The business judgment rule is applicable only if the directors make an informed
decision.
a. True
b. False
Answer:
Which of the following is true regarding “holder” claims?
a. They are disallowed by federal statute.
b. State law is preempted, and they are allowed under federal law only if the plaintiff
purchased securities issued under fraudulent pretenses.
c. They may be allowed under blue sky laws as either individual or class actions.
d. They may be allowed under blue sky laws, but not as class actions.
Answer:
Partners owe each other a duty of care but not a duty of loyalty.
a. True
b. False
Answer:
Maureen owns a business that makes kites. Maureen’s agent Bob entered into an
agreement with Alice to purchase some land for a new kite factory. Maureen’s agency
relationship with Bob was not memorialized by any writing. The day after Bob signs
the papers finalizing the sale, Maureen learned of the purchase, was furious with Bob,
and said that she wanted out of the deal. Assuming that Bob was legally considered the
agent of Maureen in making the purchase, which of the following is Maureen’s best
argument?
a. That the agency agreement with Bob was not in writing and that under the equal
dignities rule she should not be bound.
b. That agency agreements may not extend to the purchase of land.
c. That under the exclusion principle, Bob was not authorized to purchase land unless
expressly authorized by Maureen.
d. That she did not need land and that therefore she should not be bound because Bob
was mistaken.
Answer:
A law enacted to punish a specific individual would be an example of a(n):
a. bill of attainder.
b. ex post facto law.
c. proscriptive law.
d. per se law.
Answer:
Which of the following is the objective of the rule of reason rule?
a. To determine whether the requirements of the per se rule have been satisfied.
b. To determine whether, on balance, the activity at issue promotes or restrains
competition.
c. To determine whether in a particular situation a horizontal price fixing has actually
harmed consumers.
d. To determine if providers of a good acted reasonably in engaging in a boycott.
Answer:
Under Section 13 of the 1934 Act, any person acquiring beneficial ownership of more
than _____ of the equity shares of a reporting company must file a Schedule 13D
providing information regarding the acquisition within ten days after crossing the
designated ownership mark.
a. 3%
b. 5%
c. 25%
d. 51%
Answer:
Which of the following is NOT true regarding product liability in the European Union
according to the European Union product liability directive?
a. Both a statute of limitations and a statute of repose are available.
b. A manufacturer will not be liable if the defect was due to compliance of the product
with mandatory regulations.
c. The directive applies to services as well as products.
d. A supplier or wholesales is not strictly liable unless the injured party is unable to
identify the manufacturer.
Answer:
Which of the following will NOT create an express warranty under the UCC?
a. Making a statement or promise relating to the goods.
b. Expressing an opinion about the quality of the goods.
c. Providing a description of the goods.
d. Stating any fact regarding the quality of the goods.
Answer:
Under federal law a retailer who had no role in the manufacture of a defective good
may not be held liable to a consumer injured by the good.
a. True
b. False
Answer:
Under a guaranty of __________, the guarantor’s obligation to pay the lender is
triggered automatically when the debtor fails to make a payment when due.
a. security
b. collection
c. payment
d. performance
Answer:
In a(n) __________ a stock purchase is financed by debt.
a. cash out merger
b. freeze out acquisition
c. leveraged buyout
d. illegal purchase
Answer:
Agreements for term or revolving loans may call for mandatory prepayment when
certain events occur.
a. True
b. False
Answer:
Which of the following is true regarding FDA approval of drug labels in relation to state
law claims for failure to warn?
a. FDA approval of the label on a brand-name prescription drug does not preempt state
failure-to-warn claims arising out of injuries caused by the drug nor does FDA approval
of the label preempt state failure-to-warn claims related to approved generic drugs
bearing the FDA-mandated label.
b. FDA approval of the label on a brand-name prescription drug preempts state
failure-to-warn claims arising out of injuries caused by the drug, and federal law also
preempts state failure-to-warn claims related to approved generic drugs as long as they
bear the FDA-mandated label.
c. FDA approval of the label on a brand-name prescription drug preempts state
failure-to-warn claims arising out of injuries caused by the drug, but federal law does
not preempt state failure-to-warn claims related to approved generic drugs bearing the
FDA-mandated label.
d. FDA approval of the label on a brand-name prescription drug does not preempt state
failure-to-warn claims arising out of injuries caused by the drug, but federal law
preempts state failure-to-warn claims related to approved generic drugs as long as they
bear the FDA-mandated label.
