct statement regarding express​ warranties? A. An express warranty cannot be made by mistake. B. An express warranty cannot be inferred from the​ seller's conduct. C. An express warranty cannot be made by spoken words. D. It is not necessary to use formal words to create an express warranty. E. An express warranty must be in writing.

D. It is not necessary to use formal words to create an express warranty.

Under the UCC​ "taking without notice of​ defect" requirement, a person cannot qualify as an HDC if he or she has notice that the instrument is defective in all EXCEPT which of the following​ ways? A. It is overdue. B. There is a claim to it by another person. C. It contains an unauthorized signature or has been altered. D. It is payable on demand. E. It has been dishonored.

D. It is payable on demand.

Which of the following is an INCORRECT statement regarding marine​ insurance? A. Marine insurance is often comprehensive. B. Owners of a vessel can purchase marine insurance to insure against loss or damage to the vessel and its cargo caused by perils on the waters. C. Shippers can purchase marine insurance to cover the risk of loss to their goods during shipment. D. Marine insurers do not distinguish between inland marine insurance and ocean marine​ insurance, since both involve​ water-related perils. E. Marine insurance often covers property damage to the vessel or its cargo and liability insurance.

D. Marine insurers do not distinguish between inland marine insurance and ocean marine​ insurance, since both involve​ water-related perils.

Which of the following is an INCORRECT statement regarding common​ stock? A. Common stockholders have the right to elect corporate directors. B. Common stock does not have a fixed maturity date. C. Common stock has no preferences. D. The RMBCA encourages the concept of par value. E. Common stock is an equity security that represents the residual value of a corporation.

D. The RMBCA encourages the concept of par value.

Which of the following statements about automobile liability insurance is NOT​ true? A. States often require an insured to carry minimum liability insurance specified by statute. B. Automobile liability insurance covers damages that the insured causes to third​ parties, including both bodily injury and property damage. C. The limits of liability insurance are usually stated in 3​ numbers, such as​ 100/300/25. D. The minimum legal required liability insurance is usually quite high​ (e.g., $500,000). E. The limit of the​ insurer's obligation to pay insurance proceeds arising from an accident is usually up to​ $100,000 for bodily injury to each injured​ person, but limited to​ $300,000 for total bodily injury to all persons injured and up to​ $25,000 for property damage.

D. The minimum legal required liability insurance is usually quite high​ (e.g., $500,000).

Under the UCC​ "taking without notice of​ defect" requirement, a person cannot qualify as an HDC if he or she has notice that the instrument is defective in all EXCEPT which of the following​ ways? A. It is overdue. B. It contains an unauthorized signature or has been altered. C. It has been dishonored. D. There is a claim to it by another person. E. It is payable on demand.

E. It is payable on demand.

​_____ is the transfer of a negotiable instrument by a person other than the issuer. A. Abeyance B. Conveyance C. Subrogation D. Delegation E. Negotiation

E. Negotiation

​_____ stock is a type of equity security that is given certain preferences and rights over common stock. A. Dividend B. Par value C. No par value D. Derivative E. Preferred

E. Preferred

​_____ is a form of​ co-ownership of real property that can be used only by married couples. A. A cooperative B. Joint tenancy C. Tenancy in common D. Concurrent ownership E. Tenancy by the entirety

E. Tenancy by the entirety

If a​ customer's data is stolen electronically from a​ business, the business will file a claim against their​ _______. A. umbrella insurance B. business interruption insurance C. key person life insurance D. product liability insurance E. cyber insurance policy

E. cyber insurance policy

Medical health insurance plans usually cover all of the following​ EXCEPT? A. surgery B. doctor visits C. hospital care D. medical treatment E. dental care

E. dental care

The articles of incorporation of a corporation authorize the corporation to invest in real estate only. If a corporate officer invests corporate funds in the commodities​ markets, the officer is liable to the corporation for any losses suffered because of his or her​ _______. A. ​self-dealing B. duty of care C. competing with the corporation D. duty of loyalty E. duty of obedience

E. duty of obedience

Which of the following is NOT a type of real​ property? A. buildings B. subsurface rights C. plant life D. land E. harvested timber

E. harvested timber

Business​ _____ insurance reimburses a business for loss of revenue incurred when the business has been damaged or destroyed by fire or some other peril. A. impossibility B. continuation C. liability D. comprehensive E. interruption

E. interruption

Automobile​ _____ insurance covers damages that the insured causes to third​ parties, including both bodily injury and property damage. A. casualty B. comprehensive C. conglomerate D. collision E. liability

E. liability

A​ _____ seller can recover lost profits from a defaulting buyer even though the seller sold the item to another​ buyer, where the seller has other similar items and would have made​ _____ sales had the original buyer not defaulted. A. ​breaching; three B. ​breaching; two C. lost​ volume; three D. last clear​ chance; two E. lost​ volume; two

E. lost​ volume; two

Under the​ UCC, value has been given if the holder does all EXCEPT which of the​ following? A. takes the instrument in payment of or as security for an antecedent claim B. gives a negotiable instrument as payment C. acquires a security interest in or lien on the instrument D. performs the​ agreed-on promise E. makes an illusory promise

E. makes an illusory promise

At a​ minimum, most corporations have all of the following officers​ EXCEPT? A. a board chairperson B. a secretary C. a president D. a treasurer E. a​ vice-president

A. a board chairperson

Which of the following is an INCORRECT statement regarding Delaware corporation​ law? A. The Delaware legislature keeps amending the Delaware General Corporation Law as the demands of big business warrant or need such changes. B. A corporation must do business in Delaware in order to obtain the benefits of Delaware corporation law. C. In​ total, more than​ 500,000 business corporations are incorporated in Delaware. D. More than 50 percent of the publicly traded corporations in the United States are incorporated in Delaware. E. The Delaware General Corporation law is particularly written to be of benefit to large corporations.

B. A corporation must do business in Delaware in order to obtain the benefits of Delaware corporation law.

​A(n) _____ is the transfer of rights under a contract. A. offer B. stipulation C. proffer D. assignment E. delegation

D. assignment

A​ _____________________ applies to those who make an express​ warranty, although it does not require sellers to make an express warranty. A. warranty of no security interest B. warranty against infringement C. warranty of no interference D. ​Magnuson-Moss warranty E. warranty of good title

D. ​Magnuson-Moss warranty

An insurance​ _____ usually works exclusively for one insurance​ company, while an insurance​ _____ is an independent contractor who represents a number of insurance companies. A. ​broker; agent B. ​wholesaler; retailer C. ​retailer; wholesaler D. ​agent; broker E. ​broker; retailer

D. ​agent; broker

​A(n) _____ clause requires an insured to pay part of the cost of an insured loss. A. acceleration B. coinsurance C. liquidation D. renunciation E. redaction

B. coinsurance

An​ _____ is created when the seller affirms that the goods he or she is selling meet certain standards of​ quality, description,​ performance, or condition. A. express warranty B. implied warranty of fitness for a particular purpose C. implied warranty of merchantability D. implied warranty against encumbrances E. implied warranty of title

A. express warranty

Which of the following is a correct statement regarding an instrument payable in the alternative using the word or​? A. If the instrument is payable in the alternative using the word or​, either​ person's indorsement signature alone is sufficient to negotiate the instrument. B. Both​ persons' indorsements are necessary to negotiate the instrument. C. The instrument is​ non-assignable. D. The instrument is​ non-transferable. E. The instrument is​ non-negotiable.

A. If the instrument is payable in the alternative using the word or​, either​ person's indorsement signature alone is sufficient to negotiate the instrument.

Which of the following is an INCORRECT statement regarding a fully disclosed​ agency? A. In a fully disclosed​ agency, the contract is between the agent and the third party. B. In a fully disclosed​ agency, the agent is not liable on the contract with the third party. C. In a fully disclosed​ agency, the third party typically relied on the​ principal's credit and reputation when the contract was made. D. In a fully disclosed​ agency, the​ agent's signature must clearly indicate that he or she is acting as an agent for a specifically identified principal. E. A fully disclosed principal is liable on a contract with the third party.

A. In a fully disclosed​ agency, the contract is between the agent and the third party.

​A(n) _____ is a holder who takes a negotiable instrument for​ value, in good​ faith, and without notice that it is defective or overdue. A. SPC B. MPC C. DRC D. HDC E. CNC

D. HDC

Which of the following statements about a personal articles floater is NOT​ true? A. A personal articles floater does not provide coverage for loss or damage to the articles while traveling. B. An insured may wish to obtain insurance for specific valuable items​ (e.g., jewelry, works of​ art, furs). C. Insurance for specific valuable items is known as a personal articles​ floater, or personal effects​ floater, and can be added to a​ homeowners' policy. D. The insured must submit a list of the items he or she wants​ covered, along with a statement of the value of each​ item, to the insurance company. E. The insurance company will charge an increased premium based on the articles insured.

