In Hernandez v. Arizona Board of Regents, the court held that individuals who:
a. intentionally provide alcohol to minors can be liable for negligence to injured third
parties.
b. intentionally provide alcohol to minors cannot be held liable for negligence to injured
third parties.
c. carelessly provide alcohol to minors can be held liable for damages for resulting
injury to third parties.
d. none of the above.
Harold and Zack have pooled their money together to buy real estate but have filed no
formal papers to form a business. Harold, a lawyer, handles all the legal matters and
Zack, a real estate broker, finds buyers for the property they have subdivided. Harold
and Zack are engaged in a:
a. partnership.
b. close corporation.
c. limited liability company.
d. business trust.
Under a contract for the sale of land, the statute of frauds:
a. does not apply if the purchase price for the land is less than $500.
b. requires that the entire agreement be in one single document.
c. requires the defendant to sign the agreement.
d. does not apply if the total price of the land is to be paid in less than one year..
In which of the following cases will the federal accountant-client privilege protect the
information from being disclosed?
a. A criminal case.
b. A case involving the SEC.
c. A case concerning the preparation of tax returns.
d. A civil fraud case involving the IRS.
In January, Alex promised to pay Y-K Inc. $5,000 if it would refrain from filing suit
against him on a breach of contract action. Y-K agreed and accepted a $5,000 check
from Alex. Which of the following statements is correct?
a. Y-K’s promise to refrain from suing Alex was not supported by legal consideration.
b. Y-K’s promise to refrain from suing Alex was supported by legal consideration and is
enforceable.
c. This is an accord and satisfaction, and Y-K cannot sue.
d. The courts would apply promissory estoppel in this situation.
Which of the following may be legitimate nondiscriminatory criteria for selection of an
employee?
a. age.
b. race.
c. color.
d. educational level.
Bruce tells his son, “You can have my 1990 truck, but if your grades fall, Im taking it
back. Bruce:
a. has made no gift.
b. has made a “revocable gift, which is effective as a gift as long as the stated condition
is met.
c. intended to transfer ownership.
d. has made a constructive gift.
The executives of Jornaginn Corporation have decided they need to sell 50,000
additional shares of stock to finance their expansion plans. The executives:
a. cannot sell that many shares unless they were authorized initially in the corporate
charter.
b. can sell as many shares as the market will bear.
c. are limited by the number of shares authorized in the corporate charter, but this
number can be increased by amending the charter and paying a fee.
d. can sell the shares only if the shares have a par value which is close to the current
market price.
Contracts that do not arise from mutual agreement but are created by courts to avoid
unjust enrichment are:
a. express contracts.
b. implied contracts.
c. quasi-contracts.
d. unilateral contracts.
Tracy is an “at will” employee of Zebra Toy Company. One afternoon she has lunch
with a friend who works in marketing for her company’s biggest competitor, Tiger Toys.
Over a period of about three months, Tiger Toy representatives convince Tracy to work
with them. Tiger offers a larger base salary with bigger commissions than she had with
Zebra. When Tracy leaves Zebra, it sues Tiger Toys claiming it intentionally interfered
with a contractual relationship. Will Zebra Toy Company be successful?
Kylie filed a Chapter 7 bankruptcy petition in which she exempted her home, valued at
$125,000. Kylie can exempt her entire home from all creditors if:
a. she claims her exemptions under the federal Bankruptcy Code.
b. she lives in a state that allows for an exemption amount of $125,000 or more.
c. she lives in a state that allows an exemption amount of $125,000 or more, she has
lived in that state for at least two years prior to the bankruptcy, and there are no secured
creditors with perfected liens against the home.
d. None of the above.
A donee beneficiary:
a. is not entitled to enforce a contract against either party.
b. usually does not give consideration in return for the gift.
c. will generally become a creditor beneficiary after his or her rights vest.
d. is an incidental beneficiary.
The most accurate statement regarding appellate courts is:
a. appellate courts often hear new evidence and testimony.
b. appellate courts generally accept the factual findings of the trial court.
c. only the federal court system has appellate courts.
d. appellate courts hear only criminal cases.
