Which of the following statements regarding a negligence case is correct?
a. A plaintiff must show that the defendant’s act was both the factual cause of her injury
as well as a foreseeable injury.
b. A plaintiff must show that the defendant’s act was the factual cause of her injury even
if the injury was not foreseeable.
c. A plaintiff must show that the defendant’s act created a foreseeable danger even if it
was not the factual cause of her injury.
d. A plaintiff does not have to show that the defendant’s act either created a foreseeable
danger or that the act was the factual cause of her injury.
A promise to do (or not do) something in the future counts as consideration.
a. True
b. False
Sandy noticed an unauthorized electronic funds withdrawal on her bank statement. In
order for her to not be liable for the withdrawal, she must notify her bank within
_______ of the date of the bank statement.
a. 10 days
b. 30 days
c. 60 days
d. 90 days
In a strict liability case, the courts still consider if the defendant acted in a reasonable
and prudent manner.
a. True
b. False
Incoterms rules are
a. a series of three-letter codes used in international contracts for the sales of goods.
b. trade agreements promoting common policies among member states.
c. a series of laws designed to make international contracts more uniform and
predictable.
d. rules outlining when the power of one nation can impose its laws in other countries.
MoneyMaker Toy Company violated the safety standards set forth by the Consumer
Product Safety Commission when it produced a toy gun that caused injury to hundreds
of children. Because of MoneyMakers actions
a. the CPSC can impose civil penalties on the company.
b. the CPSC can impose criminal penalties on the company.
c. users can sue for damages, including attorneys fees, if MoneyMaker knew it was
violating a consumer product safety rule when it produced the guns.
d. All of the answers are correct.
Darcy buys a life insurance policy on her own life, under which she pays the annual
premiums. The insurance is issued for a specific period, but is renewable for similar
periods. Darcy is covered only as long as she makes the payments. There is no cash
value portion to the policy. Darcy probably owns
a. whole life insurance.
b. key-person life insurance.
c. term life insurance.
d. an annuity.
The principle of liability stating that an employer is liable for a physical tort committed
by an employee acting within the scope of employment and a nonphysical tort of an
employee acting with authority is called
a. the equal dignities rule.
b. respondeat superior.
c. fiduciary control.
d. apparent authority.
The guiding principal of federal securities law is
a. to keep investors from making bad investments.
b. to insure investors have full and accurate information.
c. to avoid another stock market crash.
d. to promote the issuance of securities.
The form of business ownership that is the MOST easily transferable is the
a. general partnership.
b. corporation.
c. close corporation.
d. sole proprietorship.
A bailee always has a right
a. to possession of the bailed property.
b. to use the bailed property.
c. to compensation.
d. All of the answers are correct.
Alfrieda purchased an ownership interest in a corporation. This gives her the right to
use the equipment owned by the corporation, as long as her usage does not interfere
with the normal operation of the business.
a. True
b. False
Astrid and Razi formed a partnership in which they agree to share profits 60 percent to
Astrid and 40 percent to Razi. Losses will be shared
a. equally, unless otherwise agreed.
b. 60 percent to Astrid and 40 percent to Razi, unless otherwise agreed.
c. according to their capital contributions to the partnership.
d. in whatever proportion provides the greatest tax advantage for the partners that year.
The Basic Books, Inc. v. Kinko’s Graphic Corp. case held that
a. professors could print and sell lengthy course packets of copyrighted material under
the “fair use” doctrine.
b. professors could not print and sell lengthy course packets of copyrighted material
under the “fair use” doctrine.
c. professors could not use commercial printing companies under the “fair use”
doctrine.
d. students couldprint and sell lengthy course packets of copyrighted material under the
“fair use” doctrine.
If Ray agrees to rake leaves for Michelle in exchange for Michelle’s promise to pay off
the debt Ray owes to Dean, then Dean is a donee beneficiary of the agreement between
Ray and Michelle.
a. True
b. False
The ruling in the landmark case of New York Times v. Sullivanwas that a public official
can win a defamation case
a. without proving the defendant acted with reckless disregard of the truth.
b. only by proving the defendant’s actual malice.
c. without proving the defendant knew his or her statement was false.
d. only by proving the defendant has a history of reckless behavior.