A. A personal articles floater does not provide coverage for loss or damage to the articles while traveling.

Which of the following is an INCORRECT statement regarding an insurable​ interest? A. An insurable interest in another​ person's life must exist at the time of that​ person's death. B. The named beneficiary or beneficiaries receive the proceeds from the life insurance policy when the insured dies. C. The beneficiary does not have to have an insurable interest in the​ insured's life. D. A person may insure his or her own life and name anyone as the beneficiary. E. An insurable interest in life must exist when the life insurance policy is issued.

A. An insurable interest in another​ person's life must exist at the time of that​ person's death.

​_____ insurance is a form of insurance that insures an automobile from loss or damage due to causes other than collision. A. Comprehensive B. Conglomerate C. Casualty D. Cooperative E. Liability

A. Comprehensive

Cougar Car​ Sales, Inc.​ (Cougar), a new car​ dealership, finances all its inventory of new automobiles at First Bank. First Bank takes a security interest in​ Cougar's inventory of cars and perfects this security interest.​ Kim, a buyer in the ordinary course of​ business, purchases a car from Cougar for cash. If Cougar defaults on its payments to the​ bank, _______. A. First Bank cannot recover the car from Kim because she is a purchaser in the ordinary course of business B. First Bank can recover the car from Kim because she is a purchaser in the ordinary course of business C. First Bank cannot recover the car from Kim because she has a perfected security interest in the car D. Cougar can recover the car from Kim because she is a purchaser in the ordinary course of business E. Cougar can avoid the payments to First Bank because it no longer has the car

A. First Bank cannot recover the car from Kim because she is a purchaser in the ordinary course of business

Which of the following is NOT a source of a​ corporation's express​ powers? A. articles of incorporation B. the U.S. Constitution C. local ordinances D. federal statutes and state statutes E. state constitutions

C. local ordinances

Which of the following is an INCORRECT statement regarding marine​ insurance? A. Marine insurers do not distinguish between inland marine insurance and ocean marine​ insurance, since both involve​ water-related perils. B. Marine insurance is often comprehensive. C. Owners of a vessel can purchase marine insurance to insure against loss or damage to the vessel and its cargo caused by perils on the waters. D. Marine insurance often covers property damage to the vessel or its cargo and liability insurance. E. Shippers can purchase marine insurance to cover the risk of loss to their goods during shipment.

A. Marine insurers do not distinguish between inland marine insurance and ocean marine​ insurance, since both involve​ water-related perils.

Which of the following is an INCORRECT statement regarding an insurable​ interest? A. Mortgagees do not have an insurable interest in property. B. Anyone who would suffer a monetary loss from the destruction of real or personal property has an insurable interest in that property. C. Anyone who would suffer a pecuniary loss from the destruction of real or personal property has an insurable interest in that property. D. Ownership creates an insurable interest. E. If the insured does not have an insurable interest in the property being​ insured, the contract is treated as a wager and cannot be enforced.

A. Mortgagees do not have an insurable interest in property.

Which of the following is an INCORRECT statement regarding the parties to a life insurance​ contract? A. Most life insurance contracts do not permit the owner of the policy to change beneficiaries. B. If no beneficiary is​ named, the proceeds go to the​ insured's estate. C. The owner of the policy has the power to name the beneficiary of the insurance proceeds. D. ​Often, the owner of the policy and the insured are the same person. E. The owner of a policy can take out an insurance policy on his or her own life.

A. Most life insurance contracts do not permit the owner of the policy to change beneficiaries.

​_____ rights give existing shareholders the option of subscribing to new shares being issued in proportion to their current ownership interests. A. Preemptive B. Derivative C. Curtailment D. Subrogation E. Ordainment

A. Preemptive

Which of the following is an INCORRECT statement regarding a​ corporation's shareholders? A. Shareholders have comprehensive management duties. B. Shareholders have the right to vote regarding fundamental changes in the corporation. C. Shareholders are not agents of the corporation. D. Shareholders have the right to vote in an election of corporate directors. E. A​ corporation's shareholders own the corporation.

A. Shareholders have comprehensive management duties.

Which of the following is NOT an element that must be shown to prove usurping a corporate​ opportunity? A. The opportunity is accompanied by demonstrated proof of profitability. B. The opportunity was presented to the director or officer in his or her corporate capacity. C. The opportunity is related to or connected with the​ corporation's current or proposed business. D. The corporate officer or director took the corporate opportunity for himself or herself. E. The corporation has the financial ability to take advantage of the opportunity.

A. The opportunity is accompanied by demonstrated proof of profitability.

Which of the following is NOT true about the ownership of​ for-profit corporations? A. They can be owned by the government. B. They can be owned by a small group of family members. C. They can be owned by professionals. D. They can sell their shares on an organized securities market. E. They can be owned by one person.

A. They can be owned by the government.

Chuck takes out a loan to purchase a​ high-end sports car.​ Unfortunately, he loses his job and misses a payment on the loan. The bank notifies him that the entire principal amount is now due and​ payable, lest the car be repossessed. The bank is exercising the loan​ agreement's _______ clause. A. acceleration B. installment C. prepayment D. extension E. holder in due course

A. acceleration

​A(n) _____ is a separate piece of paper attached to an instrument on which an indorsement is written. A. allonge B. parol contract C. addendum D. supplementary contract E. codicil

A. allonge

Cumulative preferred stock provides that any missed dividend payment must be paid in the future to the preferred shareholders before the​ _____________ can receive any dividends. The amount of unpaid cumulative dividends is called​ ________________. A. common​ shareholders; dividend arrearages B. ​officers; excess salary C. other preferred​ shareholders; the liquidation preference D. common​ shareholders; no par value E. other preferred​ shareholders; dividend arrearages

A. common​ shareholders; dividend arrearages

​Occasionally, the express terms of a written contract are not clear on their own and must be interpreted. In such​ cases, reference may be made to certain conduct outside the contract. In what order of priority are these conducts​ considered? (Note: Answers are in descending order of priority​ - most important to least​ important.) A. course of​ performance, course of​ dealing, usage of trade B. course of​ dealing, course of​ performance, usage of trade C. course of​ performance, usage of​ trade, course of dealing D. usage of​ trade, course of​ dealing, course of performance

A. course of​ performance, course of​ dealing, usage of trade

​A(n) _____ clause provides that insurance proceeds are payable only after the insured has paid a certain amount of the damage or loss. A. deductible B. liquidation C. acceleration D. subrogation E. redaction

A. deductible

A sight draft is also called a​ _____ draft. A. demand B. conditional C. reserve D. statutory E. qualified

A. demand

An instrument is​ ________ when it is presented for payment and payment is refused. A. dishonored B. overdue C. defective D. honored E. unauthorized

A. dishonored

A duty that directors and officers have not to act adversely to the interests of the corporation is called the​ ________. A. duty of loyalty B. business judgment rule C. duty of care D. duty of obedience E. duty of trust

A. duty of loyalty

Standard fire insurance policies often do not provide coverage for damage caused by the storage of explosives or flammable liquids unless a special premium is paid for this coverage. This is known as​ a(n) ________ clause. A. exclusion form coverage B. incontestability C. deductible D. coinsurance E. suicide

A. exclusion form coverage

Which of the following is an INCORRECT statement regarding disclaimer of the implied warranty of​ merchantability? A. Expressions such as​ "as is,"​ "with all​ faults," or other language that makes it clear to the buyer that there are no implied warranties disclaims all implied​ warranties, including the implied warranty of merchantability. B. A seller cannot disclaim the implied warranty of merchantability. C. If the​ "as is" type of disclaimer is not​ used, a disclaimer of the implied warranty of merchantability must specifically mention the term merchantability for the implied warranty of merchantability to be disclaimed. D. The implied warranty of merchantability may be disclaimed orally. E. The implied warranty of merchantability may be disclaimed in writing.

B. A seller cannot disclaim the implied warranty of merchantability.

​_____ insurance covers an automobile from loss or damage due to​ theft, windstorm,​ hail, falling​ objects, earthquakes,​ floods, hurricanes, and vandalism. A. Collision B. Comprehensive C. ​No-fault D. Liability E. ​Uninsured/underinsured

B. Comprehensive

Which of the following statements is true regarding boards of​ directors? A. Directors must be shareholders of the corporation. B. Directors can also be officers of the corporation. C. Directors must be residents of the state in which the corporation is incorporated. D. The number of​ non-initial directors is fixed by the articles of incorporation and cannot be amended at a later point in time. E. Directors cannot be officers of the corporation.

B. Directors can also be officers of the corporation.

​_____ insurance provides a monthly income to an insured who is disabled and cannot work. A. Universal B. Disability C. Whole D. ADA E. FMLA

B. Disability

Which of the following is NOT true regarding the Uniform Commercial Code​ (UCC)? A. The UCC is divided into articles. B. Each state is required to adopt the UCC or most of the UCC. C. It aims to ease the frustrations of conducting interstate business. D. The UCC is continually being revised. E. The UCC is a model act.

