Business Law 201
FinalExam Summer 2005
Professor Steven L. Isler
There are 65 questions on this exam. You are to select the best choice given. The exam is not intended to be tricky! You have seventy minutes to complete it. Good luck!
1. An assignment is best described as a transfer of
[A] a right.
[B] a personal responsibility.
[C] an obligation.
[D] all of these.
2. Conrad, an accountant, who performed tax services for Glenn, a small business owner, earned a $5,000 fee over a three-month period. Conrad then assigned this fee to her bank to apply toward a loan. Based on this information, which of the following statements is correct?
[A] Only claims other than money are assignable.
[B] Conrad’s right to collect $5,000 is not assignable without the bank’s permission.
[C] Conrad’s right to the $5,000 fee is assignable because it involves a claim for money.
[D] Legally, Conrad’s claim is not assignable.
3. An example of a contract obligation that may be delegated to another person is a
[A] seller’s obligation to deliver 20 tons of coal at a set price.
[B] surgeon’s obligation to perform a throat operation.
[C] singer’s obligation to sing on a TV show.
[D] painter’s obligation to paint a portrait.
4. Bronson entered into a contract with Crane to have some electrical work done. Crane later delegated the work to Frank, another licensed electrician. Which of the following statements is true?
[A] Crane cannot legally delegate his contract obligations.
[B] Crane is still responsible for making sure the obligation is carried out.
[C] Crane can no longer be held liable if the contract is breached.
[D] The contract is automatically terminated.
5. The “Don’t Tell” cable box company sells numerous black boxes across the country. They recently called you because they want to establish a contract to ensure that they are paid for the goods that they sell. They also want to keep their superior Better Business Bureau rating and want to make sure each customer receives the black box that was requested. Don’t Tell asks you to prepare a contract containing conditions to achieve their goal. What contractual condition would best serve Don’t Tell’s interests?
[A] A contract containing concurrent conditions
[B] A contraction containing a novation clause which excuses “Don’t Tell” from liability
[C] A contract containing a condition precedent
[D] A contract containing a condition subsequent
6. Bronson entered into a contract with Crane to have some electrical work done. Crane later delegated the work to Frank, another licensed electrician. Which of the following statements is true?
[A] Crane is still responsible for making sure the obligation is carried out unless there is a novation
[B] Crane can no longer be held liable if the contract is breached.
[C] The contract is automatically terminated.
[D] Crane cannot legally delegate his contract obligations.
7. Bronson entered into a contract with Crane to have some electrical work done. Crane later assigned his right to payment to Frank, another licensed electrician. Which of the following statements is true?
[A] The contract is automatically terminated.
[B] Crane cannot legally delegate his contract obligations.
[C] Crane is still responsible for making sure the obligation is carried out.
[D] Crane can assign even if his contract with Bronson prohibits it.
8. “Oh Honey” was a terrific song and the “one hit wonder” of what group?
[A] Concentration
[B] Termination
[C] Delegation
[D] The Novations
9. Under the common law:
[A] Incidental beneficiaries were favored over all other beneficiaries
[B] Creditor beneficiaries were favored over donee beneficiaries
[C] Only intended incidental beneficiaries were recognized
[D] Donee beneficiaries were favored over creditor beneficiaries
10. Which of the following statements is true?
[A] The right to work for someone cannot be assigned without permission.
[B] The assignee acquires the same rights as the assignor.
[C] An assignment usually requires no special form.
[D] All of these.
11. Which statement is correct regarding the transfer of contractual rights?
[A] The assignor acquires rights greater than the assignee has under the contract.
[B] The assignee acquires only such rights as the assignor has under the contract.
[C] The assignee acquires rights greater than the assignor has under the contract.
[D] In limited instances the assignor acquires only such rights as the assignee has under the contract.
12. The usual manner of discharging a contract is by
[A] novation.
[B] impossibility.
[C] death of one of the parties.
[D] performance.
13. Substantial performance is
[A] achieved when a person in good faith has fulfilled all the major requirements of the contract.
[B] slightly less than full performance.
[C] never applied to construction contracts.
[D] Both A and B are correct
14. Rescission of a contract means
[A] that the parties must accept substantial performance.
[B] that the parties must make a new agreement discharging each other from rights and obligations under the original contract and to the extent possible return anything they have received from each other
[C] that the parties must enter into a novation.
[D] all of these.
15. Abel entered into a written agreement with Burrows to buy a horse. In the meantime, the horse died. Under the common law, this contract was discharged by
[A] mutual agreement.
[B] impossibility.
[C] substantial performance.
[D] performance.
16. When one party makes a material change in the terms of the contract without the approval of the other party, the contract is discharged by
[A] accord and satisfaction.
[B] substantial performance.
[C] alteration.
[D] waiver.
