Shirley is an actress under contract with Twentieth Century. Shirley agreed to perform
the lead role in a musical to be filmed in Hollywood by Twentieth Century. At the last
minute, Twentieth Century decided to scrap the musical and assigned its rights in
Shirley to MGM. MGM was planning to film a western in Australia requiring Shirley to
spend six months filming in Australia. Can Shirley successfully prevent this
assignment?
David has worked as a CPA for Accountants R Us for about eight months. When his
wife had a baby, he requested to take some time off. He believes he is allowed to do so
pursuant to the Family and Medical Leave Act.
How many weeks is David allowed to take off under the Family and Medical Leave Act
in this situation?
a. Six weeks.
b. 12 weeks.
c. 24 weeks.
d. None.
Don received in the mail merchandise he never ordered. The package was addressed to
him, and when he opened it he saw a brochure stating he could keep the products for
only $19.95. If he chose not to keep the products he was instructed to mail them back
within five days. Don:
a. can keep and use the merchandise without having to pay for it.
b. can keep the merchandise only if he pays the $19.95.
c. must send the merchandise back within five days if he does not want it.
d. None of the above is correct.
Kyle was eating clam chowder soup in a restaurant when a very small piece of bone
lodged in his throat. Fortunately, he was able to remove the bone with his fingers.
However, he was upset by the incident and sued the restaurant for negligence. The most
likely result would be:
a. Kyle will not collect any damages since he did not sustain any damages.
b. none of these answers are correct.
c. Kyle will collect damages if he proves it was possible to prevent tiny fish bones from
being present in clam chowder.
d. Kyle will collect damages, as res ipsa loquitur applies.
A woman wishes to attend an all-male, publicly supported college. She claims the
college is violating the Equal Protection Clause of the Constitution. What level of
scrutiny will the court use when deciding this case?
a. Minimal scrutiny
b. Intermediate scrutiny
c. Strict scrutiny
d. Compelling interest scrutiny
Nate works as a carnival barker. His employment contract specifies that he can be fired
if he “loses his voice. This is an example of:
a. vagueness.
b. extortion.
c. ambiguity.
d. duress.
Which of the following is a primary goal of bankruptcy:
a. to preserve as much of the debtor’s property as possible.
b. to divide the debtor’s assets fairly between the debtor and the creditors.
c. to divide the debtor’s assets fairly among the creditors.
d. All of the above.
Which of the following words could be registered as a trademark?
a. Crunchy peanut butter.
b. Low-fat peanut butter.
c. Green peas.
d. yStar peanuts.
Which of the following is a true statement about tort reform?
a. Almost all the states have passed statutes limiting the amount a jury can award in a
tort case.
b. Congress has proposed and debated bills placing limits on tort awards, but so far has
not enacted such legislation.
c. Large medical malpractice awards account for about 60 percent of the dramatic
increase in health care costs in the United States during the last two decades.
d. All of the above.
If a condition does not occur:
a. public policy will require only substantial performance by the party for whom the
condition failed.
b. the requirement of good faith will be eliminated.
c. one party will probably be discharged without performance being required.
d. it is considered an anticipatory breach.
The traditional formula for determining damages for a violation of the
Robinson-Patman Act was to:
a. calculate the estimated amount of lost profits.
b. determine the difference between the two prices and multiply the difference by the
number of units purchased.
c. allow a jury to determine the amount of punitive damages without using any
particular formula.
d. All the above.
E. I. James is a writer with a best selling novel. He wishes to create a corporation called
“James, Inc. He will be the only shareholder. Can James incorporate his business of
writing?
a. Yes, this would be the incorporation of a sole proprietorship.
b. No, the law requires at least two people to be shareholders of a corporation.
c. No, the law does not permit a person to, in effect, incorporate himself.
d. Only if he forms an S Corporation.
We Care, a nonprofit environmental organization, believes that Quanaco is violating the
Clean Air Act. The EPA has not taken any action against Quanaco. We Care can file a
citizens suit against the EPA.
When an appeal is filed with the U.S. Supreme Court, the Supreme Court:
a. must hear the case if the validity of a federal statute is in question.
b. must hear the case if two or more U.S. courts of appeals have decided the legal issue
differently.
c. has discretion as to which cases it hears.
d. must hear all cases.