B. Each state is required to adopt the UCC or most of the UCC.

______________ are not expressly stated in the sales or lease contract but instead are​ ______________. A. Express​ warranties; implied by trade usage B. Implied​ warranties; implied by law C. Implied​ warranties; written in the addendum D. Express​ warranties; implied by law E. Express​ warranties; implied by custom

B. Implied​ warranties; implied by law

Which of the following is an INCORRECT statement regarding preferred​ stock? A. Preferred stock can be issued in classes or series. B. Preferred stockholders have unlimited liability for corporate debts and other obligations. C. Preferred stockholders generally are not given the right to vote for the election of directors. D. One class of preferred stock can be given preference over another class of preferred stock. E. Preferences of preferred stock must be set forth in the articles of incorporation.

B. Preferred stockholders have unlimited liability for corporate debts and other obligations.

Which of the following is NOT a requirement for creating a negotiable​ instrument? A. state a fixed amount of money B. be prepared by an attorney C. be an unconditional promise or order to pay D. be in writing E. be signed by the maker or drawer

B. be prepared by an attorney

The articles of incorporation are also referred to as the corporate​ _____. A. accord B. charter C. novation D. probate E. contract

B. charter

Which of the following is an INCORRECT statement regarding a​ "frolic and​ detour?" A. An agent might choose to run a personal errand while on assignment for the principal. This is commonly referred to as a frolic and detour. B. Principals are generally liable if an​ agent's frolic and detour is substantial. C. A frolic and detour is a situation in which an agent does something during the course of his or her employment to further his or her own interest rather than the​ principal's. D. Agents are always personally liable for their tortious conduct during a frolic and detour. E. Negligence actions stemming from frolic and detour are examined on a​ case-by-case basis.

B. Principals are generally liable if an​ agent's frolic and detour is substantial.

Which of the following is an INCORRECT statement regarding a​ corporation's shareholders? A. Shareholders have the right to vote in an election of corporate directors. B. Shareholders have comprehensive management duties. C. Shareholders are not agents of the corporation. D. A​ corporation's shareholders own the corporation. E. Shareholders have the right to vote regarding fundamental changes in the corporation.

B. Shareholders have comprehensive management duties.

Which of the following is an INCORRECT statement regarding subsurface​ rights? A. In​ reality, mines and oil wells usually extend only several miles into the earth. B. Subsurface rights are also referred to as intangible rights. C. The owner of land possesses mineral rights to the earth located beneath the surface of the land. D. Subsurface rights may be sold separately from surface rights. E. ​Theoretically, mineral rights extend to the center of the earth.

B. Subsurface rights are also referred to as intangible rights.

Which of the following is NOT true of the​ buyer's right to​ inspect? A. The terms of the inspection can be agreed to by the parties. B. The cost of inspection is always borne by the buyer. C. ​Non-conforming goods can be rejected by the buyer. D. It must take place at a reasonable time and place and within a reasonable manner. E. The cost of the inspection is borne by the seller if the goods are​ non-conforming.

B. The cost of inspection is always borne by the buyer.

Which of the following statements about automobile liability insurance is NOT​ true? A. Automobile liability insurance covers damages that the insured causes to third​ parties, including both bodily injury and property damage. B. The minimum legal required liability insurance is usually quite high​ (e.g., $500,000). C. The limits of liability insurance are usually stated in 3​ numbers, such as​ 100/300/25. D. The limit of the​ insurer's obligation to pay insurance proceeds arising from an accident is usually up to​ $100,000 for bodily injury to each injured​ person, but limited to​ $300,000 for total bodily injury to all persons injured and up to​ $25,000 for property damage. E. States often require an insured to carry minimum liability insurance specified by statute.

B. The minimum legal required liability insurance is usually quite high​ (e.g., $500,000).

Which of the following statements about​ key-person life insurance is NOT​ true? A. To compensate for such​ loss, the business often purchases​ key-person life insurance on owners and other important persons who work for the business. B. The​ key-person pays the premiums for the​ key-person life insurance policies. C. Sometimes​ key-person life insurance is used to fund​ buy-sell agreements among the owners of the business. D. In many small​ businesses, such as​ partnerships, limited liability​ companies, and close​ corporations, the death of one of the owners may cause a loss to the business. E. If an insured owner​ dies, the insurance proceeds are paid to the​ deceased's beneficiaries, and the​ deceased's interest in the business then reverts to either the other owners or the​ business, according to the terms of the buy-sell agreement.

B. The​ key-person pays the premiums for the​ key-person life insurance policies.

Which is the following statements about title insurance is NOT​ true? A. Owners of real property can purchase title insurance to ensure that they have clear title to the property. B. Title insurance protects against defects in titles and liens or encumbrances that are disclosed on the title insurance policy. C. An owner of real property or a mortgagee pays only one premium for title​ insurance, usually at closing. D. Mortgagees and other lienholders can purchase title insurance on property on which they have a lien. E. Each new owner or mortgagee who wants this coverage must purchase a new title insurance policy.

B. Title insurance protects against defects in titles and liens or encumbrances that are disclosed on the title insurance policy.

​________ insurance is additional insurance that provides coverage in excess of the basic policy limits of other insurance policies. A. ​Workers' compensation B. Umbrella C. ​Workers' compensation D. ​Key-person life E. ​Directors' and​ officers'

B. Umbrella

Interested in a particular email​ offer, a buyer for a large company sends an acceptance letter to the seller of the goods.​ However, the post office loses the letter and the seller does not receive the acceptance. Is this still a valid​ contract? A. No. A contract is only created when the offeror receives the acceptance. B. Yes. The contract was created when the acceptance letter was sent. C. Yes. The contract was created when the seller sent the offer to the buyer. D. No. The seller must respond to the acceptance letter before a contract is created. E. No. The offer was made by email so the acceptance must also be delivered via email.

B. Yes. The contract was created when the acceptance letter was sent.

Nathan provides a life estate in property to his friend Eddie. When Eddie​ dies, the interest in the property will go to Scott. What sort of future interest does Scott​ hold? A. a reversion B. a remainder C. a retainer D. a revocation E. a rescission

B. a remainder

Bob​ (a merchant) offers Jim​ (also a​ merchant) a sales contract. Jim accepts​ Bob's offer but adds additional terms to the contract. Under common law this would be considered a​ counteroffer; but under the UCC​ Jim's acceptance and addition of terms is still considered part of​ Bob's original offer. This is because of​ the___________ rule. A. merchant B. additional terms C. mirror image D. reasonable acceptance E. counteroffer

B. additional terms

An indorsement in trust is also known as​ a(n) _____ indorsement. A. official B. agency C. blank D. testamentary E. special

B. agency

An indorsement may also be written on a separate piece of paper called​ a(n) _______. A. assignment B. allonge C. virgule D. indorsement E. negotiation

B. allonge

Which of the following is an INCORRECT statement regarding the corporation as a legal​ person? A. A corporation can enter into contracts. B. A corporation can sue in its own name. C. A corporation has the same identity as its shareholders. D. A corporation can hold title to property. E. A corporation can be found criminally liable for violations of law.

C. A corporation has the same identity as its shareholders.

Which of the following is an INCORRECT statement regarding corporate​ management? A. Management of a corporation usually consists of a board of directors and officers of the corporation. B. The board of directors makes policy decisions concerning the operation of a corporation. C. A corporation usually has a decentralized management. D. The members of the board of directors are elected by the shareholders. E. A corporation usually has a centralized management.

C. A corporation usually has a decentralized management.

​_____ is a form of ownership in which each spouse owns an equal​ one-half share of the income of both spouses and the assets acquired during the marriage. A. Fee simple absolute B. Fee simple defeasible C. Community property D. Tenancy in common E. Joint tenancy

C. Community property

​_____ insurance covers an automobile from loss or damage due to​ theft, windstorm,​ hail, falling​ objects, earthquakes,​ floods, hurricanes, and vandalism. A. ​Uninsured/underinsured B. Liability C. Comprehensive D. ​No-fault E. Collision

C. Comprehensive

More than 50 percent of the publicly traded corporations in the United States are incorporated in​ ________. A. Massachusetts B. Maryland C. Delaware D. Connecticut E. Alabama

C. Delaware

​_____ has the most advanced corporation law in the United States. A. Texas B. Maryland C. Delaware D. Rhode Island E. New York

C. Delaware

​_____ agency occurs when an agent acts for two or more different principals in the same transaction. A. Cooperative B. Conditional C. Dual D. Unilateral E. Symbiotic

C. Dual

Which of the following is NOT true regarding financing​ statements? A. Financing statements are effective for 5 years from the date of filing​ [Revised UCC​ 9-515(a)]. B. Most states require financing statements covering farm​ equipment, farm​ products, accounts, and consumer goods to be filed with the county clerk​ [Revised UCC​ 9-501]. C. Financing statements can only be reviewed by approved creditors. D. A continuation statement may be filed up to 6 months prior to the expiration of a financing​ statement's 5-year term. E. They serve as constructive notice to the world that a creditor claims an interest in a property.

