When a partner dies, that partner’s share of the partnership assets may be left to his or
her heirs or next of kin.
Federal courts have limited jurisdiction to hear cases involving a federal question or
diversity of citizenship.
To qualify as a holder in due course under the shelter principle, the holder must qualify
as a holder in due course in his or her own right.
Article I of the United States Constitution establishes the executive branch of
government.
One corporation can acquire all the shares of another corporation through a share
default.
If inspected goods do not conform to the contract, the buyer or lessee may reject them
without paying for them.
To be relieved of his or her duties under a contract, a person must have been legally
insane at the time of entering into the contract.
Any person, including natural persons, partnerships, limited partnerships, trusts, estates,
associations, and corporations, may be a general or limited partner.
Design patents are valid for seventeen (17.) years.
In order to perfect a security agreement, a security agreement must be filed.
Under the UCC, parties to a contract can decide who will bear the risk of loss.
Prior payment is a real defense.
Whenever an employer enforces an employment policy that discriminates against one
or more protected classes, that policy will be automatically considered illegal and
unenforceable.
Critics argue that ethical fundamentalism does not permit people to determine right and
wrong for themselves.
Under the Clean Air Act, states have the option to prepare a state implementation plan if
the state does not want the Environmental Protection Agency to prepare the plan.
In a breach of express warranty action, the amount of recoverable compensatory
damages is generally equal to the difference between (1.) the value of the goods as
warranted and (2.) the actual value of the goods accepted at the time and place of
acceptance.
When there is no movement of goods, the risk of loss passes to the buyer when the
goods are received, if the seller is a merchant.
Payees generally do not meet the requirements for being a holder in due course, because
they know about any claims or defenses against the instrument.
In terms of notice of a special shareholders’ meeting, the purpose of the meeting need
not be disclosed.
Search warrants are not required for searches of business premises for businesses in
certain heavily-regulated industries.
Constructive delivery is the usual method of transferring personal property.
The Williams Act requires a tender offeror to notify either the management of the target
company or the SEC before the offer is made.
An accountant is liable to any foreseeable user of the client’s financial statements under
the plausibility standard.
An inference of the existence of a general partnership is drawn if profits are received in
payment of consideration for the sale or goodwill of a business.
Alimony is usually awarded for a specific period of time. This is called retributive
alimony.
The euro can be used in all countries of the eurozone.
Kevin overhears his roommate Donovan tell someone that he is planning to go
ski-diving next weekend. Despite not really knowing Donavan very well, Kevin
purchases a $1M life insurance policy on Donovan’s life. Donovan’s chute fails to open
and he meets his demise. Kevin can collect the $1M.
According to the Sarbanes-Oxley Act, the CEO and CFO of a public company must file
a statement accompanying each annual and quarterly report certifying that the signing
officer has reviewed the report, and that based on the officer’s knowledge, the report
does not contain any untrue statement of a material fact or omit to state a material fact
that would make the statement misleading.
Property is considered lost property when its owner negligently, carelessly, or
inadvertently leaves it somewhere.
Regarding a trade acceptance, the seller is both the drawer and the payee.
If an employee breaches an employment contract, the employer can recover the costs to
hire a new employee, but cannot recover any increase in salary paid to the replacement.
What is the “accord” in an accord and satisfaction under contract law?
A) any agreement that has been fully performed
B) an agreement made in order to settle a dispute of an earlier contract that is not valid
because the terms of the earlier contract will control
C) an agreement made in order to settle a dispute of an earlier contract that eliminates
all legal effect of the earlier contract upon the accord’s formation
D) an agreement made to correct an illusory promise made in a contract
E) an agreement made in order to settle a dispute of an earlier contract that, if not
satisfied, allows a lawsuit to enforce either the original contract or the accord
Where must the signature appear on a negotiable instrument in order to meet the
signature requirement?
A) anywhere on the face of the instrument
B) anywhere on the face of the instrument or anywhere on the back of the instrument
C) on the face only, and only at the end of the instrument
D) anywhere on the face, or in the proper indorsement place on the back
E) at the end of the instrument on the face, or in the proper indorsement place on the
back
A motion for ________ alleges that if all the facts presented in the pleadings are true,
the party making the motion would win the lawsuit when the proper law is applied to
these facts.
A) summary judgment
B) default judgment
C) directed verdict
D) judgment on the pleadings
E) acquittal
Which of the following is true regarding living wills?
A) The United States Supreme Court has acknowledged that the right to refuse medical
treatment is a personal liberty interest protected by the Due Process Clause of the
United States Constitution.
B) A living will may not specify which life-saving measures an individual does not
want.
C) The desire to refuse medical treatment must be shown by a preponderance of the
evidence in the living will.
D) A living will should not designate anyone to make health care decision for the
maker.
E) The United States Supreme Court has not addressed the issue of whether living wills
may be valid.
Alan rents textbooks from a law school website. The website requires Alan to sign an
electronic contract. Which provision of the UCC would cover Alan’s transaction?
