1. A delegation does not relieve the party making it of the obligation to perform if the party to whom the re, duty is delegated fails to perform.
2. A limited liability company offers the limited liability of a corporation.
3. A bond represents an obligation owed by the corporation.
4. The dissolution of a partnership occurs when any partner ceases to be associated with the carrying on of partnership business.
5. Punitive damages are often awarded in breach of contract actions.
6. A foreign corporation is a corporation formed in another country but does business in the United States?
7. Liquidated damages are damages that are uncertain in amount.
8. There must be a written agreement between two parties to create an agency relationship.
9. Agency relationships do not exist outside employment relationships.
10. In a contract for a sale of goods, the usual measure of compensatory damages is the difference between the contract price and the market price.
11. A principal is not liable for an agent's crime simply because it was committed while the agent was acting within the scope of employment.
12. Employees who deal with third parties are agents of their employers.
13 . Ageements to form partnership must be written.
14. In general, creditors of the partnership have priority in the distribution of partnership assets.
15. To a corporation, stocks represent debt.
16. A retail business can assign its accounts receivables to a financing company for cash.
17. To rescind a contract, the party that received a benefit in exchange for his or her promise to perform is required to return the benefit.
18. S corporations avoid federal income taxes at the corporate level.
19. A principal is not required to indemnify an agent for liabilities incurred because of authorized and law full acts and transactions by the agent.
20. The personal assets of individual partners are subject to liability if the assets of the partnership are insufficient to satisfy the demands of the partnership's creditors.
21. An agent who fails to use reasonable diligence and skill in acting on behalf of his or her principal may be liable for breaching a duty of performance.
22. The express powers of a corporation are found, in part, in its articles of corporation, its bylaws, and the resolutions of its board of directors.
23. An alien corporation is chartered in one state but does business in another.
24. A corporation is liable for the torts of its agents or officers Committed within the course and scope of their employment.
25. Development Associates (DA) agrees to buy five acres of land from Eagle Properties for $15,000. Eagle fails to go through with the deal on the agreed date, when the market price of the land is $17,000. DA may recover
a. $17,000.
b. $15,000.
c. $2,000.
d. Nothing.
26. Development Associates (DA) agrees to buy five acres of land from Eagle Properties for $15,000. Eagle fails to go through with the deal on the agreed date, when the market price of the land is $17,000. DA may recover
a. $17,000.
b. $15,000.
c. $2,000.
d. nothing. 26. Bob and Jenny act as the incorporators for National Sales, Ltd. After the first board of directors is chosen, subsequent directors are elected by a majority vote of National's
a. board of directors.
b. incorporators.
c. officers.
d. shareholders.
27. Larry is a limited partner in Associated Contractors, a limited partnership. Debts incurred by the firm come due, and the firm cannot pay them. Larry is liable
a. in proportion to the total number of partners in the firm.
b. to no extent.
c. to the extent of his capital contribution.
d. to the full extent of the debts.
28. Ellen, a salesperson at Top Tile Company, tells a customer, "Buy your tile here, and I'll install it myself for half of what Top would charge you." The customer makes the purchase based on Ellen's representation. Ellen installs the tile, charges the customer $500, and keeps the money. Ellen has breached the duty of
a. loyalty.
b. notification.
c. obedience.
d. none of the above.
29. Marie is considering forms of business organization for her law firm. One advantage of the limited liability professional partnership form is that it allows partners to avoid personal liability for
a. their acts of malpractice.
b. the malpractice of other partners.
c. the obligations of the firm beyond the partners' capital contributions.
d. the obligations of the firm within the limit of partners' capital contributions.
30. Coast-to-Coast Distribution, Inc., is a direct-mail distribution company. Like most corporations, Coast-to¬Coast's employees include its
a. board of directors.
b. incorporators.
c. officers.
d. shareholders.
31 . Mike and Dorothy incorporate their business as American Products, Inc. The first board of directors may be appointed by American's
a. board of directors.
b. incorporators.
c. officers.
d. shareholders.
32. Edward and Mark agree over the phone to go business as partners. The fact that they have not yet reduced their agreement to writing will
a. have no effect on the formation their
b. prevent them from holding themselves out as partnership.
c. violate the Statute of Frauds.
d. none of the above.
33. Superior Storage, LP, is a limited partnership. Superior partners, who have made capital contributions, include Todd. Superior's creditors include Universal Supply Company. On Superior's dissolution, the assets of the firm will be distributed to pay
a. Todd first.
b. Universal first.
c. Todd and Universal proportionately.
d. none of the above.