Answer:
A guaranty that covers all future obligations of the primary debtor to a lender is referred
to as a __________ guaranty.
a. continuing
b. restricted
c. primary
d. performance
Answer:
A professional athlete injured during practice is deemed to have consented to the
physical contact attendant to practice.
a. True
b. False
Answer:
Under 2-711 of the UCC, a buyer has a remedy called “cover”. What is cover and when
can it be used?
a. Cover applies when conforming goods are rejected by the buyer, giving him the right
to cancel the contract and buy better goods elsewhere with reimbursement for any extra
costs.
b. Cover applies when nonconforming goods are delivered to the buyer, giving him the
right to cancel the contract and buy the goods elsewhere with reimbursement for any
extra costs.
c. Cover is a SELLER’s right and does not apply to the buyer.
d. Cover allows a buyer to cancel the contract after the shipment is delayed for 30 days,
and recover direct damages from the seller.
Answer:
When a case is dismissed __________, the __________ is precluded from asserting the
__________ in another case.
a. without prejudice, plaintiff, same claim
b. with prejudice, plaintiff, same claim
c. without prejudice, defendant, same claim
d. with prejudice, defendant, same claim
Answer:
Generally, federal administrative agencies are created by:
a. Congress.
b. the President.
c. the Supreme Court.
d. the United States Constitution.
Answer:
The Electronic Signatures in Global and National Commerce Act (E-SIGN) provides
that contracts executed by electronic agents are invalid.
a. True
b. False
Answer:
Managers who create ethical solutions while maximizing shareholder value are said to
find:
a. the Universalizability Principle.
b. Distributive Justice.
c. the Sweet Spot.
d. the Shareholder Primacy.
Answer:
Fact Pattern 9-2
Blake lives in a jurisdiction that applies joint and several liability along with the
doctrine of contribution. He was involved in a very unfortunate motor vehicle accident.
Tony hit Blake’s new Mercedes in the rear just as Cathy crossed the center line and
sideswiped him. Blake’s car was severely damaged, and Blake suffered from whiplash
for a few weeks. Blake sued both Tony and Cathy. It was determined at trial that both
Tony and Cathy were negligent, that Blake was not negligent, that Tony was 60%
responsible for Blake’s injuries, that Cathy was 40% responsible for Blake’s injuries,
and that Blake’s total damages were $100,000.
Refer to Fact Pattern 9-2. Assuming she has the financial resources or sufficient
insurance, can Blake recover the entire $100,000 from Cathy?
a. Yes.
b. No, but only because she was found to be less at fault than Blake.
c. No, because joint and several liability is in effect.
d. Only if Blake can establish that Tony is insolvent can he recover the entire amount
from Cathy.
Answer:
When a governmental action affects a person’s life, liberty, or property, due process
requires only a fair hearing.
a. True
b. False
Answer:
In order to avoid an unworkable construction of the Sherman Act, the courts have
construed Section 1 to prohibit only those restraints of trade that unreasonably restrict
competition.
a. True
b. False
Answer:
A(n) __________ clause in a loan document provides that any breach by the borrower
under any other loan agreement constitutes an event of default.
a. attached
b. dragnet
c. cross-default
d. cross collateralization
Answer:
State and local governments are prohibited from complying with the overtime
provisions of the Fair Labor Standards Act by giving employees compensatory time in
lieu of overtime pay.
a. True
b. False
Answer:
If the defendant does not file an answer within the time required, a(n) __________ may
be entered in favor of the plaintiff.
a. default judgment
b. answer pro se
c. concession judgment
d. coercive judgment
Answer:
A plaintiff claiming disparate impact discrimination based on sex must prove that the
employer intentionally discriminated against him or her by denying a benefit or
privilege of employment (such as a promotion or pay raise) based upon the individual’s
sex.
a. True
b. False
Answer:
Which of the following sell beneficial shares that are traded in the stock markets and
thereby permit small investors to invest in a diversified portfolio of real estate?
a. Real estate investment trusts
b. Real estate mutual funds
c. Land diversification trusts
d. Investment land diversifications
Answer:
The __________ doctrine provides that copyright protection does not extend to the
useful application of an idea.
a. useful article
b. utility
c. equivalents
d. design
Answer:
What is meant by the business judgment rule?
