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Business Law Principles For Today Commercial Environment 3rd Edition by David P. Twomey Test Bank

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Business Law Principles For Todays Commercial Environment 3rd Edition by David P. Twomey Test Bank
SAMPLE QUESTIONS

 

Chapter 2THE COURT SYSTEM AND DISPUTE RESOLUTION

 

TRUE/FALSE

 

  1. The power of a court to decide certain types of cases is called jurisdiction.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. All courts have original jurisdiction.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. A court with limited jurisdiction can only hear certain types of cases.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. Reversible errors are commonly made by supreme courts.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. The federal court system consists of three levels.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. All federal courts are expressly created by the United States Constitution.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. The United States Supreme Court can never function as a court of original jurisdiction.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. A probate court is an example of a general trial court.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. A family law court is an example of a specialty court.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. State supreme courts generally hear all cases appealed to them.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. The defendant in a civil case is the party who is suing.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. To begin a lawsuit, both parties must appear in person and state their claims and defenses in court.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. If questions of fact are involved, the court will decide the case based on the pleadings alone.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. Documents filed by both parties at the beginning of a lawsuit are called the pleadings.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. Depositions are usually taken in the courtroom.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. A peremptory challenge to a prospective juror generally can be exercised without giving a reason.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. A motion for a directed verdict occurs immediately after the last pleading is filed.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. Once a lawsuit is commenced, the case must go to the jury.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. Generally, the prevailing party in a lawsuit will be awarded the costs of the action, including witness fees and jury fees.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. Garnishment is a procedure accomplished only by attorneys.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. Mediation is a generally accepted method of resolving disputes.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. Arbitration procedures occur in a court of law.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. The Uniform Arbitration Act requires a written agreement to arbitrate an issue.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. When arbitration is mandatory under a statute, the losing party generally can appeal from such arbitration to a court.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. A mediator has the power to actually make a decision in a dispute.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. Mediation tends to keep discussions between parties proceeding.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. If there is a reference to a third party to determine a dispute, most often the loser is not allowed to appeal the third partys decision.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. A rent-a-judge serves as a referee.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. A person who hears summary jury trials is called an ombudsman.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. The Seventh Amendment to the United States Constitution provides for a federal ombudsman.

 

ANS:  F                    MSC:  AACSB Analytic

 

MULTIPLE CHOICE

 

  1. A court is a tribunal established by:
a. the parties to a lawsuit.
b. the government.
c. the parties to a contract.
d. none of the above.

 

 

ANS:  B                    MSC:  AACSB Analytic

 

  1. The power given to courts to hear certain types of cases is called:
a. jurisdiction.
b. mediation.
c. arbitration.
d. summary judgment.

 

 

ANS:  A                    MSC:  AACSB Analytic

 

  1. Original jurisdiction courts are generally what type of courts?
a. supreme courts
b. appellate courts
c. trial courts
d. limited courts

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. An example of limited or special jurisdiction courts would include:
a. probate courts.
b. juvenile courts.
c. equity courts.
d. all of the above.

 

 

ANS:  D                    MSC:  AACSB Analytic

 

  1. The federal court system consists of ____ level(s) of courts.
a. one
b. two
c. three
d. four

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. The types of civil cases that can be brought in federal district courts include:
a. the probate of an estate.
b. cases between citizens of different states that involve damages of $75,000 or more.
c. cases brought by the citizen of one state against the state government of the same state.
d. none of the above.

 

 

ANS:  B                    MSC:  AACSB Analytic

 

  1. The United States Supreme Court was created by:
a. Congress.
b. the President.
c. the Uniform State Law Commission.
d. none of the above.

 

 

ANS:  D                    MSC:  AACSB Analytic

 

  1. State supreme courts primarily have what type of jurisdiction?
a. appellate
b. limited trial court
c. general
d. none of the above

 

 

ANS:  A                    MSC:  AACSB Analytic

 

  1. The person who initiates a lawsuit is called the:
a. defendant.
b. moving party.
c. plaintiff.
d. none of the above.

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. Service of process refers to:
a. a demand letter sent by the plaintiff to the defendant.
b. a reply sent to the plaintiff by the defendant.
c. giving the defendant proper notice that a legal action is pending.
d. a record of the courts preliminary hearing.

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. The answer to the complaint is filed by the:
a. defendant.
b. moving party.
c. plaintiff.
d. none of the above.

