If only one item is defective out of thousands of similar items that were manufactured
without defects, this one defective product could not be the basis for a product liability
lawsuit.
Only the drawer can order a stop-payment order.
The United States Supreme Court decided in Brown v. Board of Education that under
the doctrine of stare decisis, courts cannot overrule or change a prior court’s decision.
If the defendant does not answer the complaint, a consent judgment is entered against
him or her.
Due to concerns related to doctor-patient confidentiality, physical or mental
examinations are not allowed as part of the discovery process.
Denise endorses a check to you as a birthday present. You are now a holder in due
course of that check.
In a situation involving undue influence, the dominant party is known as the servient
party.
Shareholders may enter into agreements with one another to prevent unwanted persons
from becoming owners of the corporation.
Few philosophers advocate ethical relativism as an acceptable moral theory.
Stare decisis means “to stand by the decision.”
A surrogate adoption occurs when there is a private arrangement between biological
and adoptive parents of a child.
Implied warranties are created when a seller or lessor affirms that the goods he or she is
selling or leasing meet certain standards of quality, description, performance, or
condition.
Historically, in a bailment for the sole benefit of the bailee, the bailee owes a duty of
great care to protect the bailed property.
Most states do not restrict the use of limited liability partnerships to certain types of
professionals.
A large corporation will typically choose to incorporate in the state with the laws that
are most favorable to the corporation’s internal operations.
Defamatory language is protected by the First Amendment to the United States
Constitution.
The Sherman Act is the only major antitrust act that includes criminal sanctions.
The United States Congress issued the Uniform Limited Liability Company Act.
When a customer deposits a check into a checking account for collection, the
depository bank does not have to pay the customer the amount of the check until the
check “clears,” which is when final settlement occurs.
An agreement modifying a sales or lease contract needs no consideration to be binding.
Duty ethics is also known as Kantian ethics.
Employers are prohibited from engaging in unfair labor practices that interfere with a
union election, but unions are not prohibited from engaging in such practices.
No inference of the existence of a general partnership is drawn if profits are received in
payment of interest owed on a loan.
The Magnuson-Moss Warranty Act is administered by the Interstate Commerce
Commission (ICC).
The use of force is not necessary for conviction of the crime of larceny.
If Jennifer receives a catalog in the mail and sees an item she wants priced at $100,
because the catalogue is in writing the $100 price is considered an offer which she can
accept.
A merger occurs when one corporation is absorbed into another corporation and one
corporation survives and the other corporation ceases to exist.
Josh goes to Billy Bob’s Steakhouse for dinner and puts his coat in an attended
cloakroom. He is given a ticket which he must present in order to retrieve the jacket.
Josh and Billy Bob’s are parties to a bailment contract.
The ‘settlor” is the person who transfers property in order to form a trust.
A durable power of attorney remains effective even though the principal is
incapacitated.
A limited partnership interest is an investment contract.
A policy that applies equally to members of both sexes can violate Title VII because of
its overall impact on a particular gender.
Even if an instrument proves to be nonnegotiable, it is still subject to UCC Article 3
provisions regarding transfer.
An “ultra vires” act will generally cause dissolution of the corporation.
Together, the directors and the officers form the corporate management.
In general, the Statute of Frauds sets requirements for:
A) the kinds of damages that are recoverable.
B) the kinds of contracts that must be in writing to be enforceable.
C) the kinds of misrepresentations that are actionable.
D) the kinds of reliance that are justifiable.
E) the kinds of fraud that justify an award of punitive damages.
Conrad, who grew up in a safe rural area with no need to lock his door, moved to a
more dangerous city area. Despite the risk, however, he still often forgot to lock his
doors. On one of those “forgetful” days, someone came into his home and stole, among
other items, his checkbook and debit card. Conrad only writes a few checks a month, so
he did not know until two weeks later that his checkbook and debit card were missing.
Conrad had partially filled out a check, which he had planned to use to make final
payment to a carpenter who was to do some work the following week in Conrad’s
condominium. Conrad had signed the check and filled in the carpenter’s name, but had
not filled in the amount, because he did not know the carpenter’s charges. It turns out
that the thief was in fact the carpenter, who had noticed that Conrad did not keep his
door locked when he went to Conrad’s one day to estimate the job. The thief filled out
the amount on the signed check as $1,500. In addition to the incomplete check made to
him, the thief forged three other checks, and deposited them. Finally, when Conrad and
the carpenter agreed on the work, Conrad wrote a $200 check to the carpenter that had
not been paid when Conrad discovered the thefts. Immediately upon discovering the
loss, Conrad notified the bank of the theft of the checks, that there was an incomplete
check that should not be honored, and that the debit card had been stolen. Conrad also
placed a valid stop payment order with his bank on the $200 check as soon as he
discovered the loss, but the bank nevertheless paid this check five days later. All of the
other checks were also paid by Conrad’s bank. In addition, the thief used the debit card
for a $3,000 transaction. Discuss the liabilities of the parties.
