Introduction to Business Law Exam Bank
Course Introduction
Introduction to Business Law provides students with a foundational understanding of the legal principles and frameworks that govern the world of business. This course explores key topics such as contract law, torts, agency relationships, business organizations, property law, and intellectual property. Emphasis is placed on the role of law in commercial transactions, the legal implications of business decisions, and the importance of ethics in the business environment. Through case studies, real-world examples, and legal analysis, students develop the skills needed to identify legal issues and apply legal reasoning in a business context.
Recommended Textbook
Business Law Today Standard Text and Summarized Cases 11th Edition by Roger LeRoy Miller
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Chapter 1: The Legal Environment
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Q1) Criminal law focuses on duties that exist between persons.
A)True
B)False
Answer: False
Q2) Stare decisis is a doctrine obligating judges to help persons who have failed to protect their own rights.
A)True
B)False
Answer: False
Q3) Mike and Nan are involved in a case. The best definition of a case is
A) a criminal prosecution, not a civil proceeding.
B) a failure to perform a legal obligation.
C) a judicial proceeding for the resolution of a dispute.
D) a type of regulation applied to a business.
Answer: C
Q4) In order to truly understand the law, it is important to understand the origins of the law.
A)True
B)False
Answer: True
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Chapter 2: Constitutional Law
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Q1) The judicial branch has the power to hold actions of the other branches of government unconstitutional.
A)True
B)False
Answer: True
Q2) Bay Town enacts an ordinance to allow only a few recreational boating outfits to op-er-ate in certain areas of its harbor, for the purpose of reducing traffic. A court would likely review this ordinance under the principles of
A) equal protection.
B) free exercise.
C) due process.
D) free speech
Answer: A
Q3) The Eighth Amendment prohibits excessive bail and fines.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Courts and Alternative Dispute Resolution
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Q1) Hua, a resident of Illinois, owns a warehouse in Indiana. A dispute arises over the ownership of the warehouse with Jac, a resident of Kentucky. Jac files a suit against Hua in Indiana. Regarding this suit, Indiana has
A)federal jurisdiction.
B)in personam jurisdiction.
C)in remjurisdiction.
D)no jurisdiction.
Answer: C
Q2) Kari and Lillian, who are citizens of Mississippi, are involved in a case related to the adoption of their child. Over this case, Mississippi state courts have
A) concurrent jurisdiction with federal courts.
B) concurrent jurisdiction with other state courts.
C) exclusive jurisdiction.
D) no jurisdiction.
Answer: C
Q3) Arbitration that is mandated by a court is often binding on the parties.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Tort Law
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Q1) Some risks are obvious but, with respect to the duty of care required to establish negligence, a warning is always necessary.
A)True
B)False
Q2) Caleb is driving a car in which Duffy is a passenger when an accident occurs. Caleb and Duffy are emotionally rattled, but neither is physically hurt. Caleb is not liable to Dufy on a negligence theory because
A) both parties were emotionally rattled.
B) Caleb did not apparently intend to cause an accident.
C) Duffy must have been comparatively negligent.
D) Duffy was not injured.
Q3) Felix tells Genie, a prospective tenant, that the roof of the Hillside Apartments building does not leak when Felix knows that it does. This may give rise to an action for fraud, because the statement is one of A) puffery.
B) fact.
C) illusion.
D) opinion.
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Chapter 5: Product Liability
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Q1) Safe-Rite Company makes electrical cords and other connectors for electronic devices. Tina files a product liability suit against Safe-Rite, alleg-ing a warning defect. In deciding whether to hold Safe-Rite liable, the court may consider
A) consumers' general failure to read the product's warnings.
B) the plaintiff's specific failure to read the product warnings.
C) the obvious risks of other products.
D) the obvious risks of this product.
Q2) Even if a particular danger is commonly known by the users of a product, the maker or seller of must warn these users of the danger.
A)True
B)False
Q3) Fine Motor Company buys auto parts from General Mechanix, Inc., and puts them in its vehicles without changing their composition. If the parts are defective, strictly liable for any damage caused by the defects are
A) Fine Motor only.
