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A "product disparagement" claim may be brought for an untrue statement regarding a
product of a business.
In terms of the requirements for becoming a holder in due course, notice of a defect is
given when the holder has actual knowledge of the defect, has received a notice or
notification of the defect, or has reason to know from the facts and circumstances that
the defect exists.
The goals of the Sarbanes-Oxley Act are to improve corporate governance rules,
eliminate conflicts of interest, and instill confidence in investors and the public that
management will run public companies in the best interests of all constituents.
An option contract is formed when an offeree prevents the offeror form revoking his or
her offer by paying the offeror compensation to keep the offer open for an agreed-upon
period of time.
The only management duty shareholders have is the right to vote on matters such as the
election of directors and the approval of fundamental changes in the corporation.
If the testator's estate is not large enough to pay all will devises and bequests, the
doctrine of abatement applies.
You have been offered and accepted a job with a salary of $50,000. When the contract
of employment is typed, an error is made and the salary is listed as $55,000. Since your
employer made the mistake, it has no remedy and you get the $55,000.
Adhering to the Koran is a form of ethical fundamentalism.
When interpreting a contract with contradictory language, a specific term will take
precedence over a conflicting general provision.
Negligence is the prerequisite for criminal liability under the Sherman Act.
Examples of special federal courts include the U.S. Court of Federal Claims, the U.S.
Court of International Trade, and the U.S. Bankruptcy Court.
If a shareholders' annual meeting is not held within either twelve (12.) months of the
last annual meeting, or six (6.) months after the end of the corporation's fiscal year, a
shareholder may petition the court to order the meeting held.
Fred owns a tractor business that has been in his family for fifty years, and it is the only
tractor business in his small rural town. Others have tried to compete with him, but
despite the fact that Fred did nothing out of the ordinary, the others failed and went out
of business. Nevertheless, Fred's business is an illegal monopoly in violation of the
Sherman Act.
Trademark laws adequately protect holders of trademarks from persons acquiring
domain names in bad faith using the trademark, or confusingly similar names.
The theory of basing ethical business conduct on stakeholder interest is widely accepted
because it is usually possible for businesses to balance stakeholder interests so that each
stakeholder is satisfied and protected.
A limited liability company can be organized in only one state, even though it can
conduct business in all other states.
Under Article 2 of the UCC, the remedy known as cover is a buyer's remedy.
The only two types of employment discrimination prohibited by Title VII of the Civil
Rights Act of 1964 are hiring and firing.
Under the infancy doctrine, a court will not generally inquire into the particular minor's
actual knowledge or sophistication.
A satisfaction is the performance of an accord.
The philosophers of the Command School of Jurisprudence believe that the law is a set
of rules developed, communicated, and enforced by the ruling party rather than a
reflection of the society's morality, history, logic, or sociology.
If the seller or lessor has no place of business, the place of delivery is the seller's or
lessor's residence.
If the contracted-for goods or the seller's or lessor's tender of delivery fails to conform
to a sales or lease contract in any way, the buyer or lessee has the right to reject
nonconforming goods or improperly tendered goods and may (1.) reject the whole, (2.)
accept the whole, or (3.) accept any commercial unit and reject the rest.
A book publisher acquiring a retail bookstore chain would be a backward vertical
merger.
In an auction with reserve, the seller is the offeror, and the bidders are the offerees.
Notice of a shareholders' meeting may be given in person.
In bankruptcy, the automatic stay would prevent a secured creditor from repossessing
any collateral.
Security interests may be taken in personal property.
Powers of attorney must be in writing.
A closely-held corporation is one whose shares are owned by a small number of
shareholders, who are often family members, relatives, or friends.
As with contracts under common law, the UCC requires that a contract modification be
supported by consideration.
The crashworthiness doctrine requires vehicles to be designed so that they are not prone
to be involved in accidents.
Formal contracts are contracts that require a general form or method of creation.
Most contracts are discharged by the complete performance of the contracting parties.