17. Ed has entered into a contract with Fred whereby Ed is to paint Fred’s house next Friday. The day before Ed is to paint Fred’s house, Fred sees Ed at the airport about to board a twenty-seven hour flight to a small country called the Republic of Isler.
Given the above facts:
[A] Ed should invoke the doctrine of impossibility
[B] Fred should invoke the doctrine of impossibility
[C] Fred should invoke the doctrine on anticipatory repudiation
[D] Ed should invoke the doctrine of temporary impossibility
18. Once upon a time there was a famous actor who was unable to act in a movie because he was called to active duty to fight in World War Two. Based on your class lecture and the above-referenced facts what else is true?
[A] The actor was Milton Berle, he was known as “Uncle Milte,” and he used the defense of impossibility
[B] The actor used the defense of legal impossibility
[C] The actor was Gene Autry, he was known as the singing cowboy, and he used the defense of temporary impossibility
[D] The actor used the defense of impossibility
19. King Tut IV was to become king of Namibia on August 15th. On August 13th Johan decided to reserve a room at the “No Tell Motel” so that he and his mistress “Badmamajammer” could see the King’s coronation parade. The Motel charged Johan an extra five dollars so instead of paying the normal two dollar room fee, Johan paid seven. On August 14th King Tut IV woke up with a disease called “limples.” This disease causes small holes in a person’s face. In fact, the King looked like his face was on fire and someone tried to put the fire out with an ice pick. Anyway, the King cancelled the coronation parade and Johan asked for his money back.
If the case goes to trial what would be Johan’s best argument?
[A] Mutual rescission
[B] Impossibility
[C] Frustration of purpose
[D] Latches
20. According to Professor Isler, the highest paid performer in the world today is:
[A] Jay Z
[B] Michael Jackson
[C] Tina Turner
[D] Madonna
21. Dr. Dre, who was referred to as "Chronic" by his friends was to operate on a boy who had injured his hand. Dr. Dre was going to try a new operation that consisted in the removal of a considerable quantity of scar tissue from the palm of the plaintiff's right hand and the grafting of skin taken from the plaintiff's chest in place thereof.
Before the operation was performed the boy and his father went to the Dr. Dre's office, and asked Dr. Dre "How long will the boy be in the hospital?" Dr. Dre replied “figure three or four days, not over four; then the boy can go home and it will be just a few days when he will go back to work with a good hand."
After Dr. Dre operated on the boy's hand the palm of the boy's hand began to grow hair in the palm of his hand.
What do lawyers call the case that this fact pattern is based on?
[A] The Ape boy case
[B] The armpit case
[C] Raffles versus Wichelhaus
[D] The case of the hairy hand
22. The current bankruptcy trustee for the northern district of California was:
[A] A musician
[B] An attorney
[C] A judge
[D] A furniture salesman
23. Lilo has $900,000 in secured debt and $10,000 in unsecured debt and wishes to file for bankruptcy. What type of bankruptcy petition should Lilo file?
[A] Chapter 20
[B] Chapter 13
[C] Chapter 7
[D] Chapter 11
24. Under the new bankruptcy law that will go into effect in late 2005 debtors:
[A] must take an approved class on the history of bankruptcy
[B] Can only file a Chapter 7
[C] must adhere to a strict financial means test
[D] All of the above
25. To get taxpayer identification number you should complete Form:
[A] S-12
[B] 1065-K-1
[C] SS-4
[D] 1099
26. For federal income tax purposes, partnerships
[A] file and pay income taxes.
[B] pay one fourth of the income taxes if there are four partners.
[C] file an informational return only.
[D] pay one third of the income taxes if there are two partners.
27. An “S-Corporation may have:
[A] 100 shareholders but all must be preferred shareholders
[B] Up to 35 shareholders
[C] Up to 75 shareholders
[D] An unlimited amount of shareholders as long as they are not resident aliens
28. For federal income tax purposes, a Subchapter S corporation is treated as a
[A] limited partnership.
[B] partnership.
[C] sole proprietorship.
[D] corporation.
29. The liability of stockholders for the debts of the corporation is
[A] determined by the number of shares owned.
[B] nonexistent.
[C] unlimited.
[D] limited to the amount invested.
30. Acts of a corporation that exceed its express or implied authority are
[A] pre-emptive.
[B] derivative.
[C] ultra vires.
[D] criminal.
31. Major corporate policy is determined by
[A] stockholders.
[B] managers.
[C] officers.
[D] directors.
32. Day-to-day management is the responsibility of the
[A] stockholders.
[B] incorporators.
[C] directors.
[D] officers.
33. A disadvantage of the corporate form of business organization is
[A] double taxation.
[B] unlimited liability for debts.
[C] limited life.
[D] difficulty of transferring ownership interest.
