2001 Business LawPage 1
1)When parties exchange goods for goods, it is defined as a barter. / a) True / b) False2)Patents are classified as tangible personal property. / a) True / b) False
3)A sale and a contract to sell are synonymous terms. / a) True / b) False
4)The donor cannot recover property actually transferred by gift. / a) True / b) False
5)A promise to give someone a gift may be enforceable. / a) True / b) False
6)A change in a contract after the agreement is made is called a counteroffer. / a) True / b) False
7)An unconscionable contract is a contract that is grossly unfair to one party / a) True / b) False.
8)An offer that cannot be withdrawn until a specific time is called a firm offer. / a) True / b) False
9)The statute of limitations states that all contracts for personal property must be evidenced in writing. / a) True / b) False
10)Usury is the practice of charging excessively high interest rates. / a) True / b) False
11)Ratification is the process a minor uses to honor a contract. / a) True / b) False
12)The act of the parties giving and receiving in a contract is called consideration. / a) True / b) False
13)Withdrawal of an offer prior to acceptance is called revocation. / a) True / b) False
14)A woman who makes a will is called a testator. / a) True / b) False
15)A will entirely in the handwriting of the one writing it is a holographic will. / a) True / b) False
16)Wills are validated in federal district court. / a) True / b) False
17)Dying without a will is called testamentary. / a) True / b) False
18)The party who orders the check to be paid is the drawee. / a) True / b) False
19)A stale check is a draft that is over three months old. / a) True / b) False
20)A personal check that is guaranteed by the bank is a certified check. / a) True / b) False
21)Drawers can be held responsible for altered checks if their negligence contributed to the forgery. / a) True / b) False
22)A contract offer must be definite, be communicated, and be intended to create a legal obligation. / a) True / b) False
23)Children may be held responsible for their own torts. / a) True / b) False
24)Past consideration may not be used as consideration for a present contractual promise. / a) True / b) False
25)A delegation of a duty is the same as an assignment. / a) True / b) False
26)In the eyes of the law, a legal entity or artificial person is called a ______. / a) sole proprietorship / b) partnership / c) corporation / d) cooperative
27)A corporation chartered in a particular state is a/an ______corporation in that state. / a) alien / b) domestic / c) foreign / d) native
28)Written evidence of a shareholder’s ownership and rights in a business is called a ______. / a) certificate of title / b) bill of sale / c) stock certificate / d) bill of lading
29)Fixed dividends are guaranteed if the stock is ______. / a) preferred / b) arbitrary / c) common / d) directed
30)A business partner known to the public but not active in its management is known as a ______partner. / a) limited / b) silent / c) dormant / d) secret
31)When two corporations cease to exist and a new corporation is formed, it is called a ______. / a) merger / b) consolidation / c) takeover / d) reorganization
32)When a partner ceases association with the organization due to his/her death, it is called a ______. / a) dissolution / b) disaffirmance / c) special partnership / d) partnership in tenancy
33)Which of the following is NOT a duty of a partner? / a) Always use your best skill and judgment in handling the firm’s affairs. / b) Refrain from any non-partnership business. / c) Always act in good faith and in the best interest of the partnership. / d) Put the firm’s interests ahead of self-interests.
34)Farmers would use ______bankruptcy plans to reorganize their debts. / a) Chapter 7 / b) Chapter 11 / c) Chapter 12 / d) Chapter 13
35)Another name for “straight bankruptcy” is ______bankruptcy. / a) Chapter 7 / b) Chapter 11 / c) Chapter 12 / d) Chapter 13
36)Which of the following obligations would NOT be affected by a bankruptcy discharge? / a) Child support / b) Alimony / c) Taxes / d) All of the above
37)To file for bankruptcy, a city or town would file for ______. / a) Chapter 7 / b) Chapter 9 / c) Chapter 12 / d) Chapter 13
38)When an agency is created by circumstance, it is called ______. / a) ratification / b) agency by estoppel / c) power of attorney / d) an express agency
39)When an agent is lawfully appointed by another agent, he/she is called a/an ______. / a) general agent / b) agent’s agent / c) subagent / d) special agent
40)When serving as a discretionary agent, one is classed as a/an ______. / a) agent’s agent / b) subagent / c) general agent / d) special agent
41)Which law gives one the opportunity to ask for an explanation of a credit report? / a) Equal Employment Opportunity Act / b) Fair Credit Reporting Act / c) Fair Debt Collection Practices Act / d) Truth In Lending Act
42)Claude Brown took out an insurance policy on his home. He purposely did not tell the insurance agent that he was beginning a new business in his garage. Soon after he started his auto repair business, a fire caused massive damage to his entire home. Which of the following statements will probably apply? / a) Co-insurance will cover the damage. / b) Inland marine insurance will cover the damage. / c) His policy will be void. / d) His policy will be valid for this special loss.
