The principal may be an individual or entity (such as a corporation), but the agent must
be an individual.
States provide an automatic right to appeal inferior court decisions, usually to the state’s
trial court.
If two people identify themselves as general partners and create a written partnership
agreement, the law is obligated to recognize their business entity as a general
partnership.
The EPA may enforce its rules and regulations through criminal prosecutions.
Restitution is classified as an equitable remedy.
In Aquino v. Honda of America Inc., even though the charges against Aquino for alleged
vandalism were dropped, Honda’s reasonable belief, after its own investigation, met the
burden of proving that Honda had a legitimate, nondiscriminatory reason for his firing.
Agents involved in debt collection are the only parties that are regulated by the Fair
Debt Collection Practices Act.
The manager at an apartment complex has no prior criminal record but has just been
arrested for possession of child pornography. If he is convicted but given probation and
not jailed, the apartment complex may be liable if it does not fire him and he later
harms a child on the premises.
When an employee suffers a job-related injury, the employee always has a choice of
suing the employer in court or seeking workers’ compensation.
The Fair Labor Standards Act does not cover all employees.
The U.S. system of common law is deep-seated in the French common law established
by the Norman kings around 1066.
Contributory negligence and comparative negligence are generally not valid defenses to
workers’ compensation claims.
Leah has just handed in a major required report to her professor, and after careful
scrutiny the professor finds numerous instances of plagiarism. If the school policy and
the professor’s personal perspective follow a principles-based approach, Leah should be
charged and suffer whatever penalty is prescribed by school policy.
Short-term contamination sites are not placed under the Superfund laws.
An LLC is required to name a member as its registered agent and may not use a
commercial registered office provider.
Betsy is moving to New Mexico and offers to sell her television to April. April isn’t sure
if she can afford it and asks for a week to decide. If Betsy agrees to hold the offer open
for a week and makes the promise in writing, Betsy has given April a firm offer.
Mike is a bartender. Every day he pockets $20 or so by not ringing up some sales when
paid in cash. Mike, because he is stealing from his employer while on the job, is guilty
of embezzlement.
The authority of an officer to bind the corporation must expressly flow from the bylaws
or through board of director mandates.
An enforceable contract has four necessary elements: mutual assent, capacity to
contract, consideration, and legal purpose.
When a party breaches a contract, the nonbreaching party always has the option of
seeking legal or equitable remedies.
The name of an LLC must contain a designator such as “Company,” “Limited,”
“Limited Liability Company,” or “LLC.”
U.S. v. Microsoft held that the appropriate standard for analyzing Microsoft’s actions in
the browser market was the rule of reason.
The same act cannot cause a criminal and civil wrong at the same time.
LLPs may be capitalized through debt from private or commercial lenders.
States often have their own versions of federal administrative agencies.
The FDA has authority to bring criminal prosecutions.
Gas station owners agreeing on the price per gallon is not a violation of the Sherman
Act.
A state court may not unilaterally declare or decide that proper venue for a case should
be in another state.
The judge determines whether a crime is a misdemeanor or a felony.
Shareholders are the owners of the corporation and, in part, act principally through
electing and removing officers.
A new start-up corporation has gone to a bank for a commercial loan. Recognizing the
start-up status of the business and the limited assets the corporation currently possesses,
the bank, to protect its interests, may require that either collateral be pledged or a
personal guarantee be signed by shareholders but may not require both.
To develop your understanding of agency law, you need to be aware of the legal
requirements for creating an agency, the liability of a principal for an agent’s conduct,
and the remedies available to the parties.
Corporate bondholders are creditors of the corporation but are not shareholders.
The Supreme Court case of Pennoyer v. Neff articulated a framework for the exercise of
personal jurisdiction by lower courts that applied to:
A. federal courts only and was based on providing fairness to the parties with
constitutional requirements related to due process.
B. state courts only and was based on providing fairness to the parties with
constitutional requirements related to equal protection.
C. both federal and state courts and was based on providing fairness to the parties with
constitutional requirements related to equal protection.
D. both federal and state courts and was based on providing fairness to the parties with
constitutional requirements related to due process.
In the civil system, the term litigation refers to:
A. matters that occur prior to the trial.
B. the trial itself.
C. both the pretrial and the trial.
D. posttrial enforcement of judgments.
Disputes on matters under an agency’s jurisdiction are adjudicated:
A. in administrative law hearings.
B. in state courts.
C. in federal courts.
D. by licensing boards.
When are parties able to bring judicial challenges to an agency’s rule during the
rulemaking process?
A. during any point in the rulemaking process
B. after public notice has been given
C. after the final rule has been published
D. during public comment
The Safe Drinking Water Act (SDWA) does not apply to which of these water sources?
A. lakes
B. rivers
C. oceans
D. subsurface wells
What is the first step in the agency rulemaking process?
A. Determine legislative authority.
B. Draft the proposed rule change.
C. File for a hearing to start the formal rulemaking procedure.
D. Study and research the alternatives.
Wayne is the president and CEO of a corporation. He owns 25 percent or the company’s
total stock and has been selling large chunks of his holdings over the past three months.
