Zach decided to incorporate his business under the name of “Zamm.” In addition to
“Zamm,” the Model Act requires that Zach include one of the following words:
“corporation,” “incorporated,” “limited,” or “company” or an abbreviation thereof.
a. True
b. False
In order to be considered sexual harassment, behavior must be so severe that it
interferes with an employees ability to work.
a. True
b. False
Negligence concerns harm that
a. is unforeseeable.
b. arises intentionally.
c. arises by accident.
d. is always substantial.
Under FTC rules, a customer can cancel a door-to-door sales contract within
a. three business days of the sale.
b. five business days of the sale.
c. one calendar week from the date the sale was made.
d. a “reasonable time after the sale was made.
Collector Carl displays his beer can collection at the local swap meet. Mary sees the
collection and is interested in buying it. Carl says he will sell the collection for $1,500.
Mary says she really likes the collection but is only willing to pay $1,000. Which of the
following is correct?
a. Mary’s counteroffer terminates Carl’s offer of $1,500.
b. If Carl rejects Mary’s counteroffer, she can still accept Carl’s offer of $1,500.
c. Neither offer is valid. Who would ever pay $1,000 or $1,500 for a beer can
collection?
d. Mary’s offer is an option contract and she cannot revoke the offer.
The Truth-in-Lending Act applies to private individuals who loan money.
a. True
b. False
Lori and her friends burn an American flag as an act of political protest. Lori is arrested
for violating a state law that prohibits flag burning. The Supreme Court has ruled that
laws making it illegal to burn an American flag
a. are void because they deny a person due process rights.
b. are void because a state court has no power to prosecute a person for burning the
federal flag.
c. are void because they violate a person’s right to freedom of speech.
d. are valid.
For those wishing to purchase a franchise, the Federal Trade Commission acts as a
guardian ensuring that the business idea is sound and that the information in the
Franchise Disclosure Document is accurate.
a. True
b. False
If the offer does not specify a type of acceptance, the offeree may accept in any
reasonable manner and method.
a. True
b. False
A contract clause which specifies the amount of damages to be paid in the event of a
breach is called
a. a covenant of damages clause.
b. a reliance interest of damages clause.
c. a liquidated damages clause.
d. an incidental damages clause.
A director violates the corporate opportunity doctrine if he or she competes with the
corporation, unless the disinterested directors approve of the director’s actions.
a. True
b. False
Which of the following does NOT violate the Foreign Corrupt Practices Act?
a. a U.S. company bribes a government official in order to influence a governmental
decision.
b. A publicly traded company that does not engage in international trade refuses to
allow its company records to be inspected by U.S. officials.
c. A U.S. company promises to pay a bribe to a foreign company, but is unsuccessful in
gaining any benefits from that company.
d. A company allows a grease or facilitating payment for a routine governmental action.
Jamie is building a house on her lot. She invites Earnie of Earnie’s Excavation to bid on
the excavation job. Earnie observes that the lot next to Jamie’s is also under excavation
and the soil in that lot is normal and not excessively rocky. Based on the assumption
that the soil in Jamie’s lot will be similar, he and Jamie agree that the excavation will
cost $3,000. When Earnie starts digging, he learns there is solid rock under Jamie’s lot.
Earnie says it will cost an extra $2,500 for the excavation work. Jamie agrees just to get
the job done but later refuses to pay a dime more than $3,000. If Earnie sues, the most
likely result would be
a. Jamie wins, as Earnie was under a preexisting duty to dig the basement.
b. Earnie wins as this modification is governed by the UCC and consideration is not
required to enforce a modification of the agreement.
c. Jamie wins as Earnie was not acting in good faith and just wanted to put Jamie in a
situation where she didn’t have a choice but to agree to more money.
d. Earnie wins, as the modification was due to unforeseen difficulties.
Which law imposes controls on federal agencies by requiring basic fairness in areas not
regulated by enabling legislation?
a. The 1964 Civil Rights Act.
b. The Clean Agency Act.
c. The Administrative Procedure Act.
d. The Freedom of Information Act.
Does the Family and Medical Leave Act apply to professionals like CPAs?
a. Yes, if they work for a company with at least 50 workers.
b. Yes, but only if they are paid on an hourly basis.
c. No, but the professional firm must provide adequate vacation and sick days.
d. No, unless the employer specifically provides coverage.
