Commercial Law
Review Questions
Course Introduction
Commercial Law explores the legal principles governing business and commercial transactions. This course covers topics such as contracts, the sale of goods, negotiable instruments, agency, partnership, and company law. It examines the rights and obligations of parties engaged in commerce and the regulatory framework that ensures fair, transparent, and efficient trading practices. Through case studies and practical examples, students gain a comprehensive understanding of how commercial law facilitates business operations, manages disputes, and supports economic activity in both domestic and international contexts.
Recommended Textbook
Business Law with UCC Applications 14th Edition by Paul
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Page 2
A. Sukys
Chapter 1: Ethics, Social Responsibility, and the Law
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Q1) Julia decides not to dump her used motor oil in the creek that runs behind her garage since that would damage individuals who live downstream and upset the peace and harmony in which she has lived with these neighbors. Name and explain the ethical system Julia has used to make this decision.
Answer: Julia has applied the social contract theory, according to which there is an implied agreement among all individuals within a particular social system to live harmoniously. Together, each individual gives up freedom.
Q2) ____________ consist of rules of conduct established by the government of a society to maintain harmony, stability, and justice.
A) Morals
B) Ethics C) Laws
D) Values
Answer: C
Q3) Law consists of values that govern a society's attitudes toward right and wrong.
A)True
B)False
Answer: False
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Chapter 2: Sources of the Law
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Q1) ____________ is the process by which the courts decide that a federal statute must take precedence over a state statute.
A) Devolution
B) Revision
C) Uniformity
D) Preemption
Answer: D
Q2) Persuasive precedent is a precedent that courts must follow.
A)True
B)False
Answer: False
Q3) ____________ includes the freedom of the press, freedom of speech, freedom of assembly, and freedom of religion.
A) The Fifth Amendment
B) The Fourth Amendment
C) The Articles of Confederation
D) The First Amendment
Answer: D
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Chapter 3: The Judicial Process and Cyber-Procedure
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Q1) A federal court that only has the power to hear immigration cases is a court of special jurisdiction.
A)True
B)False
Answer: True
Q2) Jill, a resident of Iowa, suffers $20,000 in damages when a BIG Corp. truck hits her parked car in Illinois, where Jill is visiting her aunt. BIG Corp. is incorporated in Delaware. In what court may her suit be filed?
Answer: Jill may sue either in Illinois state court (where the accident occurred) or in Delaware state court (where BIG is incorporated), but not in a federal court since diversity jurisdiction requires more than $75,000 be in controversy, and there are no federal statutes in this problem to confer federal question jurisdiction.
Q3) Any webpage advertisement on the Internet can usually establish jurisdiction under the minimum contacts for personal jurisdiction.
A)True
B)False
Answer: False
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Chapter 4: Alternate Dispute Resolution
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Q1) Which of the following is generally true of arbitration?
A) The arbitrator can make suggestions, but not issue binding decisions.
B) The arbitrator is a non-lawyer from the relevant industry.
C) The arbitrator must be chosen from among the disputing parties.
D) The arbitrator's decision can be appealed in court.
Q2) Which of the following is true of arbitration?
A) The procedures involved in arbitration are more rigid than those followed in lawsuits.
B) An arbitrator's decision is binding and cannot be appealed in court.
C) An arbitration hearing can be planned and executed by the parties themselves.
D) An arbitrator's decision cannot come under the review of the courts.
Q3) ____________ is an ADR process by which an agency invites the people and the organizations that would be affected by a new rule to have input into the writing of that rule.
A) Med-arb
B) Negotiated rulemaking
C) A private civil trial
D) Mediation
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Chapter 5: Criminal Law and Cybercrimes
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Q1) People found not guilty by reason of insanity must be set free under the American legal system.
A)True
B)False
Q2) A person does not have a duty to retreat before using force if the attack occurs in his or her own home.
A)True
B)False
Q3) A gasoline tanker truck is speeding around a curve in the road and overturns on the shoulder of the highway. The truck catches fire due to a spark igniting the gasoline and the fire spreads through a field where it burns a house and barn. The driver is arrested and accused of a criminal act. Analyze the situation.
