1.The rights and duties of a bank and its customer are contractual.A) TrueB) False2.The payment of Eden’s debt to Flem is guaranteed by Eden’s personal property. This property isA) a secured transaction.B) a secured party.C) collateral.D) a security interest.3.Rolling Transport & Storage Corporation wants to insure its warehouse to obtain the maximum possible recovery for the lowest possible premium. To obtain the maximum recovery under a coinsurance clause, the percentage of the value of the property that should be insured isA) 80 percent.B) 120 percent.C) 90 percent.D) 100 percent.4.The basic purpose of antitrust law is to regulate economic competition.A) TrueB) False5.Labor Recruiters, Inc., has been ordered to appear at a hearing before an administrative law judge of the National Labor Relations Board. A significant difference between a trial and an administrative hearing is thatA) clients are not allowed to communicate with their attorneys during administrative hearings.B) the burden of proof is on the charged party to prove innocence.C) attorneys are not allowed to attend administrative hearings.D) hearsay can be introduced as evidence in an administrative hearing.6.To obtain a contract with the Chinese government, Digby Engineering Corporation a U.S. firm, gives a Chinese official a sport utility vehicle. This may violateA) the Foreign Corrupt Practices Act.B) the act of state doctrine.C) the doctrine of sovereign immunity.D) the principle of comity.7.Accidental destruction of a negotiable instrument cancels it.A) TrueB) False8.State and local agency actions prevail over federal agency operations.A) TrueB) False9.Quality Watches, Inc., ships an assortment of timepieces to Retail Jewelers, Inc., which agrees to pay for items that are not returned within six months. This isA) a sale or return.B) a consignment.C) a sale on approval.D) a bailment.10.A contract that by its own terms cannot be performed within a year must be in writing to be enforceable.A) TrueB) False11.A failure to exercise reasonable care is negligence.A) TrueB) False12.Parker, a salesperson for Quality Textiles, Inc., shows Rosa, a fabric buyer for Style Clothing Company, samples of cloth, stating that any shipment will match the samples. This statement isA) an implied warranty.B) an express warranty.C) a warranty of title.D) puffery.13.Midwest Agri-Products Corporation offers to sell its sugar substitute to Nice Candies, Inc., only if Nice Candies agrees to buy all the corn it needs from Midwest Agri-Products, even though there are other corn sellers from whom Nice Candies could buy. This isA) a tying arrangement.B) a group boycott.C) price discrimination.D) an exclusive-dealing contract.14.Ron makes a contract with Stu that indirectly benefits Tim, although neither Ron nor Stu intended that result. Tim isA) an assignee.B) an incidental beneficiary.C) an intended beneficiary.D) a delegatee.15.The Uniform Commercial Code governs checks.A) TrueB) False16.Fun-E Products, Inc., makes and sells toys. The government agency that has the authority to remove a potentially hazardous toy from the market isA) the Federal Trade Commission.B) the Federal Reserve Board of Governors.C) the Consumer Product Safety Commission.D) the Food and Drug Administration.17.The Securities and Exchange Commission decides to create a new rule relating to the dissemination of material nonpublic information through corporate Web sites. The first step isA) conduct an on-site inspection.B) compile the rule with others in the Code of Federal Regulations.C) solicit public comment.D) publish a notice of the proposed rulemaking.18.ABC Motors, Inc., sells to Matt the right to the possession and use of a motor vehicle under a lease. As defined in the UCC, ABC isA) a seller.B) a wholesaler.C) a dealer.D) a lessor.19.Hu believes that he is a victim of a form of employment discrimination that falls under Title VII of the Civil Rights Act. Compliance with this statute is monitored byA) employees and job applicants, not an administrative agency.B) the courts and Congress, not an administrative agency.C) the Equal Employment Opportunities Commission.D) employers and businesses, not an administrative agency.20.A click-on agreement is an agreement whose terms are expressed inside a box in which the goods are packaged.A) TrueB) False21.An agent is authorized to act on behalf of a principal in doing business with third parties.A) TrueB) False22.The brakes on a River Valley Railroad train malfunction and it rolls towards maintenance workers on the tracks. Everyone gets out of the way except Dick, who wants to show off. The train hits Dick, who sues Stops-it, Inc., the brakes’ manufacturer. Stops-it can raise the defense ofA) assumption of risk.B) a component-part manufacturer.C) consumer participation.D) product misuse.23.Superior Sign Company is subject to the Fair Labor Standards Act (FLSA). The FLSA is not concerned withA) child labor.B) maximum hours.C) minimum wages.D) employees’ privacy rights.24.The test for whether an advertisement is deceptive is whether a reasonable consumer would be deceived.A) TrueB) False25.If a lessor’s tender of delivery fails to conform to a contract in any way, the lessee can reject the goods.A) TrueB) False26.A signature can consist of initials signed by a party.A) TrueB) False27.National Ladder Company is subject to regulations issued by the Occupational Safety and Health Administration (OSHA). Like other federal administrative agencies, the OSHA was created byA) the president, through an executive order.B) the U.S. Department of Labor, through a final order.C) the Federal Trade Commission, through the rulemaking process.D) Congress, through enabling legislation.28.A price-fixing agreement that is reasonable does not violate antitrust law.A) TrueB) False29.The term cure refers to the right of the seller to adjust or replace nonconforming goods.A) TrueB) False30.