 

 

ANS:  A                    MSC:  AACSB Analytic

 

  1. A motion to dismiss a lawsuit on the basis that, even if everything in the complaint were true, the plaintiff would not be entitled to relief is called a motion:
a. to compel
b. to dismiss
c. for summary judgment
d. none of the above

 

 

ANS:  B                    MSC:  AACSB Analytic

 

  1. Who is entitled to file a motion to dismiss?
a. defendant only
b. plaintiff only
c. both plaintiff and defendant
d. none of the above

 

 

ANS:  A                    MSC:  AACSB Analytic

 

  1. A deposition:
a. is the testimony of a witness taken under oath.
b. is conducted outside of the courtroom.
c. can be used to impeach a witness.
d. all of the above.

 

 

ANS:  D                    MSC:  AACSB Analytic

 

  1. Voir dire examination is used in connection with:
a. determining whether the pleadings are valid.
b. jury selection.
c. deciding whether to appeal a trial court decision.
d. none of the above.

 

 

ANS:  B                    MSC:  AACSB Analytic

 

  1. The _____ rule(s) on the admissibility of evidence.
a. judge
b. jury
c. attorneys
d. court clerk

 

 

ANS:  A                    MSC:  AACSB Analytic

 

  1. A motion for a directed verdict is appropriate:
a. immediately after the pleadings are filed.
b. immediately after discovery is concluded.
c. immediately after the presentation of all evidence at trial.
d. on appeal.

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. One of the motions that can be made after a verdict has been entered is a motion for a:
a. voluntary nonsuit.
b. compulsory nonsuit.
c. directed verdict.
d. judgment notwithstanding the verdict.

 

 

ANS:  D                    MSC:  AACSB Analytic

 

  1. Costs generally are awarded to the prevailing party in litigation. Those costs usually include:
a. filing fees.
b. service-of-process fees.
c. deposition transcript costs.
d. all of the above.

 

 

ANS:  D                    MSC:  AACSB Analytic

 

  1. Garnishment applies to the judgment debtors:
a. wages.
b. attorney fees.
c. land and home.
d. cars.

 

 

ANS:  A                    MSC:  AACSB Analytic

 

  1. Which is not considered an alternate means of dispute resolution?
a. civil lawsuit
b. arbitration
c. association tribunals
d. minitrial

 

 

ANS:  A                    MSC:  AACSB Analytic

 

  1. In mediation, the mediator acts as a:
a. judge.
b. attorney.
c. messenger.
d. expert witness.

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. A summary jury trial is:
a. binding on the parties.
b. a mock trial.
c. a full and complete hearing of all evidence pertaining to the case.
d. a shortcut to establishing judicial precedent.

 

 

ANS:  B                    MSC:  AACSB Analytic

 

  1. In a minitrial:
a. only three jurors are used.
b. the trial addresses only portions of the case or certain issues related to the case.
c. the decision is always fully binding on the parties.
d. none of the above.

 

 

ANS:  B                    MSC:  AACSB Analytic

 

  1. An ombudsman:
a. is usually a government official.
b. is often appointed by a judge.
c. receives a large amount of judicial power.
d. none of the above.

 

 

ANS:  A                    MSC:  AACSB Analytic

 

CASE

 

  1. Chandra sues Martin for breach of contract. Both parties have completed discovery. Chandra now wants her attorney to file a motion to have the judge rule in her favor without having to proceed further. Chandra does not know whether the motion to dismiss or the motion for a summary judgment is proper. Which motion is proper and why?

 

ANS:

As between the motion to dismiss and the motion for summary judgment, Chandras attorney should file a motion for summary judgment, since the parties are beyond the pleadings stage of litigation, and since they have completed discovery.  Using evidence gathered during discovery, such as affidavits and/or deposition testimony, Chandras attorney could argue that there are no material issues of fact disputed by the parties, and that Chandra is entitled to judgment as a matter of law.

 

MSC:  AACSB Reflective Thinking | AACSB Analytic

 

  1. Billy has a dispute with Sleepdigit Bedspring Company over a number of beds Billy recently purchased from Sleepdigit for use in his hotel. Billy needs to decide whether to pursue litigation or employ an alternative means of dispute resolution. What advantages are most often associated with alternative dispute resolution? Which choice would be most appropriate in this case?