Q4) Entry through an open door or window establishes the act of burglary.
A)True
B)False
Q5) Under American law, a crime cannot be committed unless some act has occurred.
A)True
B)False
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Chapter 6: Tort Law and Cybertorts
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Q1) A tabloid journalist pays money to the trash collector of a celebrity movie star in order to obtain access to the celebrity's trash. The journalist then writes a story about the celebrity's lifestyle based upon the contents of the trash. The trash is locked in a special building on the celebrity's property and the trash collector has a key to the building and has signed a confidentiality agreement. Is truth a defense that the journalist may assert when sued by the celebrity?
Q2) Victoria is seriously injured when, during a thunderstorm, a large and seemingly healthy tree located on private property falls on her car. Discuss if Victoria can file a negligence lawsuit against the owner of the tree and be successful.
Q3) If Jennifer, a landowner, wants Smith, a neighbor, to stop polluting a stream that flows into Jennifer's land, Jennifer should request a court to grant:
A) noneconomic compensatory damages.
B) economic compensatory damages.
C) an injunction.
D) an appeal bond.
Q4) The doctrine of respondeat superior is also referred to as vicarious liability.
A)True
B)False
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Page 8
Chapter 7: The Essentials of Contract Law
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Q1) A(n) ____________ contract is implied by the direct or indirect acts of the parties.
A) express
B) implied-in-fact
C) unilateral
D) void
Q2) Henrietta offers a $500 reward for the return of Fifi, her lost dog. Silas finds and returns the dog. This is an example of a(n):
A) bilateral contract.
B) unilateral contract.
C) quasi-contract.
D) unenforceable contract.
Q3) Mutual assent involves the legal ability to make a contract.
A)True
B)False
Q4) Emerson, a wealthy man, has a special seal made that contains his family crest and motto. Emerson places the seal impression next to his name on every contract that he signs in order to prove that other contracts containing a signature without the impression are forgeries. Discuss the type of contract Emerson makes.
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9
Chapter 8: Offer, Acceptance, and Mutual Assent
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Q1) Highflight Foundation offers $1 million to the makers of the first private spacecraft to fly to the moon and back. Spaceview, Inc. succeeds in producing the first private spacecraft to fly to the moon and back, but Highflight refuses to pay. This is a ____________ contract and Highlight is ____________.
A) unilateral; not bound by the offer unless there is a written and signed contract with Spaceview
B) unilateral; bound because Spaceview performed the required action, which was an acceptance of the offer
C) unilateral; not bound since the moon is not under U.S. legal jurisdiction
D) bilateral; bound since Spaceview had a firm offer
Q2) A newspaper advertisement addressed to "Ohio residents only" would be a private offer.
A)True
B)False
Q3) Henry sends an e-mail to Bernice regarding the sale of his truck to her for a price "to be determined in good faith." Henry has made a valid offer.
A)True
B)False
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Chapter 9: Consideration and Cyber-Payments
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Q1) Laura promises to pay Stuart "a reasonable amount" for repairing her car. Stuart sends Laura a $500 invoice and Laura sends Stuart a $350 check marked "payment in full". There is an accord and satisfaction created if Stuart cashes the check.
A)True
B)False
Q2) There is no legal detriment when a person promises not to sue.
A)True
B)False
Q3) Tim's mother was concerned that Tim would develop cancer if he used tobacco, so she promised Tim $10,000 if he would refrain from any use of tobacco until age 30. Tim did so, but his mother refused to give him the $10,000. Does Tim have a legal right to the $10,000? Explain.
Q4) In an enforceable agreement, a promise itself is adequate consideration when it represents something of value.
A)True
B)False
Q5) When a contract is unconscionable, it is said to shock the court's conscience.
A)True
B)False
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Chapter 10: Capacity and Legality: The Final Elements
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Q1) Under the UCC, individuals who buy goods from minors have voidable ownership rights, and can transfer valid ownership rights to an innocent third-party purchaser of those goods.
A)True
B)False
Q2) Under the law, capacity is considered a rebuttable presumption.