B) no one.
C) Fine Motor and General Mechanix.
D) General Mechanix only.
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Chapter 6: Intellectual Property Rights
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Q1) Chris operates the Devil's Brew chain of coffee stands. "Devil's Brew" is
A) acertification mark.
B) none of the choices.
C) aservice mark.
D) atrade name.
Q2) Reprise Entertainment, Inc., a U.S. television and movie production company, files a suit against Substantivo TV, Ltd., a Mexican production firm, for infringement of intellectual property rights under Mexico's national laws. Under the TRIPS agreement, Reprise is entitled to receive
A) better treatment than Substantivo.
B) the same treatment as Substantivo.
C) worse treatment than Substantivo.
D) nothing.
Q3) Anyone who writes a book has automatic international copyright protection-even in nations that are not parties to international agreements relating to intellectual property rights.
A)True
B)False
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Chapter 7: Internet Law, Social Media, and Privacy
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Q1) InfoFree Inc. makes and sells devices and services for the circumvention of encryption software and other technological antipiracy protection. Under the Digital Millennium Copyright Act, this is
A) a violation of copyright law.
B) prohibited but not a violation of copyright law.
C) a "fair use" exception to the provisions of the act.
D) permitted for reconsideration every three years.
Q2) Omni Corporation provides cell phones, laptops, and tablets for its employees to use "in the ordinary course of its business." Omni intercepts the employees' business communications made on these devices. This is
A) a violation of the rights of Omni's employees.
B) a matter for which Omni must obtain its employees' consent.
C) a subject for dispute resolution by the communications providers that Omni uses.
D) excluded from the coverage of the Electronic Communications Privacy Act.
Q3) Downloading music into a computer's random access memory, or RAM, is not copyright infringement, even if it is done without authorization.
A)True
B)False
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Chapter 8: Criminal Law and Cyber Crime
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Q1) Falsifying public records or altering a legal document is larceny.
A)True
B)False
Q2) A person's intent to return embezzled property-or its actual return-is not a defense to the crime of embezzlement.
A)True
B)False
Q3) All persons who are arrested have the constitutional right to remain silent.
A)True
B)False
Q4) Benito accesses Creditline Bank's computer system without authority to obtain protected financial and credit records.Under federal law, this is
A) a felony if it was done for a commercial purpose.
B) a felony if Creditline brings a civil suit against Benito.
C) not a crime.
D) a crime but not a felony.
Q5) Corporations, like persons, canbe liable for crimes.
A)True
B)False
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Chapter 9: Business Ethics
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Q1) SuperMeds Corporation develops a new drug that controls severe acne. The drug is not approved by the government for sale in the United States because one of its ingredients is a banned chemical. This chemical is not banned in Mexico. Whether it is ethical for SuperMeds to sell the drug in Mexico depends on
A) theeffect of any "bad" publicity from the sale.
B) the number of potential customers.
C) which legal standards are applied.
D) which ethical standards are applied.
Q2) Julie is sales manager for Kelsos Concrete & Stone Products, Inc. In applying ethical principles to the business of the firm, Kelsos and Julie will most likely evaluate
A)what duties and responsibilities should exist for the business.
B)how to maximize profits in the short run
C)how to maximize profits in the long run.
D)marketing campaigns to counter potential bad publicity.
Q3) Managers must apply the same ethical standards to their employees as they do to themselves.
A)True
B)False
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Chapter 10: Nature and Classification
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Q1) Every contract involves at least three parties.
A)True
B)False
Q2) Wilson buys a lottery ticket at his local gas station. Wilson has accepted an offer for
A) abilateral contract.
B) aunilateral contract.
C) avoid contract.
D) anunenforceable contract.
Q3) An express contract mustbe in writing.
A)True
B)False
Q4) Tania promises to buy Saki's handheld game-player for $40. Saki is A) an executee.
B) an offeror.
C) a promisee.
