Week 1: Section 2 - Practice Test
Terms in this set (81)
A _____ is created when two or more persons agree to place their money, labor, or skills in a business and to share the profits and losses.
A _____ corporation is owned by a limited number of shareholders.
A member of the board who also serves as an officer is a(n) _____ director.
The rules that govern the internal operation of a corporation are called the _______.
Small corporations can avoid double taxation by electing to be treated as a(n) _______.
Small corporations can avoid double taxation by electing to be treated as a(n) _______.
In a _____ merger, the shares in the disappearing corporation are automatically converted into shares in the surviving corporation.
In a _____, a stock purchase is financed by debt.
all of the responses are correct
A partnership is not automatically dissolved upon a partner's ______, and the partners holding a majority of the partnership interests may elect to continue the general partnership.
corporation by estoppel
The _____ doctrine prevents a third party who acts as if it were doing business with a corporation from later claiming that the corporation is not really a corporation.
It is usually easy for sole proprietorships to raise capital.
Which of the following statements is NOT true regarding the advantages and disadvantages of a sole proprietorship?
Limited partners are responsible for the management of the partnership.
Which of the following statements is NOT true regarding limited partnerships?
The corporation must have no more than twenty-five shareholders.
Which of the following requirements is NOT required by a corporation to qualify for S corporation status?
limited liability company
A _____ combines the tax advantages of a pass-through entity with the limited liability advantages of a corporation.
corporate statutes of each state
The _____ set forth the steps that must be taken to establish a corporation in that state.
de facto corporation
If incorporators cannot show substantial compliance with statutes regarding incorporation but can show that they were unaware of any defect and acted in good faith, a court may treat the entity as a(n) _____.
_____ law legal systems primarily rely on case law and precedents.
"in suits at common law"
The Seventh Amendment to the U.S. Constitution guarantees the right to a jury trial ______.
Fast-track negotiating authority
_____ avoids renegotiation of treaties by allowing the president to negotiate trade agreements and then submit them for an up or down vote by Congress with no amendments permitted.
Through the process of _____, a nation that was NOT an original party to a treaty can elect to participate in a treaty at a later time.
_____ is the process by which a country asserts a right to regulate activities that occur beyond its borders.
_____ tariffs require the importer to pay a percentage of the value of the imported merchandise.
Exports are controlled by means of export _____.
A product is _____ when it is sold abroad below the current selling price in the exporter's home market or below the exporter's cost of production.
Section 301 of the Trade Act of 1974
_____ is the principal U.S. statute addressing unfair foreign practices affecting U.S. exports of goods or services.
The United States, Canada, and Mexico.
The North American Free Trade Agreement provides for elimination of barriers to trade between what countries?
free trade area
A _____ is created when a group of states reduce or eliminate tariffs between themselves but maintain their own individual tariffs as to other states.
conflict of law
Courts apply the principles of _____ to determine which country's laws should be used to interpret an international contract.
A contract dispute which is heard by a court without reference to a prior arbitration is known as a(n) ______ review.
Under the principle of _____, a court will enforce another country's judgments under certain conditions.
_____ is a process used mainly in the area of public international law whereby a third party, often a disinterested government, brings the parties together by establishing communication and providing a site where the parties can meet, often in secret.
________ damages compensate a party for losses that occur as a foreseeable result of the breach.
All the responses are correct
Contract law comes from which of the following?
Which of the following is not one of the basic elements for formation of a valid contract?
In the absence of a provision in an offer regarding how acceptance is to be made, acceptance is effective upon dispatch into a mailbox.
Which of the following is true regarding acceptance?
A _________ contract is a promise given in exchange for another promise.
a party to the original contract.
A third-party beneficiary is someone who is not
are an estimate of the damages likely to be sustained from the breach.
Liquidated damages are damages that
An agreement between two parties that provides that the seller will sell all of a product that he produces to the buyer is called a(n)
Under traditional common law, the acceptance must be the ________ of the offer.
Under the doctrine of ________, a court may invalidate an agreement if one party had sufficient influence and power over the other as to make genuine assent impossible.
Unilateral mistake of fact
Which of the following does not generally make a contract voidable?
accord and satisfaction
A(n) ________ is any agreement to accept performance that is different from what is called for in the contract
It is not a valid defense to enforcement of a contract.
