The legality of non-price vertical restraints of trade under Section 1 of the Sherman Act
is examined using the “rule of reason.”
A UCC sale occurs when possession of property is transferred from one party to
another.
A television purchased for your home and a television purchased for your business
would both be considered “goods.”
The doctrine of negligence per se is used where the plaintiff was unable to observe the
conduct of the defendant that led to the injury.
Treaties entered into by the federal government with Native American Nations became
void when the specific territory became a state and the treaty had to be renegotiated due
to the land governance.
A will without a valid codicil is generally ineffective.
Depositions consist of oral questions answered orally and both parties and witnesses
may be deposed.
In a merger, the corporation that continues to exist is called the merged corporation.
Execution is a pre-judgment court order that permits the seizure of a debtor’s property
that is in the debtor’s possession while a lawsuit against the debtor is pending.
An author must file a timely application in order to receive copyright protection.
In opening statements, an attorney usually summarized the main factual and legal issues
of the case and describes why he or she believes the client’s position is valid.
The ULLCA covers most problems that arise in the formation, operation, and
termination of LLCs.
A gift is valid only if the donee gives the same amount of consideration for the property
that the donor gives.
A franchisor’s ability to maintain the public’s perception of the quality of the goods and
services associated with its trade name, trademarks, and service marks is the essence of
its success.
Joint ventures are never an available option for international expansion because of the
complexities involved in transacting international business.
A corporation may be involuntarily terminated by the corporations’ creditors if an
involuntary petition for bankruptcy against the corporation is granted.
A security interest may not be given in accounts receivable.
If property is owned concurrently by two (2.) or more persons, there is divergent
ownership.
A contract where the consideration exceeds $1,000 is automatically considered a formal
contract.
Although the federal government has enacted antitrust laws, most antitrust actions are
brought under state law.
The United States Congress enacted the original federal Bankruptcy Act in 1978.
An LLC is a separate legal entity distinct from its members.
The aggressiveness with which antitrust laws are enforced varies considerably, based on
the differing political ideologies of the administrations that occupy the Office of the
President of the United States.
The First Amendment to the U.S. Constitution protects persons and corporations from
overzealous investigative activities by the government.
A “dividend preference” is the right to receive a fixed dividend at set periods during the
year.
Strict liability has made negligence far less important as a theory under which to
recover for injuries caused by products.
The purpose of an integration clause in a contract is to exclude application of the parol
evidence rule to that particular contract.
After a criminal trial, only the government has the right to appeal the verdict.
The Articles of Confederation did not provide the United States Congress with the
power to regulate interstate commerce.
A gift requires delivery in order to be effective.
If, after a public administrative hearing, the FTC finds a violation of Section 5 of the
FTC Act, it may issue corrective advertising.
Stella Liebeck was successful in her suit against McDonald’s after she was injured by
coffee spilling in her lap because McDonald’s was found to have acted recklessly in the
design of the lid, which loosened and caused a spill and resultant injuries.
Fraud by containment occurs when one party takes specific action to conceal a material
fact from another party.
In a state that has not enacted innkeepers’ statutes, if a woman knows that a hotel safe is
available but does not put her engagement and wedding rings in the safe, the hotel will
still be strictly liable for the two rings if they are stolen when a thief breaks into her
room and steals them from atop the night stand while she is in the shower.
Which of the following is a special federal court established by the United States
Congress?
A) U.S. Court of Appeals for Veterans Claims
B) U.S. Court of Appeals for the Merchant Marine
C) U.S. Court of Appeals for the Civil Service
D) U.S. Court of Appeals for the September 11, 2001 Victim Compensation Fund
E) U.S. Court of Appeals for Internal Affairs
Martin, Martina and Melvin are shareholders of Random Corporation. They each hold
several hundred of the five thousand outstanding shares. The three enter into an
agreement ensuring they will always vote against any attorney in a board of directors
election, and vote against any plans to expand the corporation’s business overseas. This
agreement is:
A) an enforceable voting agreement.
B) valid as to the overseas expansion, but invalid with respect to an attorney’s election
to the board.
C) invalid, because any such voting agreement is against public policy, since it limits a
shareholder’s right to vote freely on all matters.