34. Mike is an architect who works for General Construction Company. The most important factor in determining whether Mike is General's employee or an independent contractor is
a. the degree of control that General exercises over Mike.
b. the distinction between General's business and Mike's occupation.
c. the length of the working relationship between General and Mike.
d. the method of payment.
35. Ron breaches his lease with Sunny Properties and vacates the premises six months before the end of the term. In some states, the landlord would have to
a. avoid reletting the premises to recover any damages from Ron.
b. make reasonable efforts to relet the premises to mitigate the damages recoverable from Ron.
c. relet the premises to recover any damages from Ron.
d. sell the premises to recover any damages from Ron.
36. Visual Play Company makes DVD players. Visual Play is like most corporations in that its officers are hired by the firm's
a. board of directors.
b. incorporators.
c. other officers.
d. shareholders.
37. Eve is the agent of Franco, an actor. Eve makes a deal for Franco to act in a new movie for Great Productions, Inc. The contract is binding on Franco if it is signed on his behalf by
a. Eve, as agent.
b. Great Productions.
c. the Screen Actors Guild.
d. none of the above.
38. International Investments, LILC, is a limited liability company. Rather than distribute its profits to its members, International wants to reinvest the profits in its business. For this reason, International may prefer to be taxed as
a. a corporation.
b. a parWership.
c. a sole proprietorship.
d. none of the above.
39. Tim, a partner in a construction firm, owes $10,000 personally to several creditors. To satisfy these debts, the creditors may obtain a charging order entitling them to
a. only Tim's profits as a partner.
b. only Tim's interest in partnership assets if the firm dissolves.
c. Tim's profits as a partner and his interest in partnership assets.
d. none of the above.
40. Great Games, a firm that specializes in the research and development of computer games, is operated as a partnership. Much of the law that governs the operation of partnerships is based on principal of
a. agency law.
b. constitutional law
c. contract law.
d. none of the above.
41. Reese and Gregg enter into a contract by which Reese promises to deliver sand to Gregg. Reese subsequently delegates his duty to deliver sand to Catherine. Reese is
a. the obligor.
b. the delegator.
c. the delegatee.
d. both a and b.
42. Doug and Ellen are individual shareholders of United Digital Corporation (UDC), an S corporation, Doug and Ellen are in a lower tax bracket than UDC, which means
a. Doug and Ellen can pay the lower rate (pass through personal taxation) on their UDC
income.
b. Doug and Ellen must pay the higher (Corporate income tax) rate on their UDC income.
c. UDC must pay the higher rate on its income.
d. none of the above.
43. Vicky makes a contract with Warren with the intent to benefit Alex. This is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. none of the above.
44. Acme, Inc., is incorporated in the state of California and is doing business in the state of Nevada. In Nevada, it is properly referred to as
a. an alien corporation.
b. a foreign corporation.
c. a close corporation.
d. a national corporation.
45. Carol pays Dick $10,000 for Dick to design an advertising campaign for Carol's health club. The next day, Dick tells Carol that he has accepted a job in New York and cannot design the campaign. Carol files a suit against Dick. As restitution, Carol can recover
a. $100,000.
b. $10,000.
c. $1,000.
d. nothing.
46. Web Design, Inc., is a close corporation. Web Design is
a. eligible to make public offerings of securities.
b. exempt from corporate duties such as filing a certificate of incorporation.
c. generally allowed to restrict transfer of stock.
d. taxed in the same manner as a partnership.
47. Barry and Delia desire to have Martin replace Delia as a party to their contract. The parties can best accomplish that objective by arranging for
a. an accord and satisfaction.
b. a novation.
c. a nullification.
d. a simultaneous performance of their contractual obligations
48. CPA Accounting. LLC, is a limited liability company. If the law is CPA's state is like the law in most states unless the members have agreed otherwise participates in the firm's management will be considered to include
a. all members.
b. no member.
c. one member.
d. two members, including at least one general partner.
49. Eve and Fran want to market a new line of cooking appliances. To avoid income taxes at the corporate level, they should form
a. a C corporation.
b. a close corporation.
c. an S corporation.
d. a private corporation.
50. Ted and Wally are limited partners in T&W Enterprises, a limited partnership. To avoid personal liability for partnership obligations, they must not
a. acquire an interest in the firm.
b. contribute cash or other property to the firm.
c. undertake any managerial responsibilities.
d. all of the above.