26-30
Sue Ellen and J.R. are partners. In making a deal, Sue Ellen does not "do her homework" and makes a bad deal- signing a contract for a price that is way too high. This hurts the partnership financially. Sue Ellen most likely is
a. liable for breach of the duty of economic sense
b. not liable
c. liable for breach of the duty of care
d. liable for breach of the duty of loyalty
c. What is liable for breach of the duty of care?
Alexis wins a lawsuit against Carrington Corporation. The court determines that the directors of Carrington Corp ignored all of the formalities of a corporation- they commingled the funds of the corporation with their personal funds. As a result, the court also ignored the formalities of the corporation and holds the directors personally responsible for the debt. The court
a. issued a proxy
b. pierced the corporate veil
c. committed an unconstitutional act
d. violated the directors fiduciary duties
b. What is pierced the corporate veil?
a. fraud
b. mistake
c. nothing
d. undue influence
a. What is fraud?
Moonlight Cell Phone Company offers to buy a laser printer, with a case of paper an extra cartridge, from Office Supplies Inc. (OSI) for $200. Liam, OSI's representative, says, "Okay, but no paper and no extra cartridge. " Under common law principles, Liam has
a. made a counteroffer without rejecting the offer
b. rejected the offer without making a counteroffer
c. accepted the offer
d. rejected the offer and made a counteroffer
d. What has rejected the offer and made a counteroffer?
When an offer does not include a deadline or acceptance, the offer will terminate
a. after a typical work week
b. after a usual month
c. after a reasonable period of time
d. never
c. What is after a reasonable period of time?
Sterling threatens physical harm- "you don't want anything to happen to you or your family"- to force Jack to sell his business, Parasols Inc. to Sterling for a below-market price. This is
a. fraud
b. a mistake of value
c. duress
d. undue influence
c. What is duress?
As an officer of a corporation, with respect to that corporation, a person is
a. a proxy
b. a quorum
c. a fiduciary
d. a forum
c. What is a fiduciary
If a dispute arises about the fairness of a contract, a court would likely
a. rewrite the deal after questioning the adequacy of consideration
b. set aside the deal after questioning the adequacy of consideration
c. enforce the deal after questioning the adequacy of consideration
d. not questioning the adequacy of consideration
d. What is not questioning the adequacy of consideration?
Gavin and Marc have a partnership. They have made a lot of money and are ready to move on to other activities. When they close down their partnership, they collect all of the money owed to the partnership, sell all of the partnership assets, pay off any partnership debts, and split the remaining money between the to of them. This process is called
a. dissociation
b. a violation of fiduciary duties
c. unwinding
d. winding up
d. What is winding up?
To avoid income taxes at the corporate level, owners should form
a. a C corporation
b. a private corporation
c. a S corporation
d. a closely held corporation
c. What is a S corporation?
A corporation is a legal entity created and recognized by
a. state law
b. a central federal administrative agency
c. an artificial legal person
d. a city of county clerk's office
a. What is state law?
Typically, businesspersons put their contracts in writing to
a. obtain a check or other negotiable instrument
b. ensure proof of the contracts' existence
c. practice their "letters of credit"
d. create substance form form
b. What is ensure proof of the contracts' existence?
Nasir, a seventeen-year-old, signs a contract to sell his motorcycle to Bernie's Used Vehicles. The next day, Nasir tells Bernie's that he's decided not to sell the motorcycle. Nasir is
a. liable to Bernie's and must sell it a motorcycle of comparable value
b. liable to Bernie's and must sell it his motorcycle
c. liable to Bernie's for the amount of its profit on the deal
d. not liable to Bernie's
d. What is not liable to Bernie's?
Brittany offers to sell her Dodge truck for $20,000 to Samantha, who says, "Too much." Brittany's offer was terminated by
a. Brittany's revocation
b. Samantha's counteroffer
c. Samantha's rejection
d. no one. Brittany's offer is still open
c. What is Samantha's rejection?
Arthur Tressler Corporation agrees to sell Fur Horsemen Inc. fifty new diamonds, but the contract does not specify a place of delivery. Under the UCC, the place of delivery is
a. Horsemen's place of business
b. the Annual Gems and Jewels Convention
c. Tressler's place of business
d. the U.S. Postal Service office nearest the Horsemen's place of business
c. What is Tressler's place of business?
Karma Cinemas promises to pay Amy $1000 to repair and clean its marquee. The act of doing this work is
a. not consideration because its performance is a preexisting duty
b. not consideration because its exchange is not a bargain
c. not consideration because its value is legally insufficient
d. consideration
d. What is consideration?
Amari owns a sole proprietorship. Amari's liability is
a. unlimited
b. limited to the extent of his or her original investment
c limited to the extent of capital expenditures
d. limited by the state statute and varied from state to state
a. What is unlimited?
Jumpin' Jelly Beans, LLC (JJB) is a limited liability company. Unless indicated otherwise on JJB's federal tax form, the firm will be taxed in the same way as
a. a partnership
b. a joint venture
c. a corporation
d. a cooperative
a. What is a partnership?
Oliver and Thea do business as partners. For federal income tax purposes, the partnership would be treated as
a. a natural person
b. a partnership by estoppel
c. a tax-paying entity
d. a pass-through entity
d. What is a pass-through entity?
The elements of a contract include
a. consideration
b. practicality
c. capability
d. formation
a. What is consideration?
While a minor, Andre buys a large-screen HD TV and home theater system that he continues to use after reaching the age of majority. After a reasonable time has passed, Andre will be considered to have
a. disaffirmed the contract
b. rejected the contract
c. ratified the contract
d. rescinded the contract
c. What is ratified the contract
To support a contract, the consideration exchanged by the parties must be
a. adequately considerate
b. equally valuable
c. wisely priced
d. legally sufficient
d. What is legally sufficient?
In comparison to standards that apply to consumers, the UCC imposes on merchants
a. special business standards
b. less strict legal standards
c. stricter ethical standards
d. the same overall standards
a. What is special business standards?
Napili Inc. needs a drill to continue its operations and orders one for $3000 from Drill Sellers. Napili tells Drill Sellers that it must receive the drill by Tuesday or it will lose $10,000. Drill Sellers ships the drill late. As consequential damages, Napili can recover
a. $10,000
b. $0
c. $13,000
d. $3,000
a. What is $10,000?
Which is not an element of a contract
a. legality
b. contractual capacity
c. responsibility
d. agreement
c. What is responsibility?