 

ANS:

The most frequently cited advantages of alternative dispute resolution, compared to litigation, are a) cost savings and b) time savings. As far as a specific method of alternative dispute resolution, arbitration might be the best approach for Billy in his commercial dispute with Sleepdigit; in addition to the cost-saving and time-saving advantages of alternative dispute resolution, arbitration has a long history of success in the area of commercial contracts.

 

MSC:  AACSB Reflective Thinking | AACSB Analytic

Chapter 4THE CONSTITUTION AS THE FOUNDATION OF THE LEGAL ENVIRONMENT

 

TRUE/FALSE

 

  1. In a federal system, a central government is given power to act nationally, while states administer to local concerns.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. A constitution is the written document that establishes the structure of the government and its relationship to the people.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. The United States utilizes a tripartite division of government.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. The powers given by the states to the federal government are described as delegated powers.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. Some of the powers delegated to the national government still may be exercised by the states.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. The power of the states to adopt laws to protect the general welfare of the people is called police power.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. Ex post facto laws can be adopted by either states or the national government.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. The Constitution took certain powers away from the national government and gave them to the state governments.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. Federal law will bar state action only when there is a federal law regulating the particular subject.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. When there is a direct conflict between a federal and a state law, federal law prevails under the supremacy clause.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. Preemption means that the federal regulatory scheme is controlling.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. The Constitution may be amended, but it always has been interpreted in the same way.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. Changes to the Constitution have been brought about by interpretation, amendment, and practice.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. Under the bedrock view, the purpose of a constitution is to state certain fundamental principles for all time.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. For the past century, the United States Supreme Court has generally followed the living document view in interpreting the Constitution.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. The greatest change to the Constitution has been made by the United States Supreme Court through interpretation.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. Many changes have been made to the Constitution by the constitutional method of amending.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. One of the characteristics of the living Constitution is limited government.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. The living Constitution has as a characteristic a strong president.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. When we speak of government regulation of business we ordinarily mean state government regulation, not federal government intervention.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. Administrative agencies are, in effect, a fourth branch of the government.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. Because the power to regulate interstate commerce has been interpreted broadly, Congress has great power to adopt regulatory laws affecting the economy.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. Pursuant to the commerce clause, the United States Supreme Court has the power to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. The states may coin money as long as it is backed by gold.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. The Fifth and Fourteenth Amendments prohibit the national and state governments from depriving any person of property without due process of law.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. The due process clause limits both governmental and private action.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. The Constitution prohibits state governments from denying any person the equal protection of the law.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. The Constitution prohibits discrimination based on reasonable classification.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. The purpose of the first ten amendments to the Constitution was to enlarge the power of the federal government.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. All current rights against governmental intrusion are expressly stated in the Constitution.

 

ANS:  F                    MSC:  AACSB Analytic

 

MULTIPLE CHOICE

 

  1. A system in which a central government is given power to administer to national concerns and individual states administer to local concerns is called:
a. bicameral.
b. constitutional.
c. federal.
d. tripartite.

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. The U.S. Constitution:
a. is unwritten.
b. was brought over from England in its entirety.
c. is a written document that specifies the structures and powers of the federal government.
d. prohibits the states from having their own constitutions.

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. The legislative branch of government has the function of:
a. making laws.
b. executing the laws.
c. interpreting the laws.
d. none of the above.

 

 

ANS:  A                    MSC:  AACSB Analytic

 

  1. Judges of the United States Supreme Court:
a. are appointed by the president, with the approval of the Senate.
b. are appointed by the Senate, with the approval of the president.
c. cannot be impeached.
d. are elected by the public.

 

 

ANS:  A                    MSC:  AACSB Analytic

 

  1. A law to declare war:
a. can be enacted by both state and federal governments.
b. can be enacted only by the U.S. government.
c. can be enacted only by state governments.

d. is prohibited by the U.S. Constitution.

 

 

ANS:  B                    MSC:  AACSB Analytic

 

  1. The power to tax income:
a. is possessed only by the federal government.
b. is possessed only by state governments.
c. may be exercised concurrently by both state and federal governments.
d. is controlled exactly like the power to wage war.

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. Federal supremacy refers to:
a. the power of the President.
b. the power of the Supreme Court to make decisions.
c. the power of the federal government to legislate in certain areas.
d. all of the above.

