Horizontal price fixing occurs when a manufacturer sets the retail price of the items
they produce.
To obtain appraisal rights, a dissenting shareholder must deliver written notice of his or
her intent to demand payment of his or her shares to the corporation before the vote is
taken, and not vote his or her shares in favor of the proposed action.
All states have enacted statutes that provide for the creation of limited partnerships.
The Money Laundering Control Act, in part, applies to any illegal monetary
transactions conducted through financial institutions, regardless of the amount.
The federal government began enacting environmental statutes in the 1950s.
To establish undue influence, the dominant party must have unduly used his or her
influence to persuade the servient party to enter into a contract.
A corporate sale or lease of its assets requires the recommendation of the board of
directors and an affirmative vote of the majority of the shares of the selling or leasing
corporation that are entitled to vote (unless greater vote is required).
Certified checks and cashier’s checks are types of “bank checks.”
A holder in due course takes a negotiable instrument free of all claims and most
defenses that can be asserted against the transferor of the instrument.
There are four (4.) basic forms of franchises:
(1.) trusteeship franchise;
(2.) manufacturing plant franchise;
(3.) “chain-link” franchise;
(4.) geographical franchise.
If the principal and agent enter into an “exclusive” agency contract, the principal cannot
employ any agent other than the exclusive agent.
A court decree of divorce need not be obtained to end a common law marriage.
A material breach of a contract occurs when a party renders inferior performance of his
or her contractual obligations that impairs or destroys the essence of the contract.
The per se rule holds that only unreasonable restraints of trade violate Section 1 of the
Sherman Act.
Direct physical contact is necessary in order to prevail in an action for battery.
Since antitrust law exists and is enforced at the federal level, most states have not
enacted their own antitrust statutes.
A check that has been outstanding for more than three (3.) months is considered ‘stale.”
The number of votes that a partner has on partnership issues is directly proportional to
the percentage of the partner’s capital contribution.
Administrative agencies may be created by federal, state and local governments.
An easement appurtenant is created when the owner of one piece of land is given an
easement over a non-adjacent piece of land.
An environmental impact statement must contain “cost-benefit” analysis of the
proposed action and alternatives.
A buyer or lessee can revoke acceptance of goods only if the nonconformity is one that
substantially impairs the value of the goods to the buyer.
Dirt in a wheelbarrow would be considered real property.
A general partnership may be formed with little or no formality.
There is no dollar limit on the amount of securities that can be sold under the “private
placement” exemption.
Intentional interference with contractual relations requires a showing of bad faith before
liability can be imposed.
Once immunity is granted, a suspect loses the right to assert the Fifth Amendment
privilege against self-incrimination.
It is not necessary to use the words “warrant” or “guarantee” in order to make an
express warranty.
An installment contract is a contract that requires or authorizes goods to be delivered
and accepted in separate lots.
Any disposition of reclaimed goods by the seller or lessor must be made in good faith
and in a commercially reasonable manner.
The extent of the agent’s authority in a principal-agent relationship is governed by any
express agreement between the parties and implied from the circumstances of the
agency.
If a person owns real property in fee simple, his or her ownership is finite in duration.
Mere use of the same name does not automatically make a franchisor liable for the
franchisee’s actions.
A quasi-contract is also called an implied-in-fact contract.
The person to whom the offer is made is called the offeree.
Under the Foreign Sovereign Immunities Act, a foreign country is absolutely immune
from lawsuits in the United States for disputes involving any commercial activity.
When a bank wrongfully dishonors a check, both the drawer and the payee can recover
reasonable damages from the bank.
General jurisdiction trial courts are also called courts of record.
Franchise agreements do not usually have much room for negotiation.
When parties to a contract agree upon which state court will have jurisdiction should
litigation become necessary, that contract clause is called a:
A) venue selection clause.
B) jurisdiction selection clause.
C) choice-of-law clause.
D) forum-selection clause.
E) standings clause.
Jon, an MBA student at small school, invents a business process that makes inventory
monitoring and replenishment so efficient that his professor tells him that he’s likely to
make the “just-in-time” inventory process obsolete. Jon, a junior, tells the professor that
he’s going to patent the process right after graduation and does nothing. Thirteen
months later Josh, a senior student at a prestigious large school, without ever knowing
about Jon or his process, comes up with the identical idea, applies for and is issued a
patent. Soon afterward, Jon files for his patent, not knowing about Josh, and is denied.
