Sally seeks to list her home with Barry, a real estate broker. Sally and Barry agree that
Barry will receive a commission if the home sells within 90 days, regardless of who
actually causes the sale of the property. Sally and Barry have a(n):
A. open listing contract.
B. exclusive agency contract.
C. exclusive right to sell contract.
D. restrictive covenant contract.
Which of the following is true of eviction?
A. The law gives landlords the power to forcibly evict tenants who default on rents.
B. An eviction results when the tenant unjustifiable vacates the leased premises.
C. It results from a breach of contract by a tenant.
D. The tenant need not be given a notice before eviction.
The state of Indiana hires the Reliable Construction Company to do some excavation
work on an interstate highway. The state lays out the general objectives that Reliable
has to achieve, but the details of the job are up to Reliable. The job involves digging
holes ten feet deep, the whole way, across the highway. Given the nature of the job, it’s
important that Reliable be especially careful in putting up flashers and warning signs to
steer oncoming motorists onto a detour. Reliable, however, does not do an adequate job
in this regard and motorists are continually driving their cars into the construction area
at high speed. One of these drivers, Tim, is unable to stop in time, and drives his car
into the hole, suffering severe personal injury and damage to his car. Tim sues Reliable
and the state for Reliable’s negligence. In this case:
A. the state is liable under the doctrine of respondeat superior.
B. the state is not liable because Reliable is an independent contractor.
C. the state is liable for Reliable’s failure to take requisite special precautions.
D. the state is not liable because it was not negligent.
_____ refers to securing exempt personal property from secured creditors by paying
them the full value of the collateral at the time the property is redeemed.
A. Automatic stay
B. Discharge
C. Exemption
D. Redemption
Liability for consequential damages resulting from a breach of contract may also be
limited or excluded by agreement. Will this limitation or exclusion be always enforced?
A. Yes, it will always be enforced.
B. No, it will not be enforced if it would be unconscionable.
C. Yes, if both parties agreed to it in the contract.
D. Yes, it will be enforced in case of injury caused to a person by consumer goods.
The board of directors of a nonprofit corporation must have at least _____ director(s).
A. one
B. three
C. eight
D. five
Which of the following agreements provides a temporary insurance cover until the time
the insurer decides to accept or reject the applicant’s application?
A. Co-insurance agreement
B. Binder agreement
C. Indemnity agreement
D. Guaranty agreement
Which of the following critical thinking errors is likely to occur among the subordinates
if a leader is unethical?
A. False analogy
B. Bandwagon fallacy
C. False cause
D. Gambler’s fallacy
Which of the following is true of ‘invasion of privacy’?
A. Public figures do not enjoy any right to privacy.
B. There are four distinct torts related to it.
C. It is a subject of the Second Amendment of the U.S. Constitution.
D. Examining a person’s public records amounts to an invasion of privacy.
Which of the following is NOT one of the four distinct torts that make up the invasion
of privacy cause of action?
A. Intrusion on Solitude
B. Breach of Contract
C. Public Disclosure of Private Facts
D. False Light Publicity
The U.S. Constitution provides distinct powers to the Congress, the president, and the
federal courts. This is the principle of:
A. separation of powers.
B. federal supremacy.
C. judicial review.
D. due process of law.
Which of the following is true of the Contract Clause?
A. It applies to laws that impair contracts made after the law’s passage.
B. It imposes tougher standards on government contracts than on private contracts.
C. It does not apply to government contracts.
D. It has gradually increased in importance from the 19th century to the 20th century.
Johnathan LLC has a term of eight years. It had only two partners, Jonathan and John,
in its first five years of existence. It was not dissolved when John withdrew from
membership in the sixth year. The LLC has continued its business and Johnathan has
agreed to pay John, as per the provisions of the RULLCA. Consequently, Johnathan is
obligated to pay John the value of his interest within:
A. 120 days after John’s dissociation.
B. 90 days after John’s dissociation.
C. 120 days after the end of the LLC’s term.
D. 90 days after the end of the LLC’s term.
Under the Uniform Limited Partnership Act (ULPA), a new partner may be admitted
only upon the fulfillment of which of the following conditions?
A. Each partner’s consent is required.
B. A written agreement is required.
C. The secretary of state’s consent is required.
D. The Vote of the partners is required.
For which of the following would a shareholder derivative action be appropriate?
A. The shareholder alleges that the board of directors has imprudently managed the
corporation.
B. The shareholder has been refused a request that his/her accountant be permitted to
look at the corporate accounting records.
C. The shareholder alleges that the corporation has violated the shareholder’s
preemptive right.
D. The shareholder alleges that the corporation has been paying dividends to a previous
shareholder from whom the shareholder purchased his/her shares.
Someone who attempts to recover for breach of contract:
A. can recover only for those losses that he can prove with reasonable certainty.
B. can recover for all consequences of the breach, whether foreseeable or not.
C. can only do so for consequential damages.
D. has no duty to mitigate (or minimize) damages.
Which of the following conditions characterizes a firm offer regarding the sale of
goods?