D) invalid, because the voting agreement is contrary to the best interests of the
corporation.
E) valid, if the board of directors approves it.
The Commerce Clause of the United States Constitution gives the federal government
the ________ power to regulate commerce with foreign nations.
A) reserved
B) exclusive
C) shared
D) qualified
E) conditional
An agreement that lacks consideration:
A) is void as against public policy.
B) is not enforceable, and thus cannot be performed.
C) is enforceable only if in writing.
D) will be enforced only against the party who gave consideration.
E) will not be an enforceable contract, but may be enforced under the theory of
promissory estoppel.
Joe has a small company that makes a line of boots called “Mountain Hikers” that have
become very popular. Can Joe obtain a trademark for “Mountain Hiker?”
A) no, because the words are generic
B) yes, but only if no one else uses either of those words in a valid trademark
C) no, because Joe is not the creator of those words
D) yes, but only if he is the first to use either of the words in the name of a hiking boot
E) yes, if the words have acquired a secondary meaning in connection with the boots
Regarding the bank collection process, for an “on them” item, the drawee is also the:
A) collecting bank.
B) clearing house bank.
C) intermediary bank.
D) payer bank.
E) Federal Reserve bank.
The following are characteristic of Rawls’s social justice theory except:
A) persons in society are presumed to have entered into a social contract with all others.
B) individuals should make decisions so as to maximize the total wealth in society.
C) persons who are unaware of their station in society should be the ones to choose the
principles of justice.
D) it has been criticized because many persons in society would not choose to
maximize the benefits to the least advantaged persons in society.
E) it has been criticized because establishing the blind “original position” for choosing
moral principles is impossible in the real world.
A business that is concerned solely with the financial implications of alternate courses
of actions is applying which theory of the social responsibility of business?
A) moral minimum
B) maximizing profits
C) stakeholder interest
D) corporate citizenship
E) moral maximum
The Bankruptcy Code is contained in ________ of the United States Code.
A) Article I
B) Article II
C) Title 1
D) Title 11
E) Section II
Which of the following is a correct statement regarding the applicability of the Statute
of Frauds to easements?
A) The Statute of Frauds does not apply to easements.
B) Express easements must be in writing to be enforceable, while implied easements
need not be written.
C) Implied easements must be in writing to be enforceable, while express easements
need not be in writing.
D) Both express and implied easements must be in writing to be enforceable.
E) Although the Statute of Frauds does generally apply to easements, neither express
nor implied easements must be in writing to be enforceable.
A ________ contract consists of an agreement between the parties, is supported by
legally sufficient consideration, is between parties with contractual capacity, and
accomplishes a lawful object.
A) voidable
B) void
C) valid
D) vituperative
E) vociferous
Susie, a resident of Tennessee, purchased passage for a seven-day cruise on the
Sunspot, a cruise ship operated by Good Times Corporation. Good Times required that
Susie sign a forum-selection clause designating Florida as the only state in which any
lawsuits arising in connection with the cruise could be brought. Susie slipped in spilled
soup on the cruise injuring her back and wanted to sue. Where can Susie most likely sue
Good Times Corporation?
A) Tennessee
B) Florida
C) Tennessee or Florida
D) Tennessee, Florida, or any other state Susie passed through on her way to Florida
E) Florida, or any state bordering Florida
Which of the following is in the correct order from first to last to occur?
A) arrest, booking, arraignment
B) booking, arrest, arraignment
C) arraignment, arrest, booking
D) booking, arraignment, arrest
E) arrest, arraignment, booking
To prove that a person intended to deceive an innocent party, the person making the
misrepresentation must have either had knowledge that the representation was false or
made it without sufficient knowledge of the truth. This is called ________.
A) primogeniture
B) scienter
C) debenture
D) accenture
E) indenture
If a ________ instrument is not paid on its expressed due date, it becomes overdue the
next day.
A) demand
B) time
C) due-on-sale
D) sale-on-approval
E) condition precedent
Which of the following receives at least some protection under the U.S. Constitution?