D) a promisor.
Q5) A contract is an agreement that can be enforced in court. A)True
B)False
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Chapter 11: Agreement
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Q1) A price list is treated as an invitation to negotiate.
A)True
B)False
Q2) An offer may invite an acceptance to be worded in specific terms but that cannot make the contract definite.
A)True
B)False
Q3) An expression of opinion-"this is excellent"-is an offer.
A)True
B)False
Q4) An option contract is created when an offeror promises to hold an offer open for a specified period of time in return for a payment given by the offeree.
A)True
B)False
Q5) A counteroffer is a rejection of the original offer and the simultaneous making of a new offer.
A)True B)False
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Chapter 12: Consideration, Capacity, and Legality
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Q1) To avoid liability for negligence, Mall Mart Discount Stores can normally obtain a court order to enforce
A) a covenant not to compete.
B) an adhesion contract.
C) an exculpatory clause.
D) none of the choices.
Q2) Digital Enterprise, Inc., promises to pay its employees a year-end bonus "if profits continue to be high and management agrees at the time." This is
A) an enforceable contract.
B) an illusory promise.
C) an option-to-cancel clause.
D) an output contract.
Q3) Disaffirmance is the legal avoidance, or setting aside, of a contractual obligation. A)True
B)False
Q4) Essentially, adequacy of consideration concerns the fairness of the bargain. A)True
B)False
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Chapter 13: Defenses to Contract Enforceability
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Q1) In a transaction for the sale of a warehouse, Standard Storage Company tells Tri-County Investment Corporation that the office furniture is inÂcluded. The contract says nothing about office furniture, but does state, "This document supersedes all oral promises relating to the sale." Is the furniture part of the sale? Why or why not?
Q2) Camille, a tennis pro, convinces Dante, who has no athletic ability, that he has considerable skill and induces him to pay Camille $1,000 for tennis lessons. When Dante realizes the truth, he files a suit against Camille. Dante is most likely to recover on the basis of
A) opinion.
B) fraud.
C) mistake.
D) undue influence.
Q3) Oral evidence to "fill in the gaps" of a contract with incomplete terms can be introduced at a trial.
A)True
B)False
Q4) Misrepresentation of law ordinarily entitles a party to relief from a contract.
A)True
B)False
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Chapter 14: Third Party Rights and Discharge
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Q1) Any breach allows the nonbreaching party to sue for damages.
A)True
B)False
Q2) If the market price for organic produce exceeds the price in the contract with Harvesters, and Flora decides not to deliver the order. her contract with the grocery is A) breached.
B) discharged.
C) not affected.
D) suspended.
Q3) A contract will be discharged if unforeseeable circumstances make it impossible to attain the contract's purpose.
A)True
B)False
Q4) A delegation relieves the party making it of the obligation to perÂform.
A)True
B)False
Q5) Giving notice is legally necessary to establish the validity of an assignment.
A)True
B)False
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Chapter 15: Breach and Remedies
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Q1) Ready Repair Service enters into a contract to fix washers and dryers in Scrub n Dry Companys coin-operated laundries. If Ready Repair breaches the contract, Scrub n Dry can
A)do nothing but make a deal with a different service provider.
B)do nothing but temporarily suspend operations and wait.
C)file a criminal complaint against Ready Repair.
Q2) River Vista Inc. enters into a contract with Stable Realty Management to manage and maintain River Vista's commercial real estate. Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach. This is
A) a limitation-of-liability clause.
B) an exculpatory clause.
C) a liquidated damages clause.
D) a quasi contract.
Q3) Restitution is limited to rescission cases.
A)True
B)False
Q4) Punitive damages are generally not awarded in an action for breach of contract.
A)True
B)False
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Chapter 16: International Law in a Global Economy
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Q1) Skye Pye Corporation, a U.S. firm, wishes to participate, but limit its involvement, in Middle Eastern markets. Skye Pye empowers Alem, Ltd., a United Arab Emirates firm, to enter into contracts in certain countries on Skye Pye's behalf. This is A) a distribution agreement.
B) an agency relationship.
C) indirect exporting.
D) licensing.
Q2) Dumping is the exporting of environmentally polluting goods to a foreign market.
A)True
B)False
Q3) Generally, a foreign government cannot sue under U.S. antitrust laws in U.S. courts.
A)True
B)False
Q4) Quotas are limits on the amounts of goods that can be exported.
A)True
B)False
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Chapter 17: The Formation of Sales and Lease Contracts
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Q1) Under the UCC, good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.
A)True
B)False
Q2) If a sale involves crops that are to be harvested within twelve months, identification takes place when the crops are harvested.
A)True
B)False
Q3) Brian, an agent for Clarion Motors, Inc., writes a letter to Dina on November 1 stating that he will sell her a 2016 Subaru Outback for $20,000 between November 1 and December 31. Brian's letter to Dina is
A) a merchant's firm offer.
B) an acceptance.
C) an option contract.
D) none of the choices.
Q4) When a buyer breaches a contract, the risk of loss immediately shifts to the buyer.
A)True
B)False
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Chapter 18: Performance and Breach of Sales and Lease Contracts
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Q1) Owen and Pablo enter into a contract for a sale of fifty Western saddles. Pablo pays, but Owen does not deliver. Pablo can normally recover as damages the difference between
A) any loss avoided and any profit gained.
B) the actual price and the hoped-for price.
C) the contract price and the market price.
D) the current prices in the parties' locations.
Q2) In most sales, sellers warrant that they have good and valid title to the goods sold. A)True
B)False
Q3) To specifically disclaim an implied warrant of merchantability, a seller or lessor must mention the word merchantability.
A)True
B)False
Q4) Every sale or lease by a merchant who deals in goods of the kind sold or leased automatically gives rise to an implied warranty of merchantability.
A)True
B)False
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Chapter 19: Negotiable Instruments
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Q1) For an instrument to be negotiable, it must be in writing.
A)True
B)False
Q2) A holder cannot become an HDC if he or she has notice of any claim to the instrument or defense against it.
A)True
B)False
Q3) Avril receives a payroll check from Business Solutions, Inc., and indorses it by signing her name on the back of the check. This is
A) a blank indorsement.
B) a qualified indorsement.
C) a restrictive indorsement.
D) a special indorsement.
Q4) Builders Exchange, Inc., issues an instrument in favor of Custom Construction Company. For the instrument to be negotiable, it must
A) be a conditional promise or order to pay.
B) be payable on demand or at a specific time.
C) be signed by the payee.
D) recite the consideration given in exchange for it.
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Chapter 20: Banking in the Digital Age
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Q1) Drew signs a check pay to the order of Eastern State University drawn on Drews account in Fidelity Bank to pay her tuition. Drew is A)none of the choices.
B)the drawee.
C)the drawer.
D)the payee.
Q2) Cleo writes a check for $100 drawn on Debit & Credit Bank and presents it to Elegant Jewelers for payment. If the check is not backed by sufficient funds, Cleo may be prosecuted for A) forgery.
B) fraud.
C) negligence.
D) nothing.
Q3) An agency relationship arises between the customer and the bank when the customer writes a check on his or her account.
A)True
B)False
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22
Chapter 21: Security Interests and Creditors Rights
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Q1) Proceeds are whatever is received when collateral is sold.
A)True
B)False
Q2) A purchase-money security interest (PMSI) in consumer goods is perfected automatically when the PMSI is created.
A)True
B)False
Q3) In the context of judicial liens, an attachment is a court-ordered seizure and taking into custody of property before a judgment is obtained on a past-due debt.
A)True
B)False
Q4) Raoul is a surety for Suzu's loan from Turnkey Credit, Inc. Raoul's right to "step into the shoes" of Turnkey, after paying Suzu's debt, and exercise any of the Turnkey's rights against Suzu is the right of
A) contribution.
B) redemption.
C) reimbursement.
D) subrogation.
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Chapter 22: Bankruptcy
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Q1) Rhea's voluntary petition for bankruptcy is found to be proper. The order for relief is effective as soon as
A) Rhea files the petition.
B) Rhea posts a bond to cover the costs of the proceedings.
C) Rhea's creditors agree to the terms.
D) the trustee collects and distributes the property of Rhea's estate.
Q2) Lindsay operates a sole proprietorship, a corporation, and a partnership. Lindsay wants to obtain relief for her individual debts and the debts of her corporation and partnership. For each of these, Lindsay may file a petition in bankruptcy for relief through
A) a liquidation.
B) a reorganization.
C) a repayment plan.
D) a family-farmer bankruptcy plan.
Q3) A bankruptcy estate consists of all the debtor's interests in property currently held, wherever located.
A)True
B)False
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24
Chapter 23: Agency Relationships in Business
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Q1) Refer to Fact Pattern 23-1. With respect to third parties, Nadya is Purifieds
A)employee, agent, and independent contractor.
B)employee and agent.
C)employee but not agent.
D)independent contractor.
Q2) An agent's duties to the principal are implied from the agency relationship only if the identity of the principal is disclosed to a third party.
A)True
B)False
Q3) HomeBaked Bread Company hires Ike to sell the companys products in a certain area. HomeBaked Bread agrees to pay Ike a salary, plus commission, for a trial period. They also agree that Ike can sell using any methods and during any hours that seem appropriate. The key factor in whether Ike is HomeBaked Breads employee is A)the amount of Ikes salary.
B)the control HomeBaked Bread has over the details of the work.
C)the length of the trial period.
D)the size of Ikes sales area.
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Chapter 24: Employment, Immigration, and Labor Law
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Q1) Gwyneth works for Home & Hospice Healthcare, Inc. The basis for Gwyneth's contribution under the Federal Insurance Contribution Act to help pay for benefits that will partially make up for her loss of income on retirement is her
A) seniority at Home & Hospice.
B) annual wage base.
C) special job skills.
D) county of residence.
Q2) Northwest Energy Company is subject to mandatory workers' compensation laws in the states in which it does business. Odele and Phelps work for Northwest Energy as part of a crew that travels to remote locations to repair broken pumps and other damaged equipment. At a distant site, Odele is injured in an accident that is entirely Phelps's fault. Odele files a claim for workers' compensation. Should the claim be granted? What would be Northwest Energy's best defense against it?
Q3) An employer can exclude persons from employer-provided health-insurance coverage for preexisting conditions.
A)True
B)False
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Chapter 25: Employment Discrimination
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Q1) Conrad and Delilah are employees of EcoCrop Feed & Seed Corporation. Under the Equal Pay Act, EcoCrop can legitimately pay different wages on the basis of A) seniority.
B) job descriptions.
C) substantial equality of skill, effort, and responsibility.
D) gender.
Q2) Mirena, a female, and Neil, a male, are employees of Operational Tech Processes Corporation. Mirena regularly e-mails sexually explicit images to Neal via Operational Tech's network. Neil finds this offensive. This is
A) hostile-environment harassment.
B) not harassment or any form of discrimination.
C) quid pro quo harassment.
D) same-gender harassment.
Q3) State employers are immune from private suits brought by employees under the Age Discrimination in Employment Act.
A)True
B)False
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Chapter 26: Sole Proprietorships and Private Franchises
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Q1) If a franchisor's decision to terminate a franchise is made in the normal course of business and reasonable notice is given, it is less likely that the termination will be considered wrongful.
A)True
B)False
Q2) Digital Wizards, Inc., a franchisor of computer technicians, wishes to standardize the pricing practices of its franchisees because they have engaged in price-cutting to increase their respective shares of the market. The most prudent action might be for Digital Wizardsto
A) mandate the prices at which its franchisees sell their services.
B) suggest the prices at which its franchisees sell their services.
C) require its franchisees to pay a premium based on any increase in their market share.
D) threaten its franchisees with a suit for material breach of contract.
