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Unit 2: Business Law

Prepare for Unit 2: Business Law with practice questions covering 8 topics. Part of REG: Regulation — build your knowledge and track your progress with GoCPAus.

Questions
187
Topics
8
Access
Premium

What’s in it.

8 topics
  • Topic 01

    Agency Law

    37 questions
  • Topic 02

    Contracts

    15 questions
  • Topic 03

    Sales and Secured Transactions

    45 questions
  • Topic 04

    Negotiable Instruments

    15 questions
  • Topic 05

    Debtor-Creditor Relationships

    15 questions
  • Topic 06

    Business Structures

    30 questions
  • Topic 07

    Regulation of Business

    15 questions
  • Topic 08

    Property

    15 questions

Sample questions

3 of many

A few questions from this unit, with the answer and a full explanation. The complete bank is available when you start practising.

  1. After a surety pays the creditor in full, which right allows the surety to step into the creditor's shoes and pursue the debtor using all of the creditor's rights and remedies?

    • Contribution
    • Ratification
    • Exoneration
    • Subrogation
      Correct answer
    Explanation

    Subrogation is the right that allows a surety who has paid the creditor to step into the creditor's position and assert all the creditor's rights against the debtor, including any security interests the creditor held. This prevents the debtor from receiving a windfall (having the debt paid by the surety without consequence). Contribution is the right among co-sureties to share losses proportionately. Exoneration is the right to compel the debtor to perform before the surety is required to pay.

  2. Two investors buy a building as joint tenants. One investor subsequently conveys her interest to a third party. What type of ownership now exists between the third party and the remaining original investor?

    • The original investor gains the entire property because the conveyance terminated the other's interest
    • Tenancy by the entirety, because two parties now hold the property together
    • Tenancy in common, because the conveyance severs the joint tenancy as to the conveyed share
      Correct answer
    • Joint tenancy continues because a joint tenant cannot unilaterally sever the joint tenancy
    Explanation

    Any joint tenant may unilaterally sever their interest by conveying it to a third party. The severance destroys the required unities as to that share. The result is that the third party and the remaining investor hold as tenants in common, with undivided interests but no right of survivorship.

  3. A publisher contracts to sell 10,000 printed books to a retailer and also to design a custom e-book platform for the retailer. The e-book platform development represents 60% of the contract price. Under the predominant purpose test, which of the following is correct about coverage under UCC Article 2?

    • UCC Article 2 governs the books portion and common law governs the e-book platform portion separately.
    • UCC Article 2 governs because the contract is between merchants dealing in goods of that kind.
    • Federal copyright law governs because the contract involves intellectual property.
    • Common law governs the entire contract because the e-book platform (services) is the predominant purpose, even though printed books (goods) are also involved.
      Correct answer
    Explanation

    Under the predominant purpose test, courts look at which element — goods or services — is the primary purpose. Because e-book platform development (services) comprises 60% of the contract value and is the core obligation, common law governs the entire agreement. The fact that printed books (goods) are also included does not split the contract.