If the SEC investigates him for short-swing profits, it would do so under:
A. Regulation D of the 33 Act.
B. Rule 10(b)(5) of the 34 Act.
C. Section 16 of the 34 Act.
D. the Private Securities Litigation Reform Act of 1995.
LLCs share characteristics in common with each of the following except:
A. general partnerships.
B. limited partnerships.
C. corporations.
D. sole proprietorships.
The Resource Conservation and Recovery Act (RCRA) applies only to active facilities,
not future ones.
An Oregon corporation and a New Hampshire corporation have entered into a contract
and agreed that any legal disputes will be conducted using New Hampshire law. This
agreement is called a:
A. state selection clause.
B. venue selection clause.
C. site selection clause.
D. forum selection clause.
The origins of LLPs were rooted in protection of:
A. private service firm partnerships.
B. private service firm sole proprietorships.
C. professional service firm partnerships.
D. professional service firm sole proprietorships.
A corporation incorporated in Utah and doing business in Nevada is classified as
________ in Nevada.
Which of the following is not a role of the bankruptcy trustee?
A. void certain transfers
B. turn the assets into cash
C. provide debt counseling
D. collect the debtor’s assets
Which of the following is not a coequal branch of the U.S. government as specified in
the Constitution?
A. the legislative branch
B. the executive branch
C. the administrative branch
D. the judicial branch
Who is the presiding officer at an agency’s adjudication hearing?
A. a member of Congress appointed as a representative
B. the head of the agency
C. an arbitrator
D. an administrative law judge
In State Farm Mutual v. Campbell, the court laid out a three-part analysis for
determining the constitutionality of a statute regulating punitive damages. Which of the
following is not one of the three criteria specified by the court?
A. the degree of reprehensibility of the defendant’s misconduct
B. the disparity between the actual or potential harm suffered by the plaintiff and the
punitive-damage award
C. whether the harm resulted from a criminal act or a civil act
D. the difference between the punitive damages awarded and the civil penalties
authorized or imposed in similar or comparable cases
Wilma has a valid driver’s license but has a tendency to get speeding tickets. Fred tells
her that he will pay her $1,000 if she does not get a ticket for one year. Wilma drives
very cautiously and goes through one year without a ticket. Is Fred obligated to pay?
A. yes, because Wilma gave up a legal right based on the agreement
B. no, because $1,000 is not an adequate amount based on Wilma’s detriment
C. no, because Wilma suffered no detriment in this agreement
D. yes, because a promise is a promise and consideration has nothing to do with this
agreement
Typically, day-to-day decision making in an LLC is performed by:
A. the individual principal who filed the initial paperwork to form the business.
B. its board of directors.
C. the top 10 percent of the principal investors.
D. its managing members.
Which of the following is not a prominent group that administers arbitrations?
A. International Chamber of Commerce’s International Court of Arbitration (ICC)
B. World Arbitration Organization (WAO)
C. London Court of International Arbitration (LCIA)
D. American Arbitration Association (AAA)
Which of the following require(s) a formal filing to be recognized as a valid business
entity?
A. a sole proprietorship
B. a general partnership
C. a limited partnership
D. all business entities
The Endangered Species Act (ESA) is administered by the Department of Commerce
and the Department of the Interior.
The Colorful Paint Company got a mortgage from the bank to purchase a factory to
make paint. As part of its manufacturing process, Colorful Paint dumped the excess
paint into a pit behind the building. This practice contaminated the property. If the bank
foreclosed on the factory, would the bank be liable for cleanup costs of the
contaminated land?
A. no, because it was an innocent landowner
B. no, because it did not contaminate the property
C. no, because it was a secured creditor
D. yes, because it owns the property
In 2002, Martha Stewart, the media mogul and CEO of Martha Stewart Living, was
prosecuted for insider trading regarding her sale of ImClone stock. Her stockbroker had
informed her that Samuel Waksal, the CEO and chairman of ImClone, was selling
substantial amounts of his stock in the company, so she then sold her ImClone holdings.
What was Martha’s fate?
A. Since she ‘saved” only $45,000 by selling her stock, her dealings were deemed too
insignificant and the matter was not pursued.
B. She was found guilty of insider trading as a tippee and went to jail.
C. She claimed that she was merely acting on her broker’s advice and didn’t know the
information provided was material and nonpublic, so she didn’t qualify as a tippee.
D. She was found guilty of obstructing justice in a securities investigation and went to
jail.
Voir dire:
A. is a form of discovery.
B. is the process of choosing a jury.
C. is a motion made after trial seeking an appeal.
D. is the process of notifying a defendant that he or she has been sued.
In which of the following situations would res ipsa loquitur likely apply?
A. Jon is driving at 75 miles per hour in a 55-mph zone and causes an accident.
B. Brandon sneaks up behind someone and hits the person with a hammer.
C. A train derailed, and the cause of the accident can’t be proved.
D. Josh forgets to put a sign up to warn people that the floor has just been waxed and is
slippery.