A) Article 2
B) Revised Article 2
C) Article 2A
D) Revised Article 2A
E) Article 2 or Revised Article 2
The agency that enforces the federal Food, Drug and Cosmetic Act is the:
A) Federal Trade Commission.
B) Department of Agriculture.
C) Consumer Product Safety Commission.
D) Food and Drug Administration.
E) Interstate Commerce Commission.
What is the effect of the part performance exception under the Statute of Frauds?
A) The Statute of Frauds does not apply to a contract once performance has begun.
B) Courts will often order only partial performance of an oral contract that the Statute
of Frauds requires to be in writing.
C) If one party to an oral contract involving a transfer of an interest in real property has
performed, the court can order the other party to perform even though the contract is
oral.
D) Courts will often enforce an oral prenuptial agreement against one party but not
against the other.
E) There is no part-performance exception to the Statute of Frauds.
The definition of “trade secret” under the Economic Espionage Act (EEA) is very
specific and differs significantly from the definition used under the civil laws of
misappropriating a trade secret.
For which of the following warranties must the seller be a merchant?
A) express warranty
B) implied warranty of merchantability
C) implied warranty of fitness for a particular purpose
D) implied warranty of merchantability and express warranty
E) express warranty and implied warranty of merchantability
In the Palsgraf case, foreseeability was an issue. What question did the court address in
the case?
A) Was it foreseeable to the plaintiff (Ms. Palsgraf) that the scales would fall?
B) Was it foreseeable to the plaintiff (Ms. Palsgraf) that someone in the train station
would be carrying explosive fireworks?
C) Was it foreseeable to the passenger carrying the fireworks that they might explode
and injure someone?
D) Was it foreseeable to the railroad employee helping the passenger onto the train that
doing so might lead to injury to Ms. Palsgraf or another bystander?
E) Was it foreseeable to Ms. Palsgraf that her injury would have been caused by an
explosion?
If personal property is mislaid in a business establishment and found by an employee,
who among the following has superior rights to that property?
A) the finder/employee
B) the owner of the business
C) the police department
D) the state government
E) the federal government
A seller’s recovery for providing a minor with the necessaries of life is based on the
________ doctrine of ________.
A) legal; contract
B) equitable; quasi-contract
C) legal; quasi-contract
D) equitable; contract
E) legal; quantum meruit
Persons who engage in abnormally dangerous activities:
A) are liable only if all the elements of negligence are proven against them.
B) are liable only if they intended to cause a particular injury.
C) are generally not liable for the injuries they cause, because otherwise no one would
undertake these activities.
D) are liable to persons they injure even if they are not at fault.
E) are not liable for injuries they cause, because danger is to be expected.
________ means honesty in fact in the conduct or transaction concerned.
A) Due diligence
B) Ethics
C) Good faith
D) Equity
E) Transparency
What happens when the goods identified to a contract are totally destroyed through the
fault of neither party before risk of loss passes to the buyer?
A) The contract is void.
B) The seller is obligated to find replacement goods.
C) The contract is voidable by the buyer.
D) The seller is liable to the buyer for damages.
E) The contract is voidable.
Specific performance is generally awarded:
A) in cases where nominal damages are also awarded.
B) where the contract involves the sale of property that is unique.
C) only under the Uniform Commercial Code
D) when the non-breaching party requests it.
E) only if provided for in a liquidated damages clause.
Under the Food, Drug, and Cosmetic Act (FDCA), food does not have to be entirely
pure to be distributed or sold; instead, it only has to be unadulterated.
What was the court decision in Accrued Financial Services, Incorporated v. Prime
Retail, Incorporated, in which a corporation that conducted lease audits was assigned
the right by tenants to recover 40% to 50% of any overcharges collected?
A) The tenants’ assignment of their legal causes of action violated public policy, and
was therefore illegal and void.
B) The tenants’ had the right to assign their legal causes of action, and the assignments
were valid.
C) The tenants’ only had the right to assign their legal causes of action if overcharges
amounted to more than $1,000; otherwise, public policy was violated.
D) The tenants could not assign their legal causes of action because of anti-assignment
provisions in the leases.
E) The tenants could assign their legal causes of action only because fraud on the part
of the lessors had been shown.
The ________ of a limited liability company involves preserving and selling the assets
of the LLC and distributing the money and property to creditors and members.
A) winding down
B) winding up
C) disassociation
D) dismemberment
E) disavowment
What type of title does a thief have in stolen goods?
A) void
B) voidable
C) no title
D) restricted title
E) valid title
The American Rule regarding successive assignments is also referred to as the
________ Rule.
A) New York
B) Boston
C) Los Angeles
D) Chicago
E) San Francisco
Which of the following is true?
A) Past consideration is sufficient legal consideration to enforce an agreement.
B) Contracts based on a party’s past consideration are unenforceable unless some new
consideration is given to support the contract.
C) Contracts based on a party’s past consideration are known as illusory contracts.