A)True
B)False
Q3) Which of the following is true of a nondisclosure agreement?
A) It requires employees to promise not to reveal any confidential trade secrets, should they leave their present employment.
B) It limits a worker's employment options after leaving his or her present job in order to protect the present employer's confidential matter.
C) It restricts the seller of a business to enter the same type of business during a reasonable time and within a reasonable geographical area.
D) It states that the party who wrote the contract will not be liable for any economic loss or physical injury, even if that party caused the loss or injury.
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Page 12
Chapter 11: Written Contracts and Cyber-Commerce
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Q1) Vega appoints Ancel, a real estate broker, to negotiate the sale of her home. The ________________ rule requires that this agreement be in writing and signed to be enforceable.
A) Parol evidence
B) Best evidence
C) Standard construction
D) Equal dignities
Q2) Which of the following is true of "click" fraud?
A) The click-on process functions only in online contracts and not for online advertisements.
B) Clicks are proven ways to gauge interest in the advertiser's service or product.
C) A problem that arises in this area is verifying the identity of the "clicker."
D) The click-on process functions only for online advertisements and not for online contracts.
Q3) Oral evidence cannot be used to clarify terms that are obscure in a written contract.
A)True
B)False
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Chapter 12: Third Parties, Discharge, and Remedies
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Q1) When an assignment occurs, the assignee assumes the contractual obligations previously held by the assignor.
A)True
B)False
Q2) Which of the following is an equitable remedy under contract law?
A) Injunction
B) Monetary damages
C) Human servitude
D) Specific damages
Q3) Roxta Biscuits and Seven Eleven Supermarkets enter a contract where the biscuit-making company will supply 1,000 biscuit packs a day at $50 each to the supermarket chain for the next six months. However, Roxta Biscuits stops their supplies to the supermarkets mid-way, claiming that the prices of each biscuit pack, due to severe inflation, are $80. If Roxta continued to deliver at $50, it would lose $20 per biscuit pack it delivered. Seven Eleven Supermarkets sues Roxta, saying that it has to oblige by the contract signed. Evaluate the case.
Q4) Alphonse owes huge debts to many creditors. A month before filing for bankruptcy, he distributes all of his assets to his church. Discuss the case.
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Page 14
Chapter 13: Sales Contracts: Formation, Title, and Risk of Loss
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Q1) Jackson Furniture Co. states in writing that their offer to sell sofas to a hospital will be held open for 40 days. The written offer requires a consideration to be legally binding.
A)True
B)False
Q2) Which of the following is true of destination contracts?
A) It requires a seller to turn the goods over to a carrier for delivery to the buyer.
B) Both title and risk of loss pass to the buyer when goods are given to the carrier.
C) Title and risk of loss pass to the buyer once the seller tenders goods at a place as per the contract.
D) The seller bears no responsibility for seeing that the goods reach their destination.
Q3) Under the UCC, a signature includes any symbol made with the intent to authenticate a writing.
A)True
B)False
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15
Chapter 14: Sales Contracts Rights, Duties, Breach, and Warranties
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Q1) Jess buys a microwave oven with a manufacturer's full one-year written warranty. If Jess discovers that the microwave oven does not work properly during this time, the manufacturer is obligated to:
A) charge Jess only for the cost of the parts replaced, not for the labor involved.
B) repair the microwave at a nominal cost to Jess.
C) provide a pro-rata credit for the defective part of the microwave.
D) fix or replace the microwave for free.
Q2) The implied warranty of merchantability provides that whenever a merchant sells goods, the merchant warrants that the goods are merchantable-that is, that they are reasonably fit for the purpose for which they are sold.
A)True
B)False
Q3) Sonia's warehouse is holding Joe's goods. Joe is selling the goods to Monique. If Sonia tells Monique that she may pick up the goods, tender by the seller has occurred.
A)True
B)False
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Page 16
Chapter 15: Product Liability and Consumer Protection
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Q1) Congress passed the ____________ which requires lenders to disclose the finance charge and the annual percentage rate.