Which of the following requires that the owners be married?
A) a tenancy in common
B) a joint tenancy
C) a life estate pour autre vie
D) a tenancy by the entirety
E) a profit-a-prendre
Which of the following best describes how e-mail contracts are viewed under the law?
A) E-mail contracts are not usually valid because of the ease of deleting e-mail
messages.
B) E-mail contracts for goods can be valid, but not e-mail contracts for services.
C) E-mail contracts are valid only for contracts less than $500.
D) E-mail contracts are valid, provided that both parties sign a written copy printed out
from the e-mail.
E) E-mail contracts are generally treated similarly to contracts negotiated by other
means.
LLCs are treated as ________ distinct from its members.
A) artificial persons
B) partnerships
C) sole proprietorships
D) “C” corporations
E) “S” corporations
Which of the following is true about copyright law in the United States?
A) A work must be published in order to receive copyright protection.
B) State copyright laws supplement federal copyright laws.
C) A copyright is not created by the process of registration.
D) A copyright must be registered before public disclosure of the copyrighted material.
E) Individuals are granted copyright protection for their life plus seventy-five years.
Willy, Waylon and Johnny formed a partnership to operate a lingerie shop. One of
Willy’s jobs is to make deliveries using the partnership truck. In one such delivery,
Willy negligently ran a stop sign, striking a car driven by Reba, causing damage to the
car and injury to Reba. Discuss the personal liability of Willy, Waylon and Johnny as
partners, and the liability of the partnership.
Under the Fair Debt Collection Practices Act, what are the “convenient hours” to
contact a debtor?
A) between 8:00 a.m. and 5:00 p.m.
B) between 9:00 a.m. and 5:00 p.m.
C) between 8:00 a.m. and 8:00 p.m.
D) between 8:00 a.m. and 9:00 p.m.
E) at any time of the day or night, so long as the debt collector is respectful and
courteous when he or she contacts the debtor
A(n) ________ is a document for a person’s detainment based on a showing of probable
cause that the person committed a crime.
A) arrest warrant
B) search warrant
C) ‘show cause” warrant
D) summons
E) jurisdictional summons
What is the right of the buyer or lessee to recover goods from an insolvent seller or
lessor called?
A) capture
B) recoupment
C) goods recovery
D) insolvent recovery
E) rejection recoupment
Which of the following is false regarding state antitrust laws?
A) Most states have enacted antitrust statutes.
B) State antitrust statutes are usually patterned after the federal antitrust statutes.
C) State antitrust statutes rarely contain the same language as federal antitrust statutes.
D) State antitrust laws are used to attack anticompetitive activity that occurs in
intrastate commerce.
E) When federal antitrust laws are only loosely applied, plaintiffs often bring lawsuits
under state antitrust laws.
When one party substantially, but not completely, performs a contract, creating a minor
breach, which of the following remedies may the aggrieved party choose?
A) deduct the cost necessary to complete performance from the payment due to the
breaching party
B) sue the breaching party for the cost to complete performance
C) rescind the contract.
D) deduct the cost necessary to complete performance from the payment due to the
breaching party, sue the breaching party for the cost to complete performance, or
rescind the contract
E) deduct the cost necessary to complete performance from the payment due to the
breaching party, or sue the breaching party for the cost to complete performance
Which statement is true about franchisor liability for the acts of a franchisee?
A) Franchisors are liable for acts of their franchisees in most circumstances.
B) Franchisors are never liable for the acts of their franchisees, unless the franchisor
was a party to the act of the franchisee.
C) Whether a franchisor is liable for the acts of its franchisee depends exclusively on
the terms of the franchise agreement.
D) Franchisors are usually not liable for the acts of their franchisees, but they can be
liable if the court recognizes the existence of an apparent agency.
E) Whether the franchisor is liable for the acts of its franchisee is based on whether the
franchisee has sufficient funds to pay any judgment.
The ________ Act, which was enacted in 1950, widened Section 7 of the Clayton Act’s
scope to include asset acquisitions.
A) Celler-Kefauver
B) Robinson-Patman
C) Anderson-McKeever
D) Johnson-Robinson
E) Keller-Widener
KMAKY is an accounting firm and has been hired to audit the books for Bike Spinners,
Inc. While performing the audit, they find that although the company’s financial
statement fairly represents the company’s position, the accounting methods the client
used to arrive at the figures were not generally accepted in the accounting industry.
KMAKY should provide the following opinion:
A) a qualified opinion.
B) an unqualified opinion.
C) an adverse opinion.
D) a qualified opinion, noting the problematic accounting methods.
E) an unqualified opinion, noting the problematic accounting methods.
Anyone who uses a mark without authorization may be sued for trademark ________.
A) interruption
B) harassment
C) conversion
D) infringement
E) diminution
Which course of action would utilitarianism require be taken?
