In a chain-style franchise, the franchisor licenses the franchisee to make and sell its
products or services to the public from a retail outlet serving an exclusive geographical
territory.
Liquidated damages are enforceable only if the actual damages are easy and practical to
determine.
The automobile industry is exempt from the supervision of the Bureau of Consumer
Financial Protection.
Under the Uniform Commercial Code, the rights and obligations of the buyer, the seller,
and the third parties are determined based on who held technical title to the goods.
Wages, hours, and other terms and conditions of employment are compulsory subjects
of collective bargaining.
An eligible employee who takes leave must, upon returning to work, be restored to
either the same or an equivalent position with equivalent employment benefits and pay.
An exculpatory clause is also called a release of liability clause.
E-commerce is subject to the Commerce Clause of the U.S. Constitution.
The issuance of securities by an issuer is called an initial private offering (IPO).
Each director in a board of directors has only one vote.
Disaffirmance may be conveyed orally or by the minor’s conduct.
The income beneficiary and the remainder beneficiary to a trust must be two different
persons.
Contracts for the complete provision of services are covered by Article 2 of the UCC.
A dividend preference is the right to receive a fixed dividend at set periods during the
year.
A copyright registration certificate is issued to the copyright holder.
Senility cannot lead to mental incapacity.
A deductible clause provides that an insured must pay a percentage of an insured loss.
A contract that arises from a bargained-for exchange is automatically voided.
Scienter refers to knowledge that a representation is false or that it was made without
sufficient knowledge of the truth.
An engagement can be broken off prior to the wedding.
Foreclosure sale is initiated when a debtor successfully repays the mortgage amount.
All states have provisions that protect an accountant’s work papers from discovery in a
court case against the accountant’s client.
A check is a promise to pay.
A proof of claim is a document required to be filed by a creditor that states the amount
of his or her claim against the debtor.
Profits and losses from an LLC do not have to be distributed in the same proportion.
One of the major purposes of a pretrial hearing is to facilitate the settlement of a case.
A horizontal restraint of trade occurs when two or more competitors at different levels
of distribution enter into a contract to restrain trade.
Once an appropriate number of jurors is selected, they are impaneled to hear the case
and are sworn in.
An admission of a new general partner is effective when an amendment of the
certificate of limited partnership reflecting that fact is filed.
An inference of the existence of a general partnership is drawn if profits are received in
payment of a debt owed to a creditor in installments or otherwise.
The FSIA provides that a foreign country is not immune to lawsuits in U.S. courts if the
foreign country has waived its immunity, either explicitly or by implication.
Code books contain the list of treaties signed by the president with foreign
governments.
The Public Company Accounting Oversight Board (PCAOB) can place temporary
limitations on the activities of public accountants and accounting firms.
Utilitarianism focuses on rules that provide minimal good to the greatest number of
people.
Forming a sole proprietorship is easy and does not cost a lot.
The followers of Analytical School of jurisprudence are known as realists.
The duty of loyalty is imposed by law and cannot be waived.
Larry, a merchant seller, had contracted with Simon, to buy welding equipment. The
contract stipulated that Larry would pick up the equipment from Simon’s warehouse on
the 14th day from the date of the contract. Larry could not make the pick up on that date
and before he could do so on the 15th day, the warehouse was burned down by
miscreants. In this situation, who bears the risk of loss of the goods that were to be
received by Larry?
A) The risk of loss lies with Larry for delaying the pickup.
B) The risk of loss lies with Simon for not protecting the goods.
C) The risk of loss is equally shared by Larry and Simon.
D) The risk of loss is shifted to the persons responsible for the fire.
A(n) ________ is a contract that courts refuse to enforce in part or at all because it is so
oppressive or manifestly unfair as to be unjust.
A) unconscionable contract
B) contract of adhesion
C) contract in restraint of trade
D) quasi-contract
Which of the following is provided under the Foreign Sovereign Immunities Act?
A) It stipulates the rules for conflict resolution among the DR-CAFTA members.
B) It endows the president with powers to enter into treaties with foreign nations.
