Courts apply the logical-outgrowth standard when reviewing a challenge of a rule from
an adversely affected party.
The standard for issuance of a warrant for a search in a noncriminal administrative
violation investigation is lower than that for investigating a criminal offense.
Delaware and New Jersey are separated by the Delaware River. New Jersey has started
to build a pier extending well into the river, and Delaware claims that the construction
will infringe on Delaware’s navigational rights. If a lawsuit is filed, it must be filed in
either a Delaware or New Jersey state court.
A company’s code of conduct and code of ethics may be combined into a single
document.
Only Congress may enact securities regulations, and only the courts may interpret
securities statutes.
Enron profits showed that first-quarter revenues rose from $12 billion in 2000 to $84
billion in 2001.
If Bill Gates goes into a car dealership and buys every car on the lot at the sticker price,
the dealer has suffered no contractual detriment because he’s in the business of selling
cars and got full price.
Actual authority is the authority that the third party may reasonably assume that the
agent possesses.
Any meeting of the minds resulting in mutual assent to do or refrain from doing
something is called a contract.
One significant benefit of obtaining a patent is that the cost of defending a patent is
relatively minimal compared to the cost of typical lawsuits.
There are 51 criminal justice systems in the United States.
Express contracts arise from the parties’ conduct.
The highest court in the state is always called that state’s Supreme Court.
It is possible for authorities to conduct an illegal search of your home without ever
entering your property or the home itself.
Larry has sued Jeff and received judgment in the amount of $24,000. Larry is a
judgment creditor.
Equitable remedies are available to compensate injured parties in both civil and
criminal lawsuits.
The Paris Convention sets international standards for the patentability of inventions.
A person must exhibit some sort of distinctive physical characteristic, obvious to a
neutral observer, in order to be considered disabled.
Transcripts of ADR proceedings are required to be available to the public.
Judges must be present during depositions to resolve disputes and ensure fairness.
Congress may place limits on the use of federal money by states as long as the limit
does not affect or infringe on a citizen’s constitutional rights.
Violation of Section 16, a finding of short-swing liability, does not require evidence of
the use of insider information and is deemed a strict liability provision.
Individual consumers may bring an action against a collection agency for damages
suffered by collection efforts.
Diversity jurisdiction must be shown to bring an appeal in a state’s highest court.
The term litigation refers to the trial but does not include pretrial events as well.
The common law legal system allows judges to fill in gaps in the law that are not
covered by a statute.
If goods are to be picked up at the seller’s place of business by the buyer and the seller
is a merchant, the seller retains risk of loss until the buyer takes possession of the
goods.
Congress has oversight over administrative agencies through the Senate’s power of
advice and consent.
The United States has adopted the country of origin principle to determine the
application of law in international online disputes.
Joe and Josephine have started a plumbing business and have incorporated. They invest
nothing into the corporation, and the corporation has minimal assets. One day Josephine
negligently damages a main pipe in a customer’s home, causing the basement to flood
and resulting in $20,000 in damages. The homeowner’s only remedy is to sue the
corporation, but the corporation has no funding and only minimal assets. Thus the
homeowner must bear the loss because Joe and Josephine are shielded from liability
due to the corporate protections the business entity affords them.
Advocates of the invisible hand theory do not trust corporate leaders with stewardship
over noneconomic values.
The original Howey test required that the investor have no involvement with the
generation of profits; however, modern courts have permitted a limited passive
involvement on the part of the investor.
In an installment contract, the buyer may reject an installment if the nonconformity
substantially impairs the value of that installment or the nonconformity cannot be
cured.
The Fair Debt Collection Practices Act does not prevent creditors’ agents from
harassing debtors or using misleading tactics.
When an LLP is formed, who files the initial paperwork?
A. an individual representing two or more persons desiring to start a new business
B. the principal in a sole proprietorship already in operation
C. a limited partnership already in operation
D. a general partnership already in operation
That corporations have a social responsibility and that profitability should be secondary
reflects:
A. the narrow view, or invisible hand theory.
B. the moderate view, or government’s hand theory.
C. the hybrid view, or citizen’s hand theory.
D. the broad view, or management’s hand theory.
If a principal wants to keep her identity secret, she would use:
A. a disclosed agency.
B. a partially disclosed agency.
C. an undisclosed agency.
D. an independent agency.
In addition to being enforced by the EPA, the Clean Water Act (CWA) is also enforced
by the U.S. Army Corp of Engineers.
Which of the following is not a source of administrative law?
