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If a professional athlete dies prior to or during a contract period, his or her contract with
the team is discharged.
After becoming sober, an intoxicated person can ratify a contract he or she entered into
while intoxicated.
Contracts involving fraud in the inception are voidable.
An offer for a unilateral contract cannot be accepted by a mere promise to perform.
A partner has the power to dissolve a partnership, but only if the partnership specifically
gives the partner this power.
An integration clause is also known as a segregation clause.
The "maker" is a party to a note, but is not a party to a draft.
Because what constitutes morality is personal and subjective, immorality is not a basis
to find that a contract violates public policy.
Because adults deal with a minor at their peril, in most states today a minor who has
misrepresented her age has the same rights and duties as a minor who did not do so.
Death of the offeror terminates an offer even if the offer could still be carried out by the
estate of the offeror, such as the sale of property of the offeror.
The provisions of the Fair Housing Act do not apply to the rental of apartments in a
building of four or fewer units, when the owner lives in one of the units.
The North American Free Trade Agreement has some special protection for some
industries.
Generally, a unilateral mistake does not allow either party to rescind the contract.
An accord and satisfaction discharges the original contract upon the formation of the
accord.
A seller may refuse to deliver goods to a buyer discovered to be insolvent.
If the right of possession returns to a third party upon the expiration of a limited or
contingent estate, it is called a reversion.
In terms of a request for production of documents, if the document sought are too
voluminous to be moved or are in permanent storage, or if their movement would
disrupt the ongoing business of the party who is to produce them, the requesting party
may be required to examine the documents at the other party's premises.
An instrument that is bearer paper can be changed to order paper by a later
indorsement.
Utilitarianism requires providing the greatest good to the greatest number of people,
rather that the greatest good to society.
A ring found on a shelf in front of a bathroom mirror is most likely lost.
Under the Family and Medical Leave Act, leave because of the birth of a child or the
placement of a child for adoption or foster care can be taken intermittently, even if the
employers does not agree to such an arrangement.
Most LLCs, particularly small ones, choose as the state of organization the state in
which the LLC will be doing most of its business.
An equitable condition is one that can be implied from the circumstances surrounding a
contract and the parties' conduct.
Spam accounts for approximately twenty-five percent of all business e-mail traffic.
When the name of a payee or indorsee is misspelled, the payee or indorsee must indorse
the instrument in both the correctly spelled name and in the name as misspelled.
A special power of attorney limits the agent to those acts specifically enumerated by the
agreement
In a negligence action, the defendant's subjective intent is immaterial in assessing
liability.
An offer to pay a reward is an offer to form a bilateral contract.
Under the subjective rule, if an engagement is broken off, the person who was given the
ring must return the engagement ring, regardless of who broke off the engagement.
A seller or lessor who discovers that the buyer or lessee is insolvent before the goods
are delivered may refuse to deliver as promised unless the buyer or lessee pays cash for
the goods.
If a buyer presents a bill of lading to a bailee and the bailee refuses to deliver the goods,
the risk of loss remains with the seller.
The buyer or lessee must hold any rightfully rejected goods with reasonable care for a
reasonable time.
No inference of the existence of a general partnership is drawn if profits are received in
payment of rent owed to a landlord.
A fictitious business name statement is optional in the states that recognize them.
In order to facilitate Internet development and growth, the United States Congress
enacted the CAN-SPAM Act.
The use of limited liability companies as a form of conducting business in the United
States dates back to the American Revolution.
A deficiency judgment can be issued in all states any time that a debtor has been
deficient in repaying a debt.
A WTO member nation that believes that another member nation has breached one of
the trade agreements can initiate a proceeding to have the WTO hear and decide the
dispute.
Can the payee of a negotiable instrument be a holder in due course?
A) yes, the payee is always a holder in due course
B) yes, for notes but not for drafts
C) no, not under any circumstances
D) usually not, because the payee is usually aware of defenses or irregularities
E) only if a check is involved
What is the usual effect of a defendant's nolo contendere plea in a government antitrust
case?
A) a penalty imposed on the defendant without an admission of guilt
B) a penalty imposed on the defendant without an admission of guilt, and automatic
liability to any private plaintiffs in related cases
C) a requirement that a defendant cease business in the line of business or market where
the violation occurred
D) an admission of guilt, accompanied by a lighter penalty than if a verdict of guilty
was issued following a trial
E) no penalty in the current case, but an increased penalty for any similar future
violation
Which of the following is not a party to a check?
A) the drawer
B) the drawee
C) the maker
D) the payee
E) the payer bank
A bailment where money is paid by one party to the other is usually described as:
A) solely for the benefit of the bailor.
B) solely for the benefit of the bailee.
C) for the mutual benefit of the bailor and the bailee.
D) solely for the benefit of the bailor or bailee, depending on who receives the money.
E) solely for the benefit of the bailee, but only if the bailor did not advertise.
