Which of the following Acts sets goals without regard to the cost involved in meeting
the goals?
a. Clean Water Act.
b. Clean Air Act.
c. Both the Clean Water Act and the Clean Air Act.
d. Neither the Clean Water Act nor the Clean Air Act.
Jerry purchased a state-of-the-art computer for his personal use from Computer City on
an installment loan contract thinking he would make monthly payments directly to
Computer City. The sales contract stated that in the event the contract is assigned to a
third party, the purchaser (Jerry) promises he will not assert any claim or defense
against the assignee which he might have against Computer City. Computer City
immediately assigns the contract rights to Finance USA. The computer stops working
within two weeks of the purchase.
a. This is a valid waiver of defense clause. Jerry signed the contract, so he can’t raise a
defense to Finance USA.
b. Finance USA is an intended third party beneficiary and may therefore enforce the
contract.
c. In general, this type of waiver is not permitted in consumer contracts, so Jerry can
raise his claim against Finance USA.
d. This is a delegation of Jerry’s duties and the delegator remains liable on the contract
unless a novation agreement is made.
Congress tightened oversight of credit card companies by enforcing the following::
a. cannot increase interest rates on pending balances
b. cannot charge late fees
c. cannot allow a consumer to exceed his or her credit limit.
d. cannot issue a credit card to someone under 21 unless the person is a student.
Wedney, Inc. sold a meat processing machine to Yoro Chickens, taking a security
interest in the machine. Yoro Chickens defaulted on the loan. Wedney repossessed the
machine. Wedney would like to retain the machine to use as a model. Which of the
following statements is correct?
a. Wedney must notify the debtor that it intends to retain the machine.
b. By taking possession, Wedney automatically foreclosed on the collateral. Wedney has
valid title and need do nothing else.
c. Since the machine is equipment, Wedney cannot retain the machine. Wedney must
dispose of the collateral in a commercially reasonable manner.
d. Wedney can retain the machine but must pay Yoro the surplus, the difference between
the fair market value of the machine and the amount of the debt.
The purpose of recording a deed or other real estate transaction is to:
a. establish the rights between the grantor and the grantee.
b. assure the grantee that a transfer of real property is now complete.
c. establish the type of deed granted (i.e. warranty deed, special warranty deed, or
quitclaim deed).
d. put the rest of the world on notice that the transaction occurred between the grantor
and the grantee.
After answering a summons and complaint, Mike received a set of written questions
from the plaintiff’s attorney. He was directed to respond to the questions in writing
under oath. This discovery technique is called:
a. a request for admission.
b. a request for the production of documents.
c. a deposition.
d. interrogatories.
What duty does a landlord have?
a. Duty of quiet enjoyment
b. Duty to deliver the premises
c. Duty to maintain the premises in a habitable condition
d. All of these answers are correct
Corporate stock can be divided into classes called ________, which can be further
divided into ________.
a. authorized shares, preferred
b. preferred, common
c. equity, common
d. debentures, classes.
Adam claimed that N & A, its accounting firm, negligently prepared an audit. To hold
the accounting firm liable, which of the following elements must be established?
a. Scienter or guilty knowledge.
b. A fiduciary relationship.
c. Failure to exercise due care.
d. An executed engagement letter.
Jurisdiction is:
a. the study of law.
b. the authority of a court to decide a particular type of case.
c. a federal court concept.
d. applicable only to appeals courts.
ADA reasonable accommodations may include:
a. modification of equipment.
b. ramps for accessibility.
c. flexible work schedules.
d. all of the above.
Which of the following is an unfair labor practice for a union?
a. To encourage an employer to discriminate against a particular employee because of a
union dispute.
b. To bargain collectively.
c. To engage in a legal strike.
d. All of the above are unfair labor practices by a union.
Unsolicited commercial e-mail (UCE) or unsolicited bulk e-mail (UBE) messages:
a. are commonly known as “cookies.”
b. constitute about 80 percent of all e-mail.
c. are estimated to be fraudulent either in content or packaging in approximately
one-fourth of all cases.
d. although annoying, do lower the cost of connecting to the Internet.