E-trex, Inc. wanted Prince, a professional basketball player, to endorse its products.
Prince, however, was not interested. E-trex was not deterred and hired a person who
looked and sounded liked Prince for its commercials.
a. E-trex has defamed Prince.
b. E-trex has interfered with a contract.
c. E-trex has interfered with a prospective advantage.
d. E-trex’s conduct raises the issue of commercial exploitation.
Burns Medicine Shop developed a website where customers could ask the pharmacists
questions and could refill prescriptions online. What statute requires Burns to have and
disclose a privacy policy to anyone using the website?
a. The FTC Act.
b. The Electronic Communications Privacy Act.
c. The Gramm-Leach-Bliley Privacy Act.
d. No statutes presently require Web sites to have or disclose a privacy policy.
Al contracted to sell his house to Bev. Subsequently, they both changed their minds and
agreed to cancel the contract. The contract between Al and Bev is discharged by:
a. full performance.
b. rescission.
c. accord and satisfaction.
d. novation.
In which case does the buyer receive no title to the goods he purchases?
a. Owner has good title. Max steals the goods and sells them to buyer.
b. Owner has good title. Max purchases the goods using deception. He then sells them
to buyer who gives value and acts in good faith.
c. Owner has good title. Max purchases the goods using fraud. He then sells them to
buyer who is not a BFP.
d. All of the above.
e. Both a and c.
Which of the following warranties provides that the goods will be useable for the
ordinary purposes for which they are used?
a. Infringement.
b. Fitness for a particular purpose.
c. Merchantability.
d. Title.
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.
Which of the following statements is correct?
a. Bonds are long-term debt secured by company assets.
b. Debentures are long-term unsecured debt.
c. Notes are short-term debt and may be secured or unsecured.
d. All the above are correct.
Compensatory damages are typically assessed against the breaching party:
a. as a penalty for breaching the contract.
b. only under the UCC when the sale of goods is the subject of the contract.
c. to put the non-breaching party in the position it would have been in had the contract
never been formed.
d. to put the non-breaching party in the position it would have been in if the contract
hadn’t been breached.
Mega Corp. hired permanent replacement workers when its union went out on strike
seeking better medical and retirement benefits. After the strike is over, Mega Corp.:
a. must give the striking employees their jobs back since this was an economic strike.
b. must give the striking employees their jobs back since this was an unfair labor
practices strike.
c. may hire additional workers without considering the striking employees who want
their jobs back.
d. does not have to give the striking employees their jobs back since this was an
economic strike.
Agnes plans to file for bankruptcy under Chapter 7. One month prior to filing, Agnes
gives Joe’s Filling Station $700 to apply to her gas bill. Joe has been so kind to let her
charge the gas she needed for her car over the past year. The bankruptcy trustee
appointed to the case:
a. can cancel the payment to Joe as a fraudulent transfer.
b. cannot cancel the payment to Joe because it is payment for an existing debt.
c. cannot cancel the payment to Joe because he is not an insider.
d. can cancel the payment to Joe as a voidable preference.
A subpoena duces tecum is different from an ordinary subpoena in that a subpoena
duces tecum:
a. can only be given to an expert to require a personal appearance before a court or
administrative hearing.
b. is binding on a person even if it is mailed to the person rather than handed to her by a
process server.
c. allows for privileged or confidential information to be turned over the a court or
administrative agency.
d. requires the person to bring specified documents to the court or administrative
hearing.
In Hernandez v. Arizona Board of Regents, the court held that individuals who:
a. intentionally provide alcohol to minors can be liable for negligence to injured third
parties.
b. intentionally provide alcohol to minors cannot be held liable for negligence to injured
third parties.
c. carelessly provide alcohol to minors can be held liable for damages for resulting
injury to third parties.
d. none of the above.
A vertical allocation of customers or territory:
a. is a per se violation of Section 1 of the Sherman Act.
b. is a rule of reason violation of the Sherman Act.
c. is not a violation of the Sherman Act.
d. is illegal if it adversely affects competition at any stage of the marketing channel.
