Research indicates that consumers are willing to pay more for a product that they
believe to be ethically produced.
a. True
b. False
What is the key to all conditional clauses?
a. If a condition in a contract does not occur, public policy will require only substantial
performance by the party for whom the condition failed.
b. If a contract contains a conditional clause, the requirement of good faith will be
eliminated.
c. If a condition in a contract does not occur, one party will probably be discharged
without having to perform his or her obligations under the contract.
d. If a contract contains a conditional clause, it must be expressly written with specific
language.
Both the buyer and seller may have an insurable interest in the same goods at the same
time.
a. True
b. False
Laura intends to file a Title VII lawsuit against her employer. Which of the following is
true?
a. Laura is required to first submit her claim to the Equal Employment Opportunity
Commission.
b. Laura must first submit her claim to a state civil rights commission before she may
proceed with her lawsuit.
c. If the EEOC determines Laura has no case against her employer, she may not file a
lawsuit.
d. Laura may initiate a lawsuit or file with the EEOC as she so elects.
A buyer may revoke an acceptance of goods if
a. the nonconformity does not impair the value of the goods.
b. the buyer had a legitimate reason for the initial acceptance.
c. the buyer knew the nonconformity could not be cured.
d. the buyer thought they could easily cover.
To form an LLC, both a charter and an operating agreement must be filed with the
Secretary of State in the jurisdiction where the business will operate.
a. True
b. False
As part of a compromise to the Endangered Species Act, the government allows
developers to conserve some land in return for developing other property as they want.
This is accomplished through
a. the Resource Conservation and Recovery Act.
b. the use of the Superfund.
c. the Habitat Conservation Plan.
d. an Environmental Impact Statement.
The “business judgment rule” has been replaced by “good faith statutes in most states.
a. True
b. False
What is an exculpatory clause?
a. A requirement that the company pay the legal fees of directors who are sued for
actions taken on behalf of the company
b. A provision that 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
c. A requirement that a corporation cannot undertake any transaction unless the charter
permits it
d. A provision that protects directors from personal liability to the corporation and its
shareholders
Halbeck, LLC was negligent in its audit of E-treme, Inc. Unbeknownst to Halbeck,
E-treme used the financial statements to secure a loan from Great State Bank. Under the
foreseeable doctrine, Halbeck will be liable to Great State Bank for its losses on the
loan.
a. True
b. False
Only civil penalties can be incurred under the Uniform Trade Secrets Act.
a. True
b. False
Claude agrees to lease his house to Irvin for nine months, the lease to begin six months
from the signing of the contract. Under the statute of frauds
a. the lease is not required to be in writing.
b. the lease is required to be in writing because of the one-year rule.
c. the parol evidence rule renders the lease voidable.
d. the lease is a collateral promise which must be in writing.
Which of the following protects e-mail messages from unauthorized interception?
a. CAN-SPAM
b. FIPS
c. ECPA
d. COPPA
Congress passed a law imposing penalties for displaying “indecent” material online
where children could see it. If the U.S. Supreme Court subsequently rules that the
statute conflicts with the First Amendment of the U.S. Constitution, the statute is void.
a. True
b. False
Jeannie carelessly packed her grandmother’s antique glassware and had it shipped to her
30-year-old daughter, Abby, via Common Freight Carriers. When the china arrived at
Abby’s house, most of the pieces were broken. As between Jeannie and Common
Freight Carriers, who will bear the loss?
a. Under the Carmack Amendment, Jeannie is liable for the loss if Common Freight
Carriers shows it was not negligent and that the loss was caused by Jeannies failure to
wrap and pack the glassware properly.
b. Under the Carmack Amendment, Common Freight Carriers is liable. A common
carrier is strictly liable.
c. Under the Carmack Amendment, Common Freight Carriers is liable because of its
negligence in not inspecting Jeannie’s packing job.
d. Liability is governed by state statute and will depend on which state law will control.
Megan was employed by a large company. Her supervisor told her to falsify
government reports. She refused and was fired. She sued for wrongful discharge. Her
employer claimed that, since Megan was an at-will employee, she had no legal right to
claim the company was liable for damages. Is the employer right?
a. Yes. An at-will employee does not have a legal right to claim wrongful discharge of
employment.
b. Yes. As an employee, Megan owes a duty of loyalty to her employer. If the company
was found to have acted illegally by falsifying the reports, it (not Megan) would be
liable.
c. No. Even though Megan was an at-will employee, such employees may not be fired
without just cause.
d. No. Though at-will employees do not have extensive rights relative to job security,
they may not be legally fired for refusing to perform an illegal act.
