If the movement of goods is not required, and the seller is a nonmerchant, the risk of
loss ________.
A) passes to the buyer upon “tender of delivery” of the goods
B) remains with the seller after acceptance
C) is passed on to a merchant buyer before the goods are shipped
D) is to be borne by the carrier responsible for the delivery of the goods
Anthony buys an electric stove from a home appliance shop that provides him with a
complete 48-month warranty. The shop guarantees that the stove will be repaired or
replaced for free during this period. This is an example of a(n) ________.
A) full warranty
B) limited warranty
C) implied warranty of merchantability
D) implied warranty of fitness for a particular purpose
A(n) ________ breach of a contract occurs when a party renders inferior performance
of his or her contractual obligations.
A) material
B) minor
C) anticipatory
D) defensive
Kimberly owns a company that sells industrial tools. She borrows $50,000 from a bank
with her company’s accounts receivable as the collateral. This means that if Kimberly
defaults on the loan, the bank can reclaim the borrowed amount from her company’s
accounts receivable. This is an example of ________.
A) mortgage
B) foreclosure
C) mechanic’s lien
D) floating lien
A ________ is a symbol, name, word, motto, or device that identifies the goods or
services of a particular franchisor.
A) trademark
B) franchise
C) copyright
D) patent
A(n) ________ is property that a debtor acquires post the execution of a security
agreement.
A) repossessed property
B) after-acquired property
C) attachment
D) future advance
Which of the following statements is true of discharge of contracts?
A) Anticipatory breach discharges the breaching party’s obligations to the contract.
B) Substantial performance is sufficient to discharge a contract.
C) Tender of performance discharges a party’s contractual obligations.
D) Tender is a conditional offer by contracting party to perform his or her obligations
under the contract.
The obligation people owe each other not to cause any unreasonable harm or risk of
harm is termed as ________.
A) libel
B) res ipsa loquitur
C) slander
D) duty of care
Barney wants to rent an apartment and posts an advertisement in a classifieds website.
Two days later, Michael, who wants to rent out his apartment, emails Barney and they
finalize the deal over the Internet. Barney pays Michael through an online transfer. This
is an example of ________.
A) e-licensing
B) e-commerce
C) cybersquatting
D) spamming
Mary buys a lottery ticket and promises to buy her friend Sharon a new pair of shoes if
she checks the lottery results while Mary is away. Sharon agrees to do so provided she
has the time for it. If Sharon fails to check the results and Mary wins the lottery, which
of the following would be true for the contract between Mary and Sharon?
A) Mary can claim for breach of contract against Sharon.
B) Sharon can claim for breach of contract against Mary.
C) Neither Mary nor Sharon can claim breach of contract.
D) Mary’s promise is supported by consideration.
Bluestone Oil invests its money in a drilling project that was predicted by industry
experts to yield very profitable results. Unfortunately, the predictions failed and
Bluestone Oil incurred massive losses due to the failure. Which of the following
protects Bluestone Oil from litigation by its shareholders?
A) business judgment rule
B) thin capitalization
C) strict liability doctrine
D) piercing the corporate veil
Which of the following statements is true of disparate-treatment discrimination?
A) The complainant must prove that he or she is a member of a Title VII protected
class.
B) It can occur when an employer adopts a work rule that is neutral on its face but is
shown to cause an adverse impact on a protected class.
C) The plaintiff must demonstrate a causal link between the challenged practice and the
statistical imbalance.
D) It occurs when an employer discriminates against an entire protected class.
Which of the following is a defense to a charge of discrimination under Title VII?
A) lowering wages of other employees
B) selecting and promoting employees based on merit
C) employing younger applicants irrespective of the nature of the job
D) eliminating seniority systems within organizations
Prado Loyola is a race-car driver who has signed an agreement with the racing team
Provolt. The agreement states that Provolt is not responsible for the dangers involved in
racing and that Loyola participates in all car races voluntarily, with full knowledge of
the risk of injury or death that might result as a consequence. During the course of a
race, a slight drizzle that covers the windshield affects Loyola’s visibility and he misses
a turn, resulting in a crash. Which of the following defenses can the Provolt team cite to
protect itself from liability in the event that Loyola sues them?
A) res ipsa loquitur
B) assumption of the risk
C) private necessity
D) breach of the duty of care
According to the public use doctrine for patents, ________.
A) a patent will not be granted if the invention was already in public use for one year
before filing an application
B) an invention cannot be used in the public domain prior to it being granted a patent
C) an inventor has to test his invention in the public domain, to measure its validity,
before being granted a patent
D) a patent will always be under the first inventor’s name unless he or she chooses to
release it into the public domain
Otto approaches Mary and says, “If you pick up my new suit for me at the mall
tomorrow, I’ll pay you $20.” Mary replies, “I don’t know if I’ll have time to get it, but I’ll
see if I get a chance.” As a result of this conversation ________.
