The Establishment Clause of the U.S. Constitution allows the federal government to
establish which religions are entitled to protection.
Tenancy by the entirety is a form of co-ownership of real property that can be used only
by married couples.
In an ordinary lease in which there is no agreement as to who bears the risk of loss, the
risk of loss remains with the lessor.
With few exceptions, an unauthorized indorsement is wholly inoperative as the
indorsement of the person whose name is signed.
At common law, parties to an illegal contract are considered in pari quantum.
A police officer must be certain beyond a reasonable doubt that a person has committed
a crime before that person can be arrested.
In general, with regard to a loan connected with real property, a deed of trust can be
used to accomplish the same result as a mortgage, since the deed of trust is an
instrument that gives the creditor a security interest in the debtor’s property that is
pledged as collateral.
Advertising is false and deceptive under Section 5 of the FTC Act if it contains
misinformation or omits important information that is likely to mislead a “reasonable
consumer.”
Under the “private placement” exception to the registration of securities, the limitation
on the number of investors applies to non-accredited, but not accredited, investors.
Violations of Section 12 of the Securities Act of 1933 include selling securities pursuant
to an unwarranted exemption and making misrepresentations concerning the offer or
sale of securities.
Resale price maintenance is also known as vertical price fixing.
If requirements established by Article 3 of the Uniform Commercial Code are met, a
transferee who qualifies as a holder in due course takes the instrument free of many
defenses that can be asserted against the original payee.
State securities laws are usually applied when smaller companies are issuing securities
within that state.
Securities issued by any government in the United States are exempt from registration
with the SEC.
According to the mailbox rule, acceptance is effective when it is dispatched, even if it is
lost in the transmission.
The existence of a later will automatically revokes all earlier wills by operation of law.
Securities of a financial institution must register with the SEC, even if the financial
institution is regulated by the appropriate banking authorities.
“Every dog is entitled to one bite”, so strict liability does not apply to animals until or
unless you know them to be vicious or dangerous.
A principal is always liable for the torts of an independent contractor.
The Secretary General of the United Nations is elected by the Security Council, and the
election must be ratified by the General Assembly.
If you are found unconscious and taken to the hospital where doctors save your life, you
will be obligated to pay the bill even though you never agreed to the service based on
an implied-in-fact contract.
Securities and Exchange Commission rules require that original signatures be obtained
for all securities-related documents, so issuing securities over the Internet is prohibited
as a result.
An alien corporation is a corporation that is incorporated in another country.
The signature on a negotiable instrument can be any name, word, or mark used in lieu
of a written signature.
Merchant protection statutes allow merchants to stop, detain, and investigate suspected
shoplifters without being held liable for false imprisonment if there are reasonable
grounds for the suspicion, suspects are detained for only a reasonable time, and
investigations are conducted in a reasonable manner.
Child neglect occurs when a parent fails to provide a child with the necessities of life or
other basic needs.
Written stop-payment orders are renewable for 90-day periods after the initial order
expires.
In a tender offer, the tendering corporation and the target corporation retain their
separate legal status.
Fraud in the factum occurs if a person is deceived as to the nature of his or her act and
does not know what he or she is doing.
A patent cannot be acquired for an invention that has been in public use for more than
one year at the time of application.
The United States Congress enacted the Federal Patent Statute of 1852 to provide for
obtaining and protecting patents.
Actual cause is also called causation in ________.
A) essence
B) law
C) fact
D) equity
E) summation
Which of the following is not one of the general sources of international law?
A) a treaty between countries
B) a convention among countries
C) custom
D) United Nations resolutions
E) judicial decisions and teachings
Bob, after a long and distinguished career at a nuclear weapons plant in the plutonium
storage department, is hired by a local company to work in its warehouse. Bob’s skin
has turned bright green from his years around the plutonium, but he is otherwise healthy
and is not radioactive in any way. All scientific and health experts have determined that
his condition is permanent but harmless. After working in the warehouse, Bob does not
receive a promotion, and Bob believes it is because of his green skin. Which of the
following, if it is the true reason that Bob was not promoted, would give Bob the best
chance of prevailing if Bob sues his employer?