“Major medical” and “marine” insurance are military policies.A) TrueB) False31.Gulf Air, Inc., is the major wholesale distributor of software in the state of Florida. Its closest competitor is Fluid Systems Company, another Florida firm. The two firms agree that Gulf Air will operate in south Florida and Fluid Systems will operate in north Florida. This isA) a group boycott.B) an exclusive-dealing contract.C) a market division.D) a joint venture.32.Home Delivery Corporation and Interstate Transport, Inc., sign an agree¬ment that provides for the payment of “$1,000 by whichever party commits a material breach of the contract that creates damages difficult to esti¬mate but approximately $1,000.” This isA) a nominal damages clause.B) a mitigation of damages clause.C) a liquidated damages clause.D) a penalty clause.33.Retail Sales Company and Standard Purchasing Corporation enter into a contract for a sale of goods. To be enforceable, the contract should be in writing if the goods are valued at more thanA) $50.B) $15.C) $5.D) $500.34.Michelle gives out a business card with an e-mail address on it. It is reasonable to infer that Michelle has consented toA) accept and respond to any correspondence sent to that address.B) transact business electronically.C) nothing.D) submit to the jurisdiction of any selected forum.35.The United States and other members of a certain organization agree to grant normal trade relations status on each other with regard to imports and exports. This organization isA) the International Export-Import Bank.B) the United Nations.C) the Convention on Contracts for the International Sale of Goods.D) the World Trade Organization.36.Karen writes on a piece of paper, “I owe you $600,” signs it, and gives it to Lou. This instrument isA) nonnegotiable, because it does not state any conditions to payment.B) negotiable.C) nonnegotiable, because it does not recite any consideration.D) nonnegotiable, because it does not include an express promise to pay.37.Mona and Nero want to discharge their contract by executing and performing a new agreement. They can best accomplish this byA) accord and satisfaction.B) specific
performance.C) novation.D) reinvention.38.Congress can create a new federal administrative agency.A) TrueB) False39.Chiang Ltd., a Chinese firm, imports its goods into the United States and offers those goods for sale at “less than fair value.” This isA) defalcation.B) expropriation.C) dumping.D) confiscation.40.The United States taxes each barrel of imported oil at a flat rate. This isA) a tariff.B) an antidumping duty.C) a quota.D) a dumping duty.41.An employer who hires and fires workers according to a fair seniority system may have a good defense to an employment discrimination suit.A) TrueB) False42.Optima Medico Corporation, a U.S. firm, signs a contract with Pharma Beneficial, Ltd., a Canadian firm, to give Pharma the right to sell Optima’s products in Canada. This isA) a joint venture.B) a distribution agreement.C) licensing.D) direct exporting.43.All rights can be assigned.A) TrueB) False44.Compensatory damages are foreseeable damages that arise from a party’s breach of a contract.A) TrueB) False45.North Mining Company and South Excavation Company agree to abide by the decisions of East Coast Financial Corporation as to their respective levels of production, markets, and prices, effectively reducing competition and increasing profits. This is most likelyA) an outdated, but legal business trust.B) an innovative, legally efficient approach to doing business.C) a common, legal, time-honored type of business arrangement.D) an illegal restraint on trade.46.Cory employs Daily Delivery Agency as an agent under a written agreement that describes the rights and duties of both parties. This isA) apparent authority.B) implied authority.C) equal authority.D) express authority.47.Randy and Beach Biz Company enter into an oral contract under which Randy agrees to clean Beach Biz’s office for two years. This contract is enforceable byA) neither party.B) Beach Biz only.C) either party.D) Randy only.48.Khali’s debt to Lew is past due. Lew obtains a judgment against Khali to collect the debt, but Khali refuses to pay. Lew asks the court to order Khali’s employer to pay a portion of Khali’s paycheck to Lew. This is a request forA) a right of contribution.B) an order of garnishment.C) an exemption from most federal limits on creditors’ actions.D) an order that would violate most state laws.49.The U.S. Citizenship and Immigration Service issues a rule. Like the rules of other federal administrative agencies, this rule is compiled inA) the United States Code.B) the Administrative Register of the Federal Government.C) the Code of Federal Regulations.D) the Federal Rules of Civil Procedure.50.Article 2 of the UCC governs contracts for sales of goods.A) TrueB) False

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