There are extensive federal regulations covering airplanes and pilots. Assume that the
state of Missouri passes a statute containing numerous requirements, some conflicting
with the federal rules, covering the licensing of airplane pilots and the operation of
aircraft. A pilot's constitutional challenge to this state statute would most likely succeed
on the basis of:
A) the preemption doctrine.
B) the Equal Protection Clause.
C) substantive due process.
D) the state police power.
E) the exclusive doctrine.
Which of the following items does not need to be included in a financing statement?
A) the debtor's name
B) the debtor's mailing address
C) the secured party's name
D) a description of the collateral
E) a description of what circumstances would trigger a default in the underlying loan
agreement
Which of the following is not a typical way that a manufacturing defect arises?
A) failure to properly assemble the product
B) failure to properly engineer the product
C) failure to properly test the product
D) failure to properly check the quality of the completed product
E) failure to properly design the product
Over ________ franchise outlets in the United States account for over ________
percent of retail sales and about ________ percent of the nation's gross domestic
product.
A) 250,000; 15; 10
B) 500,000; 20; 10
C) 700,000; 25; 15
D) 1,000,000; 30; 20
E) 1,500,000; 35; 25
What was the result in International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America, UAW v. Johnson Controls, Inc., decided by
the United States Supreme Court, involving a claim brought by female employees
challenging their employer's policy that fertile women could not work at higher-paying
jobs in the company involving exposure to lead because of a potential danger to
developing fetuses?
A) The company had the right to protect children the women might have, and the
prohibition against women working in areas in which they would be exposed to lead
was a bona fide occupational qualification.
B) The women won the lawsuit because the company failed to prove that the lead
exposure to which the women would be subjected would prove harmful to a fetus.
C) The company had the right to prohibit a woman from working in areas in which
there would be exposure to lead, but only if the company had proof that the woman was
pregnant.
D) The company's policy constituted unlawful discrimination.
E) The women lost the case because they failed to meet their burden of proof that lead
exposure would not be harmful to a developing fetus.
If a party has presented a complaint to the Equal Employment Opportunity Commission
about alleged discrimination in violation of Title VII, and the Commission decides not
to bring a suit on behalf the employee, the Commission will issue a(n):
A) order of dismissal of the complaint.
B) notice of the complainant's right to appeal to the appropriate court of appeals.
C) judgment in the employer's favor.
D) injunction to prevent the illegal behavior in the future.
E) "right to sue" letter,
The Consumer Product Safety Commission is empowered to perform all of the
following actions except:
A) adopt rules and regulations to interpret and enforce the Consumer Product Safety
Act.
B) conduct research on the safety of consumer products.
C) issue comparative safety ratings of competing products.
D) order a manufacturer to recall, repair or replace a dangerous product, or take other
corrective action.
E) the Consumer Product Safety Commission can perform all of the above actions.
If a debtor has a defense to the payment of a debt, can a surety or guarantor avoid
paying the debt on the basis of the debtor's defense?
A) yes in the case of sureties, but not in the case of guarantors
B) yes in the case of breach of contract, but not in the case of a discharge in bankruptcy
C) yes in the case of a discharge in bankruptcy, but not in the case of breach of contract
D) yes, in the case of any defense
E) no, in the case of any defense
Which of the following is not one of the basic forms of a franchise?
A) area
B) chain-style
C) processing plant
D) joint venture
E) distributorship
State law provides that existing shareholders may buy new issues of stock in the same
proportion as their current holdings. This is done to allow current stockholders to keep
the same voting and dividend rights they had before the new stock issue. This right is
known as the right of:
A) redemption.
B) ratification.
C) preemption.
D) first refusal.
E) buy-sell.
Based on the law of products liability, which of the following is correct?
A) A manufacturer should design its products to take into account foreseeable misuse.
B) A manufacturer should design its products to take into account all possible misuse.
C) A manufacturer should design its products to take into account all possible misuse by
the initial purchaser, but need not worry about misuse by other users.
D) A manufacturer need only take into account the intended use of its products when
designing its products.
E) A manufacturer will not be liable for any misuse of its products if it provides
adequate instructions regarding proper use.
A business arrangement where one party licenses another party to use its trade name,
trademarks, commercial symbols, patents, copyrights, and other property in the
distribution and selling of goods and services is known as a:
A) joint venture.
B) proprietorship.
C) franchise.
D) partnership.
E) limited liability company.
There are two (2) kinds of property: ________ property and ________ property.
A) real; personal
B) conditional; unconditional
C) fixed; variable
D) perpetual; truncated
E) limited; unlimited
One way to create a destination contract is to include the term F.A.S.
Jan has two daughters, Ann and Betty. Each of these daughters has two sons. While all
of these persons are living, Jan writes a will leaving her entire estate to her "lineal
descendants, per capita." After Jan writes this will, the older daughter, Ann, dies. Jan
dies next. If the value of Jan's estate is $120,000, how much does Ann's older son
receive?
A) $20,000
B) $24,000
C) $30,000
D) $36,000
E) $40,000
Which of the following is one of the most commonly used top-level extensions for
domain names?
