Which of the following statements is correct regarding the differences between contract,
tort, and criminal law?
a. Tort and criminal law both impose a punishment for the defendant including prison
and/or a fine.
b. Criminal law imposes duties of conduct on all persons.
c. Contract law awards money damages for the plaintiff; tort and criminal law do not.
d. Criminal law is prosecuted by the government.
Which of the following represents a landowner’s lowest liability?
a. trespassing children
b. licensees
c. trespassing adults
d. invitees
A gambling contract is illegal unless it is a type of wagering specifically authorized by
state statute.
a. True
b. False
Assume that Jessie and Lester have formed a contract whereby Jessie agrees to deliver
10,000 dozen “Grade A Large Eggs” to be shipped in paper cartons. A shortage of paper
makes paper cartons much more expensive, so Jessie uses styrofoam cartons and ships
the eggs. Lester is entitled to cancel the contract based on a material breach of the
contract.
a. True
b. False
Ron’s Furnace Repair advertised it would inspect any homeowner’s furnace for free.
Janet had Ron’s come to inspect her furnace. The servicewoman dismantled the entire
furnace then refused to put it back together unless Janet paid her $250. The FTC
considers such a practice to be
a. an unfair practice.
b. a deceptive practice.
c. an act that violates public policy.
d. All the above.
All of the following are characteristics of a closely held corporation EXCEPT
a. the shares are publicly traded.
b. the corporation can typically operate without a board of directors.
c. the shareholders usually restrict share transfer.
d. minority shareholders are provided more protection than in regular corporations.
Some courts have held that employee handbooks create binding contract terms.
a. True
b. False
Seth told the salesperson at Outdoor Times that he wanted the sleeping bag that was
advertised in the Sunday paper; one that would keep him comfortable if the temperature
drops to 10 degrees Fahrenheit. The salesperson told Seth they were sold out of that
bag, but there were two other styles that would meet his needs and were the same price.
Seth insisted he wanted the advertised bag and threatened to sue for breach of contract.
Which is true?
a. Outdoor Times is guilty of “bait and swap.
b. Seth will prevail in his case, as Outdoor Times is responsible for having sufficient
stock of advertised items.
c. Seth will not prevail, as the advertisement was simply a request for offers.
d. Outdoor Times must provide Seth with a raincheck, ensuring he can buy the same
bag at the sales price at a later date.
The EPA will allow individual states’ air pollution level to rise as long as it still meets
the EPA’s existing national standards.
a. True
b. False
A criminal case under the Securities Act of 1933 is prosecuted by
a. the SEC.
b. the Justice Department.
c. the Department of the Treasury.
d. the FTC.
The UCC does not apply to a contract for the sale of goods if the value of the goods is
less than $500.
a. True
b. False
Extraterritoriality can be defined as
a. the power of one nation to create trade restrictions that involve other countries.
b. the power to regulate tariffs in foreign nations as provided for by GATT.
c. the power of one nation to impose its laws in other countries.
d. the power of a company to extend its subsidiaries overseas without abiding by trade
laws.
If Becky promises not to drink alcohol until she becomes a legal adult in exchange for
Ben’s promise of $1,000, the agreement is
a. enforceable because Becky is giving up the right to do something she would
otherwise be entitled to do.
b. enforceable because the agreement accomplishes Ben’s goal of keeping Becky from
drinking.
c. not enforceable because Becky does not have a legal right to drink alcohol.
d. not enforceable because Becky is a minor and could disaffirm the contract.
The business judgement rule is designed to protect
a. only the manager.
b. only the manager’s decision.
c. both the manager and the manager’s decison.
d. a business from a conflict of interest.
John Rawls’ suggestion that society should reward behavior that provides the most
benefit to the community as a whole is referred to as
a. the difference principle.
b. the veil of ignorance.
c. moral universalism.
d. moral relativism.
A color cannot be trademarked since it cannot be kept from use by other businesses.
a. True
b. False
The purpose of the Freedom of Information Act (FOIA) is
a. to give the government access to information concerning citizens, businesses, and
organizations.
b. to limit the amount of information that the government can collect about its citizens,
businesses, and organizations.
c. to permit warrantless searches and seizures of evidence when necessary to ensure
safety.
d. to give citizens, businesses, and organizations access to information that federal
agencies are using.