A) political speech
B) commercial speech only
C) offensive speech and commercial speech
D) political speech and commercial speech
E) political speech, commercial speech and offensive speech
Bob is moving to another job across the country and decides to sell a majority of his
household goods. In various separate contracts he agrees to sell his 50″ HD TV which is
two weeks old, his coffee maker bought at Wal-Mart, his antique, custom-built bicycle
and his hand-signed and numbered Salvador Dali lithograph. He is moving on August
8th and the buyers, who have written contracts, are to pay and pick up their purchases
on August 3rd. On August 3rd they all arrive with money in hand but Bob refuses to go
through with the contracts claiming sentimental attachment that he hadn’t anticipated.
Which of the following is true?
A) All four purchasers may successfully sue based on specific performance.
B) Sentimental attachment is a valid defense to all of these contracts, so Bob may
breach.
C) Specific performance will only apply to the coffee maker and television, but not to
the bike and the lithograph.
D) Specific performance will only apply to the bike and the lithograph, but not to the
coffee maker and the television.
E) Specific performance will only apply to the television, the bike and the lithograph,
but not to the coffee maker.
Will, Mary, and Alice form a limited liability company and do not specify a term.
Which of the following is true regarding the term of the limited liability company?
A) The limited liability company is an “at-will” company.
B) The articles of incorporation are invalid, because a term must be specified.
C) The limited liability company has an implied term of ten years, which may not be
renewed.
D) The limited liability company has an implied term of ten years, which may be
renewed.
E) The limited liability company has an implied term of five years, which may be
renewed.
A nonprofit corporation is a:
A) corporation that has never made a profit.
B) corporation that does not intend to make a profit.
C) corporation formed for charitable, educational, religious or scientific purposes that
cannot make a profit.
D) corporation formed for charitable, educational, religious or scientific purposes that
can make a profit, although any profit generated may not be distributed to its members,
officers or directors.
E) corporation formed only for charitable purposes.
Each of the following is a general function of the law except:
A) shaping moral standards.
B) maintaining the status quo.
C) encouraging individual justice.
D) facilitating orderly change.
E) providing a basis for compromise.
Where there is no agreement in a limited partnership regarding the allocation of profits,
how are they allocated?
A) equally among all the partners
B) one-half of the profits equally among the general partners, and one-half of the profits
equally among the limited partners
C) among all partners proportionally, with regard to the capital each partner invested in
the partnership
D) one-half of the profits among the limited partners proportionally, with regard to the
capital each limited partner invested, and one-half of the profits among the general
partners proportionally, with regard to the capital each general partner invested
E) in accordance with which partners generated the profits
Many state Statutes of Frauds require that agents’ contracts to sell real property covered
by the Statute of Frauds be in writing to be enforceable. The requirements is often
referred to as the ________ rule
A) perfect parity
B) equal parity
C) due diligence
D) equal dignity
E) perfect dignity
The deadline for a bank to dishonor an item received on a particular day is:
A) midnight of the next banking day, except for “on us” items, for which the deadline is
midnight of the same banking day.
B) midnight of the next banking day, except for “on us” items, for which the deadline is
midnight of the second banking day.
C) midnight of the next banking day, except for “on us” items, for which the deadline is
the open of business on the second banking day.
D) midnight of the next banking day, except for “on them” items, for which the deadline
is midnight of the second banking day.
E) midnight of the third banking day, except for “on them” items, for which the
deadline is midnight of the fourth banking day.
The Equal Pay Act of 1963 prevents discrimination on the basis of:
A) race.
B) age.
C) sex.
D) race or sex.
E) the same categories that are protected under the Civil Rights Act of
What did the court decide in Medlock v. Mitchell, when explaining how to determine
whether a will was executed under “undue influence?”
A) The proof of the existence of a confidential relationship is enough for the court to
determine that undue influence occurred.
B) Because the will was prepared using the services of an attorney, the likelihood of
undue influence is non-existent.
C) The presence of the beneficiaries at the time that the will and trust amendments were
executed is circumstantial evidence that there was undue influence.
D) Circumstantial evidence alone is not enough to presume undue influence.
E) If a person possesses another’s power of attorney, there is no undue influence
because of the rights conferred upon the holder.
Which of the following best describes the concept of promissory estoppel?
