CPA Pre-Test (Business Law). Top Questions & Answers. Latest updates.
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CPA
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CPA
CPA Pre-Test (Business Law). Top Questions & Answers. Latest updates.
The president of Deal Corporation wrote to Boyd, offering to sell the Deal factory for $300,000. The offer was sent by Deal on June 5 and was received by Boyd on June 9. The offer stated it would remain open until December 2...
CPA Pre-Test (Business Law). Top
Questions & Answers. Latest updates.
The president of Deal Corporation wrote to Boyd, offering to sell the Deal factory for $300,000. The
offer was sent by Deal on June 5 and was received by Boyd on June 9. The offer stated it would remain
open until December 20. The offer:
a. Is a firm offer under the UCC because it is in writing.
b. Constitutes an enforceable option.
c. Is a firm offer under the UCC but will be irrevocable for only three months.
d. May be revoked by Deal any time prior to Boyd's acceptance. - ✔✔-d. May be revoked by Deal any
time prior to Boyd's acceptance.
Diel entered into a written contract to sell a building to Stone. The contract was properly recorded.
Stone breached the contract and Diel has brought an action for breach of contract. Stone pleads the
statute of limitations as a defense. Which of the following statements is correct?
a. The time period fixed by the statute of limitations begins when the contract is recorded.
b. Recording of the contract stops the running of the statute of limitations.
c. The remedy sought by Diel will be barred when the period of time provided by the statute of
limitations has expired.
d. The time period fixed by the statute is uniform throughout the states - ✔✔-c. The remedy sought by
Diel will be barred when the period of time provided by the statute of limitations has expired
Union Bank loaned $200,000 to Wagner. Union required Wagner to obtain a life insurance policy naming
Union as beneficiary. While the loan was outstanding, Wagner stopped paying the premiums on the
policy. Union paid the premiums, adding the amounts to Wagner's loan. Wagner died and the insurance
company refused to pay the policy proceeds to Union. Union may:
a. Not recover the policy proceeds because it is only an incidental beneficiary.
b. Not recover the policy proceeds because it is not in privity of contract with the insurance company.
c. Recover the policy proceeds because it is a donee beneficiary.
d. Recover the policy proceeds because it is a creditor beneficiary. - ✔✔-d. Recover the policy proceeds
because it is a creditor beneficiary.
, Kent, a 16-year old minor, purchased a used car from Mint Motors Inc. Ten months later, the car was
stolen and never recovered. Which of the following statements is correct?
a. Kent may disaffirm the purchase because Kent is a minor.
b. Kent effectively ratified the purchase because Kent used the car for an unreasonable period of time.
c. The car's theft is a de facto ratification of the purchase because it is impossible to return the car.
d. Kent may disaffirm the purchase because Mint, a merchant, is subject to the UCC. - ✔✔-a. Kent may
disaffirm the purchase because Kent is a minor.
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Race entered into a written contract to sell a parcel of land to Lark for $150,000. At the time the
agreement was executed, Race had consumed a large amount of alcoholic beverages that significantly
impaired Race's ability to understand the nature and terms of the contract. Lark knew Race was very
intoxicated and that the land had been appraised at $280,000. Race wishes to avoid the contract. The
contract is:
a. Legally binding on both parties in the absence of fraud or undue influence.
b. Voidable at Race's option only if the intoxication was voluntary.
c. Void.
d. Voidable at Race's option. - ✔✔-d. Voidable at Race's option.
Fred entered into a written contract with Joe to purchase a car. The written contract was intended to be
the final and complete agreement of the parties. Fred is unhappy with the performance of the car and
has commenced an action for breach of contract based on an oral representation made at the time the
written contract was executed. Fred may introduce evidence of the representation if it:
a. Completely contradicts the written contract.
b. Serves to clarify an ambiguous term in the written contract.
c. Partially contradicts the written contract.
d. Falls within the provision of the statute of frauds. - ✔✔-b. Serves to clarify an ambiguous term in the
written contract.
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