Answer:
Compare the substantial continuity test in regard to successor liability with the mere
continuation test. Which test is applied by the majority of states?
Answer:
What must a plaintiff demonstrate for liability to attach under Section 1 of the Sherman
Act?
Answer:
Discuss the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
(“BAPCPA”) in regards to whether Chapter 7 or Chapter 13 relief is appropriate.
Answer:
Lawrence owns several apartments in a large city. The city just enacted a rent control
ordinance limiting the amount of rent that can be charged with apartments. Lawrence
heard that Susan, a friend of his, just graduated from law school and passed the bar.
Lawrence asks Susan if there is any way he can avoid the rent control measures. What
should Susan tell him?
Answer:
Critics of administrative agencies claim that they violate the doctrine of separation of
powers. Explain the basis for this criticism. Explain why agencies are so prevalent
despite the absence of any explicit provision for their existence in the Constitution.
Discuss fully.
Answer:
What is the Kyoto Protocol? Is the U.S. a signatory?
Answer:
Fully discuss limitations on the protection against double jeopardy.
Answer:
List exceptions, if any, to the Employee Polygraph Protection Act’s ban on polygraph
testing.
Answer:
What three factors does a court primarily look to in determining if a horizontal merger
is permissible once the market is defined? Discuss fully.
Answer:
Blastco is an expert demolition company. During the process of leveling some land,
Blastco fell behind in their schedule and used twice the normal amount of dynamite to
blast some hills. When a charge exploded, the blast broke several of the windows in
Paul’s home. Paul lives near the blast site. What theory or theories may Paul use to
recover damages from Blastco? Discuss fully.
Answer:
The Tiny Motel is located in State X. It is not readily accessible from any major
highway. Few, if any of their guests are from out of state. The motel has filed suit in
federal court to be exempt from the anti-discrimination provisions of the Civil Rights
Act of 1964. What are the arguments for and against exemption?
Answer:
Set forth the requirements an invention must meet in order to be eligible for a utility
patent as well as the requirements for patentable subject matter.
Answer:
Sam is an employee of Binky, Inc. While delivering a truckload of binkies to a local
retailer, Sam decided to stop at his bank to deposit his paycheck. The bank is three
blocks from the retailer and it takes approximately 15 minutes to deposit a check. While
Sam is in the bank, the truck rolled down the street because Sam negligently forgot to
set the parking brake. The truck crashed through the window of Market, killing two
people and causing $500,000 in damage. Discuss the issues involved in determining
whether Binky, Inc. is liable for the damages at issue. If Binky, Inc. is liable, can it
recover against Sam for the damages?
Answer:
Agents owe a fiduciary duty to the principal. Describe the specific responsibilities that
are generated by this duty. Discuss fully.
Answer:
S calls B and says, “I will sell my 1966 Mustang convertible to you for $3,000.” B
knows that the car is worth $4,000. B replies, “Would that include the trunk-mounted
spare tire?” S hangs up without a word. B calls back in three days and says, “I’ll buy the
car for $3,000.” Is there a contract? Discuss fully.
Answer:
Art, the sole shareholder of ABC Company, got a ticket for reckless driving because he
was speeding through a school zone at 85 miles per hour. Sue, the wife of the officer
who gave Art the ticket, was an employee of ABC Company. Art asked her if she could
get the ticket “fixed” for him. Sue indeed talked to her husband, but he was unwilling to
tear up the ticket. Art was incensed and fired Sue on the spot saying that she could not
be counted upon to do anything the right way. Discuss the pros and cons of whether Sue
should prevail in an action against ABC Company alleging a violation of public policy.
Answer: