CA Business Law 3 — Questions and Answers
Question 1: Under the statute of frauds, which of the following contracts MUST be in writing to be enforceable?
- A contract to purchase a car for $400
- A contract for services to be performed within one year
- A contract for the sale of land (Correct answer)
- A month-to-month lease
Correct answer: A contract for the sale of land
The statute of frauds requires contracts for the sale of real property to be in writing to be enforceable.
Question 2: In a secured transaction under UCC Article 9, what is the primary purpose of 'perfection'?
- To create the security interest between debtor and creditor
- To establish the creditor's priority over other claimants (Correct answer)
- To discharge the debtor's obligation
- To transfer title to the collateral
Correct answer: To establish the creditor's priority over other claimants
Perfection makes the security interest effective against third parties and establishes the creditor's priority in the collateral.
Question 3: Which corporate officer typically has actual authority to bind the corporation in ordinary business transactions?
- A minority shareholder
- The corporate secretary
- The CEO or President (Correct answer)
- An outside auditor
Correct answer: The CEO or President
A CEO or President has both express and implied actual authority to bind the corporation in the ordinary course of business.
Question 4: A seller delivers goods that do not conform to the contract. Under the UCC 'perfect tender rule,' the buyer may:
- Accept all goods and sue for damages only
- Reject only the nonconforming portion
- Accept all, reject all, or accept any commercial unit and reject the rest (Correct answer)
- Demand specific performance only
Correct answer: Accept all, reject all, or accept any commercial unit and reject the rest
Under UCC §2-601, if goods fail to conform in any respect, the buyer may accept, reject all, or accept any commercial unit and reject the rest.
Question 5: Which of the following is a characteristic unique to a limited partnership compared to a general partnership?
- Limited partnerships require at least two partners
- Limited partners have no liability beyond their investment (Correct answer)
- Limited partnerships must file taxes as corporations
- All partners in a limited partnership share management equally
Correct answer: Limited partners have no liability beyond their investment
In a limited partnership, limited partners' liability is capped at their investment, unlike general partners who have unlimited personal liability.
Question 6: An employee without a written contract is typically considered to be employed under which doctrine?
- Employment for cause
- At-will employment (Correct answer)
- Implied contract employment
- Employment by estoppel
Correct answer: At-will employment
Most U.S. employees without a written contract are employed at-will, meaning either party can terminate the relationship at any time for any lawful reason.
Question 7: Which federal law prohibits employers from discriminating against employees based on race, color, religion, sex, or national origin?
- The Fair Labor Standards Act
- Title VII of the Civil Rights Act of 1964 (Correct answer)
- The Americans with Disabilities Act
- The Equal Pay Act
Correct answer: Title VII of the Civil Rights Act of 1964
Title VII of the Civil Rights Act of 1964 is the primary federal statute prohibiting employment discrimination based on protected characteristics.
CA Business Law 3
Under the statute of frauds, which of the following contracts MUST be in writing to be enforceable?