Buck, fearing death from severe injuries suffered in a machinery accident, assigned
over a certificate of deposit worth $100,000 and delivered the certificate to Pearl, a
friend, who gladly accepts. Buck ends up recovering from the injuries. Why must Pearl
give the certificate of deposit back to Buck?
a. This type of gift is known as a gift causa mortis. It is a conditional gift which is
conditioned on Buck’s actually dying. Because Buck recovered, the gift is automatically
revoked.
b. This is an inter vivos gift because Buck was still alive when the gift was made. Any
inter vivos gift is revocable because there is no consideration to make Buck’s delivery
of the certificate binding under contract law.
c. This is an inter vivos gift and due to state laws, gifts in contemplation of death must
be written into a valid will or otherwise the deceased’s assets will be distributed
according to state statute.
d. This gift is an ordinary gift, but it is revocable because we don’t know if the
certificate of deposit has matured or not.
The term “S Corporation” comes from:
a. the Internal Revenue Code.
b. the FTC rules.
c. the U.S. Constitution.
d. state corporation law.
Dana hires Paris to paint a portrait of her poodle, “Mack.” The painting is to be done to
Dana’s personal satisfaction. Upon completion of the painting, which of the following
will be true?
a. Dana may refuse to accept the painting if she really does not like it.
b. Dana may refuse to accept the painting only if a reasonable person would not like it.
c. Dana may refuse to accept the painting if she cannot afford to pay for it.
d. Dana may not refuse to accept the painting.
RayCorp offers to buy out MegaCorp by paying $69 per share. LandCo, who also wants
to buy MegaCorp, offers to pay $75 per share. When the bidding process is finally over,
RayCorp has offered $85 per share and LandCo has offered to pay $90 per share.
MegaCorp agrees to sell to RayCorp on grounds that, all things considered, the takeover
by RayCorp would be better for the business. LandCo claims that MegaCorp should
have sold the company to it since it was the highest bidder. Is LandCo correct?
a. Yes. This is a breach of duty. MegaCorp must sell the company to the highest bidder;
it cannot give preferential treatment to a lower bidder.
b. No. This is covered by the Williams Act.
c. No. The directors have broad discretion in deciding to whom to sell the company.
d. None of the above.
A major motion picture distributor offers to provide a television station with three very
popular, desirable films. However, as part of the agreement, the distributor requires that
the television station also purchase four films that are not very desirable. This type of
arrangement is called a:
a. reciprocal dealing agreement.
b. reverter arrangement.
c. joint custody arrangement.
d. tying arrangement.
The accidental destruction of a negotiable instrument will not result in its cancellation.
A partnership is liable for both the negligent and intentional acts of a partner if the acts
were committed within the ordinary course of the partnership’s business.
The Sarbanes-Oxley Act makes it a crime to retaliate against someone who blows the
whistle on any federal offense.
Lily is involved in the winding up of her partnership. Lily is not entitled to
compensation for her work since she is a partner.
The parties to a criminal trial are the government and the defendant.
It is essential to comply with all the technicalities of a limited liability partnership
statute top maintain the limited liability status..
In order for the government to obtain a criminal conviction, it must prove its case
beyond a reasonable doubt.
Elizabeth worked as a salesperson in a carpet store. She was in the midst of divorce
proceedings and needed some money. Elizabeth sold her wedding ring. Elizabeth is
considered a merchant with regard to the sale of the ring.
Discuss common abuses that occur with auctions on the Internet and how these abuses
are being addressed.
Peggys credit card debts are mounting as her costs of insurance and fuel have
dramatically increased and her income, from sporadic free-lance jobs, has dropped.
Chapter 13 of the Bankruptcy Code will allow her to reorganize her debt while she
keeps most of her assets.
The UCC imposes a duty of good faith in the performance of all contracts.
What is the definition of the business judgment rule?
The duty of care that each of us must follow is to behave as a reasonable person.
Discuss the differences between a will and a trust.
Hankrin Corp. is incorporated under Delaware law and has its principal place of
business in Annapolis. For diversity purposes, it is considered a resident only of
Maryland.
The tariff for mens gloves can be higher than womens gloves as long as the government
did not intend to discriminate.
Wearever Builders constructs new houses in the Oak Grove subdivision. Unless it
expressly gives a warranty to buyers, Wearever does not guarantee the adequacy of
materials and good workmanship in its new houses.
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.