A) Fair Credit Reporting Act
B) Equal Credit Opportunity Act
C) Truth-in-Lending Act
D) Fair Debt Collection Practices Act
Q2) The purpose of a bait-and-switch scheme is to switch customers from buying the advertised merchandise to buying something else that is usually more expensive.
A)True
B)False
Q3) The Federal Trade Commission requires used car dealers in most states to display statements that the cars are sold "as is" if the cars are sold with no warranties.
A)True
B)False
Q4) Persons who receive unordered merchandise in the mail may treat it as a gift.
A)True
B)False
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Chapter 16: The Nature of Negotiable Instruments
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Q1) Cade, the owner of Cade Body Shop, Inc. is in the habit of paying business expenses from his personal checking account. One such check to Parts Warehouse, Inc. is dishonored, and Parts attempts to collect from Cade personally who asserts that only Cade Body Shop, Inc. is liable. Discuss the legal resolution of this problem.
Q2) A certificate of deposit is a written promise by the maker to pay money to the order of another party, the payee.
A)True
B)False
Q3) The words "without recourse" on an indorsement means the indorser is:
A) liable personally, but not other parties.
B) not liable for any problems associated with the instrument.
C) not liable if the instrument is dishonored.
D) liable for only up to fifty per cent of the loss.
Q4) Andrews forged the signature of Baumann on a check and gave it to Callas in payment for merchandise. Callas indorsed the check and delivered it to Davis as down payment on a car. When Davis presented the check to the bank for payment, the forgery was recognized. Callas claimed that he was not liable to Davis because he had no knowledge of the forgery. Discuss.
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Page 18
Chapter 17: Holders in Due Course Defenses and Liabilities
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Q1) Notice of dishonor of a check may only be given through a Federal Reserve Bank.
A)True
B)False
Q2) On May 15, 2015, Jason indorsed a check dated January 15, 2015, and payable by him to ALS Check Cashing Service. ALS:
A) can be a holder in due course, even though the check is antedated.
B) cannot be a holder in due course as it has notice that the instrument is overdue.
C) cannot be a holder in due course only if ALS contacted the drawer who agreed to honor the check.
D) can be a holder in due course only if ALS contacted the drawee who agreed to honor the check.
Q3) If Spader is found insane by a court, any checks he writes after this will be considered void.
A)True
B)False
Q4) A check is overdue ninety days after its date.
A)True
B)False
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Chapter 18: Bank-Depositor Relationships and
Cyber-Banking
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Q1) Which of the following is true of the relationship between the drawee bank and its customer?
A) The drawee bank becomes a creditor and the customer becomes a debtor at the time of opening a checking account.
B) The drawee bank becomes an insurer and the customer the insured at the time of opening a checking account.
C) The drawee bank becomes the customer's debtor at the time of opening a checking account and agent while collecting checks.
D) The drawee bank becomes a debtor to the customer when the bank pays more than the customer has on deposit.
Q2) Ivan receives his June 2015 Friendly Bank statement and promptly calls the bank to report a series of forged checks shown on the statement dating back to March 2015. Friendly Bank must credit Ivan's account for the forged checks.
A)True
B)False
Q3) An e-check is sometimes called an electronic check transfer.
A)True B)False
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Chapter 19: Insurance
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Q1) Under bodily injury liability automobile insurance, the insurer is liable for damages up to the limit of the insurance purchased.
A)True
B)False
Q2) To avoid risk while waiting for an insurance policy to be formally accepted, an insured may choose to have the insurer issue a binder to provide interim coverage.
A)True B)False
Q3) Malone purchased a painting by Van Gogh and took out a $1 million insurance policy on it. He later sold the painting, but continued to make payments on the policy. When the painting was destroyed by vandals, Malone tried to collect $1 million from the insurance company. Evaluate the situation.
Q4) Universal life insurance allows the policy owner to modify the:
A) face value of the policy and the premiums.
B) face value of the policy, but not the premiums.
C) premiums, but not the face value of the policy.
D) face value of the policy and obtain refunds of premiums already paid.
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Chapter 20: Mortgages and Security Interests
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Q1) Morey purchased a house for $150,000, paying $15,000 in cash and giving a mortgage to BigBank for the balance. When Morey defaulted on the loan, BigBank foreclosed and sold the house for $25,000 less than Morey owed. Morey believed he no longer owed BigBank any money. Discuss the case.
Q2) The process of ____________ occurs when many mortgages are bundled together and sold as bonds to institutions, such as pension funds.
A) perfection
B) foreclosure
C) acceleration
D) securitization
Q3) A mortgagee has the right to equity of redemption.
A)True
B)False
Q4) Under a ____________, the mortgagor conveys his or her interest in the property to a disinterested third party, known as a trustee.
A) security agreement
B) mortgage
C) deed of trust
D) subordination agreement
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Chapter 21: Bankruptcy and Debt Adjustment
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Q1) When a petition is filed under Chapter 7 of the Bankruptcy Code, an automatic stay goes into effect, prohibiting the creditors from collecting debts on amounts owed for back taxes, family support, and student loans.
A)True
B)False
Q2) Vernon owns a family run farming business. He earned $100,000 in the current financial year. He owes $70,000 that he cannot pay. This debt forms a part of his farm expenses to creditors, but he wants to keep the business running. Which type bankruptcy should Vernon file for?
A) Chapter 7 only
B) Chapter 11 and Chapter 7
C) Chapter 7 and Chapter 12
D) Chapter 12
Q3) Which chapter of the bankruptcy code allows a federal homestead exemption?
A) Chapter 11
B) Chapter 7
C) Chapter 8
D) Chapter 12
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23
Chapter 22: Agency Law
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Q1) Morgan, an agent was instructed to sell Drew's property at a specified "firm" price of $450,000. A month later, the value of the property decreased substantially to $75,000 because of zoning changes. What is the status of the agency relationship?
A) Most likely, the agency is terminated because of impossibility.
B) It would terminate unless Drew had given Morgan a durable power of attorney.
C) It becomes an agency coupled with an interest, and continues unaffected by any change what so ever.
D) It requires the agent to compensate the principal with less compensation.
Q2) Tom, owner of the Rico Apartment Complex, appoints Alice as "General Manager" of the Rico Apartment Complex. Alice enters into several contracts in Tom's name: (1) maintenance agreement with Alpha Enterprises; (2) purchase of cable TV service from Star Ethics for Rico; (3) purchase of a new Corvette for Alice to drive while on Rico business. Discuss which of these contracts bind Tom?
Q3) The "means test" requires an analysis of the degree of control the hiring person exercises over the hired person.
A)True
B)False
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Page 24
Chapter 23: Employment Law
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Q1) Nancy Nelson, who worked for the Farmington Institute of Technology, took a leave of absence for health purposes. Her supervisor, Mark Bohm, told Nelson, "When you recover from your health problems, you can have your job back with full seniority." Nelson believed Bohm and did not look for work elsewhere. When she returned to work, Nelson found that FIT would not honor Bohm's promise to her. It took Nelson eight months to find another job. Does Nelson have any legal recourse? Explain.
Q2) Juanita is classified by Smart Store as an exempt employee. Juanita spends 40% of her time in management tasks, 30% of her time stocking shelves at Smart Store, and 30% of her time unloading trucks that supply the store. Which of the following statements is true?
A) Juanita is appropriately classified.
B) Juanita is inappropriately classified.
C) Juanita is guaranteed at least 60% of minimum wage.
D) Juanita is guaranteed at least 160% of minimum wage.
Q3) Jackson Enterprises wants to provide two hours of work after school for children, up to eight years old, and from economically disadvantaged families who cannot afford after-school day care. The work will be coordinated with school assignments and will appeal to each child's unique interests. Discuss any legal issues associated with this plan.
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Page 25
Chapter 24: Labor Law
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Q1) A "right-to-work" state means that workers can choose to opt-out of unions.
A)True
B)False
Q2) The ____________ gives the president of the United States special powers to deal with actual or threatened strikes that affect interstate commerce or that endanger the nation's health and safety.
A) Wagner Act
B) Taft-Hartley Act
C) Landrum-Griffin Act
D) Norris-LaGuardia Act
Q3) Big Union is on strike against ABC Construction Co. It asks the employees of XYZ Subcontractor Co. not to unload trucks delivering supplies to ABC Construction Co. building sites. Discuss if this action is lawful.