The accounting firm of Gray & Co. did accounting work for both Regional Bank and
Carter Electronics. Without Carters knowledge or approval, Gray & Co. discussed
Carters financial problems with Regional Bank. In this situation, Gray & Co.
a. breached a legal obligation to keep all client information confidential.
b. breached a moral, but not a legal, obligation of confidentiality.
c. did not breach any obligations to its clients.
d. acted properly because it was protecting its client, Regional Bank, from possibly
making an unwise loan to Carter Electronics.
Dr. Gonzalez ordered specialized surgical equipment from Physicians Supply Co., but
the company informed Dr. Gonzalez that it would not be able to meet his order by the
agreed date. Even if Dr. Gonzalez does nothing to secure equipment from another
source, he will be able to recover damages since the contract was breached by
Physicians Supply, not Gonzalez.
a. True
b. False
Bob signed an agreement with Joe under which Bob agreed to purchase all the hay that
Joe grew during the coming growing season. This contract will be
a. unenforceable due to its vagueness.
b. unenforceable due to the difficulty of devising an appropriate remedy for a breach.
c. enforceable as long as both parties act in good faith and Bob doesn’t suddenly
demand more hay than what was reasonably estimated.
d. unenforceable unless state real estate law makes an exception.
To perfect a security interest in a negotiable document, Second State Savings and Loan
should
a. file a financing amendment.
b. take possession of the instrument.
c. do nothing. Perfection is automatic.
d. secure a court order.
Under what circumstances is intrusion into someone’s private life a tort?
a. under all circumstances based on the Fourth Amendment
b. if a reasonable person would find it offensive
c. only if it conflicts with the First Amendment
d. only if the intrusion had been made public
Dahlia is in the process of developing her set of Life Principles. She asks you for your
advice. Which of the following statements will you tell Dahlia is important for her to
follow when developing her Life Principles?
a. The focus of her Life Principles should reflect what the law says is “right” or
“wrong.”
b. It is better to develop Life Principles that are general in nature rather than ones that
are too specific.
c. Her Life Principles should be based on her own values.
d. Her Life Principles should be based on the moral standards dictated by society.
International rules that have become binding through a pattern of consistent,
longstanding behavior are referred to as customary international law.
a. True
b. False
Farmers Fortune Insurance has a contract with Farmer Fran to insure her crops against
insect damage. The contract does not specify which insects are covered or how much
damage is necessary to make a claim. The contract will probably be enforced in favor of
a. Farmer Fran.
b. Farmers Fortune Insurance.
c. Neither side, as it is ridiculous to try to insure against insects.
d. Cannot determine… would have to go through litigation to decide.
E-signatures are valid in all 50 states.
a. True
b. False
There are three parties on a promissory note: the maker, the drawee, and the payee.
a. True
b. False
A rule that is not automatically discriminatory, but which may be discriminatory in
practice because it excludes too many people in a protected group is considered
a. disparate treatment.
b. prima facie discrimination.
c. unbalanced treatment.
d. disparate impact.
Suppose Bill’s credit card is stolen and he notified his credit card company of this fact.
Which of the following is true regarding the amount of unauthorized charges made
before Bill notified his credit card company?
a. Bill is not responsible for any of the unathorized charges.
b. Bill is responsible for the first $50 of unathorized charges.
c. Bill is responsible for the first $100 of unauthorized charges.
d. Bill is responsible for half of the unauthorized charges.
The World Bank’s mission is to end poverty by encouraging development. It does so by
loaning money to poor countries on favorable terms.
a. True
b. False
A defendant set off fireworks at a fully-licensed Fourth of July show. The result of the
activity caused harm to the plaintiff. In order for the plaintiff to win a case of
negligence, he or she need only prove that it was foreseeable that the defendant’s
conduct might cause harm.
a. True
b. False
What legislation did Congress pass in 1932, that prohibited federal court injunctions in
nonviolent labor disputes, thereby declaring that workers should be permitted to
organize unions and use their collective power to achieve legitimate economic ends?
a. The Wagner Act
b. The Norris-LaGuardia Act
c. The National Labor Relations Act
d. The Labor-Management Relations Act
It was payday. Navidida decided to run some errands and then deposit her check in the
bank over her lunch hour. So that she wouldn’t have to spend too long at the bank,
Navidida indorsed the back of the paycheck as follows, “Navidida Jones,” before
leaving work. While window shopping, Navidida lost the check. Roger finds Navidida’s
paycheck.
(A) Will Roger be able to cash Navidida’s check?
(B) How could have Navidida indorsed the check so that she would not have to be
concerned about losing the check?
Generally, reasonable liquidated damage clauses will be enforced
a. when actual damages are easily determined.
b. when actual damages are difficult to determine.
c. almost always.
d. only in real estate sales contracts.
In order to use poison pills, staggered boards of directors, and supermajority voting as
takeover defenses, they must first be authorized by the shareholders.
a. True
b. False