A) A white worker was promoted because the white worker was simply a better
warehouseperson.
B) An African-American worker was promoted because the African-American worker
had worked longer for the employer, and his promotion was made on the basis of
seniority.
C) Supervisors need to understand the company’s computerized inventory system, but
Bob could not learn the system, despite his best efforts to do so.
D) Despite the opinion of experts, some of the people Bob would be supervising
thought he had some kind of disability, and they therefore did not want to work for him.
E) Bob had informed his boss that he was gay, and this was the reason he was not
promoted.
The median income test uses:
A) the national average income for a family similar to the debtor’s family.
B) the state median income for a family similar to the debtor’s family in the debtor’s
state of residence.
C) the city or township average income for a family similar to the debtor’s family in the
debtor’s city or township of residence .
D) the county average income for a family similar to the debtor’s family in the debtor’s
county of residence .
E) the average of the debtor’s income as reported on the debtor’s past three years of
income tax filings.
A criticism of utilitarianism is that:
A) moral and ethical rules are too rigid and fixed over time.
B) some persons would take actions that they believe to be moral, but which most
persons in society believe to be immoral.
C) decisions require the measurement of qualities that are not subject to precise
measurements.
D) decisions are not allowed to take into account an individual’s station or place in
society.
E) the legal standard of behavior often exceeds the ethical standard of behavior
established by utilitarianism.
The federal agency that covers franchises and enforces franchise law at the federal level
is the:
A) Interstate Commerce Commission.
B) Justice Department.
C) Federal Trade Commission.
D) Patent and Trademark Office.
E) Federal Franchise Commission.
A deed is used to:
A) provide proof of the current ownership of real property.
B) prove that real estate is worth the price that was paid.
C) prove that the property taxes have been paid on a piece of real property.
D) convey real property by sale or gift.
E) insure real property.
A small market that can support only one competitor, such as a small-town newspaper,
is an example of a(n) ________ monopoly.
A) natural
B) artificial
C) inherent
D) de facto
E) unregulated
A pattern of racketeering is defined under RICO as:
A) two business-related criminal acts within a five-year period.
B) two business-related criminal acts within a ten-year period.
C) five business-related criminal acts within a five-year period.
D) five business-related criminal acts within a ten-year period.
E) a minimum of five business-related criminal acts committed at least once per year
for a five-year period.
The parol evidence rule would prevent a court from hearing oral evidence about a
matter that took place prior to the signing of a written contract if that evidence:
A) showed that the contract was entered into under duress.
B) helped to explain ambiguous language in the contract.
C) filled in a gap in the written language of the contract.
D) helped to correct an obvious typographical error in the contract.
E) showed that the parties actually intended something different from the written
language of the contract.
What can a nation do if it disagrees with a decision made by the dispute-settlement
body of the World Trade Organization?
A) appeal to the World Court
B) nothing, as such a decision is final
C) appeal to that particular nation’s own national court system
D) appeal to the appellate body within the World Trade Organization
E) appeal to the International Criminal Court
Which of the following is not true regarding Social Security?
A) Benefits include retirement benefits and survivors’ benefits.
B) The amounts paid into the Social Security system by a worker during his or her
working career are accumulated and invested, to be paid out during the worker’s
retirement years.
C) The Social Security tax for an employee is paid partly by the employee and partly by
the employer.
D) A self-employed person must pay both employee and employer portions of the tax.
E) Failure to submit Social Security taxes subjects the violator to interest payments,
penalties, and possible criminal liability.
What are the two general bases on which a contract can be considered to be illegal?
A) violation of a statute and contrary to public policy
B) violation of a federal statute and violation of a state statute
C) violation of a criminal statute and violation of a civil statute
D) contrary to public policy and having a minor as a party
E) having a minor as a party and having an intoxicated person as a party
In a trademark infringement case, the court may award each of the following except:
A) treble damages.