Which of the following is true regarding a mistake of judgment?
The sovereign acts doctrine.
Which of the following is a doctrine that may excuse the government from performance on a contract due to legislative or executive acts?
Under the doctrine of ________, a court may order restitution if one party has received a benefit for which it has not paid when there was no contract between the parties.
The sale of goods.
To which of the following does article 2 of the UCC apply?
What are items of personal property that are attached to real property and cannot be removed without substantial damage called?
The buyer may treat the goods as if it owned them.
Under the UCC, which statement is not true regarding a buyer's right to reject nonconforming goods?
Under the UCC, a failure to perform is excused under the doctrine of
it reaches the offeree
Under the Convention on Contracts for the International Sale of Goods (CISG), an offer becomes effective when
Under the UCC statute of frauds, which of the following terms must be in a writing order to satisfy the statute?
An offer is not defined by the UCC.
Which of the following statements best describes an offer under the UCC?
A contract for sale of office supplies.
Which of the following is governed by Article 2 of the UCC?
UCC Section 2-319 expressly authorizes the buyer and seller to allocate the risk of ________ between them as they see fit.
when the buyer receives the document entitling it to pick up the goods.
When the seller provides the buyer with a document enabling it to pick up goods held at an independent warehouse, the risk of loss passes to the buyer
A contract is ________ if its terms are unduly harsh or oppressive or unreasonably favorable to one side.
This copier is the best in the business.
Which of the following is an example of a statement made by a salesperson that would be considered "puffing"?
all the responses are correct.
If all parties are merchants, additional provisions in an acceptance automatically become part of the contract unless
The buyer made inappropriate use of the goods.
Which of the following will not allow a consumer to recover under a breach of warranty?
damages and expenses saved because of the buyer's breach.
If a buyer wrongfully cancels a contract under the UCC, the seller may not recover
________ do not relieve a contracting party from their responsibilities under the UCC doctrine of commercial impracticability.
A(n) ________ contract occurs when one party is induced to enter a contract on a "take it or leave it" basis.
The Act requires a supplier of consumer products to give a written warranty.
Which of the following is not true under Magnuson-Moss Warranty Act?
Manufacturers should not escape liability simply because they are negligent.
Which of the following is not a rationale of strict product liability?
It imposes strict liability for manufacturing defects, and it also imposes a standard predicated on negligence for design defects and defects based on inadequate instructions or warnings.
Which of the following is true regarding the Restatement (Third) of Torts?
A product that was sold without a component part properly fastened to the product is an example of a ________ defect.
adequacy of the warning label
If a product is unavoidably unsafe, the ________ determines whether the dangerous product is also defective.
A repose statute.
Which of the following restricts the statute of limitations as a defense in a product liability lawsuit?
Both that defenses available in product liability actions vary from state to state; and that under certain circumstances, state product liability law is preempted by federal law.
Which of the following is true regarding defenses in a products liability action?
assumption of risk
Under the doctrine of _________, when a person voluntarily and unreasonably assumes the risk of a known danger, the manufacturer is not liable for any resulting injury.
Under the doctrine of _________, the plaintiff's damages in a strict liability action may be reduced by the degree to which his or her own negligence contributed to the injury.
The transaction was entered into to escape liability.
Under the rule applied in most states, which of the following justifies holding an acquiring corporation liable to a party injured by a defect in a product sold by the acquired corporation?
To prove ________ in a product liability case, the injured party must show that the defendant did not use reasonable care in the design or manufacture of its product.
The preemption defense involves certain ________, which set minimum safety standards for products.
A statute of ________ prevents recovery for product injuries by limiting the time period for recovery from the date when the injury occurred.
properly manufactured and designed product.
On a failure to warn claim, adequate warnings and instructions for a product's safe use can shield a manufacturer from liability for a
When multiple manufacturers of identical products are sued in product liability, some courts apportion liability under the ________ doctrine.
The occasional seller.
Which of the following members of the chain of distribution cannot be strictly liable in a products lawsuit?
The _________ defense shields a manufacturer from liability for a defective design if no safer product design is generally recognized as being possible.
product was produced according to manufacturer specifications.
The government-contractor defense to product liability will not apply if the
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