The one-year rule states that an executory contract that cannot be performed by its own
terms within one year of its formation must be in writing.
Under the False Claims Act, a whistleblower can be awarded up to 25 percent of the
amount recovered on behalf of the federal government, even if the informer has been a
co-conspirator in perpetrating the fraud.
An indictment is a charge of guilt against the defendant.
A tenant in common can sell his or her interest in the property without the consent of
the other co-owners.
A C corporation pays taxes at the corporate level and also at the shareholder level.
Secured bondholders can foreclose on the collateral in the event of nonpayment of
interest or principal.
If a magazine publishes a false statement about a public personality, it is liable for
invasion of the right to privacy.
Constructive notices are not valid against strangers who assert claims of apparent
agency.
Once a default judgment is established, the plaintiff only has to prove damages.
The Privileges and Immunities Clause prohibits states from enacting laws that unduly
discriminate in favor of their residents.
The authority to enact ordinances lies solely with the state legislatures.
Kantian ethics is based on the premise that people can use reasoning to reach ethical
decisions.
Division of markets is considered to be a type of horizontal restraint of trade.
A situation in which the value of the creditor’s collateral is insufficient to satisfy the
debt is called attachment.
Private corporations range from small one-owner corporations to large multinational
corporations such as Microsoft Corporation.
Vesting occurs when an employee has a nonforfeitable right to receive pension benefits.
The Sarbanes-Oxley Act requires CEO and CFO certification for annual and quarterly
reports.
The Organization of the Petroleum Exporting Countries (OPEC) sets quotas on the
output of oil production by its individual member nations.
Closed shop security agreements are illegal in the United States.
If Jim purchases an online license for a computer game, he is an e-licensor.
Registered accounting firms that audit more than 100 public companies annually are
subject to inspection and review by the Public Company Accounting Oversight Board
(PCAOB) once a year.
Dual agency occurs when an agent acts for two or more different principals in the same
transaction.
A person charged with a crime in the United States is presumed guilty until proven
innocent.
The relevant geographical market is always considered statewide.
Federal antidiscrimination laws prohibit employers from engaging in retaliation against
an employee for filing a charge of discrimination.
LLCs are treated as artificial persons who can sue or be sued and enter into and enforce
contracts.
A principal is liable for the intentional and innocent misrepresentations made by an
agent acting within the scope of his or her employment.
Software developers and other computer professionals cannot claim overtime pay.
The Clean Air Act authorizes the EPA to regulate air pollution caused by fuel and fuel
additives.
The term scienter refers to the knowledge that a representation is false or that it was
made without sufficient knowledge of the truth.
Only outstanding shares have the right to vote.
Police power permits states and local governments to enact laws to protect or promote
the public health, safety, morals, and general welfare.
The SEC has oversight and enforcement authority over the Public Company Accounting
Oversight Board (PCAOB).
Predatory pricing has been held to violate Section 2 of the Sherman Act.
If a person believes that he or she has been discriminated against in the workplace, he
or she cannot immediately file a lawsuit against the employer.
Fiduciary duties of directors and officers of a corporation include the duty of loyalty
and the duty of care.
Which of the following is true of an environmental impact statement (EIS)?
A) It is not required by state or local laws, only federal law.
B) It can be challenged in court by environmentalists or other interested parties.
C) It can only be accepted after the U.S. Congress passes a bill adopting the EIS.
D) It is not required for projects undertaken by private parties.
The ________ is a federal statute, enacted in 1890, that makes certain restraints of trade
and monopolistic acts illegal.
A) Federal Trade Commission Act
B) Robinson-Patman Act
C) Clayton Act
D) Sherman Act
Which of the following elements constitutes an affirmative defense by an employer
whose employee has suffered sexual harassment at the workplace?
A) The plaintiff-employee was harassed by other employees who are no longer
employed by the employer.
B) The employer had no knowledge about the sexual harassment faced by the
plaintiff-employee until a court notice was served on the employer.
C) The plaintiff-employee failed to take advantage of any preventive or corrective
opportunities provided by the employer.
D) The plaintiff-employee misinterpreted words or actions by the employer or his
employees which were not intended to cause sexual harassment.
Courts apply the ________ in determining whether an arrangement is an investment
contract.
A) Howey test
B) misappropriation theory
C) strict scrutiny test
D) intermediate scrutiny test
Which of the following branches of the United Nations (UN) is primarily responsible
for maintaining international peace and has authority to use armed force for this
purpose?
