A famous journalist predicted the result of an NBA match between the LA Groves and
LA Phantoms in favor of the Phantoms, based on the present form of Groves.
Accordingly, Mark placed a huge bet on the Phantoms and lost heavily. This is an
example of misrepresentation of a material fact of a contract.
All terms of contracts, even “fine-print” terms of standard form contracts, are always
part of the parties’ deal and binding on them, because parties have an obligation to read
their contracts and are assumed to have done so.
A durable power of attorney terminates when the principal becomes incapacitated.
Ms. White hired Mr. Blue to steal from Ms. Yellow. Ms. White is upset with how
everything turned out and wants to sue Mr. Blue for breach of contract. But the court
will refuse to recognize the contract and subsequently a breach of it because it is a
contract for an illegal activity.
Sherman Act violations may give rise to civil prosecutions only.
Silent partners have the duty to serve and bear the same liability for partnership debts as
any other partner.
Under the Sarbanes-Oxley Act of 2002, public accounting firms that audit financial
statements of public companies are required to register with the Public Company
Accounting Oversight Board and submit to its rules.
Bob has not paid his ex-wife alimony as required under court order. His ex-wife is
trying to collect the alimony Bob owes her. Bob files a bankruptcy petition. This
automatically stays his ex-wife’s collection efforts.
Respondeat superior liability depends on whether the principal himself was at fault.
The only manner in which a request for prompt or current shipment of goods can be
honored is by a prompt or current shipment of the goods to the buyer.
A will confers no present interest in the testator’s property.
“The ends justify the means.” This statement reflects the utilitarian ethical theory.
Chapter 13 bankruptcy petitions may be either voluntary or involuntary.
Once a contract made by a minor has been effectively ratified, it cannot be affirmed.
The equity of a partnership is called partnership capital.
When a tenant in common dies, his interest in the property does not automatically
transfer to the other tenants in common.
A partner has the power to dissociate a partnership at will at any time.
A general partner in an LLLP will have unlimited liability if the LLLP was formed
defectively.
Generally, the age of majority for contracting purposes is 21 years.
Under the Code, consideration is required to support a modification or rescission of a
contract for the sale of goods.
Minutes of the meetings are usually kept by the board of directors.
Mr. Blue and Mr. Green are in negotiations for a regular delivery of newspapers to Mr.
Blue’s business. Mr. Blue did not formally announce his acceptance to the offer. But
when Mr. Green sent a shipment of newspapers as had been agree, Mr. Blue accepted
the shipment and paid for them. According to the UCC Mr. Blue and Mr. Green have an
enforceable contract.
A person becomes the owner of abandoned property by possessing the property.
Concealment involves the active hiding of a fact, whereas nondisclosure is the failure to
volunteer information.
Signing a promissory note is an example of establishing primary liability in a negotiable
instrument.
The power to delegate under a contract is universal right and parties may not restrict the
power to delegate in the contract.
An estate is all of the property that an individual owns.
A statement in an advertisement can sometimes be considered an “express warranty.”
In a copyright infringement case, the successful plaintiff may recover either the
damages sustained by the plaintiff or the profits realized by the defendant, but not both.
A partnership and its partners are usually liable for a partner’s intentional torts.
As per the 2005 amendments, the trustee of a bankruptcy estate has the authority to sell
personally identifiable information to persons not affiliated to the debtor.
As per the test laid down by the Supreme Court (in United States v. Chiarella), the
definition of insiders includes not only officers and directors of the company but also
anyone who has been entrusted with corporate information for a corporate purpose.
The term for when both parties are mistaken about the same fact to a contract is called?
A. Mutual mistake
B. Mutual duress
C. Unilateral mistake
D. Unilateral duress
Which of the following is admissible with respect to a partially integrated contract?
A. Evidence that seeks to make the contract completely divisible.
B. Evidence that resolves ambiguities in the contract.
C. Evidence that the contract is unconditional on the happening of some event.
D. Evidence that contradicts the contract’s provisions.
Who amongst the following can be held liable under Section 12(a)(2) of the Securities
Act of 1933?
A. A consultant who is hired by a company making a public distribution of securities to
improve performance.
B. An auditor who issues an opinion regarding financial statements of a company
making a public distribution of securities.
C. An accountant in the accounts division of a publicly traded company which is issuing
new securities to the public.
D. An underwriter who is involved in issuance of new securities to the public by a
publicly traded company.
The _____ requires periodic shareholder approval of executive compensation.