If Jon challenges Josh’s patent, what will the outcome be?
A) Josh wins, since the first to file gets the patent.
B) Josh wins, because the date the patent was issued matters rather than the date of
filing.
C) Josh wins, because the idea was over twelve months old and the public use doctrine
applies.
D) Jon wins, because he invented the process first.
E) Jon wins, but only if he filed a provisional application protecting his invention
before Josh’s filing.
When a new partner is admitted to a pre-existing partnership, the new partner has:
A) unlimited liability for obligations of the partnership, both for those arising before
he/she joined the partnership, and those arising after joining.
B) liability to the extent of his/her investment for obligations that arose before joining
the partnership, and unlimited liability for those arising afterwards.
C) liability to the extent of his/her investment for all obligations, arising either before or
after he/she joined the partnership.
D) no liability for obligations arising from before he/she joined the partnership, and
unlimited liability for those arising afterwards.
E) no liability for obligations arising from before he/she joined the partnership, and
limited liability for those arising afterwards.
Which of the following is not a formal contract?
A) a contract under seal
B) a recognizance
C) a negotiable instrument
D) a letter of credit
E) a new car purchase contract
Jon has entered into a contract with Josh to sell him a statue. Just before delivery, Jon
discovers that the statue is worth three times the price in the contract. If Jon feels
obligated to go through with the contract because his promise is important to him, he
exhibiting which form of ethical behavior?
A) ethical relativism
B) utilitarianism
C) ethical fundamentalism
D) Kantian ethics
E) Rawls’s distributive justice theory
If the parties to the contract do not set a specific time of performance for any obligation
under the contract, the contract must be performed within which of the following?
A) a reasonable time
B) one year
C) six months
D) 30 days
E) 60 days
In an auction, what role do the bidders play?
A) The bidders are always offerees.
B) The bidders are always offerors.
C) The bidders can be offerees or offerors, and this depends on whether the bids are
made orally or in writing.
D) The bidders can be offerees or offerors, and this depends on whether the auction is
with reserve or without reserve.
E) The bidders are “buyers”, and the terms “offeree” and “offeror” have no legal
significance.
Buy Cheap Here, a discount retail store, is located in a strip mall in a metropolitan area.
Buy Cheap Here owns the parking lot that is used by Buy Cheap Here and twelve
smaller stores. A national union wanted to organize employees of Buy Cheap Here.
After other efforts at organization were unsuccessful, nonemployee union organizers
entered the parking lot and began placing handbills supporting the union on windshields
of cars parked in the employee section of the parking lot. Management of Buy Cheap
Here removed the handbills and required that the union organizers leave the parking lot.
Which of the following is true?
A) Buy Cheap Here was entitled to prohibit union organizers from distributing leaflets
in the parking lot.
B) Buy Cheap Here was not entitled to prevent union organizers from distributing
leaflets in the parking lot, but only because it was a common lot used by employees of
other businesses.
C) Buy Cheap Here was not entitled to prevent union organizers from distributing
leaflets in the parking lot, because distributing leaflets only is not considered
solicitation.
D) Buy Cheap Here was not entitled to prevent union organizers from distributing
leaflets in the parking lot, because the union could prove that other efforts at
organization had been unsuccessful.
E) Buy Cheap Here was entitled to prohibit union organizers from distributing leaflets
in the parking lot, but only if it could show that a substantial number of employees had
requested that the union stop efforts to contact them.
Persons who believe that law is “discovered” by men and women through the use of
reasoning and choosing between good and evil believe in which school of
jurisprudential thought?
A) the Natural School
B) the Historical School
C) the Analytical School
D) the Command School
E) the Sociological School
In order to vote shares at a shareholders’ meeting, a person must own the shares as of
the:
A) date notice of the meeting is given.
B) date the shareholders’ list is prepared.
C) record date.
D) voting date.
E) date of the meeting.
Under the Immigration Reform and Control Act of 1986 and the Immigration Act of
1990, border states (for example, the state of Arizona) are delegated exclusive authority
and jurisdiction to administer United States immigration law.
Which of the following is true about primary liability on a check?
A) No one has primary liability on a check when it is written, and no one can have
primary liability until it is paid.
B) No one has primary liability on a check when it is written, but the drawee incurs
primary liability if the check becomes certified.