In addition to the Bill of Rights, twenty-seven (27) other amendments have been added
to the United States Constitution.
A gift must be returned unless there was adequate consideration.
A strategic alliance is an arrangement between two or more companies in the same
industry in which they agree to ally themselves to accomplish a designated objective.
When is a member or manager of a limited liability company, who negligently injures
someone, personally liable to the injured person?
A) only if the limited liability company lacks the funds with which to pay
B) only if the member or manager has resigned from the limited liability company
before a final judgment is issued for the injured party
C) only if the member or manager can be said to have acted "recklessly," rather than
"negligently"
D) only if punitive damages are awarded
E) A member or manager of a limited liability company who negligently injures
someone is always personally liable to the injured person.
What distinguishes the duties of reimbursement and indemnification?
A) Reimbursement is an agent's duty, while indemnification is a principal's duty.
B) Reimbursement is a principal's duty, while indemnification is an agent's duty.
C) Reimbursement relates to expenses incurred by the agent that were authorized by the
principal, within the scope of the agency, and necessary to discharge the agent's duties
in carrying out the agency, while indemnification typically relates to losses suffered by
the agent because of the principal's misconduct.
D) Reimbursement relates to third parties, while indemnification relates to the principal.
E) Reimbursement applies only to actions that were within the scope of the agency,
while indemnification relates to all actions of the agent.
Checks are often indorsed to attorneys, executors of estates, real estate agents, and other
fiduciaries in their representative capacity for the benefit of clients, heirs, or others.
These indorsements are called ________.
A) fiduciary trusts
B) indorsements in trust
C) professional trusts
D) indorsements in fee simple
E) equitable trusts
If a violation of strict liability has been found, the plaintiff may recover ________
damages and also may be able to recover ________ damages if the defendant's conduct
has been reckless or intentional.
A) compensatory; punitive
B) punitive; compensatory
C) compensatory; confiscatory
D) punitive; confiscatory
E) compensatory; consequential
Which of the following best describes duress?
A) a situation where a trust relationship has been violated in forming a contract
B) a situation where a party has improperly given the other party no alternative but to
enter into a contract
C) a situation where one party has lied to the other to lead them to enter into a contract
D) a situation where, after the contract was negotiated, circumstances have changed so
that one of the parties is in a desperate circumstance and cannot reasonably perform
E) a situation in which fraud has been committed by a third party to the contract
Susan decides to buy new carpet for her home. She goes to Carpet City and chooses the
carpet she likes. As part of the deal, Carpet City agrees to install the carpet. The carpet
is installed while Susan is at work. When she returns home and sees it, Susan
immediately notices problems. The carpet is not the same quality of carpet she ordered,
and the color is off. Does the UCC apply, and why or why not?
A) The UCC does not apply because the deal with Carpet City included service that is
not covered by the UCC.
B) The UCC does not apply because Susan and Carpet City did not agree in writing
before the carpet was installed that the UCC would apply.
C) The UCC applies because it applies to service contracts as well as to contracts for
the sale of goods.
D) The UCC applies because the predominant part of the transaction between Susan
and Carpet City was the sale of goods.
E) The UCC does not apply because it does not apply to mixed contracts of goods and
services.
Which of the following isnot a recognized school of jurisprudential thought?
A) the Command School
B) the Critical Legal Studies School
C) the Nihilistic School
D) the Law and Economics School
E) the Natural Law School
Gift promises are also called ________ promises
A) socialistic
B) Good Samaritan
C) gratuitous
D) enforceable
E) contractual
Frank says to Mary, "If you wash every window in my house today, I'll pay you $200. I
don't care if you do it, but there is $200 in it for you if you do." Mary washes 12 of the
20 windows in Frank's house by 2:00 p.m. At this point:
A) Frank can revoke his offer to pay Mary the $200 for washing the windows.
B) Mary is obligated to finish washing the windows.
