Chicago School theorists argue that antitrust policy’s primary thrust should feature:
A. prointraindustry competition efforts.
B. proregulation efforts.
C. anticoncentration efforts.
D. anticonspiracy efforts.
The traditional objective of the business corporation has been to:
A. act in a socially and morally responsible manner.
B. act consistently with the purpose clause of the corporation.
C. serve the community in which the business resides.
D. enhance corporate profits and shareholder gain.
Where the parties to a contract wish to cancel their contract and be in the same position
as they were prior to forming the contract, they should seek to obtain a(n) _____.
A. rescission
B. novation
C. accord and satisfaction
D. revocation
A trust that is established and effective during the settlor’s lifetime is known as a(n)
_____ trust.
A. causa mortis
B. per capita
C. per stirpes
D. inter vivos
Dee Frost, president of the American Refrigerator and Freezer Producers Association
(ARFPA) and CEO of Frozenaire Corp. (one of the nation’s largest manufacturers of
refrigerators and freezers), delivered the keynote address at the ARFPA’s annual
convention in Siberia, Montana. In her speech, Frost addressed the assembled members
on the “credit sales” problem currently confronting the industry. According to Frost, this
problem was a result of refrigerator and freezer manufacturers’ increasing tendency to
sell appliances on credit instead of requiring payment in full upon delivery—a tendency
that, in Frost’s view, had led to negative price trends in the industry. Frost asserted that
if refrigerator and freezer producers would refuse to permit credit sales and would insist
upon payment in full upon delivery, prices would return to “a reasonable level that
serves the interests of the industry and consumers.” She concluded her remarks by
assuring those in attendance that Frozenaire would do its part by “unilaterally saying
‘sorry, pardner’ to requests for purchases on credit.” A few months after the ARFPA
meeting, the U.S. Justice Department filed a Sherman Act Section 1 lawsuit against
Frozenaire and the other ARFPA members, citing evidence that all ARFPA members
eliminated credit sales within one month after the meeting. Is the Justice Department’s
action proper? Explain your reasoning.
Which of the following transfers would be considered fraudulent under the 2005
revisions of the Bankruptcy Code?
A. Transfers that are intended by the debtor and creditor to be a contemporaneous
exchange for new value.
B. Transfers that led to the creation of a security interest in new property where new
value was given by the secured party to enable the debtor to obtain the property.
C. Transfers made in payment of a debt incurred in the ordinary course of the business
of the debtor and the transferee.
D. Transfers to or for the benefit of an insider under an employment contract and not in
the ordinary course of business.
A contract must be between parties who have _____ to contract.
A. knowledge
B. capacity
C. resources
D. intention
Nast Corp. orally engaged Baker & Co., CPAs, to audit its financial statements. The
management of Nast informed Baker that it suspected the accounts receivable were
materially overstated. Although the financial statements audited by Baker did, in fact,
include a materially overstated accounts receivable balance, Baker issued an
unqualified opinion. Nast relied on the financial statements in deciding to obtain a loan
from Century Bank to expand its operations. Nast has defaulted on the loan and has
incurred a substantial loss. If Nast sues Baker for negligence in failing to discover the
overstatement, Baker’s best defense would be that:
A. Baker did not perform the audit recklessly or with an intent to deceive.
B. Baker was not in privity of contract with Nast.
C. Baker performed the audit in accordance with generally accepted auditing standards.
D. Nast orally engaged Baker and no engagement letter had been signed by Baker.
If one party has concerns about another party and seeks assurances under the UCC to
the sales contract, how long does the other have to respond before the contract is
considered repudiated?
A. 180 days
B. 14 days
C. 30 days
D. 90 days
Mel owns Melco, Inc., which manufactures toys. She provides a functional discount to
Carol, a wholesaler of toys. Carol then passes on her discount to Nina, who owns
Funland, a toy store. Nina is then able to offer lower prices to toy purchasers. Under the
Robinson-Patman Act, this is:
A. tertiary level price discrimination.
B. secondary level price discrimination.
C. valid, if Nina is not in the same territory as Mel.
D. valid, as Nina and Carol are not competitors.
Which of the following is true in case of death or incompetence of a customer?
A. A bank cannot pay checks of a deceased customer until it has notice of the
customer’s death.
B. If a bank knows of a customer’s death, it can pay checks written by the customer
prior to his/her death, for a period of 30 days.
C. The deceased person’s heirs or other persons claiming an interest in the account can
order the bank to stop payment.
D. A bank can declare checks signed by the customer while he/she was alive, as null
and void.
Wayne and Mia are friends in Idaho, where gambling is illegal and they are aware of it.
Wayne and Mia bet $1,000 on which day Paradise Creek will flood its banks. They have
no financial interest in Paradise Creek. Wayne wins this bet. Mia pays Wayne the
$1,000, but later that day regrets it and sues Wayne to get her $1,000 back. The court
would probably rule in favor of:
A. Mia, since gambling was illegal.
B. Mia, because a bet is considered to a form of an implied-in-fact contract.
C. Wayne, because he won the bet fair and square, so the court will enforce the wager.
D. Wayne, since the court will “leave the parties where it finds them” in cases like this.
Melissa Seles has a checking account at the Union Bank of New York. She goes to
Home Depot and agrees to buy a room heater priced at $200. She writes a check to pay
for it. The Union Bank of New York is the:
A. bearer.
B. drawer.
C. payee.
D. drawee.
If an agent has, within the scope of the agency relationship, committed both negligent
and intentional acts resulting in injury to third parties, the principal:
A. may be liable even if the agent’s acts were unauthorized.
B. may effectively limit his or her liability to those third parties if the agent has signed a
disclaimer absolving the principal from liability.
C. will be liable under the doctrine of respondeat superior only for the intentional acts
of the agent.
D. will never be criminally liable unless he or she actively participated in the acts.
Which of the following is true of testamentary capacity?
A. A person must be in perfect mental health in order to have testamentary capacity.
B. A person must be 18 years of age (in most states) in order to have testamentary
capacity.
C. A person must have personal property in order to have testamentary capacity.
D. A person must have real property in order to have testamentary capacity.
The law of piercing the corporate veil is an example of a _____ law protecting the
creditors of corporations.
A. commerce
B. common
C. constitutional
D. statutory
To be liable for monopolization, a defendant must:
A. possess superior-quality products and services.
B. have a market share in excess of 70 percent.
C. possess best-in-class business acumen.
D. have exclusive dealing agreements with suppliers.
Joe and Jack have a written contract whereby Joe agrees to sell Jack a plot of land for
$100,000. Later, without terminating the first contract, the parties modify the deal so
that Joe sells Jack the same plot of land for $125,000. The second agreement is not a
contract because:
A. the first contract was not terminated.
B. there is no consideration for Jack’s promise.
C. Joe’s promise is illusory.
D. written contracts for the sale of land cannot be modified.
When the promoters of a business substantially comply with each of the mandatory
conditions precedent to the incorporation of the business, a(n) _____ corporation is
formed.
A. “S”
B. de jure
C. de facto
D. estoppel
An executed contract is one that has been:
A. terminated by operation of law.
B. terminated by the parties’ voluntary agreement.
C. fully performed by one or both parties.
D. fully performed by both parties.
Which of the following has the law and economics movement influenced in judicial
opinion?
A. Antitrust law
B. Homicide statutes
C. Discrimination policies
D. Education
Which of the following is true of zoning ordinances?
A. They are issued only by federal authorities.
B. There are no remedies against them.
C. They stem from the power of eminent domain.
D. They regulate the use of real property.
Which of the following characterizes the traditional rule regarding a minor who
misrepresents his/her age?
A. He/she can be prosecuted for such an offense.
B. An adult can file a tort of deceit against such a minor.
C. An adult can seek compensation for any losses caused by such a minor.
D. A minor’s right to disaffirm is valid in such a case.
Rebecca goes for a ride in Owen’s car, even though he has told her that the car’s brakes
frequently fail. In case of any injuries due to this defect, Rebecca would be said to have:
A. an implied assumption of risk.
B. contributory negligence.
C. strict liability.
D. negligence per se.
The RULLCA allows for automatic dissolution of an LLC when:
A. a member of the LLC dies.
B. a majority of the members dissociate.
C. a member of the LLC goes bankrupt.
D. it becomes unlawful for the LLC business to continue.
Which of the following statements is accurate in describing a sublease?
A. It is another term for an assignment.
B. It is used only in the context of commercial property.
C. It is an agreement between the original owner and a third-party.
D. A sublesee gets only partial rights.
Eminent domain:
A. allows the government to acquire private property for public use.
B. allows a private citizen to sue his neighbors for nuisance.
C. instructs private citizens to ensure reasonable security of their premises.
D. prohibits discrimination in housing on the basis of race or disabilities.
Steve, Martha, and Pete formed an LLC two years ago. Steve has contributed $100,000,
Martha has contributed $50,000, and Pete has contributed $50,000 to date to the LLC.
The LLC made a profit of $30,000 in two years. By default, how much will Steve’s
share of profits be?
A. $10,000
B. $20,000
C. $15,000
D. $30,000
What effect does the rule of res ipsa loquitur have in a negligence case?
A. It creates a rebuttable presumption of breach of duty.
B. It creates a non-rebuttable presumption of causation.
C. It results in strict liability of the defendant.
D. It results in strict liability of the plaintiff.
Which of the following describes a stipulation?
A. An offeror’s right to determine the manner of acceptance
B. An offeree’s right to determine who to contract with
C. The court’s right to provide gap-fillers in a contract
D. Additional terms in a contract in order to make it binding
Which types of losses are least likely to be covered by fire insurance policies?
A. Losses from friendly fires
B. Losses from hostile fires
C. Losses from fires that started outside the property
D. Losses from smoke and heat that cause indirect damage
QT Inc., is incorporated in Alabama, has offices in Nebraska, has a manufacturing plant
in Delaware, and conducts most of its sales from Virginia. Regulation of its internal
affairs will be exercised only by:
A. Alabama.
B. Nebraska.
C. Delaware.
D. Virginia.
Which of the following is the most important type of equitable remedy provided by the
equity courts?
A. Injunction
B. Specific performance remedy
C. Reformation
D. Rescission