A) It is one of the required aspects of consideration.
B) It is a doctrine that stops certain promises from being enforced.
C) It is a doctrine that allows a remedy in some cases where a promise is not supported
by agreement or consideration.
D) It is the concept that prevents persons from making unenforceable gift promises.
E) It is the requirement that the consideration exchanged in a contract be approximately
equal.
This type of contract is based on an equitable doctrine:
A) implied-in-law.
B) executed.
C) executory.
D) informal.
E) formal.
Even if management is not in favor of a shareholder resolution, a shareholder has a
right to have the resolution included in the corporation’s proxy materials if it:
A) relates to the corporation’s business.
B) concerns a policy issue.
C) does not concern the payment of dividends.
D) relates to the corporation’s business, concerns a policy issue, or concerns the
payment of dividends.
E) relates to the corporation’s business, concerns a policy issue, and does not concern
the payment of dividends.
Kantian ethics is also referred to as ________ ethics.
A) formal
B) informal
C) fundamental
D) duty
E) entitlement
Under the crashworthiness doctrine:
A) car manufacturers should make cars with a minimal chance of being involved in an
accident.
B) car manufacturers should make cars that are designed so that the risk of injury
arising from striking the interior of the car in an accident is minimized.
C) car dealers should train car buyers in order to minimize their chances of being
involved in an accident.
D) car manufacturers should design cars to minimize their repair costs in the event of an
accident.
E) sellers of used cars are required to disclose any information about the car that would
make it more likely to be involved in an accident.
Which of the following is not a basis for an unfair competition claim under Section 5 of
the Fair Trade Commission Act?
A) the action violates a provision of the Sherman Act
B) the action violates the ‘spirit” of the antitrust laws
C) the action allows the party to earn excessive profits
D) the action violates public policy
E) the action is oppressive or unscrupulous
Which of the following is not a general function of the law?
A) facilitating orderly change
B) facilitating planning
C) providing a basis for compromise
D) maximizing individual freedom
E) ensuring the supply of and demand for products in the United States economy
A(n) ________ fee is a fee for the continued use of the franchisors trade name,
property, and assistance that is often computed as a percentage of the franchisee’s gross
sales.
A) initiation
B) installment
C) periodic
D) royalty
E) commoner
How does the definition of value for purposes of holder in due course differ from the
definition of consideration? Why do you think there is a difference? Should there be a
difference?
Betty owns a home electronics store. Betty borrowed $100,000 a couple of years ago
from Thirdbank, and Betty granted a security interest to Thirdbank on “present and
after-acquired inventory.” Betty is a generous store owner. Employees are able to select
electronics and place them in their offices and homes. The understanding was that these
systems would be sold as demonstrator units after a few months, but that has happened
only once. Most of these systems have been in employee offices or homes since shortly
after the store opened two years ago. Betty defaults on the debt to Thirdbank. Will
Thirdbank be able to recover the electronic components located in employee offices and
homes?
Jacob has long been fascinated with gambling and has traveled to many of the world’s
gambling centers, including Monte Carlo. He now plans to turn his hobby into work by
opening a gambling education Web site. He hopes to attract advertising from casinos
who would want to reach the persons using his Web site to learn about gambling.
Because of his love of Monte Carlo and its worldwide fame, he acquired several
domain names with Monte Carlo in the name. Assume that a few months before he is
ready to go online, he is sued by General Motors who wants the Monte Carlo domain
name for use as a Web site to promote its Chevrolet Monte Carlo. Discuss the likely
outcome of this lawsuit.
A furniture store in a college town advertised a convertible futon sofa-sleeper as “Big
enough to sleep two people; nice oak finish; wide choice of fabrics; $199.” Bob is
interested in the item, and goes to the store. When he arrives at the store, he is told that
they only have a few of the sofa-sleepers, and that they do not have one assembled and
displayed. The salesperson says that he does not know where the ones in the warehouse
are, and that it will take some time to locate them. The salesperson tries to interest Bob
in some of the more expensive models in the showroom, but Bob is not interested.