C) Frank cannot revoke his offer to pay Mary $200 for washing the windows.
D) no contract can be established based upon the given facts.
E) Frank and Mary have a formal, executed contract.
Seth takes his watch to Wally's Watch Repair to have it fixed. When Seth gets his watch
back, the crystal, although perfect when it was brought in, is now cracked. Which of the
following is correct?
A) This was a mutual benefit bailment.
B) This was a bailment for the sole benefit of the bailee.
C) This was a bailment for the sole benefit of the bailor.
D) This was an implied bailment.
E) This was a business transaction that would not be considered a bailment.
Which of the following applies to 'scarce" goods?
A) specific performance
B) covering
C) capture
D) replevin
E) cure
Which of the following is true regarding a joint venture?
A) It is an arrangement in which two or more business entities combine their resources
to pursue a single project or transaction.
B) Joint ventures resemble corporations in terms of their legal formation requirements,
organizational structure, and business purpose.
C) The parties to a joint venture are called "joint contractors."
D) Joint ventures may not be used in international commerce.
E) Companies involved in a joint venture must register with the United States Secretary
of State.
The Food, Drug, and Cosmetic Act (FDCA) prohibits the shipment, distribution, or sale
of ameliorated food.
A divorce where the parties do not use lawyers but instead represent themselves is
called a:
A) pro-rata divorce.
B) pro bono divorce.
C) prohibita divorce.
D) pro tem divorce.
E) pro se divorce.
If a state has a Fair Employment Practice Agency (FEPA), to complainant may file his
or her claim with the FEPA instead of the EEOC.
The Americans with Disabilities Act does not require an employer to provide an
accommodation to a disabled employee under what circumstances?
A) The employee did not mention the disability in the job application and interview
process.
B) The disability first appeared after the employee had been hired.
C) Other employers could more easily provide the accommodation.
D) There would be a cost to the employer of providing the accommodation.
E) Providing the accommodation would impose an undue hardship on the employer.
Which of the following statements is correct regarding the assignment of a future right?
A) Usually, a person can assign a future right.
B) Usually, a person can assign a future right in equity.
C) Usually, a person can conditionally assign a future right.
D) Usually, a person can conditionally assign a future right to goods, but not a future
right to services.
E) Usually, a person cannot assign a future right.
The United States Congress enacted the Truth-in-Lending Act (TILA) in 1968 as part of
the Consumer Credit Protection Act (CCPA).
Generally, in order to adopt an amendment to the articles of incorporation of an existing
corporation, what must be done?
A) The shareholders must vote in favor of the amendment.
B) The promoters must file the amendment in the state of incorporation.
C) The board of directors must adopt a resolution recommending the amendment, and
the shareholders must vote to approve the amendment if the amendment will affect
shareholder rights.
D) The board of directors must adopt a resolution approving the amendment.
E) The board of directors must vote on the amendment as provided in the bylaws.
Which of the following is not true?
A) A minor can still disaffirm a contract for a reasonable time after reaching majority.
B) In most states a minor who misrepresents his or her age has no duty to place the
competent party in status quo if the minor disaffirms the contract.
C) A minor must pay the agreed price on a contract for necessaries.
D) What constitutes a necessary varies over time and can differ from state to state.
E) A minor does not have to wait until reaching majority to disaffirm a contract.
A legal system that relies on extensive codes in which judicial decisions do not become
law is known as what kind of legal system?
A) code law
B) equitable law
C) common law
D) civil law
E) authoritative law
Which of the following is a conditional sale?
A) entrustment sale
B) good faith sale
C) a sale by a merchant to a buyer in the ordinary course of business.
D) consignment
E) bailment
Which of the following is true?
A) Insurance brokers usually work for multiple companies, while insurance agents
work for one company.
B) Insurance agents usually work for multiple companies, while insurance brokers work
for one company.
C) Insurance brokers are generally shareholders of the companies they work for, while
insurance agents are not.
D) There is no real distinction between insurance brokers and insurance agents.