Q3) Mucho Tacos, Inc., sells franchises. Mucho Tacosimposes on its franchisees standards of operation and personnel training methods. What is the potential pitfall to Mucho Tacosif it exercises too much control over its franchisees?
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Chapter 27: All Forms of Partnership
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Q1) Orlando is a limited partner in Port of Call Exports, a limited partnership. By participating in the firm's management, Orlando is liable for its obligations
A) in proportion to the number of partners in the firm.
B) to no extent.
C) to the extent of his capital contribution to the firm.
D) to the full extent.
Q2) Roma and Swain are partners in Roma & Swain Attorneys, LLP, a limited liability partnership. Roma supervises their firm's associate Taylor, who negligently fails to appear in court on behalf of Umberto, a client. Liability to Umberto rests only with
A) Roma and Taylor.
B) Roma.
C) Taylor.
D) Roma and Swain.
Q3) Generally, each state limits the liability of partners in a limited liability partnership in some way.
A)True
B)False
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Chapter 28: Limited Liability Companies and Special Business Forms
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Q1) Dana is a member of Earthground Coffee, LLC, a limited liability company. Dana is liable for Earthground's debts
A) in proportion to the total number of members.
B) to the extent of her investment in the firm.
C) in proportion to her profit derived from the firm.
D) to the full extent.
Q2) Valu Food Markets is an incorporated cooperative. Like other incorporated cooperatives, Valu Food distributes profits to its owners on the basis of
A) the amount of capital they contribute.
B) the degree to which they participate in management.
C) their transactions with the cooperative.
D) the requirements of the state in which it was incorporated.
Q3) Unless a limited liability company indicates otherwise, the Internal Revenue Service automatically taxes it as a partnership.
A)True
B)False
Q4) Unless otherwise agreed, joint venturers share profits and losses equally.
A)True
B)False
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Chapter 29: Corporations
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Q1) Directors must refrain from self-dealing.
A)True
B)False
Q2) Rita and Susan want to form and do business as Trips & Travel Agency, Inc. They will serve as the firms directors and officers, and will initially hold all of the stock in the company. A corporation is owned by
A)the board of directors.
B)the officers.
C)the employees.
D)the shareholders.
Q3) Dollars & Sense, Inc., is incorporated in the state of New Jersey and is doing business in the state of New York. In New York, Dollars & Sense is properly referred to as
A)a domestic corporation.
B)a foreign corporation.
C)an alien corporation.
D)a public corporation.
Q4) Any individual director can act as an agent to bind the corporation.
A)True
B)False
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Chapter 30: Investor Protection, Insider Trading, and Corporate Governance
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Q1) Anyone who wrongfully obtains inside information and trades on it for his or her personal gain can be liable under SEC Rule 10b-5.
A)True
B)False
Q2) Ridley is an officer of Sun Watts, Inc. Ridley knows that a Sun Watts engineer recently developed a new, inexpensive method for collecting, storing, and converting solar power into fuel. Ridley takes advantage of this information to buy Sun Watts stock from Taylor and, after the discovery is announced, to sell the stock to Ulrich at a profit. Taylor claims that this is a violation of federal law. Is Taylor correct? If so, what federal law has Ridley violated, and what are its possible penalties?
Q3) The Securities Exchange Act of 1933 is a one-time disclosure law.
A)True
B)False
Q4) For a defendant to be convicted in a criminal prosecution under the securities laws, there can be no reasonable doubt that the defendant knew he or she was acting wrongfully.
A)True
B)False
Page 32
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Chapter 31: Antitrust Law and Promoting Competition
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Q1) Gaucho Ranchland Supplies Corporation believes that Vaquero Stock & Equipment Corporation engages in anticompetitive behavior in an attempt to drive Gaucho, its chief competitor, out of the market. Antitrust laws can be enforced against Vaquero by A) only a disinterested third party.
B) Congress.
C) Gaucho.
D) none of the choices.
Q2) It is in society's interest to condemn every firm that acquires a position of power.
