A duty imposed on the agent by the common law generally includes the:
duty of loyalty.
duty to reimburse.
2. Adam offered to buy automobile batteries from Ben. Adam’s purchase order was
complete with respect to all material terms except price, which was omitted. If Ben
accepts Adam’s offer, and the price of automobile batteries is well established in the
industry, which of the following statements is true?
A contract cannot be formed between Adam and Ben if the price is not
A contract can be formed between Adam and Ben only if it can be
proved that the parties intended to enter a contract to discuss the
A contract can be formed between Adam and Ben, but the price will be
treated as a proposed addition to the contract which must be
accepted by both parties.
A contract can be formed between Adam and Ben even though the
price term was omitted.
3. When an agent takes an unauthorized action:
the action cannot be ratified by the principal.
the principal can transfer liability to the agent while enjoying the
benefits of the action.
the principal may not ratify only a portion of the action.
the action may be ratified provided that the principal is a
4. A corporation is:
liable for all torts committed by its retired and ex-employees.
liable for all torts committed by its employees while acting within the
scope of their employment.
liable for all torts committed by its employees under the doctrine
of ultra vires.
not liable for the torts committed by its employees while acting on the
instructions of a high-level manager.
5 A large and wellÂknown corporation wants to acquire a plot of ground for a new plant.
To avoid the extra cost, the corporation purchases the land through several agents, each
purporting to be buying personally. In such cases, the corporation is a(n) _____.
6 The partnership is liable for torts committed by any partner of the firm while engaged
in partnership business under the doctrine of _____.
7 When a contract is silent about the time for performance:
the Uniform Commercial Code takes the same position as the
it cannot be terminated at any time by either party.
the payment for the goods is due at the time and place at which the
seller deems convenient.
it can be terminated by either party without giving any notice.
8 A contract between an employer and the union, which requires the employer to refrain
from dealing in the products of another employer who is considered to be unfair to the
union, is called a _____.
union shop agreement
9 All business corporations derive their existence from the:
Commerce Clause of the U.S.
state in which they are
10 Misrepresentations by an agent made with the intent to deceive a third person:
will make the agent liable to the third person.
will absolve the principal of any liabilities toward the
will make the third person liable to the principle.
will make the principal liable to the agent and the
11 A basic principle of corporation law is that:
shareholders are not free to dispose of their
shares by gift.
shareholders are given the authority to manage
majority rule applies to both shareholder and
there is an established market for the stock.
12 Apparent authority may exist:
only if actual authority has been conferred on the agent.
if a principal has unintentionally permitted third persons to believe a
person is him/her agent.
if the principal specifically describes the extent of the agent’s powers
in writing or orally and makes him/her a special agent.
when the conduct of the principal causes a third person reasonably to
believe that another has the authority to act for the principal.
13 Helen is a promoter who, prior to forming Bayne Corp., contracted to purchase tileÂ
manufacturing machinery from Owen Machinery Inc. The contract was negotiated and
entered into in the name of Bayne Corp. Subsequently, a certificate of incorporation was
issued to Bayne Corp. Which of the following statements is true of this scenario?
Only Bayne Corp. is liable for the contract with Owen Machinery Inc.
as it received its certificate of incorporation.
Helen would be liable for the contract with Owen Machinery Inc.
If the board of directors of Bayne Corp. issues a suitable resolution,
Helen would be relieved from all liability for the contract with Owen
Since Bayne Corp. was not in existence at the time the contract was
negotiated, the contract is void.
14 Amir bought a television set from Corbel Electronics for $250. Corbel Electronics
delivered a warranty of six years for any manufacturing defect in the product. After three
years of use, the television set caught fire because of a manufacturing defect. The fire
also damaged other goods in Amir’s house. Which of the following statements is most
accurate regarding this scenario?
Amir cannot recover damages for personal injuries under the
warranty from Corbel Electronics.
Amir cannot recover damages for loss in value of the television set.
Amir can claim consequential damages for a breach of warranty
resulting in injury to the property.
Amir’s right to recover damages is barred by the Uniform Commercial
Code’s statute of limitations.
15 If a buyer rejects tender of the goods:
title will be retained with the buyer.
title can be retained if the contract does not
describe the goods.
title will automatically be revested in the seller.
title can be retained only for a limited period of
16 An agent acting at the direction of the principal may render the principal liable if the
delegates ministerial activities to other employees of the principal.
commits a tort or crime.
is acting on behalf of a nonexistent or incompetent principal.
does not disclose the principal’s name for the duration of the
performance under the contract.
17 Under Article 2 of the Uniform Commercial Code, which of the following
statements illustrates a merchant?
Theodora, a doctor, sells her phone to her friend.
Charles, a chef, sells his car to his neighbor.
Nick, an electronic goods dealer, contracts to sell laptops to
Annie, a teacher, contracts to sell her microwave and television
to her friend, Iris.
18 Acceptance of goods occurs when:
a buyer indicates that he or she will take the
a buyer inspects the goods.
a seller ships the goods to a buyer.
a buyer makes a payment by cash or check
for the goods.
19 Kirby subscribed to purchase 10,000 shares of stock to be issued by Globule Inc.,
an existing corporation. Globule accepted the subscription. The price set forth in the
subscription agreement was $10 per share. When the time came for Kirby to pay the
amount of his subscription, Kirby paid only $6 per share, claiming that such amount
represented the fair value of the shares. Globule delivered the stock certificates to Kirby
for $6 per share. Is Kirby liable to Globule for the other $4 per share?
No, because regardless of what the subscription price was, he cannot
be forced to pay more than the fair market value of the shares.
Yes, because Globule’s stock does not have a par value.
Yes, because regardless of the fair value, a purchaser is liable for
stocks issued for less than the par value.
No, but he is liable for another $2 per share.
20 A partner who wrongfully dissociates:
the right to demand a dissolution.
can participate in the winding up process.
must not be paid the value of his interest for the breach, if the firm
can ask the court to appoint a receiver on his behalf.
21 Jessica went to Angel Beauty Salon to get a facial. The cosmetic products used by
the beautician contained certain harmful chemicals that reacted with Jessica’s face. This
resulted in several rashes and spots on her face. Which of the following statements is
true of Article 2 of the Uniform Commercial Code in determining the rights and
responsibilities of the parties?
Article 2 of the Uniform Commercial Code would not apply because
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