B) profits made by the infringer through the unauthorized use.
C) damages for injury to the plaintiff’s business and reputation.
D) an order requiring the defendant to destroy goods with the unauthorized mark.
E) punitive damages.
The U.S. Court of Federal Claims hears what kind of cases?
A) any case with claims involving more than one state
B) civil cases where at least $75,000 is in dispute
C) cases brought against the United States
D) cases where counterclaims have been filed
E) cases involving disputes in the way an earlier case was decided
The E-________ Act is designed to place the world of electronic commerce on a par
with the world of ________ contracts in the United States.
A) SIGN; paper
B) VERIFY; paper
C) CONTRACT; paper
D) SIGN; notarized
E) VERIFY; notarized
Peter runs an auto air conditioning repair shop. Because of the phase-out of the
ozone-depleting refrigerants used in older auto air conditioners, auto air conditioning
repairers have become subject to numerous new laws and regulations, some of which
are costly and burdensome to comply with. This results in much higher costs for air
conditioning repairs for many owners of older cars. By not following some of these
regulations, Peter can repair these older cars at a much lower cost. Peter believes that
the good that comes from the reduced repair costs outweighs the resulting incremental
damage to the environment, and thus decides to not follow the regulations. Peter has
reached his decision in accordance with:
A) ethical relativism.
B) utilitarianism.
C) ethical fundamentalism.
D) Kantian ethics.
E) Rawls’s distributive justice theory.
Which of the following is true regarding the payment of dividends?
A) Dividends are paid at the discretion of the board of directors.
B) Dividends are paid upon majority vote of the shareholders.
C) Dividends are paid if authorized by the board of directors and also approved by the
shareholders.
D) Dividends are paid at the discretion of the corporate president.
E) Dividends are paid at the discretion of the corporation’s chief financial officer.
Mary promises to give her car to her friend. The friend sells his current car at a fairly
low price because he is expecting to get a nearly new car at no cost from his rich and
generous friend, Mary. Mary changes her mind and decides to keep the car. If the friend
sues Mary, the court most likely will:
A) require Mary to give her friend the car because his sale of his car was consideration.
B) require Mary to give her friend the car because Mary made an illusory promise.
C) not require Mary to do anything because this was a gift promise.
D) based on the theory of promissory estoppel, require Mary to pay damages to the
friend for any loss he incurred in connection with Mary’s not keeping her promise.
E) not require Mary to do anything unless it can be proven that she subjectively
intended to cause her friend monetary difficulty.
Mr. Smith awakens one morning to the sound of construction in his back yard. When he
looks out the window, he sees Ajax Construction Co. apparently erecting a garage on
his property. He had not spoken or contracted with Ajax for this service. However, Mr.
Smith really wanted a new garage, so he let them continue. Later, it was discovered that
the garage was intended to go next door. Ajax sues Mr. Smith for the value of the
garage. What is the probable result?
A) Ajax wins; this is a case of a contract implied-in-fact, and Mr. Smith implicitly
agreed to pay for the garage.
B) Smith wins; there was no contract upon which Ajax could recover, and people are
not liable for benefits that are thrust upon them.
C) Ajax wins; although there is no real contract, this is a case of unjust enrichment, and
because Mr. Smith knew what was going on and accepted the garage, he must pay for it.
D) Smith wins; unjust enrichment does not apply here because Mr. Smith had no duty
to tell Ajax that they had the wrong house.
E) Smith wins; Ajax had a duty to get signed approval from him before beginning.
What is the purpose of the Uniform Computer Information Transactions Act?
A) to ensure that credit card companies process transactions promptly
B) to establish uniform rules for the formation and enforcement of electronic contracts
and licenses
C) to convert existing contract law so that all contracts are interpreted as if they were
negotiated over the Internet
D) to provide consumers certain rights in their contracts with Internet service providers
E) to provide a criminal cause of action for computer fraud
When a person transfers a negotiable instrument, to whom does this transferor make
transfer warranties?
