1.Brenda runs a stop sign and crashes into Quinn's car, damaging it. As Quinn struggles to open the door, a truck rams into Quinn's car, pushing it into a ditch. Quinn's car is totaled and he suffers extended injuries. In Quinn's suit against Brenda, her best defense is

Select one:

a. Brenda has no defense; she started the chain of events that led to Quinn's injuries.

b. Quinn is a knowledgeable user of his automobile.

c. Quinn assumed the risk, like every driver, when he got behind the wheel.

d. The truck was a superseding event that actually caused Quinn's injuries.

2.Bonnie and Clyde agree to become partners and start a banking business. After one year, the business has not made a profit. Bonnie tells Clyde that she needs money because she has to support herself and her children, but Clyde says there is none. Bonnie is

Select one:

a. Entitled to a salary for her work.

b. Entitled to Clyde's antipathy because she is greedy.

c. Not entitled to a salary for her work.

d. Entitled only to Clyde's enduring appreciation.

3.George and Ringo are partners and in GR Recording Studios. They lease their studio from Mick Jagger. One month before their partnership ends, Mick invites Ringo to open a recording studio with him. If Ringo accepts,

Select one:

a. Ringo has not violated his fiduciary duty to George because Mick is entitled to chose his partners.

b. Ringo has violated his fiduciary duty to George because they were childhood friends from Liverpool.

c. Ringo has violated his fiduciary duty to George by not including him in the new partnership.

d. Ringo has not violated his fiduciary duty to George because their partnership was about to end.

4.Bonaventure Roller Rink purchases 500 pairs of roller-skates on credit from Skate Great, Inc. Skate Great takes a security interest in the roller-skates and files a Finance Statement, describing the collateral as "roller-stakes." Which of the following is true?

Select one:

a. The Finance Statement is sufficient because it identifies Skate Great's security interest in the roller-skates.

b. The Finance Statement is not sufficient because it does not adequately identify the roller skates that Skate Great claims to have an interest in.

c. The Finance Statement is not sufficient because Skate Great filed it under Bonaventure's name.

d. The Finance Statement is sufficient because Skate Great was the first to file.

5.Sisters Shireen and JoJo form an LLC to sell handmade earrings. The LLC does not have a separate bank account and the sisters deposit profit into their personal bank accounts. They do not hold meetings. They do not keep up with their paperwork. When they are sued by Budding Beads, Inc. for breach of contract, the Sisters claim they are not personally liable because the debt belongs to the LLC. Which of the following is the most likely outcome?

Select one:

a. They are incorrect because neither sister has enough money to pay the debt.

b. They are incorrect because the court is likely to Pierce the Corporate Veil since they did not follow any formalities.

c. They are correct because the LLC is not a separate legal entity.

d. They are correct; the LLC incurred the debt, not the sisters.

6.ClearCall, Inc. makes cell phones which spontaneously burst into fire and burn people's ears. ClearCall admits that they substituted a known, poor quality, Lithium battery for the better battery the designers intended. Erna is injured when her cell phone suddenly bursts into flames. In her strict product liability suit against ClearCall, she is likely to allege

Select one:

a. A design defect.

b. Nothing if she didn't buy the phone directly from Clearcall.

c. Inadequate warnings.

d. A manufacturing defect.

7.Steve Alan, a college student, founded a start-up company called Macrosoft. Steve wants to borrow money from Bank of Washington, which will give him the loan if Steve's father cosigns. Steve's father agrees. He is a

Select one:

a. A promisor.

b. A guarantor.

c. A surety.

d. A security.

8.Grannie Smith is retired but would like some extra income. She loans money to Google, Inc. in exchange for a fixed rate of interest and the return of her principle at a specified maturity date. Grannie Smith has

Select one:

a. Become a venture capitalist.

b. iI a subscriber to Google, Inc.

c. Acquired stock in Google.

d. Purchased a bond.