The Bill of Rights refers to:
a. the inalienable rights found at the beginning of the original Constitution.
b. the first ten amendments added to the Constitution.
c. a specific listing of individual rights found in the original text of the Constitution.
d. a grouping of individual rights set forth by the United States Supreme Court shortly
after the Constitution was ratified by the states.
The Children’s Online Privacy Protection Act:
a. Deals only with the collection of data that will be disclosed to children.
b. Deals only with collecting, from children, information that will be disclosed publicly.
c. Regulates the activities of Internet operators.
d. Both b and c.
Identity theft:
a. is a relatively new crime that was created through use of the Internet.
b. affects about 8 million American victims each year.
c. has slight impact on the victim since consumer law protects owners of credit cards
and limits their loss to $50 if they promptly report the loss of their card.
d. is now addressed by only state statutes.
The business form that is taxed as a partnership and gives all owners limited liability, is:
a. a close corporation.
b. a limited partnership.
c. a limited liability company.
d. a general partnership.
Discuss whether or not the following common transactions are bailments and if so, who
is the bailor/bailee, and what type of bailment is involved:
A) Renting storage space in Farmer’s Frank’s huge barn to keep your classic car out of
the snow and ice of winter. The rental agreement provides for $100/month rent and
Farmer Frank has the only access to the barn.
B) Hiring a moving company to move your belongings to a new residence.
C) Loaning your lawn mower to your neighbor.
D) Parking your car in a “park and lock” parking lot.
A pretermitted child is:
a. the child named as the executor of the will
b. the oldest child
c. the youngest child
d. a child not named in the will
Money laundering consists of
a. proceeds from a criminal act
b. attempting to conceal the source
c. using the money to commit crimes
d. all of these answers are correct
What prevents the market system from achieving a clean environment on its own?
a. Externalities.
b. Inefficiently managed business.
c. Remainders.
d. SIPs.
A company’s collective bargaining agreement has expired and negotiations are
underway for a new one. After one exhausting session, union leaders have decided
management will not bargain in good faith. The union declares it will be going out on
strike the following midnight if an agreement is not reached. The union:
a. is allowed to go out on strike the following midnight.
b. must give the employer at least seven days’ notice before going out on strike.
c. must give the employer at least 30 days’ notice before going out on strike.
d. must give the employer at least 60 days’ notice before going out on strike.
The type of product that prompted passage of the Consumer Product Safety Act was:
a. automobiles.
b. children’s toys.
c. refrigerators.
d. food products.
The most accurate statement about the Robinson-Patman Act is:
a. It has rarely been enforced in recent years.
b. The U.S. government has stepped up its enforcement during the last decade.
c. It has been declared unconstitutional.
d. It was repealed by Congress in 1998.
Administrative agency rules consist of:
a. executive and independent rules.
b. legislative and interpretive rules.
c. informal and “notice and comment” rules.
d. promulgated and unpromulgated rules.
Punitive damages are awarded:
a. for past and future medical expenses.
b. to repay the victim for losses suffered.
c. to punish the defendant.
d. for past and future pain and suffering.
What is the downside of using IFRS?
a. IFRS rules generally offer greater flexibility,.
b. cross-company comparisons might be more difficult
c. It could cause multiple reports to be prepared.
d. All of the above.
The U.S. Attorney General brought a Sherman Act lawsuit against competitors in the
widget market. The Attorney General alleged that these companies agreed to charge $20
for widgets. Which of the following defenses may apply?
a. That the $20 price was fair.
b. That the $20 price was lower than the price before the agreement.
c. That the businesses did not agree to charge $20 for widgets.
d. That the competitors would have gone out of business without the agreement.
The government itself prosecutes the wrongdoer in a case involving behavior so
threatening that society outlaws it altogether. This kind of case involves:
a. Procedural law.
b. Private law.
c. Civil law.
d. Criminal law.