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. Federal law __________ conflicting state regulation when a federal law regulates that particular subject.
a. coincides with
b. is subordinate to
c. parallels
d. preempts

 

 

ANS:  D                    MSC:  AACSB Analytic

 

  1. The U.S. Constitution is a document that:
a. is clear in allocating the rights and responsibilities of people and our government.
b. can be interpreted only according to the bedrock principles of 1776.
c. can be interpreted only in accordance with current values.
d. must be interpreted to accommodate both stability and flexibility.

 

 

ANS:  D                    MSC:  AACSB Analytic

 

  1. The U.S. Constitution has been amended:
a. only expressly.
b. only by interpretation.
c. only by practice.
d. by all of the ways listed above.

 

 

ANS:  D                    MSC:  AACSB Analytic

 

  1. The greatest changes to the written Constitution have been brought about by:
a. departure by treaty.
b. judicial interpretation.
c. the amending process.
d. political party action.

 

 

ANS:  B                    MSC:  AACSB Analytic

 

  1. When the president negotiates a treaty with a foreign country and submits it to the Senate for approval, the presidents action is based on:
a. an express Constitutional amendment.
b. an amendment by judicial interpretation.
c. an amendment by practice.
d. the power of manifest destiny.

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. The living Constitution has which of the following characteristics?
a. strong federal government
b. a strong president
c. diminution of state powers relative to those of the federal government
d. all of the above

 

 

ANS:  D                    MSC:  AACSB Analytic

 

  1. Which of the following is not characteristic of the living Constitution?
a. strong government
b. strong President
c. administrative agencies
d. states powers equal to federal powers

 

 

ANS:  D                    MSC:  AACSB Analytic

 

  1. Which of the following is true about administrative agencies?
a. Administrative agencies exercise powers guaranteed to them in the U.S. Constitution.
b. Administrative agencies exercise powers allocated to them by the president.
c. Administrative agencies make decisions that are rarely reviewed by the courts.
d. Administrative agencies make decisions that are effectively reviewed by voters.

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. The commerce clause of the Constitution:
a. prohibits the U.S. government from engaging in interstate commerce.
b. prohibits the U.S. government from regulating interstate commerce.
c. has been expanded by Supreme Court interpretations to give the U.S. government the power to regulate the general welfare of the nation.
d. was declared unconstitutional in 1937.

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. Congress can regulate which of the following activities under the concept of interstate commerce?
a. manufacturing
b. the stock exchanges
c. mining
d. all of the above

 

 

ANS:  D                    MSC:  AACSB Analytic

 

  1. Which of the following is not a true statement regarding the commerce clause?
a. If the federal government establishes safety device regulations for interstate carriers, a state cannot require different devices.
b. States may not use their tax power for the purpose of discriminating against interstate commerce.
c. The commerce clause empowers Congress to regulate interstate commerce, but not commerce with foreign nations.
d. A state cannot refuse to allow an interstate waste collector to conduct business within the state on the grounds that the state already has enough waste collectors.

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. Which of the following powers is not reserved solely to the national government?
a. power to regulate interstate commerce
b. power to tax
c. power to coin money
d. power to borrow money on the credit of the United States

 

 

ANS:  B                    MSC:  AACSB Analytic

 

  1. The due process clause:
a. allows the U.S. government to take private property without due process.
b. allows a state to take private property without due process.
c. is, by liberal interpretation, held to be a guarantee of protection from unreasonable legal procedures.
d. does not apply to state governments.

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. The concept of equal protection of the law:
a. applies to both state and federal governments.
b. prohibits any classification whatsoever.
c. applies only to conduct by private parties.
d. does not permit reasonable classifications.

 

 

ANS:  A                    MSC:  AACSB Analytic

 

  1. The equal protection clause:
a. requires all persons to be treated equally.
b. allows laws that discriminate on the basis of moral standards.
c. requires that a statute be sustained unless it is clearly arbitrary or capricious.
d. allows laws that discriminate on the basis of cultural patterns.

 

 

ANS:  C                    MSC:  AACSB Analytic

 

  1. Which of the following is not protected under the privileges and immunities clause?
a. right to go to another state and make a contract
b. right to go to another state and vote in local elections
c. right to go to another state and purchase property
d. right to go to another state and open a business

 

 

ANS:  B                    MSC:  AACSB Analytic

 

  1. Under the U.S. Constitution:
a. persons are expressly protected.
b. particular rights of persons are expressly protected.
c. certain rights of persons have been implied by the Supreme Court.
d. both b and c.