9.Two cars, driven by Fred and Barney, collide.At trial, the jury determines that the accident was 90% Fred's fault and 10% Barney's fault.Barney's losses total $100,000.If he lives in a state that uses comparative negligence, Barney will recover

Select one:

a. $10,000

b. $90,00

c. $0

d. $100,000

10.Jolson's neighbor's hobby is to make drone airplanes. Jolson buys one of the airplanes but after its first flight it uncontrollably flies into Jolson's eyes and blinds him. If Jolson sues his neighbor under a theory of strict product liability,

Select one:

a. He is likely to lose because it's his own fault that he didn't know how to properly land the drone.

b. He is likely to lose because the neighbor is not normally engaged in the business of selling drones.

c. He is likely to win if his neighbor has sufficient home-owner's insurance.

d. He is likely to win because the neighbor obviously manufactured a defective product.

11.Misha and Nguyen are shareholders of Outsourcing Solutions, Inc. Misha's written authorization to Nguyen to vote her shares at a shareholders' meeting is

Select one:

a. A proxy.

b. A voting trust.

c. A violation of their fiduciary duties.

d. Not allowed.

12.Luella purchases 5000 shares of common stock in TriColor, Inc., which gives her 19% of the business. Luella has the right to

Select one:

a. Set executive compensation.

b. Vote to elect the directors.

c. Demand that a proposal be placed in the company' proxy statement to be voted on at the next shareholder meeting.

d. Manage the day-to-day business of the corporation.

13.Harry and Meghan form a partnership to develop content for Netflix. Meghan does all the work while Harry lunches and golfs with perspective investors. When the partnership loses three contracts, Harry believes its time to file for bankruptcy. Meghan disagrees. Which of the following is true?

Select one:

a. Harry wins because he invested more capital and has more to lose.

b. Because Harry is not a US Citizen, his vote doesn't count at all.

c. Because there is no partnership agreement saying otherwise, their votes are equal.

d. Meghan wins because Meghan she did all the work.

14.Jerry was a limited partner in a strip mall. Norman was the general partner. The business loses a large lawsuit and is forced to dissolve. Jerry is

Select one:

a. Liable to Norman for failing to contribute his labor.

b. Liable to the extent of his capital contribution because he is a limited partner.

c. 100% personally liable because he is a partner.

d. Liable for 50% of the debt since there are only 2 partners.

15.Morticia sells her waterfront property, worth $2 million, to Fester, Inc. in exchange for stock of the same price. Later, Fester's shareholders learn that the property was only worth $1 million. Which of the following is true?

Select one:

a. Morticia must pay Fester Inc. the difference in price between the value of the property when she purchased it and the value of the property when she sold it to Fester Inc. in exchange for shares of stock.

b. Nothing happens. The parties are free to contract and Morticia made a good deal whereas Fester, Inc. made a bad deal.

c. Morticia must pay Fester Inc. the difference in price between the value of the property and the value of the stock she received.

d. Fester Inc. must sell the waterfront property and give the proceeds to Morticia.

16.Bella owns a fashionable clothing store called Bella's Beauties. After dating Armand for two months she invites him to work with her. Armand becomes involved in every aspect of the business - bookkeeping, marketing anddesign. He does not take a salary. He uses his own savings to pay some of the bills. After a year, Bella breaks up with Armand and fires him. Bella

Select one:

a. Cannot fire him because he has become a partner by equally sharing in labor and losses.

b. Can fire him because she owns the business.

c. Cannot fire him until he is fully reimbursed.

d. Can fire him because he is an employee.

17.Robin's home is in a state that has a $30,000 homestead exemption. Robin defaults on a $60,000 debt that she owes to Suburban Mortgage Company. Robin's home is sold at auction for $80,000. Of the $80,000, Suburban Mortgage may recover

Select one:

a. $0

b. $50,000

c. $60,000

d. $30,000

18.Mitch and Becca are partners. This year, after expenses, the partnership had a profit of $200,000. Mitch and Becca will each pay taxes on:

Select one:

a.None of the above. The partnership itself will pay the taxes on the business's profit.

b.$200,000.

c.The salary they earn from the partnership.

d.$100,000

19.Marnee sews and sells decorative quilts at local art fairs. All her profits are invested in her personal account and she pays the taxes. Marnee understands that she would be personally liable if she is sued. Marnee's business is most likely a

Select one:

a.Publicly traded corporation.

b.Sole proprietorship.

c.Limited partnership.

d.Private corporation.