C. Financing statements can only be reviewed by approved creditors.

Which of the following is an INCORRECT statement regarding express​ warranties? A. Express warranties are often found in advertisements. B. Buyers can recover for breach of an express warranty if the warranty induced the buyer to purchase the product. C. Sellers are required to make express warranties. D. ​Generally, express warranties are made to entice consumers and others to buy or lease products. E. Lessees can recover for breach of an express warranty if the warranty induced the lessee to lease the product.

C. Sellers are required to make express warranties.

Which of the following is NOT a requirement for a corporation to qualify as an S​ corporation? A. The corporation can have no more than 100 shareholders. B. The corporation cannot be a member of an affiliated group of corporations. C. The corporation must have begun its business operations as either a sole proprietorship or a general partnership. D. The corporation must be a domestic corporation. E. Shareholders must be​ individuals, estates, or certain trusts.

C. The corporation must have begun its business operations as either a sole proprietorship or a general partnership.

Which of the following is an INCORRECT statement regarding the duty of care of directors and officers of a​ corporation? A. To meet the duty of​ care, directors and officer must discharge their duties with the care that an ordinary prudent person in a like position would use under similar circumstances. B. The duty of care requires corporate directors and officers to use care and diligence when acting on behalf of the corporation. C. The duty of care is not a fiduciary duty. D. To meet the duty of​ care, directors and officer must discharge their duties in a manner they reasonably believe to be in the best interests of the corporation. E. To meet the duty of​ care, directors and officer must discharge their duties in good faith.

C. The duty of care is not a fiduciary duty.

Which of the following is an INCORRECT statement regarding a​ director's and an​ officer's duty of​ care? A. To meet the duty of​ care, directors and officers must discharge their duties in good faith. B. The officers of a corporation owe certain fiduciary duties when taking action on behalf of the corporation. C. The duty of obedience is a duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation. D. To meet the duty of​ care, directors and officers must discharge their duties with the care that an ordinary prudent person in a like position would use under similar circumstances. E. The directors of a corporation owe certain fiduciary duties when making decisions on behalf of the corporation.

C. The duty of obedience is a duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation.

Which of the following is an INCORRECT statement regarding the implied warranty of fitness for a particular​ purpose? A. The implied warranty of fitness for a particular purpose applies to both merchant and​ non-merchant sellers and lessors. B. The implied warranty of fitness for a particular purpose is breached if the goods do not meet the​ buyer's or​ lessee's expressed needs. C. The implied warranty of fitness for a particular purpose guarantees that sold or leased goods are fit for the ordinary purpose for which they are sold or leased. D. The implied warranty of fitness for a particular purpose attaches to the sale or lease of goods if the seller or lessor has made statements that the goods will meet the​ buyer's or​ lessee's needs or purpose. E. The implied warranty of fitness for a particular purpose requires that the buyer or lessee must rely on the​ seller's or​ lessor's skill and judgment.

C. The implied warranty of fitness for a particular purpose guarantees that sold or leased goods are fit for the ordinary purpose for which they are sold or leased.

Which of the following is an INCORRECT statement regarding the registered office​ and/or registered agent of a​ corporation? A. Attorneys often act as the registered agents of corporations. B. The articles of incorporation must identify a registered office with a designated registered agent in the state of incorporation. C. The registered office must be the same as the​ corporation's place of business. D. A statement of change must be filed with the secretary of state of the state of incorporation if either the registered office or the registered agent is changed. E. The registered agent is empowered to accept service of process on behalf of the corporation.

C. The registered office must be the same as the​ corporation's place of business.

Which of the following statements about​ key-person life insurance is NOT​ true? A. Sometimes​ key-person life insurance is used to fund​ buy-sell agreements among the owners of the business. B. In many small​ businesses, such as​ partnerships, limited liability​ companies, and close​ corporations, the death of one of the owners may cause a loss to the business. C. The​ key-person pays the premiums for the​ key-person life insurance policies. D. If an insured owner​ dies, the insurance proceeds are paid to the​ deceased's beneficiaries, and the​ deceased's interest in the business then reverts to either the other owners or the​ business, according to the terms of the buy-sell agreement. E. To compensate for such​ loss, the business often purchases​ key-person life insurance on owners and other important persons who work for the business.

C. The​ key-person pays the premiums for the​ key-person life insurance policies.

What is an insurance contract​ called? A. an obligation B. an instrument C. a policy D. a quote E. a letter

C. a policy

Which of the following is NOT a topic covered by the Uniform Commercial Code​ (UCC)? A. investment securities B. leases C. assault D. bank deposits E. negotiable instruments

C. assault

Which of the following is NOT a requirement for creating a negotiable​ instrument? A. be in writing B. be an unconditional promise or order to pay C. be prepared by an attorney D. state a fixed amount of money E. be signed by the maker or drawer

C. be prepared by an attorney

A(n) _____ instrument is payable to anyone in physical possession of the instrument who presents it for payment when it is due. A. ​non-negotiable B. order C. bearer D. conditional E. situational

C. bearer

When a lessee purchases or leases substitute goods when a lessor fails to make​ delivery, it is known as​ _______. A. rejection B. specific performance C. cover D. acceptance E. replevin

C. cover

A merchant is one who​ ________________. A. does not have to follow the UCC when entering into contracts for the sale of goods B. does not have knowledge of the goods involved in the transaction C. deals in the goods of the kind involved in a​ transaction, or has knowledge or skill peculiar to the goods involved in the transaction D. does not deal in the goods of the kind involved in a transaction E. is involved in a finance lease

C. deals in the goods of the kind involved in a​ transaction, or has knowledge or skill peculiar to the goods involved in the transaction

A warranty​ _____ negates express and implied warranties. A. ratification B. revocation C. disclaimer D. deed E. rescission

C. disclaimer

An instrument is​ ________ when it is presented for payment and payment is refused. A. unauthorized B. overdue C. dishonored D. honored E. defective

C. dishonored

The Ford Motor​ Company, a major manufacturer of automobiles and other​ vehicles, is incorporated in Delaware. It is​ a(n) _____ corporation in Delaware. A. ​government-owned B. professional C. domestic D. alien E. foreign

C. domestic

The articles of incorporation of a corporation authorize the corporation to invest in real estate only. If a corporate officer invests corporate funds in the commodities​ markets, the officer is liable to the corporation for any losses suffered because of his or her​ _______. A. ​self-dealing B. duty of care C. duty of obedience D. duty of loyalty E. competing with the corporation

C. duty of obedience

If an instrument is payable to​ "Shou-Yi Kang/Min-Wer​ Chen," who may indorse and negotiate the​ instrument? A. ​Min-Wer Chen only B. ​Shou-Yi Kang only C. either​ Shou-Yi Kang or​ Min-Wer Chen D. both​ Shou-Yi Kang and​ Min-Wer Chen E. ​neither, the payable clause is ineffective

C. either​ Shou-Yi Kang or​ Min-Wer Chen

A college student borrows money from her mother for college expenses. The loan agreement provides that the student will repay the loan five years after graduation from college. The loan agreement contains​ a(n) ______________ that permits the graduate to add on another two years to the loan​ if, at the end of five​ years, she wants extra time to pay the loan. A. default clause B. prepayment penalty C. extension clause D. acceleration clause E. prepayment clause

C. extension clause

Some of the most common breaches of the duty of loyalty include all of the following​ EXCEPT? A. ​self-dealing B. making a secret profit C. failure to be informed regarding corporate affairs D. usurping a corporate opportunity E. competing with the corporation

C. failure to be informed regarding corporate affairs

The UCC contains an implied warranty of​ ___________________. This implied warranty attaches to the sale or lease of goods if the seller or lessor has made statements that the goods​ __________________________. A. ​title; will meet the​ buyer's or​ lessee's needs B. fitness for a particular​ purpose; are the best in the country C. fitness for a particular​ purpose; will meet the​ buyer's or​ lessee's particular needs D. fitness for human​ consumption; are the best in the country E. ​merchantability; will meet the​ buyer's or​ lessee's needs

C. fitness for a particular​ purpose; will meet the​ buyer's or​ lessee's particular needs

​A(n) ___________ is a person who is in possession of a negotiable instrument that is​ drawn, issued, or indorsed to him or his​ order, or to​ bearer, or in blank. A. indorsee B. holder in due course C. holder D. unqualified indorser E. indorser

C. holder

When does a lessor have a right to reclaim the​ goods? A. if the lessee accepts the goods B. if the lessee discovers that the lessor is insolvent C. if the lessor discovers that the lessee is insolvent D. if the lessor is in default E. if the lessee disposes of the goods

C. if the lessor discovers that the lessee is insolvent

​A(n) _____ is the signature​ (and other​ directions) written by or on behalf of the holder somewhere on an instrument. A. allonge B. execution C. indorsement D. assignment E. delegation

C. indorsement

Business​ _____ insurance reimburses a business for loss of revenue incurred when the business has been damaged or destroyed by fire or some other peril. A. comprehensive B. liability C. interruption D. continuation E. impossibility