A) the General Assembly
B) the Secretariat
C) the Security Council
D) the International Court of Justice (ICJ)
Which of the following is a federal government mandate under the Nuclear Waste
Policy Act?
A) to set standards for radioactivity in the environment
B) to select a permanent site for the disposal of nuclear wastes
C) to regulate thermal pollution from nuclear power plants
D) to use wetlands for nuclear waste disposal
Which of the following is true of an undisclosed agency?
A) The third party has no knowledge of the agency.
B) The third party knows the agent, not the principal.
C) All transactions with the third party are made by the principal without involving the
agent.
D) Transactions under the agency are considered unlawful.
Rita Fuller and Robert Morgan are contending parties to a lawsuit involving the
division of the inheritance from their grandmother. They wish to settle their case out of
court. Rita and Robert engage in discussions and bargaining in the presence of their
attorneys and finally conclude that Robert keeps 60 percent of the inheritance and Rita
gets the remainder. In this scenario, the ________ method of alternative dispute
resolution is used.
A) negotiation
B) arbitration
C) mini-trial
D) mediation
Decisions of the ________ are final unless a question of law is involved that is
appealable to the U.S. Supreme Court.
A) courts of appeals
B) courts of records
C) highest state courts
D) general-jurisdiction trial courts
Which of the following is true of price fixing?
A) It is a reasonable violation of Section 1 of the Sherman Act.
B) It is a process seen exclusively among sellers of goods and services.
C) It is permissible as it helps consumers or protects competitors from ruinous
competition.
D) It includes fixing the quantity of a product or service to be produced or provided.
Mary buys a new toaster for $500. The toaster’s label bears a disclaimer stating that the
manufacturer is not liable for consequential damages. One morning while Mary is using
the toaster, it emits sparks and damages the electrical wiring in the kitchen. The
electrician tells Mary that the toaster malfunctioned and that the cost of repairs in her
kitchen would amount to $2,000. What amount of monetary damages can Mary likely
recover from the manufacturer of the toaster?
A) $500
B) $2,500
C) $2,000
D) No monetary damages can be recovered.
________ refers to jurisdiction that allows a plaintiff who obtains a judgment in one
state to try to collect the judgment by attaching property of the defendant located in
another state.
A) In rem jurisdiction
B) In personam jurisdiction
C) Private jurisdiction
D) Quasi in rem jurisdiction
Which of the following violates Section 10(b) of the Securities Exchange Act of 1934
and SEC Rule 10b-5?
A) nonexemption status
B) scienter
C) a lack of due care
D) negligence
An arrangement where an owner of real property borrows money from a lender and
pledges the real property as collateral to secure the repayment of the loan is known as
________.
A) consignment
B) foreclosure
C) a mortgage
D) an assignment
Which of the following methods is used to appoint a manager of a manager-managed
LLC?
A) appointment by the secretary of state
B) majority vote of the members
C) unanimous vote of members
D) unanimous vote of shareholders
According to the coming and going rule, what is the liability of the principal for injuries
caused by its agents and employees while they are on their way to or from work?
A) complete liability
B) vicarious liability
C) limited liability
D) no liability
Which of the following standards have most states adopted regarding accountant
liability for negligence to third parties?
A) the Ultramares doctrine
B) the foreseeability standard
C) Section 552 of the Restatement (Second) of Torts
D) the due diligence standard
Which of the following horizontal restraints of trade has the element of monopoly in it?
A) conscious parallelism
B) market sharing
C) group boycott
D) exchange of nonprice information
________ provides that an accountant’s work papers cannot be used against his or her
client in a court action.
A) Work product immunity
B) The accountant-client privilege
C) The foreseeability standard
D) The Noerr Doctrine
Which of the following statements about adverse possession is true?
A) Adverse possession requires the delivery of a deed.
B) Adverse possession covers all property, including those owned by federal and state
governments.
C) Adverse possession requires continuous and uninterrupted occupancy of the
property.
D) Adverse possession covers only voluntary occupancy obtained with the express or
implied permission of the owner.
A ________ statute requires a mortgage or deed of trust to be recorded in the county
recorder’s office of the county in which the real property is located.