Finally, Bob is able to see the $199 model. Even when opened out as a bed, it is several
inches narrower than a standard full-size mattress. In addition, the finish on the wood is
poorly-applied. Lastly, Bob is told that the only fabric colors are white, gray and black,
and that they are currently out of stock on the white and gray colors. Has the store
violated Federal Trade Commission regulations?
An act or a decision can be legal but not ethical, or be ethical but not legal. Is this
statement correct? Why or why not? Discuss your conclusion and give examples.
Justin purchased a new Ford Thunderbird in April of 2007. This was to be Justin’s
mid-life crisis car and would not be used in everyday driving. He did not sell his current
car and would continue to drive it most of the time. Even though this was a low-volume
car, Justin wanted his to be unique. He entered into a contract on May 1st, with a firm to
make a custom interior for the car, with the job to be completed on June 11th. The
customizer informed Justin on May 10th that the car would not be ready until June 15th.
On June 12th, Justin rented a 2007 Thunderbird from a specialty car rental company at a
cost of $120 a day until his car was ready on June 15th. Can Justin recover his car rental
cost from the customizer?
What are some of the issues and reasons that have kept an international uniform code of
legal principles from being established?
Jessica owns a piece of land on the outskirts of Happy City. The residence on the land
was built by her great-great grandfather; since its construction, her great- grandmother,
grandfather and mother were born in the house, as were Jessica and her daughter.
Jessica is sixty-nine years old, retired and in good health. The mayor of Happy City has
just visited her, informing her that the city needs her land for a highway project. Happy
City has experienced enormous economic and population growth, and needs the
highway to maintain its continued prosperity. Jessica is extremely unhappy, and refuses
to sell. Is there anything that Jessica can do? What will the final outcome likely be?
Leah has entered into a licensing agreement with Tommy J. Software. Leah has
received and accepted the software tendered under the agreement. A few days later she
encounters problems with the software and realizes that the program is nonconforming
to the contract. Since she has accepted, installed and used the software, does she have
any recourse?
Belle and Company, Inc., a public accounting firm, has been engaged by Starr
Associates to prepare an audit. After the audit is prepared, Starr uses it, along with an
unqualified opinion letter, to secure a large commercial loan. During the preparation of
the audit, Belle failed to properly represent Starr’s true financial condition, and soon
after the loan is secured, Starr defaults. Is Belle liable to the bank? If the bank sues
Belle, under which theories of liability will Belle be liable, if any?
Choose any social issue that you feel strongly about and state your position discussing
the ethical approach you follow to arrive at your position. How might another person
looking at the same issue come to a similar or dissimilar position through a different
ethical approach?
How much regulation of Internet content should be permissible? How does the Internet
differ from television and how is it similar with respect to this issue? How should
children’s access enter into the analysis?
Determine whether the following instrument is a negotiable instrument, addressing all
the requirements of negotiability in your response.
“I, Orville Wright, promise to pay $5,000 to Billy’s Bicycle Parts in four equal
installments of principal, beginning on January 1, 2012, and on the same day in each of
the next three years. Each payment will consist of $1,250 in principal, plus interest
accrued since the date of this note, in the case of the first payment, or since the prior
payment in the case of all other payments. Interest shall accrue at the rate of 8% per
annum, or in the event of default, at the maximum rate allowed by law until the default
is cured. This note is secured by collateral consisting of various experimental flying
machines. This note may be paid in whole or in part prior to the due dates, and the
interest accrued will be reduced accordingly. The due date for any payment under this
note may be extended by mutual agreement of the parties up to six months from the due
date as stated herein. The proceeds of this note will be used by Orville Wright to further
his aviation experiments, and in the event those experiments are unsuccessful, the
payment obligation is canceled.
Signed: Orville Wright
Date: 1/1/11
Many laws require a determination of actual injury before liability or guilt is
determined. Is it fair that under the Clayton Act, a merger may be prevented merely
because the merger is “likely” to substantially lessen competition or create a monopoly?
Even if you do not agree with this regulation, why do you think it was enacted?
Should individual states be able to engage in treaties with foreign nations? What
problems could arise?
Why is the general measure of compensatory damages “benefit of the bargain” rather
than a measure based on returning the parties to the position that they were in prior to
the contract? What do you think is the best approach?