 

 

ANS:  D                    MSC:  AACSB Analytic

 

CASE

 

  1. A school district supplied school bus service for all children 12 years of age or under who lived at least one mile from school. This service was provided for transportation to and from school. Joanna was a 13-year-old student who lived in that school district. Joannas home was 1.2 miles from school. Her parents brought suit against the school district alleging that Joanna was entitled to school bus service and the failure to provide such service denied her the equal protection of the law. Discuss the probable outcome of the lawsuit.

 

ANS:

The lawsuit probably will be unsuccessful. The equal protection clause does not require that all persons be treated equally. It requires a reasonable classification of individuals. If there is a rational basis for the classification, it will be permitted. In this case, if there is a rational basis for holding that 13-year-old children are old enough to transport themselves to school, then the regulation will be upheld.

 

MSC:  AACSB Reflective Thinking | AACSB Analytic

 

  1. The head of the Department of Transportation reviewed a film that demonstrated the effectiveness of air bags in automobiles. He then passed a rule that Ford Motor Company must retrofit, without charge to the automobile owner, all of its 1985 models as an experiment on the safety of the air bag. Ford refused to do so. The DOT held a hearing and decided to fine Ford $1 million for violating its regulation. A notification of this decision was mailed to Ford. What constitutional issues does this case raise?

 

ANS:

Adjudicating Fords responsibility without a chance for Ford to argue its case violates due process. Requiring Ford to spend its money to add air bags to cars it has already sold also violates due process. Further, it violates equal protection to single out Ford instead of imposing an equal obligation on the entire automobile industry. There is no reasonable basis for applying such a regulation only to Ford.

 

MSC:  AACSB Reflective Thinking | AACSB Analytic

 

  1. California passed a law prohibiting any transporting of nuclear waste in the state unless the company doing so is a resident or is owned by residents of California. What constitutional issues does this law raise?

 

ANS:

Regulation of the production of nuclear energy and the disposal of nuclear waste is an area that has been preempted by federal law. Nuclear waste must often be transported if it is to be effectively stored. The appropriate federal agencies have established rules and regulations. To allow the states to have control would result in a patchwork of various laws throughout the country on a matter of national concern when uniformity is desirable. The commerce clause is interpreted to give the federal government power over matters affecting the general welfare of the nation, such as the production of nuclear energy and its related activities. Consequently, this area is preempted under the supremacy clause. It would further violate the commerce clause of the U.S. Constitution to allow a state to favor its local industries and discriminate against out-of-state businesses.

 

MSC:  AACSB Reflective Thinking | AACSB Analytic

Chapter 12NATURE AND CLASSES OF CONTRACTS: CONTRACTING ON THE INTERNET

 

TRUE/FALSE

 

  1. Quasi contracts are contracts.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. A contract is essentially an agreement that creates an obligation.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. Because transfer of value is essential to a valid contract, contracts cannot arise in the performance of personal services.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. A contract can only involve two parties.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. A person who makes a promise is the promisor, while a person to whom the promise is made is the promisee.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. Only the parties who signed the original contract can have rights with respect to that contract.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. A reward offered to the public for the return of lost property is not considered an offer.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. An offer may be made only to a specific person.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. An offeror makes an offer to an offeree.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. Negotiable instruments are examples of formal contracts.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. A contract for an amount greater than $1 million must be made under seal or it is not binding.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. A contract of record arises when the accountant of one of the parties has made an entry of the contract in the business record of that party.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. A recognizance is an agreement by which one party admits or recognizes that a specified sum of money is owed to another party.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. An express contract is one in which the agreement is shown by the acts and conduct of the parties.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. An implied contract is one in which the agreement is shown not by words, written or spoken, but by the acts and conduct of the parties.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. The effect of an implied contract is not the same as the effect of an express contract.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. A void contract is one that is otherwise valid but may be rejected or set aside by one of the parties.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. An agreement that contemplates the performance of an act prohibited by law is usually void.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. An executory contract is an agreement by which something remains to be done by one or both parties.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. An executed contract is an agreement that has been completely performed.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. When a contract is fully performed by one party, it is called a unilateral contract.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. A bilateral contract is essentially an exchange of promises.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. With regard to a unilateral contract, the offeree does not accept the offer by express agreement, but rather by performance.

 

ANS:  T                    MSC:  AACSB Analytic

 

  1. A contract never can be both executory and unilateral.

 

ANS:  F                    MSC:  AACSB Analytic

 

  1. An option contract gives one of the parties a

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