Alice signs a contract with Bob to buy Bob’s house for $150,000, with the clause, “if I
am able to obtain a mortgage loan for $125,000, at no more than 7% interest, payable
over 15 years.” Assume that Alice tries but is unable to obtain the described loan, and
therefore refuses to proceed with the purchase. Alice is in breach of the contract.
a. True
b. False
The National Labor Relations Act guarantees employees the right to join unions.
a. True
b. False
The Children’s Online Privacy Protection Act prohibits Internet operators from
collecting information from children under what age without parental permission?
a. 18
b. 16
c. 13
d. 10
Vicki entered into a written contract to buy a car from Valley Motors. The written
contract included a provision that stated, “This writing is the full and final expression of
the parties’ agreement; anything said before signing or while signing is irrelevant.” This
is
a. an integration clause.
b. a statute of frauds clause.
c. parol evidence.
d. an exculpatory clause.
Gorhan Construction, Brighton Bros., and Tirenn Construction agreed that on three
upcoming projects, Gorhan would bid lowest on one, Brighton would submit the lowest
bid on the second project, and Tirenn would submit the lowest bid on the third project.
In this way, they would each be assured of work for the upcoming season. This
behavior
a. is legal and acceptable practice in the construction industry to spread work more
evenly.
b. is a per se violation of the Sherman Act.
c. is a rule of reason violation of the Sherman Act.
d. violates ethical, but not legal, standards.
Leonna orders five table settings of china from Elite China. Each set includes a dinner
plate, cup & saucer, bowl, and dessert plate. The china is sold only in sets. When the
delivery arrives, Leonna discovers that Elite China sent the wrong pattern. Leonna
immediately calls Elite China and is instructed to send the shipment back. While
repacking the shipment, Leonna changes her mind and decides to keep the cups and
saucers. She returns everything else. Can she do this?
The expectation interest is designed to put the injured party in the position he or she
would have been in had both sides fully performed their obligations.
a. True
b. False
Grandpa owns a farm. In a signed writing, Grandpa gave Sue the irrevocable right to
use a road on his farm so that Sue could more easily reach her own property. What kind
of interest in land did Grandpa give to Sue?
a. Easement appurtenant
b. Easement by implication
c. Reserved easement
d. Easement by prescription
Personal and real defenses are valid against an ordinary holder, only real defenses can
be used against a holder in due course.
a. True
b. False
Peter, a minor, purchased a car from ACME Motors. Using a fake ID, he misrepresented
his age to be 18. The contract is fully executed. Which of the following is correct?
a. Peter cannot disaffirm the contract because a car is a necessary.
b. Peter cannot disaffirm the contract because of his misrepresentation.
c. Peter can disaffirm the contract, because a minor must be saved from his own poor
judgment, including his lie.
d. Either b or c may be applicable depending on the law of the jurisdiction in which the
contract was formed.
The phrase “piercing the company veil” applies to which type of organization?
a. a close corporation
b. a general partnership
c. a limited liability company
d. an S corporation
When a judge orders a criminal defendant to reimburse the victim, it is called
a. reimbursement.
b. restitution.
c. restraint.
d. retribution.
Pamela owns a small bakery that specializes in gluten-free products. She installed
commercial ovens and refrigerators in the kitchen. The ovens and refrigerators are
________, and therefore can be removed if Pamela moves her bakery to a new location.
a. trade fixtures
b. convertable fixtures
c. nonfixed appliances
d. personal property
In bailment cases, exculpatory clauses
a. are very rarely used.
b. are somewhat more likely to be enforced than in other types of cases.
c. ordinarily involve an attempt to limit liability for damage to persons rather than
property.
d. are not enforced because any harm is to property and not persons.
Software clickwrap and shrinkwrap agreements limiting the manufacturers maximum
responsibility to a refund of the purchase price even if the software destroys your hard
drive have generally been found to be binding against consumers.
a. True
b. False
Alice offers to sell her car to Barry for $500, and Barry accepts. Alice’s car has a market
value of $1,000 but this fact is unknown to Alice. The contract is enforceable.
a. True
b. False
Which of the following is a ‘special circumstance” in which an oral contract may be
enforceable under the UCC?
a. It is the first transaction between both parties who are not considered to be
merchants.
b. The contract is for goods in an amount of $750.
c. The seller is specially manufacturing goods for the buyer and begins work on them
before the buyer cancels the order.
d. There are no special circumstances to the UCC; it deems that all contracts must be in
writing.
Bailey Co. and Spryt Bros. enter into a contract for the manufacture and sale of 400
lawn chairs. If both parties agree that a modification is necessary
a. the surest way to modify the contract is to liquidate it.
b. they may not do so without court supervision.
c. an agreement to rescind the contract will terminate the contractual rights of Bailey
Co. and Spryt Bros. if neither of them had completed their obligations.
d. courts will generally not enforce a cancellation and modification of a contract unless
one party received inadequate consideration under the original contract.
To be negotiated, bearer paper must simply be delivered to the recipient.
a. True
b. False
Which of the following warranties provides that the goods will be useable for the
ordinary purposes for which they are used?
a. Disclaimer
b. Fitness for a particular purpose
c. Merchantability
d. Title