A) recording
B) real property
C) mortgage
D) compilation
Henry is undergoing a surgery at Sacred Heart Hospital to insert an artificial pacemaker
that will keep his heartbeat regular. The pacemaker is manufactured by Benford, Inc. In
this case, Dr. DeBenedetto, the surgeon, is considered as the dominant element. In the
event that the pacemaker fails to function as expected after the surgery, who would be
strictly liable for its failure?
A) Benford, Inc.
B) Dr. DeBenedetto
C) Henry
D) Sacred Heart Hospital
Which of the following contracts is required to be in writing in most states?
A) contracts for the sale of goods priced at $100
B) contracts for the lease of goods with payments of $500
C) promises to transfer an ownership interest in real property
D) handshake deals
________ are written questions submitted by one party to a lawsuit to another party.
A) Depositions
B) Rejoinders
C) Interrogatories
D) Summons
Which of the following is true of a limited partnership agreement?
A) It must provide that all partnership transactions be approved by all partners.
B) It does not contain information about dissolution of the partnership, since it is an
agreement of formation.
C) It must provide that general and limited partners have equal voting rights.
D) It sets forth the terms and conditions regarding the termination of the partnership.
Which of the following is true of seeking injunctions on consumer products that violate
the Consumer Product Safety Act (CPSA) or Consumer Product Safety Commission
(CPSC) rules?
A) Only the CPSC can seek an injunction once a private party has lodged a complaint
with it.
B) Only the CPSC can sue for an injunction when CPSC rules are violated.
C) A private party can sue for an injunction to prevent violations of the act or of CPSC
rules and regulations.
D) Injunctions cannot be pursued on products that have not yet been sold or marketed.
Which of the following is true of covenants and conditions?
A) A covenant is a conditional promise to perform.
B) A conditional promise becomes a covenant if the condition is met.
C) A contract cannot contain conditions that excuse performance.
D) A party cannot sue the other party for breach of a covenant.
A(n) ________ clause in an international contract designates which nation’s laws will
be applied in deciding a dispute arising out of the contract.
A) equal protection
B) supremacy
C) forum-selection
D) choice of law
Which of the following is true about dividends?
A) Dividends are paid at the discretion of the shareholders.
B) Dividends cannot be used for corporate purposes.
C) Dividends will be paid to shareholders who have sold their shares prior to the record
date.
D) Dividends in cash or property, once declared, cannot be revoked.
________ is a doctrine that raises a presumption of negligence and switches the burden
to the defendant to prove that he or she was not negligent.
A) Res ipsa loquitur
B) Negligence per se
C) The doctrine of proximate cause
D) The doctrine of comparative negligence
The majority of cases involving international law disputes are heard by ________.
A) the International Court of Justice (ICJ)
B) the World Court
C) national courts
D) the United Nations (UN)
The Securities and Exchange Commission (SEC) is an administrative agency composed
of five members who are appointed by the ________.
Explain the liabilities of general and limited partners in a limited partnership.
The Due Process Clause of the ________ Amendment applies to federal government
action.
The Securities and Exchange Commission (SEC) provides a(n) ________ which allows
a person who provides information that leads to a successful SEC action to receive 10
percent to 30 percent of the money collected over $1 million recovered by the SEC.
Give an account of express warranties.
________ occurs when (1) a certificate of limited partnership is not properly filed, (2)
there are errors in a certificate that is filed, or (3) some other statutory requirement for
the creation of a limited partnership is not met.
________ refers to a court’s jurisdiction over the parties to a lawsuit.
Distinguish between strikes and picketing. When is picketing lawful?
Article 2 of the UCC governs ________.
In a destination contract, the ________ bears the risk of loss of the goods during their
transportation.
A statement that negates express and implied warranties is known as a ________.
In a joint tenancy, upon the death of one of the co-owners, or joint tenants, the deceased
person’s interest in the property automatically passes to the remaining joint tenant or
joint tenants. This is due to the co-owners’ ________.
Discuss mail fraud and wire fraud.
In 1935, Congress established a(n) ________ to assist workers who are temporarily
unemployed.
Explain the basic requirements that must be met for a contract to be enforceable.
The World Wide Web consists of millions of computers that support a standard set of
rules called ________ for the exchange of information.
Describe the operation of a fully disclosed agency.
________ is a form of negotiation in which a neutral third party assists the disputing
parties in reaching a settlement of their dispute.
The act of others joining as parties to an existing lawsuit is called ________.