A) Otto and Mary have formed a bilateral contract
B) Mary has a legal obligation to use her best efforts to pick up the suit
C) a contract will be formed only if Mary picks up the suit
D) the contract Otto and Mary have formed is void because Mary did not promise a
performance
Ali is a member of a member-managed LLC. While Ali is driving to a client’s office to
handle the LLC’s business, he hits an old man and severely injures him. The man sues
the LLC and recovers $3 million in damages. The court also determines that Ali was
driving above the speed limit while the accident occurred and so was grossly negligent.
Which of the following is true of the given scenario?
A) Ali is liable to the LLC for the $3 million it was ordered to pay the man.
B) Ali will not be liable to the LLC for any losses caused to the LLC.
C) The $3 million should be paid by all the members of the LLC.
D) The $3 million should be paid by the member-managers of the LLC.
A(n) ________ is an independent choice made by one party not to deal with another
party.
A) nonprice vertical restraint
B) monopoly to deal
C) unilateral refusal to deal
D) accommodation
In which of the following cases do federal courts have exclusive jurisdiction?
A) cases involving sales and lease contracts
B) federal question cases
C) suits against the United States
D) diversity of citizenship cases
Tangible property such as automobiles, furniture, and equipment, and intangible
property such as securities, patents, and copyrights are collectively referred to as
________.
A) real property
B) immovable property
C) personal property
D) fixtures
Where a foreign corporation is required to qualify to conduct intrastate commerce in a
state, it must obtain a certificate of ________ from the state.
A) authority
B) domesticity
C) authenticity
D) autonomy
Which of the following is considered a major physiological impairment by the
Americans with Disabilities Act Amendments Act (ADAAA)?
A) the death of a loved one
B) a history of surgery
C) a temporary but contagious disease
D) cancer
Which of the following is an instance of a decision involving the Equal Protection
Clause being made on the basis of the rational basis test?
A) The government requires only men above the age of 18 to volunteer for military
service.
B) The government establishes a trust fund to provide financial aid to minority groups.
C) A state government employs measures to improve living conditions in the
reservations.
D) The government provides subsidies to farmers, but not to carpenters or lumberjacks.
A business purchases an airplane from an airplane manufacturer. The business obtains a
loan from a bank to purchase the airplane. The bank obtains a security interest in the
airplane. The airplane manufacturer is paid for the airplane from of the proceeds of the
loan. This is an example of a ________ transaction.
A) two-party secured
B) three-party secured
C) three-party unsecured
D) two-party unsecured
A closely guarded formula for a recipe protected by a soft drink manufacturer would be
considered as an example of a ________.
A) copyright
B) patent
C) trademark
D) trade secret
Jerry owns a farmhouse with plenty of cattle. One of the cows on the farm gives birth.
Which of the following methods of acquiring ownership justifies Jerry’s ownership of
the newborn calf?
A) confusion
B) possession
C) accession
D) inheritance
Section 24 of the Restatement (Second) of Contracts defines a(n) ________ as the
manifestation of willingness to enter into a bargain, so made as to justify another person
in understanding that his assent to that bargain is invited and will conclude it.
A) order
B) offer
C) advertisement
D) revocation
Which of the following is true of the profits and losses of an LLC whose operating
agreement does not contain profit or loss sharing clauses?
A) A member who invests 10 percent capital must bear 10 percent of the losses.
B) A member who invests 30 percent of the capital receives 15 percent of the profit.
C) A member who invests 20 percent of the capital receives 40 percent of the profit.
D) All members receive equal shares in profits regardless of capital contributed.
________ is the most widely used domain extension in the world, and is preferred by
businesses.
A) .net
B) .com
C) .biz
D) .org
Which of the following is a requirement that a shareholder’s resolution must satisfy in
order for it to be included in the corporation’s proxy materials?
A) It must be unrelated to the corporation’s business.
B) It should concern a policy issue.
C) It must involve the day-to-day operations of the corporation.
D) It should concern the payment of dividends.
A duty that directors and officers have not to act adversely to the interests of the
corporation and to subordinate their personal interests to those of the corporation and its
shareholders is known as ________.
A) duty of care
B) duty of loyalty
C) duty of obedience
D) self-dealing
The transfer by a tenant of all of his or her rights under a lease to another party is
known as an ________.
A) assignment
B) easement
C) accommodation
D) arraignment
Which of the following statements is true about the ability of a partner to withdraw
from a general partnership?
A) Partners have both the power and the right to withdraw from a partnership.
B) Partners have the right, but not necessarily the power, to withdraw from a
partnership.
C) Partners have the power, but not necessarily the right, to withdraw from a
partnership.
D) Partners have neither the right nor the power to withdraw from a partnership.
Bill buys a truck and replaces the regular tires with large tires to turn the vehicle into a
monster truck. When he tries to drive the truck, the oversized tires cause the truck to
roll over and crash. Bill then files a strict liability lawsuit against the truck manufacturer
to recover for his injuries. Which of the following is the best defense for truck
manufacturer in this lawsuit?
A) comparative negligence
B) assumption of the risk
C) professional malpractice
D) superseding event