C) No one has primary liability on a check when it is written, but the drawer incurs
primary liability if the check is certified.
D) The drawee has primary liability when the check is written.
E) The drawer has primary liability when the check is written.
Justin is 17 years old, but looks several years older. He bought a motorcycle several
months ago from Steve. Justin was able to convince Steve that he was over age 18, the
age of majority in his state. In the time that he has owned it, he has been in one minor
accident and the motorcycle has fallen over several times while parked. Justin, while
still 17, notifies Steve that he is disaffirming the contract. What is true in this situation
under today’s law in most states?
A) Justin has no right to disaffirm, because by claiming to be an adult he will be treated
as an adult.
B) Justin can disaffirm and must only return the motorcycle in its present condition to
Steve and will then receive a refund of what he paid for the motorcycle.
C) Justin can disaffirm and must only return the motorcycle in its present condition to
Steve and then be entitled to receive the fair market value (at the time of purchase) of
the motorcycle from Steve.
D) Justin can disaffirm, but has an obligation to return Steve to the status quo.
E) Justin has no right to disaffirm unless he can establish that Steve had actual
knowledge of his minority.
Which of the following is true regarding the formation of limited liability companies?
A) Professionals such as accountants, lawyers, and doctors may form limited liability
companies.
B) Professionals such as accountants, lawyers, and doctors may form limited liability
companies, but must retain personal liability.
C) Accountants may form limited liability companies, but no other professionals may
do so.
D) Certain professionals, such as accountants, lawyers, and doctors, cannot operate
practices as limited liability companies
E) Certain professionals, such as accountants, lawyers, and doctors, cannot operate
practices as limited liability companies, unless each limited liability company is
comprised of only three members.
Don, who owed Dan $1,000 for his share of the cost of a fishing trip they took together
two years ago, transferred to Dan a check for $700 that he had just received from a
customer. Has Dan given value for holder in due course purposes?
A) yes, because accepting an instrument in payment of a prior antecedent debt is
considered to be value given for holder in due course purposes
B) yes, but only if Dan still intends to collect the remaining $300 from Don
C) no, because the check was less than the amount of the debt
D) no, because the check was from a business transaction and the debt was personal
E) no, because Don had a pre-existing duty to pay Dan the $1,000
The United States Congress created the Environmental Protection Agency (EPA) in
1950.
The only state to maintain a separate court to decide business-related matters is:
A) New York.
B) California.
C) Illinois.
D) Texas.
E) Delaware.
The two main functions of the U.S. Constitution are to:
A) create the three branches of government and create the individual states.
B) create the three branches of government and promote a strong economy.
C) protect individual rights and establish the electoral college.
D) create the three branches of government and protect individual rights.
E) provide all citizens with a right to vote and allow for judicial review of laws.
Banks in the collection process that are not the depository or payer bank are called
________ banks.
A) mediator
B) intermediary
C) secondary
D) tertiary
E) default
Who can a donee third-party beneficiary sue under a contract?
A) the promisor who is to provide the benefit to the third-party beneficiary
B) the promisee who directed that the benefit be provided to the third party beneficiary
C) the promisor who is to provide the benefit to the third-party beneficiary and the
promisee who directed that the benefit be provided to the third party
D) neither the promisor who is to provide the benefit to the third-party beneficiary nor
the promisee who directed that the benefit be provided to the third party
E) both the promisor who is to provide the benefit to the third-party beneficiary and the
promisee who directed that the benefit be provided to the third party, but only if it can
be shown that the third-party beneficiary was aware of the contract when it was made.
A ________ is a grant by the federal government upon the inventor of an invention for
the exclusive right to use, sell, or license the invention for a limited amount of time.
A) copyright
B) trade secret
C) patent
D) trademark
E) service mark
When does a seller’s insurable interest terminate?
A) when title passes to the buyer
B) when risk of loss passes to the buyer
C) when the seller identifies the goods to be sent to the buyer
D) The seller never has an insurable interest, only the buyer.
E) The seller always has an insurable interest, but the buyer never has an insurable
interest.
A “common carrier” trucking company will be liable for loss or damage to goods:
A) if the truck is hijacked by a gang of thieves.
B) if the truck is destroyed by a sudden tornado.
C) if the police impound the truck and destroy the cargo during a search.
D) never, because common carriers are free from bailment liability.