20.Olivia purchases a washing machine and dryer on credit from Home2U Stores, Inc., which she has delivered to her home. To create purchase-money security interest, Home2U must

Select one:

a. File a Finance Statement.

b. Retain possession of the appliances until Olivia pays the full price.

c. Have extended credit for the purchase price of the goods

d. Sell the debt to a bank who is better equipped to collect the debt.

21.Wanda owns shares of Fisheries, Inc. She believes the officers and directors are mismanaging the corporation. If Wanda and the other shareholders win a Derivative lawsuit against Fisheries, Inc.,

Select one:

a.The money from the judgment will be put into a trust for future shareholders.

b.The money from the judgment will be returned to Fisheries, Inc.

c.The money from the judgment will be divided among the shareholders.

d.The money from the judgement will be given to charity.

22.Michael contracts with Jill to fix the brakes on her Honda Civic. Jill leaves her car with Michael but refuses to pay when the work is done. Michael refuses to return the car to Jill until she pays for the brake work. This is

Select one:

a.An artisan's lien.

b.A violation of most states' laws.

c.A mechanic's lien.

d.A garnishment order.

23.Ali and Alecia are promoters of a new u-pick farm named AA-Apples. Before incorporating, Ali and Alecia draft a document that identifies the number of directors and officers, their responsibilities, explains the rights of shareholders, the structure of the business, and how many shares form a quorum. This document is called

Select one:

a.Bylaws.

b.Articles of organization.

c.A partnership agreement.

d.Articles of incorporation.

24.On January 5, Gringotts Bank took a security interest in Dumbledore's entire inventory & after-acquired inventory, and perfects immediately. On February 5, Dumbledore purchases New Inventory on credit from Voldemort, who immediately perfects his security interest and notifies Gringotts before Dumbledore receives the New Inventory. If Dumbledore defaults on both loans, who has the best claim to the New Inventory?

Select one:

a. Gringotts Bank because its security interests include an after-acquired property clause.

b. Voldemort because he hasPMSI which he perfected. & notified Gringotts before Dumbledore took possession.

c. Gringotts Bank because its interest was first to attack.

25.Ivanka, Jared, and Donny are partners but do not get along. They do not have a written Partnership Agreement. If a dispute arises

Select one:

a. The Partners typically hold a wrestling match to see who wins.

b. The Partnership will be dissolved as a matter of law for violating the UPA which requires written Partnership Agreements.

c. The Partner who contributed the most capital has the final say in all decisions.

d. The Uniform Partnership Act will apply.

26.Eva and Liesel have been partners of Swiss Construction for 5 years. One day, Liesel purchases an F-150, which is titled in her name, but which they both use for business. One weekend, while Liesel is using the truck to go off-roading, Eva calls asking to use it to for business purposes. Liesel says "No, it's mine." Which of the following is true?

Select one:

a.Liesel must allow Eva to use the truck but she can charge Eva reasonable rent.

b.Eva only has use of the truck during regular business hours - not on the weekend.

c.Liesel must let Eva use the truck because it is partnership property.

d.Liesel does not have to let Eva use the truck because its title is in her name.

27.Charles and Diana form a partnership. Charles' capital contribution is 60% and Diana's is 40%. They do not have a written partnership agreement. At the end of the first year, the partnership made a profit of $100,000. Which of the following is true?

Select one:

a.Diana takes nothing because she contributed less capital and less labor.

b. The profits may not be distributed until the partnership dissolves.

c. The profits are split equally.

d.Charles takes 60% of the profit because he contributed 60% of the capital.

Taylor and Maddie want to form a Limited Liability Company to teach people how to play Euchre. Before starting their business, they

Select one:

a. Must file an Operating Agreement with the State.

b. Must file Articles of Organization with the State.

c. Doesn't have to anything because LLC's are just like partnerships and start-up is automatic.

d. Must prepare Bylaws.