A) only parties to whom the transferor makes a written assertion in connection with the
transfer
B) for all transfers, to the immediate transferee only
C) for all transfers, to the immediate transferee and all subsequent transferees
D) for transfers for consideration, to the immediate transferee, and if the transfer is by
indorsement, to all subsequent transferees as well
E) to subsequent transferees only
Which of the following is least likely to succeed as a claim under the Americans with
Disabilities Act?
A) a man who is unable to walk, but who can perform all of the requirements of a job,
although in some cases it might take him a little longer to complete the work compared
to a person who can walk
B) a man who is not hired because of a past drug habit that he has avoided for two years
C) a woman who has a documented history of severe asthma and who was not hired for
a job in Denver for that reason, although she has not experienced any problems since
moving from New Orleans to Denver
D) a woman who has a bad back that prevents her from being able to work at the
minimum speed required on an assembly line
E) a man who wears unusual-looking, thick glasses to correct a rare vision problem.
This person has normal vision with the glasses, but most people falsely assume that he
cannot see normally, even with the glasses
An ________ is a(n)________ exchange of promises between ________ legally
competent persons to do, or refrain from doing, an act.
A) offer; voluntary; two (2.)
B) offer; involuntary; two (2.) or more
C) agreement; voluntary; two (2.) or more
D) agreement; involuntary; two (2.)
E) agreement; involuntary; two (2.) or more
Utilitarianism can best be characterized by:
A) the consultation of an outside source, such as a book or person, for guidance.
B) the belief that the moral rules should be determined by persons who have a “veil of
ignorance” about their place or station in society.
C) the belief that a person must decide what course of action is proper based on that
person’s own set of beliefs or feelings.
D) determining which course of action produces the greatest amount of good for
society.
E) a set of universal rules based on reasoning which must be applied in all situations
and are characterized by reversibility.
What is the general concept of the “fresh start” in bankruptcy?
A) Debtors are given a new start in paying off their existing debts.
B) Creditors are given a new start in collecting amounts owed to them.
C) Businesses adopt new business plans.
D) Debtors have most debts discharged, and ‘start over” without those debts.
E) Debtors’ past problems are erased from their credit records, and they ‘start over” with
a “clean slate,” and all debts discharged.
An accord and satisfaction:
A) usually arises in settlement of a dispute under the original contract.
B) brings a new third party into the contract.
C) discharges the original contract’s duties upon reaching the accord.
D) can come into existence even if only one party wants it.
E) is against public policy and illegal.
Under the infancy doctrine, a contract is ________ by a minor.
A) canceled
B) void
C) voidable
D) renounced
E) disaffirmed
The Public Company Accounting Oversight Board was created by:
A) the Securities Exchange Act of 1933.
B) the Securities Exchange Act of 1934.
C) the Private Securities Litigation Reform Act of 1995.
D) the Tax Reform Act of 1976.
E) the Sarbanes Oxley Act of 2002.
Which of the following is not true about copyright protection for computer programs?
A) Computer programs are included in the list of tangible items protected by copyright
law.
B) The Register of Copyrights is authorized to accept and record documents related to
copyrighted computer programs.
C) The masks used to create computer chips are able to be copyrighted.
D) The term of protection is shorter for computer programs than for other copyrighted
items.
E) Computer programs must be marked with a copyright symbol to be protected.
Karen has a checking account at First Bank. Karen writes a check to Bonanza
Apartments for her rent. In this situation:
A) Karen is the drawer, First Bank is the drawee, and Bonanza is the payee.
B) Karen is the drawee, First Banks is the drawer, and Bonanza is the payee.
C) Karen is the payee, First Bank is the drawee, and Bonanza is the drawer.
D) Karen is the payee, First Bank is the drawer, and Bonanza is the drawee.
E) Karen is the maker, First Bank is the drawee, and Bonanza is the payee.
The duty of loyalty is generally a duty of:
A) the principal.
B) the agent.
C) both the principal and agent.