E) Insurance agents are regulated by the state, while insurance brokers are not.
Which of the following is a type of damages recoverable in a breach of contract action?
A) dispensatory
B) tangential
C) liquidated
D) phenomenal
E) non-cumulative
Robert is a pastor at United Flock Church. One of the members of his congregation,
Mrs. Smith, is a very devout believer. Robert convinces Mrs. Smith to sell him her farm
for $5,000. The actual value of the farm is $500,000. Mrs. Smith dies and her estate
sues to get her farm back. Which of the following best describes this situation?
A) This is a case of fraud, so the estate can rescind the contract.
B) This is a case of undue influence, so the estate can rescind the contract.
C) Unless Robert can prove that there was no undue influence, the contract can be
rescinded.
D) This is not a case of undue influence, because there is no fiduciary relationship.
E) Mrs. Smith is a competent adult and may dispose of her property in any way and for
any price she sees fit.
Badger Enterprises has one hundred employees, engages in interstate commerce, and
has been in existence since it incorporated in 1979. Badger never had a pension plan for
its employees, but decided to adopt one in 2001. Badger has been a very successful
company, so the company decided that twenty-five percent of the pension plan assets
would be invested into Badger Enterprises stock. The pension plan provides that
employees will vest within three years of earning benefits. Based on the above, Badger
is in violation of the Employee Retirement Income Security Act:
A) before adopting its pension plan, but not thereafter.
B) after adopting its pension plan, but not beforehand.
C) both before and after the adoption of its pension plan.
D) neither before nor after adopting its pension plan.
E) only if it did not obtain the votes of at least fifty percent of its employees
approving the placement of pension plan assets into Badger Enterprises stock.
Under Rawl's social justice theory, the principle of equal opportunity in employment
would be promulgated by ________.
A) public interest attorneys
B) federal legislators
C) state legislators
D) people who do not yet know if they are in a favored class
E) the federal judiciary
A limited liability company can be organized:
A) in only one state.
B) in no more than two states.
C) in no more than three states.
D) in all states.
E) at the federal level.
Jennifer and Vince have obtained a divorce, and under the court-supervised and ordered
settlement, the Mercedes has been awarded to Jennifer. There is still money owed on
the joint loan regarding the car, and the court has ordered Jennifer responsible for the
debt. If Jennifer stops making payment to the bank on the loan, what may the bank do?
A) The bank may only sue Jennifer for the debt.
B) The bank may sue Jennifer and/or the state in which the court is located for the debt.
C) The court may sue Jennifer and/or Vince for the debt.
D) The court may only sue Vince for the debt.
E) The court may sue Jennifer, Vince, and/or the state in which the court is located for
the debt.
Which of the following is not a recognized theory of the social responsibility of
business?
A) maximize profits
B) moral minimum
C) stakeholder interest
D) corporate partisanship
E) corporate citizenship
What is the main difference between Articles 2 and 2A and Revised Articles 2 and 2A?
A) There are no significant differences between Article 2 and 2A and Revised Articles 2
and 2A.
B) The existing Articles did not have provisions related to leases, the Revised Articles
contain new provisions so that the UCC now covers leases.
C) The existing Articles only apply to merchants; the Revised Articles now include
non-merchants under the UCC.
D) The Revised Articles include provisions to protect non-merchants against merchants,
these provision are not in Articles 2 and 2A.
E) The Revised Articles include provision related to electronic contracting for the sale
and lease of goods; these provisions are not in Articles 2 and 2A.
Common law as a source of law for contracts:
A) comes primarily from federal law.
B) comes exclusively from state law.
C) comes primarily from French common law.
D) comes primarily from state law.
E) comes equally from state and federal law.
An easement by prescription:
A) creates ownership of the land in question.
B) creates a permanent right of use in the land in question.
C) creates a temporary right of use in the land in question.
D) occurs when landlocked property is purchased.
E) creates a freehold estate.
