Shoe Sunshine, Inc. filed for bankruptcy protection under Chapter 11 and submitted a
plan of reorganization within 120 days after filing for relief. Two of the classes of
creditors voted against the plan. However, the bankruptcy judge considered the plan to
be feasible, fair, and in the best interests of the creditors; it approved it in spite of these
creditors’ objections. This action by the judge is called a “cramdown.”
a. True
b. False
For the FTC to consider a practice to be unfair, it must meet a three-part test. Which of
the following is NOT one of those tests?
a. The practice causes a substantial consumer injury.
b. The harm of the injury outweighs any countervailing benefit.
c. The consumer had no reasonable way to recoup lost funds from the injury.
d. The consumer could not reasonably avoid the injury.
Assignment is prohibited when the obligor is agreeing to perform personal services.
a. True
b. False
Which of the following statements is accurate concerning express conditions?
a. A court will enforce any express conditions intended by the parties.
b. A court may refuse to enforce an express condition intended by the parties if the court
determines it is unfair and harmful to the general public.
c. A court requires strict performance if a clause of the contract expressly demands it.
d. A court applies an objective standard whenever ruling on a personal satisfaction
contract.
If a plaintiff is successful in proving that an auditor has violated Section 10(b) of the
1934 Securities Exchange Act, the auditor has
a. primary liability.
b. secondary liability.
c. contingent liability.
d. rebuttable liability.
Pamela hired Lena to sell her business. Lena
a. can buy the business as long as the price is fair.
b. can buy the business as long as she qualifies for financing.
c. can buy the business only with Pamela’s permission.
d. cannot buy the business under any circumstances.
Rich and Archie sign an agreement in which Archie agrees to deliver ten cases of
champagne in 5 days. The parties negotiated and meant to say in the written agreement,
delivery in 50 days. If the two cannot settle this dispute, and Archie still wants to
deliver the champagne, then Archie should sue for the remedy of
a. reformation.
b. rescission.
c. restitution.
d. reliance.
A major motion picture distributor offers to provide a television station with three very
popular, desirable films. However, as part of the agreement, the distributor requires that
the television station also purchase four films that are not very desirable. This type of
arrangement is called a
a. reciprocal dealing agreement.
b. reverter arrangement.
c. joint custody arrangement.
d. tying arrangement.
Alimony and child support obligations are considered priority claims.
a. True
b. False
A manager who first offers an opportunity to disinterested directors or shareholders who
turn it down has the right to take advantage of the opportunity herself.
a. True
b. False
Quid pro quo sexual harassment cases involve co-workers making offensive jokes, rude
comments or displaying pornographic materials, but not sexual offers or requests.
a. True
b. False
Zoe, who works as a retail clerk, wishes to talk with her co-workers about organizing a
union. Her employer forbids her from talking with other workers about union activity in
the presence of customers and threatens to fire her if she joins the union. Does the
employer have a legal right to make this threat to Zoe?
a. Yes, the employer may prohibit its employees from discussions about union
organizing.
b. Yes, but only if expressly authorized by state law.
c. No, an employee has the right of free speech at anytime.
d. No. An employee may limit the time and place of conversation, but may not threaten
to fire the employee.
Sam, the chief executive officer of Boch Industries, was prosecuted for violating the
Resource Conservation and Recovery Act. Which of the following is correct concerning
the penalties?
a. Sam cannot be criminally prosecuted for violating this statue.
b. Sam faces criminal fines as well as imprisonment.
c. Sam faces only criminal fines.
d. The only remedy Sam faces is an injunction to prevent further violations.
Bob, a house painter, contracts with Ollie to paint a rental house which Ollie owns. Bob
hires Rob to take his place as the painter on this contract. What has Bob done?
a. Made a scriveners error
b. Severed the contract
c. Delegated his duties
d. Assigned his rights
Generally, mandatory arbitration provisions in a contract are valid.
a. True
b. False
The basic distinction between a bilateral contract and a unilateral contract is that
a. only one promise is involved in a bilateral contract.
b. only one promise is involved in a unilateral contract.
c. the Statute of Frauds applies to one and not the other.
d. one is enforceable, the other is not.
