Ethics is the study of how people should act.
a. True
b. False
Reva prepares and signs a document that she intends to be her will. If she has not
followed the legal technicalities of her state regarding executing a will, the court may
not enforce the will.
a. True
b. False
When the Food and Drug Administration prohibits a certain drug from being marketed
in the United States, this is
a. private law.
b. an agency regulation.
c. legal negativism.
d. an executive order.
The European Union is one of the worlds most powerful regional associations with 42
member nations as of 2014.
a. True
b. False
A promise by Derkin Restaurants to buy all of the produce it needs this next year at an
established price from Elfredo’s Produce would be an
a. enforceable requirements contract.
b. enforceable output contract.
c. unenforceable, illusory contract.
d. unenforceable promise based on past consideration.
Mohammad was an employee in the new product development department of Estay Inc.
Mohammad was directly involved in the development of a new product that Estay
intended to launch in 6 months. Estay took great care to keep information concerning
the new product a secret. Ceries, Inc., a competitor of Estay, persuaded Mohammad to
leave Estay to direct Ceries’ marketing department. Which statement is correct?
a. Mohammad can share with Ceries the confidential information he knows about
Estay’s new product because he was directly involved in its development.
b. Mohammad can share with Ceries the confidential information he knows about
Estay’s new product because his agency relationship with Estay is terminated.
c. Mohammad cannot share with Ceries the confidential information he knows about
Estay’s new product because of the equal dignities rule.
d. Mohammad cannot share with Ceries the confidential information he knows about
Estay’s new product because he has a duty not to disclose confidential information he
acquired during the agency.
Race may be a bona fide occupational qualification when the employee will be working
with children of a different race.
a. True
b. False
Lucy owns 10 shares of stock in Quamba, Inc. Lucy wishes to place a proposal in a
company’s proxy statement to be voted on at the shareholders’ meeting. Pursuant to the
SEC rules, before Lucy is allowed to place her proposal on the proxy statement she
must
a. have owned continuously for one year at least one percent of the company and
$2,000 or more of the stock.
b. have owned continuously for one year at least one percent of the company or $2,000
or more of the stock.
c. have the permission of the board of directors.
d. have been a stockholder for at least two years.
The Williams Act
a. is designed to regulate the conduct of those attempting to take over a company.
b. is designed to regulate the conduct of the target company subject to a takeover.
c. was established to prohibit corporate defensive tactics.
d. was established to resolve conflicts of interests between directors and stakeholders.
Parol evidence refers to anything (other than the written contract itself) that was said,
done, or written before or as the parties signed the contract.
a. True
b. False
Typically, exemptions under the 1933 Act are based on either the type of security or the
type of transaction.
a. True
b. False
Southern Bar-B-Q owns a special, secret recipe for sauce which it guards because it
gives the restaurant a competitive advantage. If Mort willfully misappropriates the
recipe, a court may hold him liable to Southern for double damages.
a. True
b. False
Sea Rovers, Inc. contracted to sell 1,000 pounds of shrimp to the Seafood Shack with
delivery on June 1. On May 1, Sea Rovers advised the Seafood Shack that it would not
be able to deliver the shrimp. The Seafood Shack
a. can sue Sea Rovers immediately for breach of contract.
b. must wait until June 1 to see if Sea Rovers will perform before suing for breach of
contract.
c. cannot sue Sea Rovers because Sea Rovers gave adequate notice.
d. must wait until actual damages are determined before it can sue.
Administrative agency rules consist of
a. executive and independent rules.
b. legislative and interpretive rules.
c. informal and “notice and comment” rules.
d. promulgated and unpromulgated rules.
The notion that if a plaintiff is even slightly negligent, he or she recovers nothing is
known as
a. comparative negligence.
b. reasonable negligence.
c. contributory negligence.
d. insignificant negligence.
The Johnsons decided to sell their summer cabin on Beech Lake. They sent flyers out to
all who previously had expressed an interest in buying the cabin stating that they were
planning on selling their cabin. The flyer described the location of the property, the size
of the lot, and the price. If one of the recipients responds by sending a letter accepting,
an agreement
a. will not be formed because the flyer was sent out as an invitation to make an offer.
b. will be formed because the first to respond gets the property.
c. will be formed because the price is included.
d. will not be formed because of the parol evidence rule.
