Complete the mcq:
1 A manager who has engaged in self-dealing has violated the duty of loyalty to the corporation.
1) True
2) False
2 Alicia and Ted have a written agreement wherein they will share the losses of their joint business. This agreement is strong evidence they are partners.
1) True
2) False
3 It is illegal for shareholders to transfer their stock to a trust and give the trustee the power to vote the shares.
1) True
2) False
4 An agent is always liable for his or her own torts committed within the scope of the agency relationship.
1) True
2) False
5 Owners of preferred stock typically have a preference in liquidation.
1) True
2) False
6 Either party may demand rescission of a fully executed oral contract that was required to have been in writing under the statute of frauds.
1) True
2) False
7 If apparent authority is present, the principal is liable for even the unauthorized acts of the agent.
1) True
2) False
8 Filings are required to form and operate a limited liability partnership.
1) True
2) False
9 Chance is a traveling marketing representative for a publishing company. He is an independent contractor. One afternoon while driving to a meeting, he negligently runs a stop sign and causes an accident. Judy is injured. Judy can:
1) hold both Chance and his company liable for her injury.
2) hold the company but not Chance liable.
3) hold Chance but not the company liable.
4) not hold Chance or his company liable for her injury.
10 The warranty of habitability provides:
1) the landlord may keep a tenant's security deposit for damages.
2) a landlord must meet all standards set by the local building code.
3) a tenant must not disturb other tenants.
4) a tenant cannot leave the premises before the end of the lease term but can be granted an abatement of the rent if there is a substantial defect.
11 The first step a court takes in choosing a remedy is to determine:
1) what interest it is trying to protect.
2) if the damages can be quantified with reasonable certainty.
3) if punitive damages should be awarded.
4) whether the injured party mitigated its damages.
12 A "fundamental change" in a corporation would be illustrated by:
1) E-prise, Inc. merging with Vitta Corporation.
2) the voluntary dissolution of Oldtry, Inc.
3) the amendment to bylaws of Chaney Company.
4) All of the above.
13 Dana hires Paris to paint a portrait of her poodle, "Mack." The painting is to be done to Dana's personal satisfaction. Upon completion of the painting, which of the following will be true?
1) Dana may refuse to accept the painting if she really does not like it.
2) Dana may refuse to accept the painting only if a reasonable person would not like it.
3) Dana may refuse to accept the painting if she cannot afford to pay for it.
4) Dana may not refuse to accept the painting.
14 Sea Rovers, Inc. contracted to sell 1,000 pounds of shrimp to the Seafood Shack with delivery on June 1. On May 1 Sea Rovers advised the Seafood Shack that it would not be able to deliver the shrimp. The Seafood Shack:
1) can sue Sea Rovers immediately for breach of contract.
2) must wait until June 1 to see if Sea Rovers will perform before suing for breach of contract.
3) cannot sue Sea Rovers because Sea Rovers gave adequate notice.
4) must wait until actual damages are determined before it can sue.
15 At what stage are the partnership debts paid and the proceeds distributed to the partners?
1) During dissolution.
2) During winding up.
3) During termination.
4) During dissociation.
16 The officers of a corporation are:
1) chosen by the board of directors.
2) appointed by the president of the company.
3) elected by shareholders.
4) appointed by the Secretary of State.
17 Renita, a merchant, has received a signed, written confirmation from Merchants, Inc. referring to goods she had not ordered. Renita should:
1) ignore the confirmation.
2) call the seller and object to the confirmation as soon as she gets back from her two-week vacation.
3) object to the confirmation in writing within 10 days.
4) return the goods within two weeks of their delivery with a note attached saying she will not pay for the goods.
18 An agency relationship can be created:
1) by the conduct of the parties.
2) by an oral agreement in all circumstances.
3) only by a written agreement.
4) only by the meeting of all the standards of contract law.
19 Factors influencing whether a servant is acting within the scope of employment include all but which of the following?
1) The act is similar to the one the principal authorized.
2) The act is not seriously criminal.
3) The act took place during hours that the servant is generally employed.
4) All of the answer choices are factors in determining if an act is "within the scope of employment."
20 An agency will be terminated in all but which one of the following situations?
1) The principal and agent agree on an agency relationship to sell a boat, and the boat is sold.
2) A travel agent files for individual bankruptcy under Chapter 13.
3) The agent violates his duty of loyalty.
4) An electrician, an agent of a contractor, has her license revoked
21 Which of the following would suffice for a signature on a writing under the statute of frauds?
1) A stamped signature.
2) A retinal scan.
3) A name keyed at the bottom of an e-mail.
4) Any of the above would suffice. Judges define "signature" very broadly.
22 Management's duty to have a rational business purpose, avoid illegal behavior, and make informed decisions refers to its:
1) duty of care.
2) duty of loyalty.
3) duty of openness.
4) duty of fairness.
23 Charles and Becky are partners. If they have a disagreement, the Uniform Partnership Act will govern their respective rights with each other:
1) despite any written partnership agreement they may have signed.
2) only if they do not have a written partnership agreement that addresses the issue of dispute.
3) only if they agree to be bound by the UPA.
4) only if their written partnership agreement states that they will be bound by the terms of the UPA.
24 HBR Accounting hired Denise, a CPA, to prepare tax returns. Which statement is correct?
1) Denise is a gratuitous agent and has a duty not to commit gross negligence.
2) Denise is an agent and has a duty not to commit ordinary negligence.
3) Denise, as a CPA, is an agent with special skills. She is held to a higher duty than ordinary negligence.
4) Denise, as a CPA, is an agent with special skills. She is held to a lower standard than ordinary negligence.
25 Before filing a derivative lawsuit, shareholders must:
1) notify the board that the corporation has been wronged and ask the board to bring suit in the name of the corporation directly.
2) notify the Secretary of State that the corporation has been wronged and ask the Attorney General to file the lawsuit on behalf of the corporation.
3) hold a special meeting, and a majority of the shareholders must vote to file the lawsuit.
4) place the lawsuit on the company's proxy statement, and the proposal must receive a majority vote.
26 Luella just purchased 5 shares of common stock in TriColor, Inc. for $250. Luella has the right to:
1) manage the day-to-day business of the corporation.
2) set executive compensation.
3) require that a proposal be placed in the company's proxy statement to be voted on at the shareholder meeting.
4) vote to elect directors.
27 Rachel and Cyndi started a retail business called Zebra Toy Company. The business is operated as a partnership. Under partnership law:
1) Rachel is personally liable for any business contracts entered into by Cyndi.
2) Rachel is personally liable for any business debts, regardless of whether she or Cyndi created the obligation.
3) Rachel is personally liable for any negligent act committed by Cyndi in the scope of the business activity.
4) All the above.
1) the board was grossly uninformed before it set the compensation amount.
2) the executive's performance caused the business to become unprofitable.
3) the amount of the executive's compensation was too high in relation to the compensation of the typical employee within the company.
4) the compensation level is not in the company's best interests.
30 The remedy of reformation:
1) applies only when money damages are inadequate.
2) can be used to correct mistakes in the original contract
3) is available if fraud is involved.
4) is a commonly used remedy.