Which of the following occurs when a person uses labor and/or materials to add value
to personal property belonging to another?
a. accession
b. bailment
c. an inter vivos gift
d. a mutual-benefit bailment
Circus Pizza contracted with Art to run its birthday parties. Art’s responsibilities
included supervising the children and organizing the games. Circus did not investigate
Art’s background, which included a history of assaulting children. Art assaulted a
7-year-old girl in the restaurant’s kitchen during a birthday party. Circus Pizza
a. cannot be liable for the damages because Art committed an unforeseeable intentional
tort.
b. cannot be held liable for the damages because Art’s conduct was not in the scope of
employment.
c. may be held liable on the basis of negligent hiring.
d. may be held liable only if Circus actually knew of Art’s background.
John D. Rockefellers oil business was the main reason which legislation was enacted?
a. Sherman Act
b. Robinson-Patman Act
c. Clayton Act
d. Chicago School Act
Bankruptcy is regulated by federal law.
a. True
b. False
Adam claimed that N & A, its accounting firm, negligently prepared an audit. To hold
the accounting firm liable, which of the following elements must be established?
a. Scienter or guilty knowledge
b. A fiduciary relationship
c. Failure to exercise due care
d. An executed engagement letter
Generally, indorsers are not liable under signature liability if
a. they write the words “without recourse” next to their signatures on the instrument.
b. they are not the drawee.
c. a check is presented for payment within 30 days after the indorsement.
d. they are an accommodation party.
Maurina Barker is an agent of Southland, and she is authorized to sign checks on
Southlands bank account. If Maurina signs a check as “Maurina Barker, as agent for
Southland” she is not liable on the instrument.
a. True
b. False
Kayla and Marshall formed a partnership. Marshall incurred a debt in the ordinary
course of the partnership business. If the debt is not paid, the creditor may sue:
a. only Marshall.
b. only the partnership.
c. the partnership and the partners together, or in separate lawsuits, or in any
combination.
d. only Marshall and the partnership in a lawsuit together or the creditor loses any right
to sue the partnership.
Jose and Juanita are first cousins. Jose lives in San Francisco, California; Juanita lives
in Toronto, Canada. The two have met only once in life, and may never meet again.
Nonetheless, because they are blood relatives, Juanita has an insurable interest in Jose’s
life.
a. True
b. False
The management and union at TriColor have bargained for two years without reaching
an agreement. After notifying the union, TriColor prohibited the workers from entering
the factory to work. This is a lockout.
a. True
b. False
Farmer Fred is leasing pasture land from Wealthy Warren. Farmer Fred is working the
soil to turn the pasture land into land that will be able to grow crops. As Farmer Fred is
preparing the field, he discovers a treasure chest full of gold and silver coins. The coins
are all dated before 1810. A finder of treasure trove under common law,
a. was entitled to keep the treasure trove.
b. was required to turn the property over to the owner. Here, under common law,
Farmer Fred is required to turn the treasure trove over to Wealthy Warren.
c. was required to turn the treasure trove over to the State.
d. was required to turn the treasure trove over to the federal government who will give
the treasure trove to the closest Native American reservation.
E-mation entered into a contract with a consumer, Ezra, a recent immigrant to the
United States, who spoke very little English, and had no formal education. The contract
provided for Ezra to pay $2500 for a computer system. The system was worth $400. If
E-mation sued Ezra for enforcement the contract, what is the most likely result?
a. The contract is enforceable because of usury statues.
b. The contract is unenforceable because it is ancillary to a legitimate bargain.
c. The contract is enforceable because of the exculpatory clause.
d. The contract is unenforceable because it is unconscionable.
Maureen, a shareholder of Metra, Inc., is unhappy with how the corporation was being
managed. Maureen wants the company to sell off its unproductive divisions. Which
statement is correct?
a. If Maureen owns at least 1 percent or $2,000 of Metra’s stock, she can require the
company to include her proposal in its proxy statement.
b. If Maureen has a proper purpose, she can require the company to include her
proposal in its proxy statement.
c. If Maureen can show cause, she can require the company to automatically sell off its
unproductive divisions.
d. Maureen cannot require that the company put her proposal to sell off unproductive
divisions on its proxy statement.