Your department secretary has called a local office supply company and ordered 100
reams of copy paper. The agreement is that the paper will be delivered to the
department office and a check for payment will be given on delivery. On the way to
make the delivery the truck is in a crash, and the paper is destroyed in a fire resulting
from the accident.
A. This is a shipment contract, and the office supply company bears risk of loss.
B. This is a shipment contract, and your school bears risk of loss because the paper had
been set aside and tendered.
C. This is a destination contract, and because delivery had been initiated, the school
bears the risk of loss.
D. This is a destination contract, and since the goods were never properly tendered, the
office supply company bears the risk of loss.
The amendment that guarantees a speedy public trial is the:
A. Fourth Amendment.
B. Fifth Amendment.
C. Sixth Amendment.
D. Eighth Amendment.
Ben is the manager of a branch of a large bank. He has regularly taken money from
customers’ accounts for his own use and changed the bank records to cover his actions.
Ben is guilty of:
A. a conspiracy.
B. a Ponzi scheme.
C. racketeering.
D. embezzlement.
In Leonard v. PepsiCo Inc., the court ruled against Leonard and refused to enforce the
purchase of a Harrier jet because:
A. the advertisement specifically referred to the accumulation of points to purchase
items in the catalog and the Harrier was not listed in the catalog.
B. the sale of a Harrier jet, still used by the military, would jeopardize national security,
so Pepsi’s ad could not be taken seriously.
C. Leonard did not accumulate points but instead purchased them, which violated the
rules of the offer.
D. Leonard did not accept the offer in the manner specified and required in the offer, so
his acceptance was defective and void.
Robert is about to graduate college, and his parents tell him that because he is the first
member of the family to graduate college, they want to buy him a new, but inexpensive,
car. They have the money to buy the car, and Robert is excited about getting his gift.
Robert owns a used car but has never owned a new car, so this will be his first. He
decides to keep his used car because he had been promised a new car by his parents for
his high school graduation and never got it. On graduation day, his parents tell him that
they have decided to use the car money for a vacation and there will be no new car.
A. Robert can successfully sue based on promissory estoppel.
B. Robert can successfully sue based on the promise of a gift.
C. Robert cannot successfully sue because he did not rely to his detriment on the
promise.
D. Robert cannot successfully sue because the promise was not reasonable and would
not support promissory estoppel.
The filing of the complaint begins which stage of litigation?
A. the pleadings
B. discovery
C. voir dire
D. the trial
In Miranda v. Arizona, Miranda’s voluntary confession was thrown out because:
A. Miranda asked for an attorney but was questioned before the attorney arrived.
B. Miranda spoke such poor English that he didn’t fully understand his rights as told to
him and an interpreter was not provided.
C. Miranda spoke English but didn’t read English, so he didn’t understand that the
document he signed was a confession.
D. Miranda was questioned in a police interrogation room and the court deemed the
setting too coercive, particularly since he didn’t know his rights, and even though he
was not forced to talk by the police, his confession was therefore not truly voluntary.
In Diaz v. Pan Am Word Airways Inc., the plaintiff was denied a job as a flight attendant
because the airline had a policy of hiring only women as flight attendants. The court
held that:
A. because the airline proved women were better in certain aspects of the job, gender
was a bona fide qualification for the position.
B. because customer and employee preference was so high, gender was a bona fide
qualification for the position.
C. while important, more effective performance by women in nonmechanical functions
and customer preference did not make gender a bona fide qualification for the position.
D. hiring men as flight attendants would lead to sexual harassment.
Explain the difference between a frolic and a detour and how they affect or do not affect
the principal’s liability.
Explain how the Fifth Amendment right against self-incrimination applies to
corporations and the individuals working for corporations.
In the case of U.S. v. Colgate, the court found that ________ boycotts do not fall under
the Sherman Act.
In what ways does the United Nations Convention on Contracts for the International
Sale of Goods differ from the UCC in terms of coverage and application?
ADR has some advantages for a company that makes it a better alternative than
litigation in many situations. Name and explain the various methods of ODR and the
advantages that ODR has over ADR for some companies.
A basic fact or assumption in a contract is said to be ________ to the contract.
The expiration date of a corporate bond is also called its _______.
What is the logical-outgrowth test?
Government acts that affect semi-suspect or quasi-suspect classifications require that
the court apply ________ scrutiny to determine the act’s validity.
How is the Revised Uniform Partnership Act similar to the Uniform Commercial Code
in terms of gap filling?
The civil law system relies heavily on ________ to define the laws.
When and why would a defendant file a cross-claim, and when would a defendant file a
counterclaim?
Acceptance of an agent’s previously unauthorized act by a principal is called _____.
Your professor has dismissed the class, and everyone is walking toward the exit. Ashton
takes out his phone and is accessing a site to see whether his favorite celebrity starlet
has been released from police custody yet. While staring intently into the phone, he
bumps into you, causing you to fall and injure your leg. Has he committed a crime, and
if so, what crime has he committed?
The standards courts use to determine violations of the Sherman Act are the rule of
reason standard and the ________ standard.