Jim was a mechanic. One day when he attempted to weld a car’s gasoline tank, it
exploded and he was hurt. He filed to collect workers’ compensation. His employer
resisted on grounds that Jim had been negligent and had also violated the express
regulations of the company when he attempted to weld a gasoline tank. Which
statement is correct?
a. Jim cannot recover if it is shown that his negligent conduct caused the explosion.
b. Jim cannot recover if it is shown that he violated the express regulations of his
employer.
c. Workers’ compensation doesn’t apply in situations like this.
d. Jim can recover even if he was negligent and violated the employer’s rules.
Jeremy was terminated by his employer for violating company rules. He challenged the
termination by filing a grievance. Eventually, the matter went to arbitration and
Jeremy’s termination was ruled to have been improper. The employer filed a claim in
court to have the arbitrator’s ruling overturned since it claimed the facts clearly
demonstrated Jeremy had violated the express rules of the company. The employer
claimed that the arbitrator had ignored the obvious and had committed a serious mistake
of fact. A court may refuse to enforce an arbitrators ruling if:
a. it is proven that the arbitrator made a serious error of fact.
b. the court finds the ruling is contrary to public policy.
c. Both of the above are correct.
d. Neither of the above is correct.
When a party to a contract fails to fulfill all of her promises, she has breached the
contract. What response does a court typically have for a breach?
The first person to use a mark in trade, owns it.
Spangel Fashions sends out its spring and summer catalog to Cindy. Cindy falls in love
with the cute dress featured on the front cover of the catalog. When Cindy calls to order
the dress, she is informed that the company has sold out of the dress. Cindy is upset and
claims that the store is in breach of contract. She argues that the catalog presented an
offer, which she accepted when she called to order the dress. Is Cindy correct?
Why/why not?
Cincy, Inc. is building a $20 million dollar addition onto its distribution facility. To
build the facility, Cincy must fill in two acres of wetlands. Under the Clean Water Act,
Cincy must obtain a permit before filling in the wetlands.
The Truth-in-Lending Act applies to private individuals who loan money.
What are the advantages and disadvantages of using arbitration rather than litigation?
The statute of frauds generally requires that a lease for over one year be in writing.
Specific performance is available when the subject matter of the contract is unique.
The possessor of non-negotiable commercial paper has the same rightsno more, no
lessas the person who made the original contract.
Rachel Retailer sends a preprinted purchase order offering to buy goods from Snidley
Supplier. Snidley acknowledges Rachel’s offer with a preprinted acceptance form. The
terms of the two forms do not mirror each other. To analyze whether an enforceable
contract exists, one must first determine whether the new language in the acceptance is
an additional term or a different term.
Unethical behavior is a bar to financial success.
Owners in a joint tenancy with the right of survivorship cannot transfer their interest
during their lifetime.
Fowler Bros. has applied to Gibralter Bank for a $50,000 loan for its business
expansion. If Fowler Bros. plans to use its account at Gibralter Bank as collateral,
discuss what the bank needs to do for a security interest to attach.
Rick wrote a song entitled “Wonderful.” At the bottom of the first page of music he
wrote “© 1990 by Rick Reed.” Four months later a local band was playing his song at a
bar. Rick felt that the bar was an inappropriate setting for his music. What is his
remedy?
Andrew Durham was injured in a job-related accident that resulted in a workers’
compensation settlement agreement with the employer’s insurance carrier, Traveler’s
Indemnity Company. The settlement agreement required Traveler’s to pay Durham
$2500 per month for the rest of his life. To finance its obligation, Traveler’s purchased
an annuity in its name. The settlement agreement required Traveler’s approval or
consent prior to an assignment of the annuity payments. Durham later decided to open a
business and went to a credit union for a $214,000 loan. The credit union loaned the
money, taking a security interest in Durham’s monthly annuity payments. Traveler’s
consent was never secured. Was this a valid assignment?