D) Contracts based on a party’s past consideration are generally enforceable on the
grounds of moral obligation.
E) Contracts based on a party’s past consideration are known as quasi-contracts.
Bob sells real estate in Knoxville, Tennessee for a real estate sales company. One
afternoon, he shows a client two homes in Knoxville, and the client tells Bob that there
is a great cabin for sale in Gatlinburg, about 40 miles from Knoxville. Bob drops the
client off in Knoxville and travels to Gatlinburg to check out this property, because he
would like to purchase a place for his family to “get away” on weekends. As he is
entering Gatlinburg, he accidentally hits and injures a pedestrian. In determining
whether Bob’s employer can be held liable, a court will:
A) apply the “work-related” test and find the employer liable.
B) not find the employer liable under the “coming and going” rule.
C) use the “frolic and detour” rule to determine the employer’s liability.
D) determine the outcome based on the degree of disclosure of the agency relationship.
E) apply the “motivation” test, and find the employer liable.
Most states provide that the minor must put the adult in status quo upon disaffirmance
of the contract if the minor’s intentional, reckless, or grossly negligent conduct caused
the loss of value to the adult’s property. This rule is called the minor’s duty of
________.
A) restitution
B) revocation
C) restoration
D) reallocation
E) retribution
Because the word ‘sting” is ________, someone other than the singer nicknamed Sting
was able to originally register and keep the domain name sting.com.
A) generic
B) non-generic
C) non-ubiquitous
D) non-obvious
E) public domain
If goods are unique or the remedy at law is inadequate, a buyer or lessee has the right to
obtain ________ of a sales or lease contract.
A) a temporary injunction
B) a permanent injunction
C) specific performance
D) command performance
E) abeyance
Bob has decided to solicit proxies from shareholders of Sunset Corporation. Bob owns
two shares of Sunset, which have a share price of $48. Bob is soliciting the proxies in
order to elect a friend of his to the board of directors. Bob’s friend is reasonably
intelligent, but he has no business experience. In his proxy solicitation, Bob accurately
describes his friend and his background and, indicates that the proxy is being sought in
order to elect this friend to the board of directors. Bob does not disclose why he thinks
his friend should be on the board of directors, nor does Bob disclose what effect he
thinks his friend’s membership on the board will have on company earnings. Two weeks
before starting to solicit proxies, Bob filed copies of his proxy materials with the
Securities and Exchange Commission. Bob:
A) has not properly prepared the proxy statement, because he did not disclose the
potential effect on company earnings of his friend’s membership on the board.
B) cannot solicit proxies because, he does not own a sufficient amount of stock in the
corporation.
C) can solicit the proxies, but only if he has obtained approval from the board of
directors.
D) will be able to recover the costs of this proxy contest, even if his friend is not
elected.
E) has complied with all applicable proxy requirements.
Oral contracts can never be:
A) executory.
B) express.
C) formal.
D) bilateral.
E) valid.
Ultronics Corporation is incorporated in New Mexico. The articles of incorporation
state that the purpose of Ultronics is to “manufacture consumer electronic products.”
One of the executives has recently read an article stating that most young electronics
enthusiasts also engage in the sport of snowboarding; as a result, he convinces the
company to begin manufacturing snowboards. Which of the following best describes
Ultronics’ manufacture of snowboards?
A) This is an exercise of express powers.
B) This is an exercise of implied powers.
C) This is an ultra vires act.
D) This is an exercise of inherent powers.
E) Until the articles of incorporation are amended, the manufacture of snowboards is
considered to be a promoter’s activity.
Accountants can assert a due diligence defense under Section 11(a) of the Securities Act
of 1933.
Which theory of business social responsibility holds that a business owes duties to its
various constituencies such as customers and employees in addition to its shareholders?
A) moral minimum
B) maximizing profits
C) stakeholder interest
D) corporate citizenship
E) moral maximum
The most favorable opinion that an accountant can give is (a)n:
A) qualified opinion.
B) unqualified opinion.
C) adverse opinion.
D) disclaimed opinion.
E) sanctioned opinion.
Which of the following is a requirement for a merchant to stop, detain, and investigate
suspected shoplifters without being held liable for false imprisonment?
A) There must be reasonable grounds for the suspicion.
B) Suspects must be detained for no longer than one (1.) hour.
C) Interrogations must be conducted by authorized store security personnel.
D) Authorized store security personnel must stop, detain, and investigate suspected
shoplifters.
E) Suspects must be “Mirandized” in recognition of their constitutionally-protected due
process rights.
Most Statutes of Frauds require leases for a term of more than ________ to be in
writing.
A) one (1.) month
B) six (6.) months
C) one (1.) year
D) eighteen (18.) months
E) three (3.) years
Under the Equal Pay Act of 1963, what must be shown for the law to apply and require
equal pay for two jobs?
A) They are essentially similar.
B) They are reasonably alike.
C) They are comparable in difficulty.
D) They are equal and similar.
E) They are reciprocal and equally desirable.