George’s Wholesaling agrees to purchase 1000 pounds of bananas from Chickadee
Exports at 39 cents per pound. George’s does not have the money for the bananas now,
but promises to pay in two months. Chickadee Exports wants George’s business but
needs the money now. Chickadee (as drawer) prepares an instrument ordering George’s
(as drawee) to pay $390 to Primary Bank (the payee). This is an example of
a. a check.
b. a trade acceptance.
c. a promissory note.
d. an outstanding claim.
Jessie is the maker of a $1000 promissory note in favor of Tyler. Tyler subsequently
indorses the note to Ryan by signing just his name. Ryan in turn indorses it to Breanna
by indorsing the back of the note, “Without recourse, Ryan.” Breanna then indorses it to
Liz, the present holder.If Liz collects payment from Tyler, then Tyler can demand
payment from
a. Ryan and Breanna.
b. Ryan only.
c. Jessie only.
d. Breanna only.
Which of the following is NOT a provision of the Clean Air Act?
a. Establishment of national ambient air quality standards
b. Prevention of significant deterioration (PSD) program
c. Regulation of stationary sources
d. Consolidation of environmental regulation under one agency
An organization that does not pay income tax on its profits but passes them through to
its owners who pay the tax at their individual rates is called a
a. business corporation.
b. flow-through tax entity.
c. tax-free business venture.
d. professional corporation.
Summary judgment is appropriate when there are no essential facts in dispute.
a. True
b. False
Holt and Collins decide to have their dispute arbitrated by Corrales. Which of the
following will NOT be a result of the arbitration?
a. Corrales will render a binding decision.
b. Holt and Collins retain the right to a class action.
c. Holt and Collins give up the right to discovery.
d. Corrales need not give reasons for the decision.
The Civil Rights Act of 1964, a federal statute, forbids discrimination on the basis of
national origin in employment. The Equal Employment Opportunity Commission
(EEOC) is the administrative agency that oversees the law. The EEOC issued
Guidelines on Discrimination because of National Origin. According to one of the
guidelines, the EEOC will presume a violation of the law if an employer sets a work
requirement that employees must speak only English in the workplace. This is an
interpretive rule because it interprets the Civil Rights Act.
a. True
b. False
Hal was arrested for burning the United States’ flag in a protest of governmental policy.
His action is protected under the First Amendments guarantee of free speech because
the flag burning is considered symbolic speech.
a. True
b. False
A recent study found that more creative people tend to be less ethical. Why is this so?
a. Creative people are better at rationalizing their bad behavior.
b. Creative people don’t care about profitability.
c. Creative people are capable of coming up with more ways to be unethical.
d. Creative people are not loyal to the organization.
In a promissory estoppel case, a court will generally award
a. only reliance damages.
b. specific performance.
c. both reliance and punitive damages.
d. only nominal damages.
Which of the following is NOTrequired to establish promissory estoppel?
a. a promise made by the defendant
b. a promise made by the plaintiff in response to the defendant’s promise
c. reliance on the defendant’s promise
d. Enforcing the promise is the only way to avoid injustice.
Commonground Collections has been hired to collect past-due medical bills for
Lakeview Physicians. List some activities that Commonground may not do pursuant to
the FDCPA.
If Cub Cadet wins a trademark infringement suit by proving the defendants trademark,
Kub Kadet, is likely to deceive customers about who made the goods, Cub Cadet is
entitled to
a. up to twice the actual damages.
b. an injunction to prevent further infringement.
c. any profits Kub Kadet makes on its infringing product going forward.
d. a public apology.
If property is mislaid, the finder of the property will have a superior claim to possession
of the property against everyone except the true owner.
a. True
b. False