E) always, because common carriers are strictly liable for all goods in their possession
and control.
Which of the following is not a requirement of negotiability?
A) The instrument must be in writing.
B) The instrument must be signed by the maker or drawer.
C) The instrument must state a fixed amount of money.
D) The instrument must contain an indorsement.
E) The instrument must contain an unconditional order or promise to pay.
If a seller breaches a contract for the sale of goods and the buyer then acquires similar
goods from another supplier, this is known as the right of:
A) alternate acquisition.
B) specific performance.
C) cover.
D) contract cancellation.
E) specific acquisition.
Marvin, a sole proprietor, sells Perk-Up cereal to grocery stores. Some stores only buy a
few boxes, but others buy large quantities. Marvin finds that it is cheaper to bulk ship
large amounts to stores that buy a large quantity of the cereal. Is it permissible under the
Robinson-Patman Act for Marvin to charge the purchasers of larger quantities less per
box for the cereal?
A) yes, but only to the extent that the reduced price is supported by cost savings
B) yes, and there is no requirement that the reduced price be supported by cost savings
C) yes, but only because a food product is involved, and the reduced price must be
supported by cost savings
D) yes, but only because a sole proprietor is involved, and the reduced price must be
supported by cost savings
E) no, Marvin may not reduce the price to purchasers of large quantities
A transfer of real property is also known as a:
A) commitment.
B) quitclaim.
C) conveyance.
D) recording.
E) closing record.
Which of the following statements is true about activities allowed in connection with a
public offering?
A) Generally, the waiting period is twenty days.
B) During the pre-filing period, the issuer may “condition” the market.
C) During the waiting period, the issuer may sell and deliver securities, as long as a
prospectus is provided to the investor.
D) After the registration statement is effective, the issuer may sell and deliver securities
without giving the investor a prospectus.
E) The post-effective period runs until the issuer sells all of the offered securities.
The best description of misappropriation of the right to publicity is:
A) claiming credit for the accomplishments of another.
B) publishing the creative work of another and claiming that it is yours.
C) publicly claiming to have accomplished something that you have not accomplished.
D) attempting to use another living person’s name or identity for commercial purposes
without that person’s consent.
E) publicizing private information about someone without that person’s consent.
What is the consequence of failing to give adequate notice of partnership dissolution to
third parties?
A) The partnership’s attempted dissolution will be ineffective.
B) The partners will be prevented from receiving their share of partnership assets.
C) There will be a court-ordered waiting period before partners can receive their share
of partnership assets.
D) Partners might be personally liable for transactions entered into by other partners
occurring after the partnership dissolution.
E) Partners could be liable for criminal penalties under the Uniform Partnership Act.
If several plaintiffs have filed separate lawsuits stemming from the same fact situation
against the same defendant, the court can ________ the cases into one case if doing so
would not cause undue prejudice to the parties.
A) collaborate
B) consolidate
C) integrate
D) merge
E) disassociate
In 2009, the United States Congress enacted the Anticybersquatting Consumer
Protection Act (ACPA).
Worldwide Toys sells a game in which the players throw heavy steel balls, about 1 inch
in diameter, at knock-down targets that are placed approximately 20 feet from where
the player stands when throwing the balls. There have been a number of injuries caused
by persons being struck by the balls while the game is being played. If the balls were
made any lighter, they would not be able to knock down the targets when thrown at
them. In a product liability suit, most likely:
A) Worldwide will win, because this is an unavoidably dangerous product.
B) Worldwide will win, because the players are contributorily negligent if they throw
the balls when others are around.
C) Worldwide will win, because throwing the balls when other persons are around
amounts to misuse of the product.
D) Worldwide will lose, unless the instruction manual contains a warning to not throw
the balls so as to cause a risk to others.
E) Worldwide will lose, because this product has too little utility to justify a design with
these known dangers.
When a client breaches a contract with a construction contractor in the early phase of
construction, what is the contractor generally able to recover?
A) the amount of the contract price
B) only the out-of-pocket costs incurred by the contractor up to the time of the breach
C) the amount necessary to provide the same profit to the contractor that the contractor
would have earned if the contract were fully performed
D) nominal damages
E) the amount determined by the court to have been a fair profit on the contract
Arbitrators and mediators are also called:
A) neutrals.
B) impartials.
C) disinteresteds.
D) dispassionates.
E) equitables.