A. Dodd-Frank Wall Street Reform and Consumer Protection Act
B. Burnett Act
C. Sarbanes-Oxley Act
D. Debbie Smith Act
Under the business judgment rule, corporate managers:
A. must not make uninformed decisions.
B. may have conflicts of interest.
C. are not required to make reasonable investigations.
D. may not benefit even as shareholders.
Eastern Company wants to make an offering of securities exempt from registration
under Rule 504 of the Securities Act of 1933. Which of the following is a requirement
of Rule 504?
A. Eastern may sell to no more than 35 unaccredited purchasers.
B. Eastern must sell only to investors who are able to protect themselves by making
informed investment decisions.
C. Eastern must be a nonpublic issuer under the Securities Exchange Act.
D. Eastern may not make any general solicitations of investors.
Which of the following characterizes the Code’s standards of definiteness?
A. It sees courts as contract enforcers.
B. It requires a high degree of definiteness in contracts.
C. It can create contractual liabilities.
D. It cannot fill in gaps in contracts.
Which of the following is true of the Foreign Intelligence Surveillance Act (FISA)?
A. It was enacted as a result of the U.S.A. Patriot Act.
B. It has not been amended after its enactment.
C. It prohibits surveillance or monitoring without a warrant.
D. It has expanded the government’s ability to monitor the phone calls of suspected
terrorists.
The _____ of corporate social responsibility holds that rather than merely striving to
maximize profits for its shareholders, a corporation should balance the interests of
shareholders against the interests of employees, suppliers, customers, and the
community.
A. deontological theory
B. Kantian theory
C. stakeholder theory
D. utilitarian theory
If Viola owes Tina money, Tina may frame a document for the amount of the debt,
naming Viola as drawee and herself or her bank as payee, and send the document to
Viola’s bank for payment. This document is a:
A. promissory note.
B. certificate of deposit.
C. draft.
D. bond.
NEPA is what type of law?
A. Federal law that affects all federal agencies and federal action
B. State law affecting state agencies across all 50 States
C. International law impacting State action
D. Municipal law that impacts federal action
Hillary tells Iris that she wants to buy Iris’s house “on behalf of a party who wishes her
identity not to be known.” The party is Baker Associates. With Baker’s consent, Hillary
contracts with Iris on Baker’s behalf to buy the house. What is Hillary’s liability on this
contract?
A. Hillary is liable because Baker is an undisclosed principal.
B. Hillary is liable because Baker is an unidentified principal.
C. Hillary can be liable only if she expressly agreed to be liable.
D. Hillary is liable because Baker is a legally non-existent principal.
Pam and Deb were in a car accident. Deb went through a red light, hitting Pam from the
side. Pam was driving 45 miles per hour in a 25-miles-per-hour zone. Pam sues Deb
based on negligence for damages. If Pam loses the suit for speeding, which of the
following is the most likely reason?
A. The lawsuit was filed in a “contributory negligence” state.
B. The lawsuit was filed in a “comparative negligence” state.
C. Pam is uninsured.
D. Pam’s accident was seen as “res ipsa loquitur.”
Mr. White contracts with his wife Ms. White to watch their kids, Joe and Jimmy, for
$50 for night. What is the status of the contract between Mr. Smith and Ms. White?
A. There is no contract because Ms. White gave inadequate consideration
B. There is a contract as long as Mr. White registers the contract with the Secretary of
State
C. There is a contract as long as $50 is a reasonable profit for watching the kids
D. There is a contract as long as a court reviews the terms within 30 days
“Books are Us” (BU), a bookstore, is being sued for defamation after it sold a book
containing false, defamatory statements about the plaintiff. What is BU’s best defense to
this lawsuit?
A. BU is not the publisher of the book.
B. BU did not intend to harm the plaintiff.
C. BU had no knowledge of the contents of the book.
D. BU did not violate any criminal law or regulation in selling the book.
To prove domination, it is _____ to show that there is only one shareholder.
A. neither sufficient nor necessary
B. sufficient
C. both necessary and sufficient
D. necessary
Under Revised Article 3, a person is a(n) _____ if she is in possession of an instrument
that is payable to bearer or made payable to an identified person and she is that
identified person.
A. payor
B. issuer
C. bailor
D. holder
In a case where concurrent jurisdiction exists, a state court may decide a case involving
federal questions if:
A. it is a criminal case.
B. it is a civil case.
C. the plaintiff asserts so.
D. the defendant belongs to that state.
Mr. Green enters into a partnership with IT Doctors LLP. Mr. Green’s capital investment
into the business is $10,000. Shortly after joining the new business a client sues the IT
Doctors LLP and wins a judgment of $750,000. How much is Mr. Green liable for?
A. $10,000
B. $100,000
C. $750,000
D. $0
Under which of the following situations is an employee most likely to recover under a
workers’ compensation system?