A. It must be verbally communicated.
B. It can be revoked by the offeror prior to acceptance.
C. It must be made in the presence of a government official.
D. It must be made by an offeror who is a merchant.
Which of the following corresponds to the priority rule for purchase money security
interest in inventory?
A. The PMSI has priority if it is perfected at the time the debtor receives possession of
the inventory.
B. The PMSI has priority if it is perfected within 20 days after the debtor receives
possession of the inventory.
C. The PMSI has priority if the holder of the competing security interest received
notification within three years before the debtor receives the inventory.
D. The PMSI has priority when it has been filed or perfected before the other interest on
the same collateral.
Which of the following is nonnegotiable?
A. A note that does not state any other undertaking by the person promising to do any
act in addition to the payment of money.
B. A draft payable “15 days after sight.”
C. A note with a clause permitting the time for payment to be accelerated at the option
of the maker.
D. A note that is payable “when the interest rate on 30-year treasury bonds reaches 10
percent.”
Which of the following statements is true concerning multiple forgeries and alterations?
A. A customer cannot hold the bank responsible for paying, in good faith, any altered
checks after he/she receives the statement of account.
B. A bank will be held liable for honoring altered checks which were presented to the
bank multiple times.
C. A customer bears the responsibility for any forgeries and subsequent forgeries that
take place, even if he/she has notified the bank.
D. A bank will be held liable even if it proves that it suffered a loss due to the
customer’s failure to examine his/her statement and notify the bank.
Abby orally offers to sell Carl 100 premium-grade fountain pens but neglects to state
the price. Such pens typically sell for $1 each. Carl orally accepts. Immediately
thereafter, Abby tries to back out of the deal. At this point in time, which of the
following is most likely to be true?
A. There is no offer and no contract because the offer is indefinite.
B. There is no offer and no contract because the offer must be in writing.
C. There is a contract, if the parties intended to make a contract and there is a
reasonably certain basis for giving an appropriate remedy.
D. There is a contract, because the offer contained all material terms.
Jim created a valid will in 2003. Three years later, he wanted to make some minor
changes to the will. Jim wants to modify the provisions of his will without making an
entirely new will. He can amend his will by adding a(n) _____.
A. bequest
B. residuary
C. advance directive
D. codicil
Which of the following permits a firm to register a trademark in all its signatory nations
simultaneously by filing an application for registration in any signatory nation and was
joined by the United States in 2003?
A. The Berne Convention
B. The Paris Convention for the Protection of Industrial Property
C. The Madrid Protocol
D. The Kyoto Protocol
In intestate succession what is the term for the individuals that stand to inherit the
decedent’s assets?
A. Probate
B. Heirs
C. Incorporation
D. Executors
Payne entered into a written agreement to sell a parcel of land to Stevens. At the time
the agreement was executed, Payne had consumed alcoholic beverages. Payne’s ability
to understand the nature and terms of the contract was not impaired. Stevens did not
believe that Payne was intoxicated. The contract is:
A. void as a matter of law.
B. legally binding on both parties.
C. voidable at Payne’s option.
D. voidable at Stevens’ option.
_____ rulemaking procedures provide limited rights to interested parties to
cross-examine agency witnesses.
A. Formal
B. Executive
C. Informal
D. Hybrid
Tina cosigns a promissory note at Globe Bank for $500 for her friend Tom. Tom
defaults on the loan, and Globe Bank collects $500 from Tina. Tina then collects $500
from Tom. Tina could collect money from Tom because of her right of _____.
A. subrogation
B. reimbursement
C. contribution
D. attachment
Brian signs a promissory note for $500 payable to Harwich. Harwich indorses the note
“Pay to order of Stephen, Harwich” and negotiates it to Stephen. Stephen fraudulently
changes the $500 to $5,000. Under these circumstances, Brian is discharged from his
liability as maker of note because:
A. Brian has not forged the signature.
B. the instrument is not negotiable.
C. the amount for which he was liable was altered.
D. Stephen is insolvent.
A conditional indorsement:
A. destroys the negotiability of the instrument.
B. does not destroy the negotiability of an otherwise negotiable instrument.
C. validates the instrument.
D. does not destroy the negotiability of the instrument but invalidates it.
In response to the Telemarketing Sales Rule (TSR), affected commercial telemarketers
initiated litigation brought on lack-of-statutory authority and:
A. First Amendment grounds.
B. Fourth Amendment grounds.
C. Fifth Amendment grounds.
D. Seventh Amendment grounds.
Any word, name, symbol, device, or combination thereof used by a manufacturer or
seller to identify its products and distinguish them from the products of competitors is
called a:
A. copyright.
B. trademark.
C. signature.
D. patent.
_____ analysis of behavior challenged under Section 1 of the Sherman Act is thought to
provide reliable guidance to business.
A. Quick-look
B. Rule of reason
C. Secondary
D. Per se
Camm Corp. has 10,000,000 common shares outstanding. Its four directors are elected
by cumulative voting. To elect one director, a shareholder must own at least:
A. 5,000,001 shares.
B. 2,000,001 shares.
C. 2,500,001 shares.
D. 5,000,000 shares.