D) neither the principal nor the agent.
E) the principal only, if the agent is a gratuitous agent.
Zelda, the bookkeeper for Travel Unlimited, Inc., is responsible for issuing payroll
checks. Zelda is tired of her job and wants to move to another state. She issues a large
check to a fictitious person, Ann Zonk. Zelda takes the check issued to Ann Zonk,
forges the name of Ann Zonk, and cashes the check at a local check cashing service.
Zelda then leaves town. Assuming Zelda cannot be fund, who will bear the loss in this
situation and why?
Donna formed a corporation several years ago by issuing five hundred shares of stock.
There are ten shareholders, with the smallest shareholder owning twenty-five shares,
and Donna holding the most shares, one hundred. The corporation needs additional
cash, but current shareholders do not wish to permit any additional shareholders. What
are their options, and what additional factors should current shareholders consider in
raising the additional cash?
Why would an agent not disclose the existence and identity of the principal when
negotiating a contract, given that doing so would avoid agent liability on the contract?
What should an agent do when the principal does not want to be disclosed?
Why, when choosing a name for a new limited liability company, must organizers
include the words “limited liability company,” “limited company,” or an appropriate
abbreviation?
Round Wheel, Inc. is a manufacturer of bicycle rims, their only product. The workers
are unionized and are currently on strike. Talks are proceeding slowly, so the workers
decide to picket the local bike shops that sell Round Wheel rims. Their signs say,
“Round Wheel Employees are ON STRIKE; Don’t Buy Round Wheel Rims.” They
picket in a peaceful manner; further, they are courteous to customers, allowing them
through the picket line without problems, although they do comment on the Round
Wheel product as customers pass through the line. Is their picketing a legal or an illegal
act?
Chris and Bob, college students and athletes, became concerned about the amount of
information on the Internet that promotes unhealthy food consumption in children. They
decided to lobby their representatives regarding passage of a law criminalizing the
transmission of information accessible by children that encourages unhealthy food
consumption. Are Chris and Bob likely to be successful in their efforts, and why or why
not?
In 1995, O.J. Simpson was found not guilty of murder charges related to the death of
Ronald Goldman and his former wife Nicole Brown by a California court. Soon after
the verdict, a civil trial was commenced in a California court and in 1997 he was found
guilty of wrongful death with regard to both Goldman and Brown. Since he was
acquitted in the first trial by the jury, how could the second trial occur without violating
his double jeopardy rights?
Susan orders a great computer from an out-of-state company. The terms of the contract
provide F.O.B. place of destination. The seller ships the computer to Susan.
Unfortunately, it never arrives. Between Susan and the seller, who is responsible for
loss?
In contracts for the sale of goods, do the parties contracting electronically or
face-to-face need more protections? What circumstances might affect your opinion?
What is the advantage of an “S” Corporation, in comparison to a partnership?
Learned University is an exclusive Boston-area university. The private school admitted
only women until 1990, when it became a coeducational institution. Two of the factors
contributing to the school’s success and reputation have been its focus on student
service, and hiring only its own graduates whenever possible. The school has tripled in
size since it became a coeducational institution. Because of the increased number of
graduates available to work, the school has made being a graduate of its institution a
requirement for most of its positions. Discuss the employment discrimination aspects of
this policy.
What are the ethical issues involved in franchising businesses in foreign nations, when
doing so puts local businesses out of business, and may cause cultural disruptions?
Kathy owns an apartment building on the edge of a densely-populated city. It has
become dilapidated. It would be more expensive to renovate the existing building than
to tear it down and rebuild, so she hires the Big Boom Demolition Company to implode
the building. Kathy, who knows nothing about demolitions, simply tells Big Boom that
she wants the demolition completed by August 1. She will be on vacation in Japan at
the time, and will return on August 8. Mike, who has twenty-one years of demolition
experience and is the manager of Big Boom, secured the proper governmental permits,
and set the explosive charges. On August 1, at the time allowed in the permit, the
explosives are detonated. Although barriers were set up keeping the public away for a
radius of one-half mile in all directions, the debris scattered over a three-quarter mile
radius, harming several people. This was because Mike used more dynamite than was
necessary. What are the relationships of the parties, and who is liable for the injuries?