A. Injuries suffered while traveling to work
B. Injuries resulting from employee horseplay
C. Self-inflicted injuries
D. Injuries related to occupational diseases
Under the ULPA of 2001, a limited partner who participates in management and control
of the limited partnership:
A. has unlimited liability to creditors of the limited partnership.
B. has limited liability only to those creditors with whom he has transacted businesses.
C. has unlimited liability only to those creditors with whom he has transacted business
and who reasonably believe that he is a general partner.
D. has liability up to the limit of his capital contribution.
Which of the following is a ground for avoidance of contract based on a unilateral
mistake?
A. Both parties are mistaken about a fact.
B. Nonmistaken party caused the mistake.
C. The mistaken party had reason to know of the mistake.
D. Person affected by the mistake does not bear the risk for it.
Amber gave her boyfriend, Hunter, an expensive set of stereo speakers for his birthday.
Two days later, Hunter broke up with Amber and began dating Kelly. Amber is both
heartbroken and furious. Is she entitled to get the speakers back from Hunter?
A. Yes, because Hunter provided Amber no consideration.
B. No, because she intended to make a gift of the speakers and actually delivered them
to Hunter.
C. No, because this was a gift causa mortis.
D. Yes, because a donor is entitled to revoke her gift within a reasonable time.
Which of the following is most true regarding noncompetition clauses in contracts?
A. Such clauses are not used during employment contracts.
B. If they have a legitimate business purpose, such clauses will be enforced.
C. Such clauses are enforced only for protecting the environment and conserving
resources.
D. Such clauses help in promoting free trade.
Which of the following is subject to a “substantial performance” standard in the absence
of an express condition?
A. A promise to pay money
B. A promise to deliver a deed
C. A promise to build a house
D. A promise to deliver some goods
The _____ underwriting is typically used only to sell common shares to existing
shareholders pursuant to a preemptive rights offering.
A. standby
B. sponsorship
C. best efforts
D. firm commitment
Carol is the only general partner in ABC Limited Partnership. She contributes $50,000
in capital. Wayne and Hosek are the only limited partners. Wayne contributes $25,000
in capital, and Hosek contributes $25,000 in capital. ABC suffers a loss of $5,000. What
is Hosek’s share of the loss?
A. $1,250
B. $2,500
C. $5,000
D. $0
Debra asks Alex, her stock broker, if she can trust his advice to purchase the stocks for
Acme Co. Alex replies, “Of course you can.” Debra asks, “Why should I trust you?”
Alex says, with a smile, “Because I am a trustworthy person.” Alex is engaging in:
A. circular reasoning.
B. bandwagon fallacy.
C. argumentum ad baculum.
D. false analogy.
Mark, an attorney, accepts an offer for an attorney position at The Firm. Prior to Mitch’s
first day at work, Harold, a managing partner, sends Mark an Employment Policy
Manual which contains policies regarding attendance and confidentiality. Harold
includes a note advising Mark to carefully review the manual as he would be expected
to adhere to its policies. During his first week at The Firm, Mark is seen leaving the
office at noon with copies of files tucked under his arm. He is also observed giving the
copied files to a man not associated with The Firm. At the end of the week, Mark is
terminated for violating the terms of the Employment Policy Manual. Which of the
following is true?
A. Mark may recover his moving expenses under the doctrine of promissory estoppel.
B. The Firm breached its express contract with Mark by terminating him.
C. The Employment Policy Manual is part of the implied contract between Mark and
The Firm.
D. The Firm may recover Mark’s salary under the doctrine of quasi-contract.
According to Revised Article 3 of the UCC, the risk of loss from fraudulent
indorsements by employees:
A. should fall on the holder in due course.
B. should fall on the employer.
C. should fall on the bank.
D. should fall on the employee.
Which of the following ethical theories emphasizes that certain human rights are
fundamental and must be respected by other humans?
A. Rights theory
B. Utilitarian theory
C. Teleological theory
D. Profit maximization theory
Under Section 11 of the Securities Act of 1933, in order to establish the liability of an
auditor who prepared a defective registration statement, a plaintiff must prove that:
A. he/she purchased securities issued pursuant to the defective registration statement.
B. the auditor was negligent in preparing the registration statement.
C. the auditor acted with scienter in preparing the registration statement.
D. he/she had privity of contract with the auditor.
Which of the following is a nonwrongful dissociation?
A. A partner’s filing a bankruptcy petition
B. A partner’s retirement at age 60 when the partnership agreement requires the partners
to retire at age 70
C. A partner’s willful and persistent breach of the partnership agreement
D. Death of a partner
A contract in which one or more of the parties have the legal right to cancel their
obligations under the contract is called a(n):
A. void contract.
B. valid contract.
C. voidable contract.
D. unenforceable contract.