Q4) The Wagner Act allowed an individual employee in a unionized business to negotiate his or her own employment contract.
A)True
B)False
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Chapter 25: Sole Proprietorships and Partnerships
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Q1) John knows that The Franklin Enterprises Partnership, in which John is a partner, is interested in purchasing a particular tract of land for a business location. Can John lawfully have his aunt buy the land, so that she may resell the land to Franklin Partnership?
A) No, it violates John's duty of care.
B) Yes, assuming the price to Franklin was a fair market price.
C) No, it violates John's duty of loyalty.
D) Yes, the aunt is not a Franklin partner and has no loyalty to it.
Q2) The UPA clearly states that a partnership should be considered a separate legal entity with an existence separate from the partners.
A)True
B)False
Q3) Limited partners receive a return on their investment, while risking only that original investment.
A)True
B)False
Q4) Louisiana was the last state to adopt the Uniform Partnership Act.
A)True
B)False
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Chapter 26: The Corporate Entity
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Q1) Janet is the promoter of a corporation called Time Inc., which is in the process of being formed. Janet rents office space in Time's name. Time is bound by Janet's contract.
A)True
B)False
Q2) Viola, a promoter, wants to be certain the name Xenographics, Inc. is available for her corporation. She can reserve the name in advance of incorporation.
A)True
B)False
Q3) The four fundamental legal principles that are designed to protect the corporate structure are (1) corporate status as an entity, (2) corporate constitutional rights, (3) corporate citizenship and (4):
A) anticipatory repudiation.
B) unconscionable contract.
C) mutual recession.
D) limited liability.
Q4) An LLC operating agreement is required by law in all states.
A)True
B)False
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Chapter 27: Corporate Governance
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Q1) Tye, a director at Big Co., suspects wrongdoing within Big Co. and after investigation, uncovers legal violations. Discuss the steps that must be taken under current law in light of this discovery.
Q2) For most business decisions, the quorum, or minimum number of directors necessary to conduct business, is usually ____________ of the total number of directors.
A) three-quarters
B) two-thirds
C) one-half
D) a majority
Q3) Some jurisdictions consider managers liable only if they exceed their authority and the violation results in negligent or intentional conduct. This duty is referred to as the duty of:
A) diligence.
B) loyalty.
C) care.
D) obedience.
Q4) Sam, a manager at Small Co., is confronted with a difficult business decision. Discuss what Sam must do to meet the duty of due diligence in making his decision.
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Chapter 28: Government Regulation of Corporate Business
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Q1) If Tom is a potential investor in Delta Co. he should receive a ____________ prior to investing.
A) contract summary
B) prospectus
C) closing settlement statement
D) registration statement
Q2) A derivative is a financial tool that can be used to manage risks in the stock market.
A)True
B)False
Q3) A lockup agreement requires that a friendly suitor is given an option to buy a valuable piece of property owned by the target corporation should a hostile bidder gain control of the corporation.
A)True
B)False
Q4) A state has police power simply by virtue of its existence as a legitimate governmental authority.
A)True
B)False
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Page 30
Chapter 29: Personal Property and Bailments
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Q1) If an abandoned shipwreck is found outside the boundaries of a state, what law applies?
A) Only the Abandoned Shipwreck Act
B) Only the law of finds
C) Only the law of salvage
D) Either the law of finds or the law of salvage
Q2) Jason has observed an old car parked in the alley behind his apartment for three months. It has no license plates on it and the tires are flat. Jason concludes that the car has been abandoned and takes possession of the car, gets it running, and decides to use it in a demolition derby. At this point, Alex claims that the car is his. To have title to the car, Jason must prove:
A) Alex deserted the car.
B) Alex did not intend to return for the car.
C) Alex deserted the car and did not intend to return for it.
D) Alex had promised the car to Jason as a gift.
Q3) Tangible personal property is property that has substance and can be touched.