Which of the following is/are generally subject to a standard of strict liability for bailed
goods?
a. Contract carriers and common carriers.
b. Common carriers and innkeepers.
c. Common carriers.
d. Contract carriers.
What is the ratio for a putative damage to be awarded?
a. 50% of the compensatory award
b. 9 times the compensatory award.
c. 1% the value of the company or individual being penalized
d. 100 time the compensatory award
To prove a disparate treatment case: the plaintiff must:
a. only show a presumption that discrimination occurred.
b. show that any reasoning presented by the defendant is just a pretext, not legitimate
reasons for the treatment.
c. provide a witness who testifies that the defendant intentionally discriminated.
d. prove that the defendant has discriminated similarly in the past.
Most new law is created by
a. Stare decises
b. The Supreme Court
c. Statutes
d. Committees
Which of the following statements express the purpose of the Truth-in-Lending Act?
a. To require lenders to charge a “reasonable” rate of interest.
b. To help small business.
c. To provide consumers with information necessary to make the best credit decision.
d. To help lenders limit state laws.
Charles and Ellen, an unmarried couple, run an ice cream store. The business is not
incorporated and they have filed no formation papers with the state. Their business is a:
a. sole proprietorship.
b. partnership.
c. joint venture.
d. limited liability company.
The European Union
a. Eliminated travel restrictions between member nations
b. Sets union wide standards for trade restrictions.
c. Has a common currency that not all countries have adopted.
d. All of these answers are true
What is ethics
a. Always telling the truth
b. The study of how people should act
c. Following the law
d. none of these answers is true
Which of the following is not a provision of the Sarbanes-Oxley Act of 2002?
a. Congress established the Public Company Accounting Oversight Board, which has
the authority to regulate public accounting firms, establishing audit rules and ethics
guidelines.
b. After five years with a client, the lead audit partner must rotate off the account for at
least five years.
c. Congress established the American Institute of Certified Public Accountants to
develop ethical guidelines in a Code of Professional Conduct.
d. Auditors must communicate regularly and completely with audit committees of their
clients and must describe options the firm considers in preparing financial statements.
Which of the following statements is correct?
a. Violent street crime results in a greater monetary loss to society than white-collar
crime.
b. White-collar crime results in a greater monetary loss to society than violent street
crime.
c. Studies are not able to calculate the estimated value of white-collar crime since most
white-collar crime is never publicly disclosed.
d. Studies are not able to accurately calculate the estimated value of either violent street
crime or white-collar crime.
Kathleen filed for voluntary bankruptcy and the automatic stay went into effect. The
automatic stay:
a. acts to automatically discharge Kathleen’s debts.
b. stops any and all acts to collect, assess, or recover a claim against Kathleen that arose
before she filed bankruptcy.
c. stops only secured creditors from taking any act to collect, assess, or recover a claim
against Kathleen that arose before she filed bankruptcy.
d. stops creditors from trying to collect from Kathleen, but it does not stop them from
filing lawsuits against her.
An accountant is liable for fraud to:
a. only her client.
b. only her client and any known user of her information.
c. any foreseeable user of her work product who justifiably relied on it.
d. any third party who used the information contained in her work product.
Wright Company contracted with the city of St. Louis to train and employ
disadvantaged youths. If Wright fails to fulfill the contract and is sued by one of the
disadvantaged youths, the youth would:
a. win, as he is an intended beneficiary.
b. win, as he is a donor beneficiary.
c. lose, as he is a creditor beneficiary.
d. lose, as he is an incidental beneficiary.
The United States and Argentina have signed the Convention on Contracts for the
International Sale of Goods (CISG). Oxtron, Inc., a U.S. company, and Leer, an
Argentinean company, have entered into a contract under which Oxtron is to ship
medical devices to Leer. The contract does not include a choice of law provision. The
contract will be governed by:
a. the CISG.
b. the UCC.
c. the domestic contract law of Argentina.
d. the domestic contract law of the United States.