C) It exclusively governs suits against foreign nations in the United States.
D) It regulates commerce between the United States and foreign nations.
________ is a general rule of corporate law that provides that generally shareholders
are liable only to the extent of their capital contributions for the debts and obligations of
their corporation and are not personally liable for the debts and obligations of the
corporation.
A) Limited-purpose clause
B) Limited liability of shareholders
C) Preferred shareholder rule
D) Nonparticipating shareholder rule
Which of the following is true for an auction with reserve?
A) The seller retains the right to refuse the highest bidder.
B) Invitations to make an offer are not allowed.
C) Goods cannot be withdrawn from sale after the offer has been made.
D) A bid once made cannot be withdrawn and is legally binding.
Which of the following is true of the Restatement of the Law of Contracts?
A) It serves as a reference for guidance in contract disputes.
B) It does not identify negotiable instruments as formal contracts.
C) Its goal is to create a uniform system of commercial law among the 50 states.
D) It is the absolute federal law for contracts drafted in the U.S.
Unless otherwise stated, an offer made face-to-face or during a telephone call usually
expires ________.
A) after a few weeks
B) when the conversation ends
C) after a few years
D) when one of the parties makes a counteroffer
________ of the Uniform Commercial Code establishes the requirements for negotiable
instruments.
A) Article 3
B) Article 4
C) Article 4A
D) Article 5
________ of a trade secret arises when one party has unlawfully acquired a trade secret
through bribery or industrial espionage.
A) Reverse engineering
B) Misappropriation
C) Tarnishment
D) Blurring
The four largest automobile manufacturers in a country each individually come to a
decision to stop purchasing tires from a certain company. In accordance with the
________ doctrine, they cannot be charged with a violation of Section 1 of the Sherman
Act.
A) conscious parallelism
B) Noerr
C) Colgate
D) failing company
Which of the following is true of utility patents?
A) They are used to patent machines and processes.
B) They are obtained for the ornamental nonfunctional design of an item.
C) They are valid for the lifetime of the inventor.
D) They are implemented to protect intangible abstractions.
Which of the following is true of a gift promise?
A) A gift promise can be enforced in a court of law.
B) A completed gift promise cannot be cancelled for lack of consideration.
C) A gift promise contains considerations.
D) The promisee can take legal action if the promisor does not uphold the promise.
Article 4A of the Uniform Commercial Code establishes the ________.
A) requirements for negotiable instruments, such as checks
B) rules and principles that regulate bank deposit and collection procedures for
checking accounts offered by commercial banks
C) rules that regulate the creation and collection of and liability for wire transfers
D) guidelines for ownership of securities by investors
An LLC is a ________ in the state in which it is organized.
A) sole proprietorship
B) domestic LLC
C) foreign LLC
D) general partnership
Which of the following is true of a copyright?
A) It is subject to the fair use doctrine that permits limited unauthorized use of
copyrighted material.
B) It is signified by the symbol ® which must be placed on copyrighted work according
to the Berne Convention.
C) It is applicable to intangible ideas and unwritten abstractions.
D) It is valid for an indefinite period of time and is permanently restricted from entry
into the public domain.
When can an intoxicated person ratify the contracts he or she entered into while
intoxicated?
A) while still intoxicated
B) after becoming sober
C) after reaching the age of majority
D) when the other party is intoxicated
Under which of the following UCC requirements is a holder considered a “holder in due
process,” given that the holder performs the agreed-upon promise in a negotiable
instrument?
A) taking in good faith requirement
B) taking for value requirement
C) taking without notice of defect requirement
D) no evidence of forgery, alteration, or irregularity requirement
Which of the following is suitable for copyrighting?
A) buildings
B) musical compositions
C) tacit business methods
D) product logos
Which of the following is true of the Endangered Species Act?
A) It is the only federal law that protects wildlife.
B) It empowers the secretary of the interior to declare certain wildlife as endangered.
C) It does not include marine species and amphibian life forms.
D) It does not protect threatened species of wildlife.