C. interruption

Suppose an insured purchases​ $1 million of life insurance and names his spouse as the beneficiary. The policy contains a​ two-year suicide clause. Twenty months after purchasing the​ insurance, the insured commits suicide. The beneficiary​ _____. A. may recover the insurance​ proceeds, assuming the beneficiary​ (the wife) had no involvement in the death of the insured​ (the husband) B. may not recover the insurance proceeds because the taking of​ one' own life is against established public policy C. may not recover the insurance proceeds because the​ insured's suicide occurred within two years of issuance of the life insurance policy D. may recover the insurance​ proceeds, assuming premiums were paid according to the requirements of the life insurance contract E. may not recover the insurance proceeds since death to the insured resulting from​ first-degree murder is typically excluded from life insurance coverage

C. may not recover the insurance proceeds because the​ insured's suicide occurred within two years of issuance of the life insurance policy

An indorsement signature may​ (1) appear​ alone, (2)​ ____________ to whom the instrument is to be​ paid, or​ (3) ________________________​ [UCC 3-204(2)]. A. name the​ maker; be accompanied by other words B. name an​ individual; be accompanied by money C. name an​ individual; be accompanied by other words D. name the​ drawer; be accompanied by other words E. name the​ maker; be accompanied by money

C. name an​ individual; be accompanied by other words

Intentional torts include all but which of the​ following? A. battery B. false imprisonment C. negligence D. assault E. intentional infliction of emotional distress

C. negligence

In​ a(n) _____​ agency, a contracting third party knows that the agent is acting for a principal but does not know the identity of the principal. A. undisclosed B. statutory C. partially disclosed D. fully disclosed E. common law

C. partially disclosed

Article​ 2(A) of the Uniform Commercial Code​ (UCC) applies to​ _____. A. contracts for the sale of securities​ (stocks and​ bonds) B. service contracts C. personal property leases D. the negotiation of commercial paper E. contracts for the sale of goods

C. personal property leases

​A(n) _____ is a person who organizes and starts a​ corporation, negotiates and enters into contracts in advance of its​ formation, and finds the initial investors to finance the corporation. A. trustee B. administrator C. promoter D. ​attorney-in-fact E. executor

C. promoter

Which of the following is NOT needed by an insurance company to create a personal articles​ floater? A. a list of the value of all items to be covered B. an increased premium to be paid to the insurance company C. proof of purchase of all items to be covered D. an original home​ owners' policy for the floater to be attached to E. a list of specific items to be covered

C. proof of purchase of all items to be covered

A creditor who extends credit to a consumer to purchase a consumer good under a written security agreement obtains​ a(n) _____ security interest in the consumer good. A. symbolic B. equitable C. purchase money D. incidental E. constructive

C. purchase money

A​ _____ is a right of possession that returns to the grantor after the expiration of a limited or contingent estate. A. rescission B. rejection C. reversion D. revocation E. ratification

C. reversion

Owners of a corporation who elect the board of directors are​ ________. A. members B. general partners C. shareholders D. limited partners E. sole proprietors

C. shareholders

Joint tenancy is a form of​ co-ownership that includes the right of​ _____. A. due process B. eminent domain C. survivorship D. first refusal E. notice

C. survivorship

The directors and officers of a corporation must act within the authority conferred upon them by all of the following​ EXCEPT? A. the bylaws of the corporation B. resolutions of the board of directors C. the alter ego doctrine D. a state corporate code E. the​ corporation's articles of incorporation

C. the alter ego doctrine

The UCC incorporates the implied warranty of fitness for human consumption within​ _____. A. the implied warranty of title B. the implied warranty against encumbrances C. the implied warranty of merchantability D. express warranty theory E. the implied warranty of fitness for a particular purpose

C. the implied warranty of merchantability

Which of the following is NOT one of the most common forms of life​ insurance? A. ​limited-payment life B. term life C. triple indemnity D. whole life E. universal life

C. triple indemnity

Insureds who want to increase their liability coverage beyond the original coverage can purchase​ _____ insurance. A. ​no-fault B. strict liability C. umbrella D. comprehensive E. casualty

C. umbrella

To prove​ _____, there must be proof that the parties had substantially unequal bargaining​ power, that the dominant party misused its power in​ contracting, and that it would be manifestly unfair or oppressive to enforce the contract. A. fraud B. commercial impracticability C. unconscionability D. negligent misrepresentation E. frustration of purpose

C. unconscionability

An indorsement whereby the indorser promises to pay the holder or any subsequent indorser the amount of the instrument if the​ maker, drawer, or acceptor defaults on it is​ a(n) __________ indorsement. A. testamentary B. qualified C. unqualified D. official E. restrictive

C. unqualified

According to the UCC Statute of​ Frauds, all contracts for the sale of goods priced at​ _____ or more must be in writing. A. ​$250 B. ​$20 C. ​$500 D. ​$50 E. ​$100

C. ​$500

A negotiable instrument is a special form of contract that satisfies the requirements established by Article​ _____ of the Uniform​ _____ Code. A. ​1; Constitutional B. ​1; Commercial C. ​3; Commercial D. ​3; Contracts E. ​2; Contracts

C. ​3; Commercial

A negotiable instrument is a special form of contract that satisfies the requirements established by Article​ _____ of the Uniform​ _____ Code. A. ​1; Constitutional B. ​2; Contracts C. ​3; Commercial D. ​1; Commercial E. ​3; Contracts

C. ​3; Commercial

Which of the following is an INCORRECT statement regarding agent​ self-dealing? A. An agent who engages in undisclosed​ self-dealing with the principal has violated his or her duty of loyalty to the principal. B. If there has been undisclosed dealing by an​ agent, the principal can rescind the purchase and recover the money paid to the agent. C. If there has been undisclosed dealing by an​ agent, the principal can ratify the purchase. D. Agents are generally allowed to​ self-deal with the​ principal, especially if the​ self-dealing is undisclosed. E. ​Self-dealing is a common type of breach of the​ agent's duty of loyalty to the principal.

D. Agents are generally allowed to​ self-deal with the​ principal, especially if the​ self-dealing is undisclosed.

Which of the following is an INCORRECT statement regarding the functions of negotiable​ instruments? A. Negotiable instruments often serve as​ record-keeping devices. B. Certain forms of negotiable​ instruments, such as​ checks, serve as substitutes for money. C. Some forms of negotiable instruments extend credit from one party to another. D. As​ securities, negotiable instruments represent ownership in a corporation. E. Without negotiable​ instruments, the​ "credit economy" of the United States and other modern industrial countries would not be possible.

D. As​ securities, negotiable instruments represent ownership in a corporation.

​_____ voting is a system in which a shareholder can accumulate all of his or her votes and vote them all for one candidate or split them among several candidates. A. Derivative B. Proxy C. Straight D. Cumulative E. Noncumulative

D. Cumulative

​_____ voting is a system in which a shareholder can accumulate all of his or her votes and vote them all for one candidate or split them among several candidates. A. Proxy B. Straight C. Noncumulative D. Cumulative E. Derivative

D. Cumulative

_____ insurance provides a monthly income to an insured who is disabled and cannot work. A. Universal B. Whole C. ADA D. Disability E. FMLA

D. Disability

Which of the following is NOT true about corporate​ officers? A. The duties of each officer are specified in the bylaws of the corporation. B. Officers who are removed in violation of an employment contract can sue the corporation for damages. C. The bylaws or the board of directors can authorize duly appointed officers the power to appoint assistant officers. D. The same individual may NOT simultaneously hold more than one office in the corporation. E. The same individual may simultaneously hold more than one office in the corporation.