A) the one that provides at least some good to the greatest number of people
B) the one that provides the greatest overall good to society, even if the benefit of that
alternative flows to only one person
C) the one that harms the smallest number of individuals
D) the one that places the greatest number of people in a better position than they were
in previously
E) the one that reduces risk-taking
Jeremy is a seventeen-year-old high school student and the captain of the football team.
It is the summer before his senior year, and he wants to “bulk up” in order to play better
and to impress college scouts so he can get a scholarship. He applies for a full-time job
at a local steel mill, knowing that the work is hazardous, but thinking that it will keep
him in great shape physically. Can the steel mill hire him?
A) yes, because the Fair Labor Standards Act allows seventeen-year-olds to work
B) yes, but only with parental permission, due to the nature of the work
C) yes, because he is bigger and stronger than the average seventeen-year-old, so he can
handle the work
D) no, because seventeen-year-olds are not permitted to work full-time hours
E) no, because seventeen-year-olds are not permitted to work at hazardous jobs
The business or party selling securities to the public is called the ________.
A) incorporator
B) underwriter
C) originator
D) issuer
E) guarantor
When a bank ________ a check, it agrees in advance (1.) to accept the check when it is
presented for payment and (2.) to pay the check out of funds set aside from the
customer’s account.
A) ratifies
B) acknowledges
C) certifies
D) notarizes
E) processes
Which of the following provides that all assets acquired during a marriage, other than
gifts and inheritances, belong equally to the two spouses?
A) community property laws
B) joint tenancy
C) tenancy by the entirety
D) marital partnership laws
E) spousal equality laws
Bankruptcy proceedings are commenced under:
A) state law.
B) federal law.
C) local (city or county) law.
D) state or federal law, at the option of the debtor.
E) state or federal law, at the option of the creditors.
To be liable for consequential damages, the breaching party must ________ that the
breach will cause special damages to the other party.
A) predict
B) intend
C) know
D) have reason to know
E) know or have reason to know
In January 2010, Fred had a cocktail party for his co-workers. The following day, after
cleaning up, Fred noticed that a check had been stolen from his checkbook. Fred
immediately called his bank and issued a stop- payment order on the check. One week
later, the check was received by the bank, and the bank paid it. Fred’s signature was
forged on the check. Fred never followed his oral stop- payment order with a written
stop- payment order. Fred received his bank statement and cancelled checks, including
the forged check, on January 30, Because Fred was notoriously sloppy with his personal
financial affairs, Fred did not notice that the bank had paid the check until he was
preparing his income tax return in April 2011. Can Fred recover from the bank?
A) yes, because the bank paid the check contrary to a valid stop payment order
B) yes, because the indorsement on the check was forged
C) no, because he did not execute a written stop payment order to follow up his oral
order
D) no, because the fact that the check was stolen was not the bank’s fault
E) no, because too much time had passed from when Fred had the information about the
bank having paid the check to notify the bank
If the board of Sony and the board of Samsung agreed to stop providing discounts to the
retailers of their televisions, what crime have they committed?
A) resale price maintenance
B) vertical price-fixing
C) horizontal price-fixing
D) conscious parallelism
E) creating a tying agreement
As a form of conducting business in the United States, limited liability companies
began:
A) in Massachusetts, in the early 1800s.
B) in 1950, when New York became the first state in the United States to enact
legislation allowing limited liability companies.
C) in 2000, when the United States Congress enacted legislation allowing limited
liability companies.
D) in Massachusetts, in the 1700s.
E) in 1977, when Wyoming became the first state in the United States to enact
legislation allowing limited liability companies.
Which of the following is true regarding priority of law in the United States?
A) Federal statutes take precedence over federal regulations.
B) Valid federal law takes precedence over any conflicting state or local law.
C) State constitutions rank as the highest state law.
D) Valid state law takes precedence over local laws.
E) Federal statutes take precedence over federal regulations, valid federal law takes
precedence over any conflicting state or local law, state constitutions rank as the highest
state law, and valid state law takes precedence over local laws.
John Rawls’s promoted which of the following in terms of promoting justice?
A) the consultation of an outside source, such as a book or person, for guidance
B) the belief that the moral rules should be determined by persons who have a “veil of
ignorance” about their place or station in society
C) the belief that a person must decide what course of action is proper based on that
person’s own set of beliefs or feelings
D) determining which course of action produces the greatest amount of good for the
greatest number of people
E) a set of universal rules based on reasoning which must be applied in all situations
and are characterized by reversibility
If you rationalize that it is acceptable for you to engage in deceptive practices, which
ethical theory would contend it is acceptable for your competitors to do so as well?
A) ethical fundamentalism
B) ethical realism
C) ethical relativism
D) Kantian ethics
E) Rawl’s social justice theory
Section 8(a) of the National Labor Relations Act prevents employers from interfering
with employees’ rights to form a union.