43)Jacob Burman took out a $100,000 life insurance policy on himself and named his wife as beneficiary. The $100,000 is called the ______. / a) principal / b) dividend / c) premium / d) face value
44)Coverage against loss to a rock band’s equipment while being transported is called ______. / a) fidelity insurance / b) marine insurance / c) inland marine insurance / d) indemnity insurance
45)Rachel Jacobson spends time in two homes—one in Florida and one in Utah. To provide insurance protection for personal property used in both of these homes, she would need a policy called a ______. / a floater / b) homeowner’s / c) preferred provider / d) binder
46)When leaving your suit at the cleaners for dry cleaning, there is a/an ______taking place. / a gratuitious bailment / b) consignment bailment / c) mutual benefit bailment / d) extraordinary bailment
47)Micah Bivens went to PaoliPeaks for a ski trip and rented skies at the local ski shop establishing a/an ____. / a) gratuitious bailment / b) consignment bailment / c) mutual benefit bailment / d) extraordinary bailment
48)Jacob Green’s act of borrowing neighbor Josh Brown’s car is / a) a bailment for the sole benefit of the bailor. / b) a bailment for the sole benefit of the bailee. / c) a bailment for the mutual benefit of the bailor and bailee. / d) not a bailment but an example of an agency contract.
49)A person who refuses to return property at the end of the bailment period is called a/an ______. / a) Thief / b) tortuous bailor / c) tortuous bailee / d) assignee
50)Wilbur Walters ordered a set of cookbooks from a door-to-door salesperson. The cooling off period for Wilbur to cancel his purchase is ______business days. / a) Two / b) three / c) five / d) ten
51)Jeffrey Alan went to Cost Plus to purchase a new stereo system for the advertised price of $295. Upon Jeffrey’s arrival, the clerk described all the shortcomings of this model and encouraged Jeffrey to buy the deluxe model for $695. Cost Plus is practicing ______. / a) express advertising / b) telemarketing fraud / c) a standard sales practice / d) bait and switch
52)When two parties reach a binding agreement to avoid going to court, it is called ______. / a) Negotiation / b) arbitration / c) mediation / d) litigation
53)The Bay Shore Shop received a binding order to stop a false advertising practice. This is called a/an _____. / a) cease and desist order / b) cancellation order / c) revocation order / d) prohibition order
54)An oral or written guarantee by a manufacturer is known as a/an ______. / a) implied warranty / b) encumbrances warranty / c) merchantability warranty / d) express warranty
55)Warranty of merchantability is made by / a) CircuitCity selling a television. / b) Tom Wade selling his television. / c) Easy Pawn selling a television. / d) All of the above
56)Handy Market is advertising a gallon of milk for $1.01 (which is below their cost) to attract customers to their market is ______. / a) bait and switch / b) a loss leader / c) absorption / d) clever advertising
57)A class action suit is brought on behalf of a/an ______. / a) individual / b) a class of students / c) a specific group similarly affected / d) community of neighbors
58)Unfair methods of competition are prohibited by the / a) Department of Revenue. / b) Federal Trade Commission. / c) Federal Reserve Board. / d) Department of Unfair Trades.
59)Laws enacted by both the state and federal governments to prevent monopolies are known as ______. / a) antitrust laws / b) competition laws / c) sales restriction acts / d) monopoly statutes
60)Orally repeating malicious untruths about someone is categorized as ______. / a) Gossip / b) slander / c) libel / d) extortion
61)While a guest in your home, a person takes one of your valuable pieces of jewelry. What type of tort action is involved? / a) Extortion / b) Fraud / c) Embezzlement / d) Conversion
62)______means being denied the right to recover damages in a tort action because the person was partly responsible for his/her own injuries. / a) Comparative negligence / b) Contributory negligence / c) Negligence / d) The reasonable man rule
63)To have the capacity to contract means that the individual / a) is at least 18 years of age. / b) can read and write English. / c) is capable of understanding his/her contractual decisions. / d) meets all of the these three requirements.
64)Luke found the perfect used car at a great price. To keep the offer for the sale of the car open for a week, Luke paid the owner $50. This agreement is called a/an ______. / a) Counteroffer / b) option / c) finder’s fee / d) quasi-contract
65)A life insurance policy that is in effect for a definite period of time and then expires is called a/an ______. / a) endowment policy / b) universal policy / c) term policy / d) whole life policy
66)______is the failure to complete the terms of a contract as previously agreed. / a) Cancellation / b) Revocation / c) Restitution / d) Breach
67)In tort actions, the damages agreed to in the original contract are referred to as ______. / a) liquidated damages / b) mitigated damages / c) compensatory damages / d) punitive damages
68)An agreement to accept less consideration than stipulated in the contract is called ______. / a) nominal consideration / b) forbearance / c) past consideration / d) token consideration
69)Contracts can be discharged by impossibility of performance when / a) a person dies and his/her personal service was required. / b) subject matter of the contract is destroyed. / c) the person obligated on the contract goes into bankruptcy. / d) Either A or B occurs.