34. The right to cut down trees on a neighbor’s land is called a license.
[A] True
[B] False
35. Land may be seized by condemnation only for the public welfare.
[A] True
[B] False
36. If a local government takes an individual’s land by condemnation, it must pay the property owner a fair value for the land.
[A] True
[B] False
37. In a tenancy in common, there is a right of survivorship.
[A] True
[B] False
38. The right to use a portion of another’s land for a specific purpose either forever or for a set time is called a(n)
[A] easement.
[B] fixture.
[C] license.
[D] profit.
39. The right to take minerals from another’s land is a(n)
[A] leasehold estate.
[B] easement.
[C] license.
[D] profit.
40. The power of the state to condemn an owner’s property is called the power of
[A] zoning.
[B] eminent domain.
[C] licensing.
[D] prescription.
41. To establish title to real property by adverse possession, the party claiming such title must show, among other things,
[A] that a deed to the property was properly recorded.
[B] that the property was used with the consent of the owner.
[C] continuous use of property for a certain period of time.
[D] that the property will be used for a public use.
42. When a joint tenant dies, the deceased tenant’s interest in the property passes to
[A] the deceased’s heirs.
[B] the person named in the deceased’s will.
[C] the surviving joint tenants.
[D] none of these.
43. Money damages are the usual remedy for a breach of contract.
[A] True
[B] False
44. A material breach of contract discharges the contract.
[A] True
[B] False
45. A minor breach of contract discharges the contract.
[A] True
[B] False
46. Money damages are intended to place the injured party in the same position he or she would have been in if the contract had been carried out.
[A] True
[B] False
47. Damages awarded for an actual loss or injury are called liquidated damages.
[A] True
[B] False
48. Specific performance is an equitable remedy.
[A] True
[B] False
49. Generally, to rescind a contract, both parties must return any consideration received under the contract.
[A] True
[B] False
50. The party to whom rights under a contract are transferred is called the obligor.
[A] True
[B] False
51. Rights under a contract are legally transferred by delegation.
[A] True
[B] False
52. Nonpersonal rights may be transferred without permission.
[A] True
[B] False
53. Most businesses in the United States are organized as sole proprietorships.
[A] True
[B] False
54. The easiest form of business to establish is the partnership.
[A] True
[B] False
55. A license:
[A] is the revocable right of a person to take something from another person’s land
[B] Is a verbal deed
[C] is the irrevocable right of a person to take something from another person’s land
[D] is the revocable right of a person to come onto another person’s land
56. A pure notice statute provides that:
[A] Provides that the first person to record a deed has superior rights to the property
[B] Provides that the first person to record a deed has superior rights to the property in a minority of states
[C] Regardless of who records a deed first, a person who knows that someone else has already brought the property cannot claim priority
[D] Protects a purchaser who does not know that someone else has already brought the property and who records his or her deed first.
57. A fee simple absolute:
[A] is the same as a life estate
[B] Is the same as a defeasable fee
[C] the owner has the greatest aggregation of rights, privileges, and power possible and at common law you had to use the phrase “and his heirs.”
[D] the owner has the greatest aggregation of rights, privileges, and power possible
58. Rhode gave National Oil Company the right to lay a pipeline under Rhode’s property. This right is
[A] an easement.
[B] eminent domain.
[C] a license.
[D] an accretion.
59. Independent contractors:
[A] Pay 100% of Medicare and Social Security taxes
[B] Pay no taxes
[C] Only pay worker’s compensation insurance
[D] Pay 100% of Social Security and Medicare taxes but are allowed an adjustment to income for half of the self-employment taxes paid
60. What comes after Round?
[A] Tuit
[B] The way girl
[C] About
[D] Damn, so many attendance questions, so many missed classes! See you next semester Professor!
These are extra credit and just for fun. Hope you are a good guesser!
61. Donald Duncan was a manufacturer of two products common throughout the United States. One is the Duncan yo-yo. What is the other?
[A] Duncan traffic lights
[B] Duncan Hines cake mix
[C] Duncan parking meters
[D] Dunkin’ Donuts
62. What popular toy was invented by a naval engineer?
[A] Etch A Sketch
[B] Slinky
[C] Silly Putty
[D] Hula Hoop
63. A surplus of which of the following items led Carl Swanson to create the first Swanson TV Dinner in 1953?
[A] Chicken
[B] Aluminum
[C] Turkey
[D] Salisbury Steak
64. Invented by Charles Darrow, which ubiquitous board game was initially rejected by Parker Brothers in 1934?
[A] Scrabble
[B] Risk
[C] Monopoly
[D] Stratego
65. At a 1913 dinner honoring the British ambassador, what product did Secretary of State William Jennings Bryan serve to the guests, creating a furor in the press?
[A] Kentucky Fried Chicken
[B] Mott’s Applesauce
[C] Welch’s Grape Juice
[D] Keebler Crackers
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