A)True
B)False
Q3) Healthcare Device, Inc., has exclusive control over the market for its product. Healthcare Device's market power is most likely
A) "an unfair or deceptive act or practice."
B) a per se violation.
C) not a violation.
D) subject to further evaluation.
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Chapter 32: Consumer and Environmental Law
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Q1) Regulations governing air pollution cover mobile and stationary sources. Those who may be subject to penalties for violations of the Clean Air Act include
A) corporate officers who knowingly violate the act.
B) persons who provide information about violators but otherwise fail to act.
C) private citizens who fail to sue violators.
D) none of the choices.
Q2) The Federal Trade Commission carries out the broadly stated goal of preventing unfair and deceptive trade practices.
A)True
B)False
Q3) Businesses that engage in ultrahazardous activities are not liable for any injuries the activities cause.
A)True
B)False
Q4) New sources of water pollutants must install pollution-control equipment before beginning operations.
A)True
B)False
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Chapter 33: Liability of Accountants and Other Professionals
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Q1) An accountant normally will notbe held liable to the client for incorrect judgment. A)True
B)False
Q2) Under rules of professional conduct, committing a criminal act that reflects adversely on a person's "honesty" is professional misconduct.
A)True
B)False
Q3) Rollo is an accountant whose clients include Systems Analysis Corporation. Tyra is Rollo's attorney. Under the common law and by statute in many states, working papers that Rollo develops when preparing financial reports for Systems Analysis are owned by A) Rollo.
B) Systems Analysis.
C) Tyra.
D) no one-the papers must be destroyed immediately after use.
Q4) Miriam is an accountant. Natalie is an attorney. Which professional is most restricted from disclosing her or his client's communication?
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Page 35
Chapter 34: Personal Property and Bailments
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Q1) Businesses do not usually pay taxes on the personal property they own, use, or lease, including office or farm equipment and supplies.
A)True
B)False
Q2) Logan borrows Morris's bike to ride over mountain trails. The bike is damaged during the ride. Liable for the cost of repairing the bike is
A) Logan and Morris in equal measure.
B) Logan.
C) Morris.
D) all of the choices.
Q3) Common carriers can contract away their liability for damaged goods.
A)True
B)False
Q4) For estray statutes to apply, property must be mislaid, not merely lost.
A)True B)False
Q5) When you board a plane as a passenger, a bailment is created.
A)True
B)False
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Chapter 35: Real Property and Landlord-Tenant Law
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Q1) If property is owned as community property, each spouse owns an undivided one-half interest in it.
A)True
B)False
Q2) The exterior boundaries of land extend down to the depth of the deepest hole and up to the height of the tallest structure and no further.
A)True
B)False
Q3) Verna sells her farm to Wilfred. The title is transferred by deed. Verna is
A) the grantee.
B) the grantor.
C) the adverse possessor.
D) the licensor.
Q4) Cierra rents an apartment from Damian that floods whenever there is a heavy rain. Damian refuses to fix the problem. Damian has breached
A) the implied warranty of habitability.
B) the covenant of quiet enjoyment.
C) nothing.
D) the concept of eminent domain.
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Chapter 36: Insurance, Wills, and Trusts
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Q1) U-Rents Company wants to insure the equipment that it rents to consumers. To obtain insurance, U-Rents must have an insurable interest in the property
A) at the time U-Rents rents the equipment.
B) at the time a loss occurs.
C) at the time a policy is obtained.
D) continuously from the time a policy is obtained to the time a loss occurs.
Q2) Paxton makes a gift of real estate in his will to Orinda. This gift is A) a bequest.
B) a devise.
C) a legacy.
D) a residuary.
Q3) Frank applies to Guard Dog Insurance Company for homeowners' insurance. The company issues a policy, but later discovers that Frank's application includes several misstatements. Most likely, these misstatements can
A) affect the coverage under the policy but cannot void the policy.
B) bind Frank but cannot affect the coverage.
C) not bind Frank or affect the policy.
D) void the policy.
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