A)True
B)False
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Chapter 30: Real Property and Landlord and Tenant Law
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Q1) Mike has the right to cross Paco's land to get to the highway. Paco has the dominant tenement, since Mike could not get to the highway without using Paco's land.
A)True
B)False
Q2) Robert is interested in leasing Bill's property. Robert must include all of the following essentials into the lease agreement, except a definite:
A) agreement as to the extent and bounds of the leased property.
B) and agreed term.
C) agreement about the purchase options of the property.
D) and agreed price of rental and manner of payment.
Q3) At the end of her two-year lease, Margo remained in her apartment and continued to pay her landlord rent every month, which he accepted. One day, Margo received a letter from her landlord accusing her of creating a tenancy at sufferance and threatening immediate eviction. Was the landlord acting within his rights? Explain.
Q4) A "profit à prendre" may be created by deed, will, or adverse use.
A)True
B)False
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Chapter 31: Wills, Trusts, and Advanced Directives
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Q1) Chandra is an invalid and, therefore, she cannot put her signature on her will. Her friend Nina signs the will for her. When Nina signs on behalf of Chandra, there is no one else in the house. Is the will valid?
A) Yes, since Chandra was present during the time the will was signed.
B) No, since she did not date it.
C) Yes, since she is presumed to be mentally competent.
D) No, since there were no witnesses present during the signing of the will.
Q2) Parents are legally obligated to leave their property to their children.
A)True
B)False
Q3) A trust that is created by a will is called a(n):
A) conveyance in trust.
B) declaration of trust.
C) intervivos trust.
D) testamentary trust.
Q4) Jared is physically unable to sign his will. He may direct another person to sign for him.
A)True
B)False
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Chapter 32: Professional Liability
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Q1) Claus tells CPA Vernon that he needs an audit to borrow money from Big Bank. Claus pays Vernon, and Claus takes Vernon's audit to Big Bank who makes the loan. When Claus defaults on the loan, Big discovers numerous liabilities that the audit did not reveal. Can Big Bank sue Vernon for negligence in a state that recognizes the near-privity rule?
A) Yes, because Vernon breached the trust that Claus had placed in him.
B) No, because Big and Vernon did not have a contract.
C) Yes, because Big was an actually named third party.
D) No, because Vernon does not guarantee the collection of Big's loans.
Q2) The Platonic Stabilizing standard refers to a legal balancing act between the various liability standards and the individualized nature of each case. A)True
B)False
Q3) Attorney Riana prepares a will for her client, Jones. After Jones dies, Jones's son, Ted, sues Riana because Jones did not minimize the probate process by creating probate-avoiding devices in the will. Discuss if Ted's suit will be successful.
Q4) Sally is angry with George, her attorney, and wants to sue him for malpractice. Discuss what Sally must prove to win her case.
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Page 34
Chapter 33: The Intersection of Law and Science
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Q1) A ____________ is an intangible property right granted to authors of musical compositions, while a ____________ gives a person the exclusive right to sell an invention.
A) copyright; trade secret
B) copyright; patent
C) patent; trade secret
D) trademark; patent
Q2) In the case of ____________, the United States Supreme Court decided that it was possible to define and patent a life-form.
A) Diamond v. United States
B) Diamond v. Chakrabarty
C) Roe v. Wade
D) Carey v. Population Services International
Q3) The Nuclear Regulatory Commission is responsible for making certain that, on a global basis, nuclear energy is used only for peaceful purposes.
A)True
B)False
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35
Chapter 34: International Law
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Q1) The ____________ was designed to limit the power of the President as Commander-in-Chief of the Armed Forces to commit American troops to the field.
A) Preventative War Resolution of 1973
B) Protective War Resolution of 1973
C) War Powers Resolution of 1973
D) authorization for the Use of Military Force of 2002 Act
Q2) The earliest development of the preemptive war concept was by:
A) Leslie Groves.
B) Curtis LeMay.
C) Thomas More.
D) Socrates.
Q3) Membership in the EU is enough to allow a nation to adopt the euro.
A)True
B)False
Q4) The principle of restoration requires that the defeated nation pay the victor the expense incurred in the war.
A)True
B)False
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