A. the Constitution
B. the Administrative Procedures Act
C. common law
D. treaties
In an LLP, any income is taxed:
A. when distributed to shareholders.
B. at the end of the fiscal year.
C. at the level of the entity.
D. only when distributed to its partners.
If a credit card is issued to a consumer under the age of 21, the credit card company is
required to:
A. obtain the signature of a cosigner who has the means to repay any debt.
B. give a 60-day notice before making any rate hikes.
C. notify the cardholder’s parents so they can monitor their child.
D. set reasonable spending limits.
Trade secrets are protectable:
A. for 9 years.
B. for 17 years.
C. for 23 years.
D. for as long as the company desires.
Stan is an investment manager. He has received money from various investors and
given them a promise of very high returns on their investments. The invested money is
not supplying enough capital to pay the returns promised, so he has started using new
investors’ money to pay older investors. By advertising and by word of mouth, people
are anxious to invest with Stan because of the money being paid, and with the influx of
new investors he is able to continue operating. Stan is:
A. operating an insider-trading operation.
B. racketeering.
C. guilty of conspiracy to defraud.
Mike calls Beth and asks her to referee a soccer game. Beth is not obligated to work the
game. If she accepts the assignment and works the game, she is told the time of the
game, she must wear an approved uniform, and she is paid a fee. Once on the pitch
(field) she is in complete control. Beth is considered:
A. an incidental contractor.
B. a principal.
C. an employee agent.
D. an independent contractor.
Big Bucks Bank has published a detailed company ethical code based on an extensive
values management process. The code specifies that all dealings with customers are to
be fully documented and all dealings with the public not only are to be legal but should
be based on what is best for the consumer. Everyone who deals with a customer is
responsible for what he or she advises and must document conversations. Promotions
and rewards will be based not only on productivity but also on fairness and how the
customer is dealt with. At the weekly mortgage department meeting, Bill, the
supervisor, informs his department that the loan production is way down and that they
need to do whatever is necessary to step up the amount of loans granted. As a result, a
number of questionable loans are granted that make money for Big Bucks but result in
families being foreclosed on. Assuming the questionable loans to be unethically given,
which trait of an ethical company has been breached?
A. Senior management has not articulated a clear vision of integrity.
B. Policies and practices of the mortgage department are not aligned with those of the
organization.
C. Responsibility is collective rather than individual.
D. Nothing has been breached as this is common among even the most ethical of
companies.
Sally has just purchased a home and wants to have an in-ground pool installed. She
calls Cool Pools, the company that put in her neighbors’ pools. When the company rep
comes to her property, he does some soil tests that are standard for the industry and gets
the same results as he got when the other pools were put in, so the company gives her a
price quote of $16,000. When Cool Pools begin excavating, it discovers solid rock 4
feel below ground level. The neighbors had no such rock. Cool Pools stops work and
informs Sally that it will have to use explosives to remove the rock and the cost of the
pool will now be $32,000.
A. Sally is under contract and will have to pay the new price.
B. Sally can have the contract discharged based on impracticability.
C. Sally can have the contract discharged based on impossibility.
D. Sally can have the contract discharged based on frustration of purpose.
Lisa and Tara are operating a business as a general partnership without an express
partnership agreement. Should a dispute arise, the courts will look to ________ to
resolve the issue regarding operation of the partnership.
A. common law
B. state contract law
C. the Revised Uniform Partnership Act
D. federal contract law
Redrock GP has decided to go out of business. Selling the partnership assets and
making payments to creditors will occur during the ________ phase of the closing of a
partnership.
A. dissolution
B. dissociation
C. winding-up
D. termination
Which of the following agencies enforces federal antitrust laws?
A. Securities and Exchange Commission
B. Federal Bureau of Investigation
C. Better Business Bureau
D. Federal Trade Commission
In Palmer v. Champion Mortgage, Palmer received a debt-consolidation loan from
Champion. When she signed the loan agreement, she also received the required TILA
disclosures. Several days later Palmer received copies of the documents and a notice of
her right to cancel under TILA, which permitted her to cancel within three business
days of three different dates stated in the document. Over a year later Palmer filed to
cancel the transaction, claiming that the time frames given to her in the TILA
disclosures were too confusing. The court held that Palmer:
A. could cancel her loan because the time disclosures were too confusing.
B. could cancel her loan because of the extended three-year time frame of the TILA.
C. could not cancel her loan because the TILA does not permit cancellation of loans.
D. could not cancel her loan because the TILA disclosures would not confuse an
objectively reasonable consumer.
In Belanger v. Swift Transportation Inc., after Belanger had an accident driving a
company vehicle, the accident was reported to a government website. Belanger claimed
that Swift acted with malice and lost any reference-related privilege by reporting
information to a third-party website.
A. Swift followed all company procedures, so it did not act with malice and defamation
did not occur.
B. Swift has an absolute privilege to report on former employees, so no defamation
occurred.
C. Swift showed malice by not reporting Belanger’s side of the story, so it is guilty of
defamation.