Under which of the following exemptions is there no dollar limitation?
a. Rule 504
b. Rule 505
c. Rule 506
d. Regulation A
In a “mixed contract,” one involving a sale of both goods and services, the court will
a. apply the UCC to the provisions of the contract involving the sale of goods and the
common law to the provisions involving the sale of services.
b. apply the lex mercatoria to the contract.
c. first determine the dominant purpose of the contract. If the sale of goods dominates
the contract, then the court will apply the law of the UCC, Article 2. If the sale of
services dominates the contract, the court will apply the common law.
d. apply UCC Article 2A.
A “holder” of order paper can be described as
a. the payee.
b. any person in possession of the instrument.
c. any person in possession of the instrument if it is payable to or indorsed to him.
d. the first party to come in contact with a negotiable instrument.
The Solomans own a cabin on the south side of Mount Henry. One day, the Solomans
told Bennie and Claudia they could live in the cabin and use it as they wished until the
Solomans wanted to use it again. Twelve years later, the Solomans informed Bennie and
Claudia that they were going to spend the summer at the cabin and that Bennie and
Claudia would have to make other arrangements for the summer. Bennie and Claudia
claimed that they had acquired title by adverse possession, because they had occupied
the property for the period of time required for adverse possession under state law (10
years in that state). Are Bennie and Claudia correct?
a. Yes, Bennie and Claudia were living on the property with exclusive, open possession
for a continuous period of time for the required 10 years.
b. Yes, Bennie and Claudia had the Solomans’ permission, therefore the possession was
not illegal.
c. No, Bennie’s and Claudia’s possession was with the Solomans’ permission and
therefore the claim was not adverse to the Solomans.
d. No, there was no warranty deed transferred to Bennie and Claudia.
Which of the following would be an example of a civil lawsuit?
a. George is being prosecuted for bank fraud.
b. The government has initiated an action against Jeff for operating a motor vehicle
under the influence of alcohol.
c. Gretta hit Rita in a bar during happy hour. Rita is now suing for her injuries.
d. The district attorney is bringing Ali to court for violating the city’s keg ordinance.
A Japanese company operates a ship called the Kinia. If the Kinia sails in U.S. waters, it
must comply with design standards set by the Oil Pollution Act of 1990.
a. True
b. False
A trademark lasts for
a. 20 years after the application is filed.
b. 70 years after the death of the creator.
c. 10 years, but it can be renewed for an unlimited number of terms as long as it is used.
d. as long as it is kept confidential.
The idea that courts should not be heavily involved in lawmaking, but rather should
only rule in cases where the constitutionality is clear is known as
a. judicial review.
b. judicial activism.
c. judicial reform.
d. judicial restraint.
On April 10, Amy agreed to buy a riding lawn mower from Mowers Plus, signing a
promissory note and security agreement giving Mowers Plus a security interest in the
mower. On April 15, Amy took delivery of the mower. On May 1, Mowers Plus filed a
financing statement. Which of the following is correct?
a. Despite the agreement, Mowers Plus could not create a security interest in the mower
since it is a consumer good.
b. Mowers Plus has attachment of a security interest in Amy’s mower.
c. Mowers Plus completed the attachment of a security interest in the mower when it
filed the financing statement on May 1.
d. The security interest has not attached, but attachment is unimportant to enforceability
of a security interest.
A possessor of non-negotiable commercial paper has the same rights as the person who
made the original contract.
a. True
b. False
Firing an employee for her refusal to violate the law would raise a claim of wrongful
discharge.
a. True
b. False
An agreement to sell a product on the condition that a buyer also purchases another,
usually less desirable, product is referred to as
a. a tying arrangement.
b. price fixing.
c. resale price maintenance.
d. market division.
Unless the form provides for a longer period, a proxy is valid for how long under the
Model Act?
a. 90 days
b. six months
c. 11 months
d. one year
When a negotiable instrument is transferred, the transferor warrants all of the following
EXCEPT
a. the instrument is bearer paper.
b. all signatures are authentic.
c. as far as she knows the issuer is solvent.
d. the instrument has not been altered.
If a party enters into a contract believing in good faith that the corporation exists, he
cannot later take advantage of the fact that it does not.
a. True
b. False
Jody loaned her neighbor, Phil, her snow blower. Phil set it near his driveway, and later
accidentally ran over and destroyed it. In a suit to recover damages, Jody as plaintiff has
the burden of proving that Phil was negligent and caused the destruction of her snow
blower.
a. True
b. False
Small claims courts have jurisdiction over settling the estates of deceased persons.
a. True
b. False
Micky, a mechanic, repaired Daphane’s Dodge. Daphane failed to pay the repair bill of
$595. Since Micky was still storing the car, he could therefore claim a landlords lien on
the car.
a. True
b. False