D. The same individual may NOT simultaneously hold more than one office in the corporation.

​A(n) _____ is a separate piece of paper attached to an instrument on which an indorsement is written. A. supplementary contract B. parol contract C. addendum D. allonge E. codicil

D. allonge

Which of the following is NOT a form of implied​ warranty? A. implied warranty of fitness for human consumption B. a warranty implied by law C. implied warranty of fitness for a particular purpose D. a​ Magnuson-Moss warranty E. implied warranty of merchantability

D. a​ Magnuson-Moss warranty

If an instrument is payable to​ "Shou-Yi Kang and​ Min-Wer Chen," who may indorse and negotiate the​ instrument? A. ​Min-Wer Chen only B. ​Shou-Yi Kang only C. either​ Shou-Yi Kang or​ Min-Wer Chen D. both​ Shou-Yi Kang and​ Min-Wer Chen E. ​neither, the payable clause is ineffective

D. both​ Shou-Yi Kang and​ Min-Wer Chen

Which of the following actions does NOT require​ shareholders' approval? A. sale of substantially all of the​ corporation's assets outside the course of ordinary business. B. amending the articles of incorporation C. voluntary dissolution of the corporation D. declaring a dividend E. merging with another corporation

D. declaring a dividend

Which of the following actions does NOT require​ shareholders' approval? A. sale of substantially all of the​ corporation's assets outside the course of ordinary business. B. voluntary dissolution of the corporation C. amending the articles of incorporation D. declaring a dividend E. merging with another corporation

D. declaring a dividend

A life estate may be measured by the life of a third​ party, which is called​ a(n) _____. A. fee simple absolute B. third party beneficiary contract C. qualified fee D. es estate pour autre vie E. fee simple defeasible

D. es estate pour autre vie

A​ person's ownership right in real property is called​ a(n) ________. A. easement B. bailment C. personal property right D. estate in land E. gift

D. estate in land

The​ UCC's ____________ rule states that a merchant who makes an offer to​ buy, sell, or lease​ goods, and assures the other party in a separate writing that the offer will be held​ open, cannot revoke the offer for the time stated. A. merchant B. course of dealing C. irrevocable offer D. firm offer E. written confirmation

D. firm offer

The UCC contains an implied warranty of​ ___________________. This implied warranty attaches to the sale or lease of goods if the seller or lessor has made statements that the goods​ __________________________. A. ​title; will meet the​ buyer's or​ lessee's needs B. fitness for a particular​ purpose; are the best in the country C. ​merchantability; will meet the​ buyer's or​ lessee's needs D. fitness for a particular​ purpose; will meet the​ buyer's or​ lessee's particular needs E. fitness for human​ consumption; are the best in the country

D. fitness for a particular​ purpose; will meet the​ buyer's or​ lessee's particular needs

Under the​ _____ test, a food product is​ non-merchantable if a foreign object in that product causes injury to a person. A. implied warranty of fitness for a particular purpose B. reasonable expectation C. consumer safeguard D. foreign substance E. express warranty

D. foreign substance

Under the​ _____ test, the implied warranty would be breached if a person were injured by eating a nail in an apple pie. A. consumer safeguard B. reasonable expectation C. consumer expectation D. foreign substance E. express warranty

D. foreign substance

If a person owns real property in fee​ simple, his or her ownership​ _____. A. is per se subject to a condition subsequent B. is not subject to an easement C. is subject to title challenge D. has no limitation on inheritability E. is per se subject to a condition precedent

D. has no limitation on inheritability

​Ingersoll-Rand owns a​ heavy-duty crane. A thief steals the crane and sells it to Turner Construction. Turner Construction does not know that the crane is stolen. If​ Ingersoll-Rand discovers that Turner Construction has the​ equipment, ______________. Turner​ Construction, in​ turn, ______________________. A. it can reclaim​ it; cannot recover against the thief for breach of the warranty of title B. it can reclaim​ it; can recover against no one C. it may not reclaim​ it;, can recover against the thief for breach of the warranty of title D. it can reclaim​ it; can recover against the thief for breach of the warranty of title E. it may not reclaim​ it; can recover against no one

D. it can reclaim​ it; can recover against the thief for breach of the warranty of title

Automobile​ _____ insurance covers damages that the insured causes to third​ parties, including both bodily injury and property damage. A. conglomerate B. casualty C. collision D. liability E. comprehensive

D. liability

A(n) _____ instrument is​ payable: 1) to the order of an identified​ person; or​ 2) to an identified person or order. A. holder B. conditional C. ​non-negotiable D. order E. bearer

D. order

If an officer acts​ ______________ and enters into a contract with a third​ person, but the corporation​ _________________ of the​ contract, the corporation has​ ___________ the contract and is bound by it. A. outside the scope of his or her​ employment, accepts the​ benefits, repudiated B. within the scope of his or her​ employment, refuses the​ benefits, ratified C. outside the scope of his or her​ employment, refuses the​ benefits, ratified D. outside the scope of his or her​ employment, accepts the​ benefits, ratified E. in competition with the​ corporation, rejects the​ benefits, ratified

D. outside the scope of his or her​ employment, accepts the​ benefits, ratified

If an officer acts​ ______________ and enters into a contract with a third​ person, but the corporation​ _________________ of the​ contract, the corporation has​ ___________ the contract and is bound by it. A. outside the scope of his or her​ employment, refuses the​ benefits, ratified B. outside the scope of his or her​ employment, accepts the​ benefits, repudiated C. in competition with the​ corporation, rejects the​ benefits, ratified D. outside the scope of his or her​ employment, accepts the​ benefits, ratified E. within the scope of his or her​ employment, refuses the​ benefits, ratified

D. outside the scope of his or her​ employment, accepts the​ benefits, ratified

The​ _____ requirement of negotiable instruments says that they must be able to be easily transported between areas. A. deportability B. permanency C. signature D. portability E. commercial

D. portability

A person borrows money from a bank to purchase a house. The loan is a​ 30-year loan, with interest and principal to be paid in equal monthly installments. If the borrower can pay off the loan at any time during the​ 30-year period, the loan agreement contains​ a(n) _______. A. extension clause B. prepayment penalty C. maker clause D. prepayment clause E. acceleration clause

D. prepayment clause

Written disclaimers must be conspicuously displayed to be valid. The courts construe conspicuous to mean noticeable to​ a(n) _____ person. A. uneducated B. intelligent C. educated D. reasonable E. unsuspecting

D. reasonable

The goals of the​ Sarbanes-Oxley Act​ (SOX) of 2002 include all EXCEPT which of the​ following? A. instill confidence in the public that management will run public companies in the best interests of all constituents B. eliminate conflicts of interest C. instill confidence in investors that management will run public companies in the best interests of all constituents D. replace independent corporate audits with internal audits E. improve corporate governance rules

D. replace independent corporate audits with internal audits

Common stock is a type of equity security that represents the​ _____ value of a corporation. A. projected B. net C. fair market value D. residual E. equitable

D. residual

​A(n) _____ contract requires the seller to send the goods to the​ buyer, but not to a specifically named destination. A. ordinance B. ​sale-or-return C. destination D. shipment E. ​sale-on-approval

D. shipment

Adams​ Company, a manufacturer of machines that make​ shoes, sells a machine to Smith​ & Franklin, a shoe manufacturer.​ Subsequently, Nerdette claims that she has a patent on the machine. Nerdette proves her patent claim in court. Nerdette notifies Smith​ & Franklin that the machine can no longer be used without her permission and the payment of a fee to her. Smith​ & Franklin may rescind the sales contract with Adams​ Company, based on breach of​ _____. A. the implied warranty of fitness for ordinary use B. the implied warranty of fitness for a particular purpose C. the implied warranty of merchantability D. the implied warranty against infringement E. express warranty

D. the implied warranty against infringement

According to the​ RMBCA, the articles of incorporation must include which of the​ following? A. the limitation or regulation of the powers of the corporation B. the purpose or purposes for which the corporation is organized C. regulations of the affairs of the corporation D. the name and address of each incorporator E. the period of duration of the corporation

D. the name and address of each incorporator

Which of the following is NOT a corporate​ power? A. to make contracts B. to​ purchase, own,​ lease, sell,​ mortgage, or otherwise deal in real and personal property C. to lend​ money, borrow​ money, and incur liabilities D. to make excessive contributions to a political campaign E. to issue notes and bonds and other obligations

D. to make excessive contributions to a political campaign

An act by a corporation that is beyond its express or implied powers is called​ a(n) _____ act. A. ex post facto B. post hoc ergo propter hoc C. res ipsa loquitur D. ultra vires E. esse quam videri

D. ultra vires

An act by a corporation that is beyond its express or implied powers is called​ a(n) _____ act. A. post hoc ergo propter hoc B. res ipsa loquitur C. esse quam videri D. ultra vires E. ex post facto

D. ultra vires

Insureds who want to increase their liability coverage beyond the original coverage can purchase​ _____ insurance. A. casualty B. comprehensive C. ​no-fault D. umbrella E. strict liability

D. umbrella

To be​ negotiable, a promise or an order must be​ _____. A. theoretical B. situational C. hypothetical D. unconditional E. conditional

D. unconditional

The UCC provides that if goods identified in a sales or lease contract are totally destroyed without the fault of either party before the risk of loss passes to the buyer or​ lessee, the contract is​ _____. A. nevertheless enforceable B. voidable C. executed D. void E. modified

D. void

Shareholders have the right to​ ________. A. be an agent of the corporation B. bind the corporation to contracts C. hire top level managers D. vote on matters such as the election of directors E. fire staff

D. vote on matters such as the election of directors

The drawee of a check is the party​ ________. A. who promises to pay the note B. in possession of the instrument C. who writes the check D. who must pay the money stated in a check E. who receives the money from a check

D. who must pay the money stated in a check

Which of the following is NOT a bearer​ instrument? A. ​"payable to​ bearer" B. ​"payable to​ cash" C. ​"payable to Google or​ bearer" D. ​"payable to​ Google" E. ​"payable to the order of​ cash"

D. ​"payable to​ Google"

In​ 2013, Target​ Corporation, the​ third-largest retailer in the United​ States, was subject to a cyberattack when hackers breached​ Target's firewalls and obtained information on more than​ _________________ million credit and debit cards used by Target customers. Target had cyber insurance that covered about​ _____________ of the​ company's liability caused by the security breach. A. ​20; half B. ​50; one-third C. ​30; one-third D. ​40; two-thirds E. ​10; two-thirds

D. ​40; two-thirds

Which of the following is an INCORRECT statement regarding a​ principal's liability for an independent​ contractor's torts and​ contracts? A. Principals cannot avoid liability for inherently dangerous activities that they assign to independent contractors. B. If an independent contractor enters into a contract with a third party on behalf of the principal without express or implied authority from the principal to do​ so, the principal is not liable on the contract. C. The reason a principal is not usually liable for the torts of an independent contractor is because the principal does not control the means by which the independent contractor accomplishes results. D. ​Generally, a principal is liable for the torts of its independent contractors. E. Principals are bound by the authorized contracts of their independent contractors.