D. Swift defamed Belanger by reporting to a website, as privilege applies only in
company-to-company references.
In DiFolco v. MSNBC, a TV commentator e-mailed her supervisors indicating that she
wished to have a meeting to discuss her exit from the shows and to give MSNBC ample
time to replace her, but she also wrote that she wanted to be part of the MSNBC team
“for a long time to come.” MSNBC claimed anticipatory repudiation. The court:
A. found DiFolco did not manifest a clear and unequivocal repudiation and ruled in her
favor on the issue of anticipatory repudiation.
B. found DiFolco’s e-mails were unambiguous in expressing her intent to leave and
ruled in MSNBC’s favor on the issue of anticipatory repudiation.
C. found DiFolco’s e-mails were ambiguous but her past employment issues were
sufficient to indicate refusal to perform.
D. dismissed DiFolco’s claim and ruled that the e-mails constituted DiFolco’s
anticipatory repudiation.
The first LLP legislation was enacted in:
A. New York.
B. Texas.
C. Florida.
D. Iowa.
You have booked a hotel room for a conference at a rate of $100 per day for five days.
When you arrive to check in, you are told that the hotel is full and that it overbooked
and cannot supply you with a room. You are forced to go to the only hotel in town with
available rooms and pay $150 per night. If you sue for damages:
A. you are entitled to compensatory damages in the amount of $250.
B. you are entitled to consequential damages in the amount of $250.
C. you are not entitled to any damages because the additional costs were not
foreseeable.
D. you are entitled to liquidated damages in the amount of $250.
Chris and Paul operate a business in which both have contributed $50,000 to the
business’s capitalization. Chris makes all business decisions, and Paul made Chris sign
a partnership agreement saying that Paul is liable only for partnership debts up to
$50,000.
A. Both are general partners.
B. Chris is a general partner, and Paul is a limited partner.
C. Paul is a general partner, and Chris is a limited partner.
D. Both are limited partners.
Saul was elected to the board of trustees of Round Way Corp. four years ago. He makes
sure everyone knows he’s a board member and always brings it up at parties.
Unfortunately, he cares more about the prestige than doing a good job, so he hasn’t
attended board meetings or meetings of committees to which he’s been assigned. If the
insiders at Round Way enter into a series of bad business deals causing financial loss to
the corporation:
A. Saul is shielded from liability under the corporate veil.
B. Saul cannot be held responsible because he didn’t vote to approve the transactions.
C. Saul will be liable because his inattention will likely be considered negligence on
his part.
D. Saul will be held liable because by accepting the board position he has opened
himself up to liability for the actions of the corporation.
Which of the following will not allow for an anticipatory repudiation to occur?
A. Tom calls Dick and says that he can’t find the raw materials to complete
performance and doubts he can meet the contract’s performance deadline.
B. Sally is buying Jane’s car, with the money and car to be exchanged in a week;
however, Sally meets Betty, who tells her she just bought Jane’s car.
C. Mary Beth is scheduled for knee surgery next month with Dr. Slice but reads in the
paper that Dr. Slice has lost his license to practice medicine.
D. Manny calls Moe and tells him that the sculpture he’s creating for him is coming
along slower than anticipated but he’s pretty sure he’ll be done by the contract deadline.
Initial public offerings occur when:
A. a public corporation seeks to become a professional corporation.
B. a publicly held corporation seeks to become a privately held corporation.
C. a privately held corporation seeks to become a publicly held corporation.
D. a for-profit corporation seeks to become a nonprofit corporation.
Harry wants to start a personal training business. He should choose a sole
proprietorship entity if he seeks:
A. limited liability.
B. perpetual existence for the new company.
C. the ability to raise capital by selling equity in the business.
D. the ability to avoid management conflict.
The president’s authority to exercise power over administrative agencies is derived
from:
A. federal law.
B. judicial decisions.
C. the Constitution.
D. congressional delegations.
Which of the following would not be considered a real estate fixture?
A. an area rug laid out in the living room with double-sided tape to keep it in place
B. a chandelier hanging in the dining room
C. a dishwasher installed under a kitchen countertop
D. wood paneling in the den
Which of the following is not exempt from the Do Not Call Registry?
A. charitable organizations
B. certain political organizations
C. businesses seeking commercial contracts
D. businesses with which the consumer has past commercial contacts
Although it may vary because of the nature of the case, generally a delay of more than
________ is presumptively an unconstitutional violation of a defendant’s right to a
speedy trial.
A. four months
B. six months
C. eight months
D. ten months
Which of the following would be valid grounds to recognize and apply a bona fide
occupational qualification?
A. A survey of customers at a restaurant shows a preference for female servers, so
males are not hired.