The Sony Bono Copyright Term Extension Act of 1998 granted individuals copyright
protection for their life plus 70 years. Do you believe that a period this long is necessary
to encourage the production of creative work? What are the advantages and
disadvantages of a longer copyright validity period?
Jan, a resident of Delaware, owns and operates a prominent building construction firm
specializing in residential home building in Kent County Delaware and Prince Georges
County, Maryland. She is in the news a lot and is frequently sued by customers for
substandard work. Her reputation is not very high amongst the general populace. While
driving to the store in her personal car, she collides with Pat, a resident of Maryland
who is severely injured. Pat’s brand new $250,000 Lamborghini is totaled and Pat has
medical bills that total $65,000. The accident occurred in Dover, Delaware. Pat wants to
file a lawsuit for the damages to his car and for his medical bills but doesn’t know
which court to file in. What are Pat’s options and what issues attach to each choice?
What might Jan’s options be and why? Disregard any possible insurance issues.
Terry has a business in which he visits with clients’ pet cats in the clients’ home while
the client is out of town. The primary purpose is to prevent the cats from becoming
psychotic due to the owner’s absence. Terry contracted to visit Valerie’s cat daily for a
two-week period when Valerie was on vacation. Because Terry charged by the hour,
Valerie gave Terry a signed check with the amount blank for Terry to fill in based on
$10 per hour. While visiting with Valerie’s cat, Terry noticed a check on Valerie’s desk
that had the amount of $100 filled in, but no payee and no signature. Terry took the
check, converted the $100 to $1,000 and signed Valerie’s name. Terry then filled out the
check that Valerie had given him in the amount of $10,000, rather than the $200 he had
earned at $10 per hour. Terry transferred both checks to a holder in due course, who
later seeks payment from Valerie. How much must Valerie pay on each of these checks?
Sam wants to sell his stereo system because one side of his amplifier occasionally
doesn’t work properly and the cost of repair is so high that Sam wants to get a new
stereo. Otherwise, it works well, and the sound quality is very good. Sam places an
advertisement in the newspaper and Bob comes to look at it. Bob tries it out and likes
what he hears. Then the following takes place:
Bob: How does it work?
Sam: Listen for yourself. Isn’t that sound great?
Bob: Yes it is. Have you ever had to have it repaired?
Sam: It’s never been repaired; it’s just as it came from the factory. Try the CD, the
cassette tape and the tuner. You’ll see they all work.
Bob: Playing this cassette tape, all of a sudden it doesn’t sound right. I know a lot about
stereos and that just doesn’t sound the way it should.
Sam: Try the CD and I’ll get another tape.
Bob plays the CD, then tries a different cassette, and then Sam is relieved that the
problem does not recur. Bob spends an hour or so playing and testing the stereo system,
and then they reach a deal. Bob discovers the problem after he gets home. What
remedies does he have?
Roger is a director of a major car manufacturer. This is one of the few remaining car
companies yet to introduce a sport utility vehicle. Roger convinces the board to
investigate forming a new division to design, build and market a sport utility vehicle.
Roger convinces the board that the first sport utility vehicle that the division introduces
should be the largest yet sold to the general public. The board establishes a committee
to perform product research, and this committee hires a marketing consulting firm. The
committee and the consulting firm both have a few reservations about such a large
vehicle, but research data demonstrates that the market could most likely support it.
After much discussion, the board of directors votes in favor of creating the new
division, and offering the huge sport utility vehicle as its first product. The vote was “9
to 6″ in favor of the plan. Shortly before this vehicle was introduced, there was a major
oil supply disruption that caused the price of crude oil to nearly triple. Only a few of the
new sport utility vehicles are purchased, and the company loses considerable money as
a result. Discuss Roger’s liability for these losses.