D. ​Generally, a principal is liable for the torts of its independent contractors.

Which of the following is NOT true about a​ condominium? A. Owners may sell or mortgage their units without the permission of the other owners. B. Condominiums are a common form of ownership in​ multiple-dwelling buildings. C. Purchasers of a condominium​ (1) have title to their individual units and​ (2) own the common areas​ (e.g., hallways,​ elevators, parking​ areas, recreational​ facilities) as tenants in common with the other owners. D. ​Usually, condominium owners may not sell or sublease their units without the approval of the other owners. E. In addition to being used for dwelling​ units, the condominium form of ownership is often used for office​ buildings, boat​ docks, and the like.

D. ​Usually, condominium owners may not sell or sublease their units without the approval of the other owners.

The implied warranty of merchantability​ _____________ to the sale of a coffee pot that is sold by a merchant who is in the business of selling kitchen appliances. The implied warranty of merchantability​ _______________ when someone sells a coffee pot at her garage sale. A. ​applies; applies B. does not​ apply; does not apply C. sometimes​ applies; always applies D. ​applies; does not apply E. does not​ apply; applies

D. ​applies; does not apply

With respect to nonnegotiable​ instruments, any defenses to the enforcement of the contract that could have been raised against the​ __________ can also be raised against the​ ____________. A. ​assignee; assignor B. ​holder; assignor C. ​assignee; holder D. ​assignor; assignee E. ​holder; assignee

D. ​assignor; assignee

Article 9 of the Uniform Commercial Code​ (UCC) governs​ _____ transactions in​ _____ property. A. ​secured; intangible B. ​unsecured; real C. ​secured; real D. ​secured; personal E. ​unsecured; intangible

D. ​secured; personal

A certificate of deposit is a​ _____ instrument. A. multilateral B. ​non-negotiable C. ​single-party D. ​two-party E. ​three-party

D. ​two-party

An HDC takes a negotiable instrument free of all claims and most defenses that can be asserted against the transferor of the instrument. Only​ ____________ defenses—and not​ ____________ defenses—may be asserted against an HDC. A. ​personal; special endorsement B. blank​ endorsement; special endorsement C. ​universal; blank endorsement D. ​universal; personal E. ​personal; universal

D. ​universal; personal

Which of the following statements about a personal articles floater is NOT​ true? A. The insurance company will charge an increased premium based on the articles insured. B. Insurance for specific valuable items is known as a personal articles​ floater, or personal effects​ floater, and can be added to a​ homeowners' policy. C. An insured may wish to obtain insurance for specific valuable items​ (e.g., jewelry, works of​ art, furs). D. The insured must submit a list of the items he or she wants​ covered, along with a statement of the value of each​ item, to the insurance company. E. A personal articles floater does not provide coverage for loss or damage to the articles while traveling.

E. A personal articles floater does not provide coverage for loss or damage to the articles while traveling.

Which of the following is an INCORRECT statement regarding agent​ self-dealing? A. An agent who engages in undisclosed​ self-dealing with the principal has violated his or her duty of loyalty to the principal. B. If there has been undisclosed dealing by an​ agent, the principal can ratify the purchase. C. ​Self-dealing is a common type of breach of the​ agent's duty of loyalty to the principal. D. If there has been undisclosed dealing by an​ agent, the principal can rescind the purchase and recover the money paid to the agent. E. Agents are generally allowed to​ self-deal with the​ principal, especially if the​ self-dealing is undisclosed.

E. Agents are generally allowed to​ self-deal with the​ principal, especially if the​ self-dealing is undisclosed.

Which of the following is true about a holder in due course​ (HDC)? A. An HDC is a person in possession of an instrument that is payable to a bearer. B. An HDC and holder are the same thing. C. An HDC is a person in possession of an instrument that is payable to an identified person who is in possession of an instrument payable to that person. D. An HDC takes a negotiable instrument free of all universal defenses. E. An HDC takes a negotiable instrument free of all claims and most defenses that can be asserted against the transferor of the instrument.

E. An HDC takes a negotiable instrument free of all claims and most defenses that can be asserted against the transferor of the instrument.

​_____ agency occurs when an agent acts for two or more different principals in the same transaction. A. Symbiotic B. Cooperative C. Conditional D. Unilateral E. Dual

E. Dual

_____________ means a computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in​ part, without review or action by an individual. A. Merchant B. Revised Article 2​ (Sales) and Revised Article 2A​ (Leases) of the UCC C. Electronic record D. Electronic E. Electronic agent

E. Electronic agent

Which of the following is NOT true regarding payment of accepted​ goods? A. Payment is due when and where the goods are delivered unless the parties agreed otherwise. B. If cash payment is​ required, the buyer must be given an extension of time to procure the cash. C. When purchasing goods on​ credit, the credit period begins to run from the time the goods are​ shipped, unless the parties agreed otherwise. D. Check payments are conditional on the check being honored when presented to the bank for payment. E. Goods can be paid for in any manner even if the contract states otherwise.

E. Goods can be paid for in any manner even if the contract states otherwise.

Which of the following is a correct statement regarding an instrument payable jointly using the word and​? A. Only the first payee named must indorse the instrument. B. An instrument payable jointly is​ non-negotiable. C. An instrument payable jointly is neither order paper nor bearer paper. D. Only the second payee named must indorse the instrument. E. If an instrument is payable jointly using the word​ and, both​ persons' indorsements are necessary to negotiate the instrument.

E. If an instrument is payable jointly using the word​ and, both​ persons' indorsements are necessary to negotiate the instrument.

Which of the following is an INCORRECT statement regarding a fully disclosed​ agency? A. In a fully disclosed​ agency, the​ agent's signature must clearly indicate that he or she is acting as an agent for a specifically identified principal. B. In a fully disclosed​ agency, the agent is not liable on the contract with the third party. C. In a fully disclosed​ agency, the third party typically relied on the​ principal's credit and reputation when the contract was made. D. A fully disclosed principal is liable on a contract with the third party. E. In a fully disclosed​ agency, the contract is between the agent and the third party.

E. In a fully disclosed​ agency, the contract is between the agent and the third party.

Which of the following is an INCORRECT statement regarding the duty of care of directors and officers of a​ corporation? A. To meet the duty of​ care, directors and officer must discharge their duties in good faith. B. To meet the duty of​ care, directors and officer must discharge their duties in a manner they reasonably believe to be in the best interests of the corporation. C. To meet the duty of​ care, directors and officer must discharge their duties with the care that an ordinary prudent person in a like position would use under similar circumstances. D. The duty of care requires corporate directors and officers to use care and diligence when acting on behalf of the corporation. E. The duty of care is not a fiduciary duty.

E. The duty of care is not a fiduciary duty.

Which of the following is NOT an element that must be shown to prove usurping a corporate​ opportunity? A. The opportunity is related to or connected with the​ corporation's current or proposed business. B. The corporate officer or director took the corporate opportunity for himself or herself. C. The corporation has the financial ability to take advantage of the opportunity. D. The opportunity was presented to the director or officer in his or her corporate capacity. E. The opportunity is accompanied by demonstrated proof of profitability.

E. The opportunity is accompanied by demonstrated proof of profitability.

Which of the following is an INCORRECT statement regarding a life​ estate? A. A life estate may be measured by the life of a third party. B. A life estate may be defeasible. C. A life tenant has the right to possess and use the property except to the extent it would cause permanent waste of the property. D. A life tenant is treated as the owner of the property during the duration of the life estate. E. The person who is given a life estate is called the proprietor.

E. The person who is given a life estate is called the proprietor.

Which of the following is an INCORRECT statement regarding​ fixtures? A. Unless otherwise​ provided, if a building is​ sold, the fixtures are included in the sale. B. Certain personal property is so closely associated with real property that it becomes part of the realty. C. Doorknobs are fixtures. D. Kitchen cabinets are fixtures. E. Throw rugs are fixtures.