Which of the following is a fundamental goal of shareholders?
a. To have the business survive
b. To keep their jobs
c. To have an immediate increase in stock price
d. To have the business provide jobs
In 30-year mortgages, the finance charge typically exceeds the amount of the principal.
a. True
b. False
Quick Supply House breached a contract with MegaCorp. The breach resulted in the
loss of a great deal of money to MegaCorp. The board of directors for MegaCorp vote
not to sue the supply house since it believes the legal costs would be more than it would
probably recover. If a group of shareholders wish to sue the supply house, this would
a. be a type of direct lawsuit.
b. have to be a derivative lawsuit.
c. be a settlement lawsuit.
d. be an SEC lawsuit.
Solomon breaches his contract with Neal to purchase the 500 pairs of socks he had
promised to buy. Neal is able to sell the 500 pairs to Renny for a much lower amount.
Neal then sues Solomon for damages. Neal will be able to recover
a. the amount in the liquidated damages clause.
b. the difference between Solomon’s contract price and the amount paid by Renny.
c. Solomon’s contract price.
d. an amount which depends on whether Solomon intentionally breached because he
found cheaper socks somewhere else.
Minority shareholders have no right to overturn an ordinary business transaction
between the corporation and a controlling shareholder.
a. True
b. False
The United Nations Security Council, comprised of all its member nations, is the UN’s
lawmaking body.
a. True
b. False
Longs Department Store contracted to buy 1,000 drop-waist velour dresses in heather
gray from Durham. Subsequently, Durham called and asked to ship mink-colored
dresses instead of heather gray. Long agreed, in writing, to the change. Which statement
is correct?
a. The modification is not enforceable since there was no consideration for the change.
b. The modification is not enforceable since the parties are merchants.
c. The modification is enforceable.
d. Whether the modification is enforceable depends on the gap-filler rule.
Anyone who presents a check for payment makes certain warranties. Which of the
following is NOT one of those warranties?
a. that he or she is a holder
b. that the check has not been altered
c. that the drawee is a solvent institution
d. that all signatures are authentic
An email scam that involves personalized messages sent from someone the victim
knows is called
a. larceny.
b. shilling.
c. hacking.
d. spear phishing.
April put an advertisement in the newspaper advertising the sale of her computer for
$500. Simultaneously, six people responded to the ad by mail with formal written
acceptances. April is bound on all six contracts to sell her computer for $500.
a. True
b. False
The case of Carafano v. Metrosplash.com, Inc. held that
a. the Fourth Amendment applies to computers.
b. Congress, in enacting the Communications Decency Act, intended that ISPs should
not be held liable for information provided by someone else.
c. Congress had weighed free speech interests with protection of the public from
offensive or obscene materials and determined that protection of the public was more
important in the Internet setting.
d. Matchmaker, because it had provided the questionnaires for collecting information
from its users, must be considered an “information content provider under the
Communications Decency Act, and it is therefore liable under the Act.
For the defendant to be liable in a negligence case, it must be proven that the type of
harm caused by the defendant must have been reasonably foreseeable. This is referred
to as
a. proximate cause.
b. duty of due care.
c. factual cause.
d. breach.
When may an employer require an employee to submit to a lie detector test?
a. When the employee has been hired for less than 90 days
b. When the test is part of an on-going investigation into crimes that have occurred
c. When the employer has reason to believe the employee is using illegal drugs on the
job
d. When all employees are being questioned using a lie detector
Discuss the effect on an instrument of: (a) contradictory amounts between the numerals
and amount written in words on a check; (b) the interest rate left blank on a promissory
note; and (c) contradictory terms that are typed or printed onto a promissory note and
terms that are handwritten.
When the government induces the defendant to break the law it is known as
a. entrapment.
b. racketeering.
c. an exclusionary rule.
d. a good faith exception.