A) .coop
B) .nfl
C) .nba
D) .nhl
E) .mlb
Under what circumstances can a state impose a tax on goods that are imported from
other nations?
A) in any circumstance
B) if the tax does not conflict with any valid federal law
C) if the amount of the tax is reasonable
D) if the tax is also applied equally to the same type(s) of goods produced domestically
E) in no circumstance
The World Trade Organization was created as part of:
A) the United Nations.
B) the North American Free Trade Agreement.
C) the International Monetary Fund.
D) negotiations on the General Agreement on Tariffs and Trade.
E) the European Union.
The term for jurisdiction based on the location of a piece of property is:
A) long-arm jurisdiction.
B) in personam jurisdiction.
C) in rem jurisdiction.
D) subject matter jurisdiction.
E) property-rem jurisdiction.
Which of the following is true regarding a mechanic's lien?
A) It is a lien filed by a bank that provides a home equity loan for repairs.
B) It is a lien filed by a credit card company when funds are used for home repairs.
C) It is a lien filed by a contractor or laborer who has performed work on a home, but
has not been paid.
D) It is not possible for such a lien to result in a property owner paying twice for work.
E) There is no requirement that a person wishing to assert a mechanic's lien file notice
of lien in the county in which the real property is located.
Which of the following is true regarding conversion of an existing business to a limited
liability company, assuming any applicable requirements to do so are satisfied?
A) An existing business may not be converted to a limited liability company.
B) General partnerships may be converted to limited liability companies, but other
business forms may not be converted.
C) General partnerships and limited partnerships may be converted to limited liability
companies, but corporations cannot.
D) General partnerships and corporations may be converted to limited liability
companies, but other business forms may not be converted.
E) General partnerships, limited partnerships, and corporations may be converted to
limited liability companies.
In Medrano v. Marshall Electrical Contracting Inc., the court had to determine whether
Medrano was covered by workers' compensation when he was killed while driving
home from a night class. They said:
A) since he was driving home, the "coming and going" rule prevented a valid lawsuit.
B) the class was solely benefiting Medrano, so the employer had no liability.
C) even though the class made Medrano a better employee and benefited the company,
Medrano was kill off of the company premises, so it was not a job related injury and the
company was not liable.
D) because the class made Medrano a better employee and the company benefited from
having a better employee, the "mutual benefit" doctrine applied, and the company was
liable for workers' compensation benefits.
E) because Medrano was killed by a drunk driver, since the company had no control of
the situation, and since the company could not have acted to prevent the injury, the
employee's death was not a compensable, work-related injury.
Any state law that ________ conflicts with valid federal law is ________ under the
Supremacy Clause.
A) potentially; preempted
B) potentially; co-opted
C) directly and substantially; preempted
D) directly and substantially; co-opted
E) directly and substantially; valid
In a guaranty arrangement, the guarantor:
A) promises to pay the debt of another in any circumstance.
B) promises to pay the debt of another if that other person does not pay.
C) promises to pay the debt of another contingent upon the happening of an external
event.
D) promises to assume responsibility for the quality of goods.
E) promises to collect a debt or debts on behalf of a creditor.
A business that is willing to sacrifice some income in order to avoid harm to others 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
In the United States, the supreme law of the land includes:
A) the U.S. Constitution only.
B) the statutes passed by Congress only.
C) the U.S. Constitution and executive orders issued by the President.
D) the U.S. Constitution and treaties with foreign governments.
E) the U.S. Constitution and statutes passed by Congress.
Which of the following describes a licensing agreement?
A) It is an arrangement in which a party that owns trademarks and other intellectual
property contracts to permit another party to use those trademarks and intellectual
property in the distribution of goods, services, software, and digital information.
B) It is an arrangement only pertaining to trademarks in which a party that owns a
trademark contracts to permit another party to use the trademark in the distribution of
goods, services, software, and digital information.
C) It is an arrangement in which a franchisee allows another party to operate the
franchise.
D) It is an arrangement in which a party that owns trademarks and other intellectual
property contracts to permit another party to use those trademarks and intellectual
property, but only in the distribution of goods.
E) It is an arrangement in which a party that owns trademarks and other intellectual
property contracts to permit another party to use those trademarks and intellectual
property, but only in the distribution of services.
The proper relationship between the common law and the UCC regarding sales is:
A) common law no longer applies to sales.
B) the UCC no longer applies to sales.
C) the UCC controls sales, but where the UCC is silent, common law still controls.
D) the common law controls sales, but where the common law is silent, the UCC
controls.
E) the UCC applies only common law to sales.
Which two agencies are responsible for the enforcement of the antitrust laws?
A) the Department of Justice and the Securities and Exchange Commission
B) the Federal Trade Commission and the Securities and Exchange Commission
C) the Federal Competition Commission and the Department of Justice
D) the Federal Competition Commission and the Securities and Exchange Commission
E) the Department of Justice and the Federal Trade Commission