B. A survey of customers at a health spa indicates that same-sex attendants are wanted
in locker rooms for privacy reasons.
C. A factory is in a bad part of town, so it refuses to allow women to work the night
shift for safety reasons.
D. A church has always had a white pastor, so other races who apply are automatically
excluded.
A creditor with an interest in real property is called:
A. a surety.
B. an unsecured creditor.
C. a mortgagee.
D. a mortgagor.
In Pagan v. Fruchey and Village of Glendale, Pagan sued, questioning a village
ordinance prohibiting the parking of a car on a public street for the purpose of
displaying it for sale. Pagan won because:
A. Glendale’s law violated Pagan’s commercial speech rights, which are absolute.
B. Glendale was unable to prove that Pagan’s speech was unlawful.
C. Glendale’s ordinance was broader than necessary to accomplish the village’s
government interest.
D. Glendale did not prove that the ordinance directly advanced the village’s claimed
government interest because Glendale based its argument on opinion rather than data.
A state statute mandates that the statute of limitations for a negligence lawsuit is two
years and the plaintiff is barred from filing the suit if he or she files after that time. This
statute is an example of a:
A. private law.
B. procedural law.
C. criminal law.
D. substantive law.
One form of private placement exemption involves sales of securities:
A. in limited dollar amounts to nonaccredited investors.
B. only to employees, officers, and board members of the issuing corporation.
C. to accredited investors.
D. to other corporations, with no sales to individuals permitted.
Regarding business owners and managers, what is generally considered the most
important part of the Truth in Lending Act? Why?
An employee group with mutual interests and goals that is an appropriate unit for
negotiating union contracts is called a ________ unit.
In a destination contract, the ________ bears risk of loss until the goods reach the
destination.
After the complaint is filed, the complaint and summons are served on the defendant.
What is the summons, and what constitutional mandate does service of the complaint
and summons accomplish?
Discuss the differences between Chapters 7 and 11 bankruptcy proceedings.
You have just purchased a new car. After driving the car for a few days without
incident, you go through a puddle of water while turning through an intersection. The
water splashes up and your power steering momentarily stops operating. You lose
control and run into a car parked along the road. You read in the paper the next day that
the power-steering problem has occurred with this model car before and a recall is
being considered. If you sue the manufacturer, what are the three theories of product
liability you may sue under and how do they differ?
What is an anticipatory repudiation, and what must be shown for it to be enforced?
When the parties perform their obligations in good faith in order to complete the
contract, this completion is called _______.
Name the three specific events that are deemed events of dissociation by the Revised
Uniform Partnership Act and are considered to be the most common.
The government’s system of checks and balances is called the _______.
Fixed-site emitters of air pollutants are known as ________ sources of air pollution.
Donald is an agent representing Xmart, a large department store chain. Xmart has sent
him to deal with Fred in regard to purchasing Fred’s land in order to erect a new store.
When Donald first meets Fred, Fred calls Xmart to verify that Donald is in fact an agent
authorized to deal on Xmart’s behalf. Xmart sends Fred a written confirmation of
Donald’s authorization to act as its agent and states that a contract signed by Donald
will be honored by Xmart. Donald and Fred meet every other day during the
negotiations. While the negotiations are still ongoing, Donald is fired by Xmart because
it doesn’t feel that he is making sufficient progress. Why is it important for Xmart to
communicate with Fred regarding Donald’s firing?
Alan is a freshman in the computer science department. One of his professors has
embarrassed him in class and then mocked him, saying that Alan will never be as good
as she is with computers. In order to prove the professor wrong, Alan decides to break
into the main computer at the Department of Defense and leave a note saying the
professor is a spy. Alan indeed hacks into the computer and leaves the message. He
designed the message to erase itself after 13 hours, leaving no trail and no damage to
the computer. If Alan is discovered to be the hacker, has he committed a crime?
Explain.
Corporate tax structures result in ________ taxation.
Tom has been injured on the job, so Dick hires Harry to fill in for Tom. The agreement
with Harry is that he will work until Tom is ready to return. When Tom is indeed ready
to return, Dick’s position is terminated by an express act defined as _____.
What was the justification for, and the purpose of, the Lilly Ledbetter Fair Pay Act of
2009?
Bud and Lou own and operate a bakery. They each perform all of the functions in the
bakery, from baking to cleaning up. They make decisions jointly and hold themselves
out to the public as business equals. When starting the business, Bud contributed
$60,000 and Lou $40,000 to capitalize the business. They have a written agreement
stating that they will share profits equally; however, responsibility for losses will be
allocated at 60 percent to Lou and 40 percent to Bud. If Helen slips and falls in the shop
and gets a judgment for $100,000, how may Helen proceed?
A ________ is a third party who agrees to be liable to pay a loan only if the debtor
actually defaults.