E. Throw rugs are fixtures.

Which is the following statements about title insurance is NOT​ true? A. An owner of real property or a mortgagee pays only one premium for title​ insurance, usually at closing. B. Mortgagees and other lienholders can purchase title insurance on property on which they have a lien. C. Owners of real property can purchase title insurance to ensure that they have clear title to the property. D. Each new owner or mortgagee who wants this coverage must purchase a new title insurance policy. E. Title insurance protects against defects in titles and liens or encumbrances that are disclosed on the title insurance policy.

E. Title insurance protects against defects in titles and liens or encumbrances that are disclosed on the title insurance policy.

Which of the following is NOT a nonnegotiable​ instrument? A. a promise or an order to pay a fixed amount of money B. a promise to pay when the Texans win the Super Bowl C. a promise or an order that conspicuously states that it is or is not subject to Article 3 D. a promise to pay​ $10,000 in gold E. a promise or an order that conspicuously states that it is not negotiable

E. a promise or an order that conspicuously states that it is not negotiable

A(n) _____ is the transfer of rights under a contract. A. offer B. delegation C. stipulation D. proffer E. assignment

E. assignment

If two or more secured parties claim an interest in the same collateral but neither has a perfected​ claim, the first to​ _____ has priority. A. arbitrate B. litigate C. detach D. mediate E. attach

E. attach

What is an order to​ pay? A. a​ payee's order to pay a maker B. a​ maker's promise to pay at payee C. a​ drawer's promise to pay a payee D. ​drawee's unconditional order to pay a drawer E. a​ drawer's unconditional order to a drawee to pay a payee

E. a​ drawer's unconditional order to a drawee to pay a payee

A​ _____ indorsement does not specify a particular​ indorsee; it may consist of just a signature. A. qualified B. special C. testamentary D. restrictive E. blank

E. blank

The​ Sarbanes-Oxley Act requires CEO and CFO certification for​ ________. A. only quarterly reports B. only monthly reports C. six month reports D. only annual reports E. both annual and quarterly reports

E. both annual and quarterly reports

An order paper is negotiated by​ ________. A. delivery only B. qualified indorsement only C. indorsement only D. special indorsement only E. both delivery and indorsement

E. both delivery and indorsement

The determination of whether or not a corporate director has met her duty of care can be decided by the​ _________. A. duty of loyalty B. corporate code C. corporate officers D. audit committee E. business judgment rule

E. business judgment rule

Which of the following is NOT an example of tangible personal​ property? A. accessions B. inventory C. equipment D. consumer goods E. chattel paper

E. chattel paper

An owner of an automobile may purchase​ _____ insurance that insures his or her car against risk of loss or damage. This form of property insurance pays for damage caused if the car is struck by another car. A. liability B. contingency C. ​co-pay D. comprehensive E. collision

E. collision

Under the​ _____ rule, a principal is generally​ _____ for injuries caused by its agents and employees while they are on their way to or from work. A. frolic and​ detour; liable B. coming and​ going; liable C. tort​ reform; liable D. ​worker's compensation; liable E. coming and​ going; not liable

E. coming and​ going; not liable

Under the​ _____ test, the implied warranty would be breached if a person were injured by a chicken bone while eating a chicken salad sandwich. A. consumer safeguard B. foreign substance C. express warranty D. reasonable expectation E. consumer expectation

E. consumer expectation

Cyberattacks and cyber crimes have led to the development of​ _________ insurance for purchase by businesses. A. professional malpractice B. umbrella C. product liability D. business interruption E. cyber

E. cyber

Under article 2 of the​ UCC, what is a​ sale? A. a contract for the provision of services B. tangible things that are movable at the time of their identification to a contract C. transfer of the right to the possession and use of named goods for a set term in return for certain consideration D. a transaction that involves both the provision of a service and a good in the same transaction E. passing of title of goods from a seller to a buyer for a price

E. passing of title of goods from a seller to a buyer for a price

​Google, Inc. is an example of a​ ________________ corporation. A. professional B. nonprofit C. public D. closely held E. publicly held

E. publicly held

Bearer paper​ _________________. A. is a conditional promise to pay a specific person B. is made to a specific person C. is made to order D. is a promise to pay a specific entity E. results when the drawer or maker does not indicate a specific payee

E. results when the drawer or maker does not indicate a specific payee

​Edwardo, an owner of real​ property, conveys his property​ "to Carmen Lawson for​ life." If the property will go to Edwardo or his estate upon​ Carmen's death, his interest is known as a​ ________. A. tenancy in common B. remainder C. tenancy by the entirety D. cooperative E. reversion

E. reversion

Which of the following is NOT a characteristic of a​ corporation? A. separate legal entity B. free transferability of shares C. perpetual existence D. centralized management E. same identity as​ owner(s)

E. same identity as​ owner(s)

Owners of corporations are called​ _____. A. partners B. associates C. board members D. limited partners E. shareholders

E. shareholders

​A(n) _____ indorsement contains the signature of the indorser and specifies the person​ (or indorsee) to whom the indorser intends the instrument to be payable. A. restrictive B. qualified C. blank D. official E. special

E. special

A form of​ co-ownership of real property that can be used only by married couples is known as which of the​ following? A. an easement B. joint tenancy C. tenancy in common D. a life estate E. tenancy by the entirety

E. tenancy by the entirety

The directors and officers of a corporation must act within the authority conferred upon them by all of the following​ EXCEPT? A. the​ corporation's articles of incorporation B. a state corporate code C. the bylaws of the corporation D. resolutions of the board of directors E. the alter ego doctrine

E. the alter ego doctrine

Which of the following is NOT covered by home​ owners' insurance? A. real and personal risks that fire insurance would cover B. any structures outside the dwelling such as a garage or storage shed C. items stolen from the home while the home owner was on vacation D. real and personal risks that personal liability insurance would cover E. the items of a neighbor destroyed by the owner of the insurance

E. the items of a neighbor destroyed by the owner of the insurance

An agent works for a principal that is in the business of real estate development. The principal is looking for vacant land to purchase to develop. A third party who owns and wants to sell his vacant land tells an agent of the principal of the availability of the land. The​ agent, without informing the​ principal, purchases the land for personal use. This is a violation of the duty of loyalty known as​ _______________. A. ​self-dealing B. misuse of confidential information C. dual agency D. competing with the principal E. usurping an opportunity

E. usurping an opportunity

Which of the following is NOT a critical factor in determining independent contractor​ status? A. whether the worker is engaged in a distinct occupation or an independently established business B. the amount of time that the agent works for the principal C. whether the principal supplies the tools and equipment used in the work D. the length of time the agent has been employed by the principal E. whether or not the agent has a degree

E. whether or not the agent has a degree

Article​ _________ of the​ ________ establishes rules for the creation​ of, transfer​ of, enforcement​ of, and liability on negotiable instruments. A. ​3; Interstate Commerce Code B. ​2(A); Uniform Contracts Code C. ​2; Interstate Commerce Code D. ​3; Uniform Contracts Code E. ​3; Uniform Commercial Code

E. ​3; Uniform Commercial Code

​Zora, Heathcliff,​ Manuel, and Mohammad own a large commercial building as joint tenants. If Heathcliff executes a will that leaves all of his property to his alma mater​ university, who owns the property when Heathcliff​ dies? A. The university owns the entire building in fee simple. B. It will depend on what the probate judge rules. C. ​Zora, Manuel,​ Mohammad, and the university each own a​ one-quarter interest in the building. D. ​Zora, Manuel, and Mohammad each own a life estate in the building that will go to the university upon their deaths. E. ​Zora, Manuel, and Mohammad each own a​ one-third interest in the building.

E. ​Zora, Manuel, and Mohammad each own a​ one-third interest in the building.

A debenture is a​ _____________ debt instrument that is​ _________________. A. ​short-term, secured​ debt; either secured or unsecured B. ​short-term, unsecured; based on a​ corporation's general credit standing C. ​long-term, secureddebt; secured by some form of collateral D. ​long-term, secureddebt; either secured or unsecured E. ​long-term, unsecured; based on a​ corporation's general credit standing

E. ​long-term, unsecured; based on a​ corporation's general credit standing

Personal property includes​ _____ property such as​ equipment, vehicles,​ furniture, and​ jewelry, as well as​ _____ property such as​ securities, patents,​ trademarks, and copyrights. A. ​real; physical B. ​intangible; tangible C. ​tangible; real D. ​intangible; physical E. ​tangible; intangible

E. ​tangible; intangible

A farmer purchases equipment from a manufacturer. The farmer obtains a loan to purchase the equipment from a​ bank, which obtains a security interest in the equipment. The equipment manufacturer is paid for the equipment out of the proceeds of the loan. This is a​ _____________ secured transaction. The manufacturer is the​ seller, the farmer is the​ ______________, and the bank is the​ ______________ creditor. A. ​two-party; buyer-debtor;​ seller-lender-unsecured B. ​two-party; buyer-debtor;​ seller-lender-secured C. ​two-party; seller-lender;​ buyer-debtor-secured D. ​three-party; seller-lender;​ buyer-debtor-secured E. ​three-party; buyer-debtor;​ lender-secured

E. ​three-party; buyer-debtor;​ lender-secured