Marlon intends to sell a piece of real estate he owns and contracts Nita, a real estate
broker, to make the sale. In the contract, Marlon authorizes Nita to make the sale at or
above a minimum price he wants and the date by which he wants the sale to be
completed. The contract also stipulates that Marlon should not hire another broker to
sell that piece of land until the expiry of the contract period. Nita finds a suitable buyer,
makes the sale in time, and is paid by Marlon for her services. Which of the following
types of agency had Marlon and Nita entered into?
A) apparent agency
B) agency by ratification
C) implied agency
D) express agency
Which of the following steps immediately follows the publication of the Environmental
Impact Statement (EIS) for a proposed project?
A) Congress has to pass a bill adopting the EIS.
B) Non-profit agencies are allowed access to the EIS.
C) The government issues an order to proceed with a federal action on the project.
D) Interested parties submit comments to the EPA.
Section 14(a) of the Securities Exchange Act gives the SEC the authority to regulate
________.
A) the formation of the board of directors of a corporation
B) mergers between two or more corporations
C) the issue of shares by a corporation
D) the solicitation of proxies by a corporation
Kingsland is a country that has been exporting apples to the United States for over a
century, shipping 300 tons to the state of Georgia each month. However, last month,
Kingsland violated a trading norm which was not condoned by Georgia. Which of the
following measures should be taken to regulate apple imports from Kingsland?
A) Georgia can stop trading with Kingsland after serving a notice.
B) Georgia can stop trading with Kingsland without serving a notice.
C) Georgia can appeal to the federal authority which can stop imports from Kingsland.
D) Georgia can make Kingsland export its apples to North Carolina.
Which of the following statements is true about pretrial motions?
A) In deciding the motion for judgment on the pleadings, the judge cannot consider any
facts outside the pleadings.
B) In deciding the motion for summary judgment, the case cannot be decided before
trial by a judge.
C) If a judge finds that a factual dispute exists, the motion for summary judgment will
be approved.
D) If a judge finds that a factual dispute exists, the case will not go to trial.
Which of the following types of clauses, in a franchise agreement, provides that any
claim or controversy arising from the franchise agreement or an alleged breach thereof
will be settled outside the courts?
A) reserve clause
B) arbitration clause
C) integration clause
D) covenant not to compete
Which of the following is true of duress?
A) It is liable for fraud.
B) Its threat should involve physical harm for it to be actionable as duress.
C) It is not enforceable against the innocent party.
D) Intoxicating a person to sign a contract is considered duress.
________ is a rule that limits a defendant’s accountability to his or her equivalent
degree of fault.
A) Privity of contract
B) Due diligence defense
C) Proportionate liability
D) The Ultramares doctrine
Which of the following can convert a gift promise into an enforceable promise?
A) if the promisee offers a consideration
B) if the promisor offers a consideration
C) if the promisee receives a legal benefit
D) if the promisor suffers a legal detriment
Which of the following is a sanction imposed on states that don’t implement approved
plans for reduction in air pollution?
A) increased taxation of personal property
B) reduction in funding for public schools
C) loss of federal highway funds
D) implementation of monthly fines based on pollution levels
________ are a panel of decision makers who are elected by the shareholders.
A) Registered agents
B) Corporate officers
C) Resident agents
D) Board of directors
The ________ established by Congress have limited jurisdiction.
A) state supreme courts
B) state appeals courts
C) special federal courts
D) courts of records
Peter borrowed Carl’s car, as his own car had broken down, and he needed to go to the
city, urgently. Carl, a close friend of Peter, did not charge any fee from Peter for using
the car. What kind of agreement existed between Peter and Carl over the car?
A) bailment for the sole benefit of the bailor
B) bailment for the sole benefit of the bailee
C) bailment for the partial benefit of the bailor
D) mutual benefit bailment
Which of the following should provide a notice of assignment to the obligor?
A) the assignee
B) the assignor
C) the obligee
D) the facilitator
An ordinary partnership is also known as a ________.
A) sole proprietorship
B) general partnership
C) limited partnership
D) limited liability company