70)Examples of intangible property are ______. / a) Automobiles / b) houses / c) promissory notes / d) boats
71)When a price is quoted for goods “FOB destination,” / a) the buyer must pay the freight. / b) the shipper must pay the freight. / c) freight is not charged. / d) freight charges occur only if shipped aboard a plane.
72)Risk of loss remains with the seller when products are shipped ______. / a) FOB destination / b) FOB shipping point / c) bulk transfer / d) as attachments
73)Shares of stock with a stated value are known as ______. / a) option stock / b) common stock / c) par stock / d) no par stock
74)The legal transfer of the possession of property but not the title is a/an ______. / a) bailment / b) sale / c) gift / d) assignment
75)The purpose of a bankruptcy proceeding is to / a) discharge all debts of all creditors. / b) allow persons to borrow and spend with no obligation to repay. / c) protect certain rights of debtors and creditors. / d) allow persons to purchase out of business bargains.
76)Although no consideration is involved, a promise may still be enforced under certain conditions under the doctrine of ______. / a) promissory estoppel / b) past consideration / c) nominal consideration / d) caveat venditor
77)Signing only the endorser’s name on the back of a check or draft is called a ______. / a) qualified endorsement / b) blank endorsement / c) special endorsement / d) restrictive endorsement
78)A business partner unknown to the public is called a ______. / a) limited partner / b) silent partner / c) dormant partner / d) secret partner
79)Which of the following is NOT classed as tangible personal property? / a) Clothing / b) Car / c) Land / d) Television
80)If a court rules that a clause in a contract is unconscionable, it may do any of the following EXCEPT / a) refuse to enforce the contract. / b) enforce the contract without the unconscionable clause. / c) limit the application of the unconscionable clause. / d) enforce the complete contract with both parties.
81)In a sales contract, the vendee is also known as the ______. / a) seller / b) buyer / c) merchant / d) contractor
82)One who sells goods only occasionally is classed as a ______. / a) merchant / b) vendor / c) casual seller / d) wholesaler
83)A receipt that serves as written evidence of the transfer of ownership of goods is a ______. / a) bill of lading / b) bill of particulars / c) bill of sale / d) bill of attainment
84)Under the statute of frauds, sales of goods for ______or more must have written evidence to be enforceable. / a) $300 / b) $500 / c) $700 / d) $900
85)Which of the following would NOT be classified as a fungible good? / a) Automobile / b) Crude oil / c) Wheat / d) Canned fruit
86)In a COD sale, the COD means ______. / a) cash on delivery / b) collect on delivery / c) call on delivery / d) credit on delivery
87)The Latin term for “let the buyer beware” is ______. / a) Caveat Venditor / b) Caveat Emptor / c) Caveat Puffing / d) Caveat Warranty
88)Which of the following sale of goods’ warranties is NOT implied by law in all sales? / a) Warranty of title / b) Warranty of fitness for purpose / c) Warranty of conformity to seller’s statement / d) Warranty against encumbrances
89)Which of the following is NOT one of the basic types of bailments? / a) Ordinary / b) Warranted / c) Voluntary / d) Involuntary
90)Mary Sue Smith is persuaded by one of her nephews to make her will directing that the bulk of her estate go to him at her death. Upon Mary Sue’s death, the other family members could possibly get the will declared void based on ______. / a) undue influence / b) duress / c) senility / d) incompetence
91)A minor disaffirms a contract for necessaries. The minor is / a) not required to pay anything to the seller. / b) required to pay the sales price to the seller. / c) required to pay the reasonable value of the goods to the seller. / d) required to pay the reasonable value to the parents.
92)In most states, a minor is one who is under the age of _____. / a) 12 / b) 16 / c) 18 / d) 21
93)A contract that requires the performance of an act prohibited by law is ______. / a) Void / b) voidable / c) valid / d) enforceable
94)Tom and Jerry may create an agency relationship for ______. / a) any purpose / b) a business purpose only / c) any legal purpose / d) any legal purpose so long as it is evidenced in writing
95)George orders a quantity of materials from Xavier Products and accepts them when they are delivered. George’s later withdrawal of his acceptance is called ______. / a) Nullification / b) termination / c) cancellation / d) revocation
96)Except for goods that are shipped COD, a buyer is entitled to the right of ______. / a) Inspection / b) rejection / c) acceptance / d) accommodation
97)Which of the following warranties does NOT arise in a sales contract? / a) Warranty of title / b) Warranty of habitability / c) Implied warranty of merchantability / d) Implied warranty of fitness for a particular purpose
98)The U.S. Constitution gave Congress the power to set standards of weights and measures, and Congress in turn created the / a) Division of Weights and Measures. / b) National Bureau of Standards. / c) Division of Scales and Measurement. / d) National Board of Measurement.
99)The law concerned with the power and actions of governmental agencies and their regulations is ______. / a) historical law / b) common law / c) statute law / d) administrative law
100)An order to produce a witness or an object such as a document is a/an ______. / a) summons / b) subpoena / c) request / d) injunction