Employees of Mega Corp. have gone out on strike seeking better pay. Mega Corp.
announces that if the union does not end the strike it will begin hiring replacement
workers. Which statement is correct?
a. Hiring replacement workers during a strike is an unfair labor practice.
b. Mega Corp can only hire replacement workers if the collective bargaining agreement
expressly gives the company the right to do so.
c. Mega Corp can only hire replacement workers if it gives the union 14 days’ notice
prior to actually bringing in the replacement employees.
d. Mega Corp can hire replacement workers at any time during a strike.
Federal jurisdiction based upon a “federal question” includes cases based on:
a. the United States Constitution.
b. a federal statute.
c. a federal treaty.
d. All of the above.
Fact Pattern 40-1
John purchased $600 worth of clothes from Clothing Mart. He paid for the clothes with
a credit card. When he received his statement, he sent the credit card company a check
for $600. The credit card company mistakenly recorded his payment as $60. When John
received his next statement, he noticed the $540 error and contacted the credit card
company.
A few days later when he attempted to use his card to buy gasoline, he was told by the
cashier that the card had been canceled and she was instructed to take his card. John
was shocked, embarrassed, and angry. When he contacted the credit card company, it
pointed out a provision in his initial contract for the card that stated the company could
revoke his card privileges at any time with or without cause.
Such a provision within the credit card contract is:
a. unconscionable.
b. an illegal contract of adhesion.
c. not binding, as a person cannot waive the statutory rights granted to him by federal
credit card legislation.
d. valid unless state legislation prohibits such clauses.
Does ethical behavior maximize profitability?
a. Yes, there is concrete evidence that ethical behavior maximizes profitability.
b. No, there is concrete evidence that unethical companies outperform ethical
companies.
c. Although there is no guarantee that ethical behavior pays in the short or long run,
there is evidence that the ethical company is more likely to win financially.
d. There is strong evidence that ethical behavior pays financially in the long run, but not
in the short run.
Curtis filed a lawsuit against Ulhoff for failure to repay $1,000 according to the terms
of a promissory note. The trial ended before it began, with the trial judge granting a
motion for summary judgment in favor of Curtis. Ulhoff has appealed, and the Supreme
Court of Iowa has remanded the case. This means:
a. Curtis automatically wins because he won in the lower court.
b. Ulhoff automatically wins because he lost in the lower court.
c. Neither party wins because the case is being thrown out.
d. We don’t know who wins yet because the case is being returned to the trial court for
additional steps.
Under the federal legislation known as OSHA:
a. employers must keep records of all workplace injuries.
b. employers must keep records of positive results of workplace drug tests.
c. employees must keep their work area free from recognized hazards.
d. employers may monitor workers e-mail messages if the monitoring is done in the
ordinary course of business and the employer provides the e-mail system.
An express warranty?
a. is one that the seller creates with his words or actions.
b. is a contractual assurance that goods will meet certain standards
c. can be created by the act or words of the seller
d. all of these answers are true.
The Fair Labor Standards Act includes the minimum wage laws.
Generally, filing bankruptcy stops the collection activity of creditors.
3Discuss the pros and cons of whole life (or straight life) insurance.
Under the laws of most states, a corporation cannot be held responsible for committing
crimes.
Emails and their attachments are not subject to pretrial discovery.
The 1934 Act requires companies with a class of stock that is publicly traded to make
regular filings with the SEC.
In order for a plaintiff to win a case involving intentional infliction of emotional
distress, she must prove the defendant acted in an extreme and outrageous manner.
Employers must have written permission from job applicants to request a credit report.
Remedies under title VII include unlimited punitive damages.
Generally, managers that make informed decisions will not be liable even if their
decision turned out badly.
The Magnuson-Moss Warranty Act only covers face-to-face sales, not catalog or
Internet sales.
The only defense available to a defendant in a per se violation is that the violation never
occurred.
If a trademarked name acquires a generic meaning, the owner of the trademark loses
protection.
Identify and discuss six values that are almost universal.
When you surf the Internet, information, much of which is anonymous, is collected
about you.
Kenneth was exposed to radiation on his job in an environmental cleanup. In a lawsuit
against his employer, the court must decide the full extent of both present and future
damages rather than allowing Kenneth to return to court years later if medical problems
develop at that time.