The U.S. Congress enacted the Federal Arbitration Act to promote the arbitration of
disputes.
A shareholder loses the ability to exercise the appraisal right by voting in favor of the
proposed action.
Both the buyer and seller of goods can have an insurable interest in the same goods at
the same time.
If an offeree first dispatches a rejection and then sends an acceptance, the mailbox rule
applies to the acceptance.
Accidents that occur while the employee is at an off-premises restaurant during his or
her personal lunch hour are not covered by workers’ compensation.
As established by the United States Constitution, the legislative branch of government
(the United States Congress) has the power to enforce the law.
Professional corporations have normal corporate attributes, and are formed like other
corporations.
C.I.T. is a pricing term that indicates the cost for which the seller is responsible.
NASDAQ has the largest trading volume of any securities exchange in the world.
An employee might or might not also be an agent of the employer.
Most real property is subject to larceny.
The primary purpose of commercial paper is to act as a substitute for money.
A good faith purchaser for value can receive goods with void title.
Conglomerate mergers are mergers between companies who each have no greater than
$500,000 in assets.
The UN Security Council is composed of all UN member nations.
In order for a contract to be considered against public policy, it must be in violation of a
statute.
The word “apple” cannot be trademarked because it is a generic name.
Electronic contracts are not covered by the UCC.
In an assignment of contract rights, the assignee takes no better rights under the contract
that the assignor had.
In an auction without reserve, the bidders are the offerors, and the seller is the offeree.
A holder who does not qualify as a holder in due course in his or her own right becomes
a holder in due course if he or she acquires the instrument through a holder in due
course. This is called the “transference” principle.
Josh buys a home and finances it through Smyrna National Bank with a Deed of Trust.
Smyrna National Bank has legal title to the home.
An insurer may not be held liable under any circumstances for refusing to settle a case,
because that decision is within the sole discretion of the insurer.
If the parent corporation owns 51 percent or more of the outstanding shares of the
subsidiary corporation, a short-form merger procedure may be followed to merge the
two corporations.
“Certificate of limited partnership” and “articles of limited partnership” are synonymous
terms referring to the same document.
In general, a party must wait until the trial to find out the facts of the other party’s case.
The special federal courts established by Congress have unlimited jurisdiction.
“Right-to-work” laws are federal statutes enforcing the United States Constitution’s
“equal protection” clause.
If a person pickpockets somebody’s wallet, this constitutes the crime of robbery.
Generally accepted accounting principles specify the methods and procedures that must
be used to conduct audits.
A government rule that permits persons of one race but not of another race to receive
government benefits such as Medicaid would violate the ‘strict scrutiny” test of equal
protection.
Many of the OSHA standards are ________ duty standards.
A) conditional
B) general
C) specific
D) industrial
E) unconditional
The Uniform Commercial Code places the risk of loss on an incomplete check on the:
A) drawer.
B) drawee.
C) payee.
D) maker.
E) accommodation party.
What is the significance of the term “preferred” in reference to the term “preferred
stock?”
A) It is generally considered to be a worse investment than common stock.
B) Preferred stockholders usually have greater voting rights than common stockholders.
C) In the event of corporate liquidation, holders of common stock are paid before
holders of preferred stock.
D) In the event of corporate liquidation, preferred stockholders receive certain
preferences over common stockholders with respect to dividends or assets.
E) Only shareholders owning a certain minimum amount of common stock are entitled
to purchase preferred stock.
When a business makes a promise of performance that it knows the law will not
enforce:
A) the business has violated ethics by making the promise knowing that it is
unenforceable.
B) the promise will be enforced if it can be shown that it would be unethical to not do
so.
C) the promise will not be enforced, but the business will be liable for the ethical
violation.
D) a court will generally not enforce the promise, even if the court recognizes that the
business made an ethical violation by not keeping the promise.
E) The promise will be enforced and the business will be legally liable for the ethical
violation.
Jon is a holder in due course of a negotiable instrument and gives the instrument to
Sarah as a Valentine’s Day gift.
A) Sarah is a holder in due course.
B) Sarah is not a holder in due course but has the rights of a holder in due course.
C) Personal defenses would be successful against Sarah.
D) Sarah has become the payee of the instrument.
E) Anyone Sarah transfers the instrument to becomes a holder in due course.
When a statute is enacted dealing with abortion or pornography, this would be an
example of which function of law?
A) encouraging individual justice
B) facilitating planning
C) keeping the peace
D) shaping moral standards
E) maintaining the status quo
Truth Accounting, Inc. has been retained to perform an audit for a client. In doing the
Audit, it fails to discover an embezzlement that has gone on for two years by the client’s
chief financial officer. The reason that Truth Accounting, Inc. failed to discover the
embezzlement was because the auditor was in a rush to finish due to being too busy, so
she did not conduct a reasonable investigation. Soon after the audit, the embezzlement
is discovered, and the client goes bankrupt. If Truth Accounting, Inc. is sued, which of
the following theories of liability apply?
A) the Ultramares doctrine
B) Section 552 of the Restatement (Second) of Torts
C) negligence
D) the foreseeability standard
E) strict liability
What is the correct order, from greatest rights to least rights, of the rights acquired by a
finder upon discovering the following kinds of property?
A) lost property, abandoned property, mislaid property
B) abandoned property, lost property, mislaid property
C) mislaid property, lost property, abandoned property
D) mislaid property, abandoned property, lost property
E) abandoned property, mislaid property, lost property
Copyrights owned by businesses are protected for:
A) 70 years from the year of creation.
B) 70 years from the date of first publication.
C) 95 years from the date of first publication or 120 years from the year of creation,
whichever is shorter.
D) 95 years from the date of first publication or 120 years from the year of creation,
whichever is longer.
E) the life of the business plus 70 years.
Sam had just finished a great day of skiing as he walked toward the parking lot with his
skis over his shoulders. While waiting to cross at a crosswalk, a car’s horn honks down
the street. He suddenly turns to see where the sound came from, and in doing so his skis
swing around and hit Pam in the head, injuring her. Which of the following, if true,
would give Sam the best chance of avoiding liability to Pam?
A) Sam did not intend to harm anyone when he turned to see the source of the sound.
B) The driver of the car violated an anti-noise ordinance in blowing the horn.
C) Pam had planned to cross the crosswalk as soon as traffic allowed, rather than wait
for the “walk” light to indicate that it was safe to do so.
D) Pam had been walking behind Sam for several hundred yards and had observed that
Sam, on several occasions, had nearly struck other persons as he carried his skis.
E) Sam was exhausted and would not be charged with a duty of due care.
What is voir dire?
A) The jury deliberation process in a trial.
B) The U.S. Supreme Court’s case selection process.
C) The jury selection process in a trial.
D) A discovery method to learn about the other party’s case.
E) A motion to dismiss a case.
What are the two primary duties of insurers to their insured?
A) pay legitimate claims, and act to minimize losses to the insured
B) pay legitimate claims, and make sure the insured purchases appropriate and adequate
levels of insurance
C) pay legitimate claims, and make sure that the proceeds paid for claims are properly
used
D) pay legitimate claims, and defend the insured against lawsuits brought in connection
with claims covered by the policy
E) minimize risks to the insured, and provide reasonably-priced coverage
Which of the following does not revoke a will, either wholly or partially?
A) a properly-executed subsequent will
B) divorce
C) a child born after the will is executed
D) an action by the testator destroying the will
E) annulment
Do merchant-sellers bear the same risk of loss under carrier cases and noncarrier cases?
A) Yes, in both cases the merchant bears the risk of loss.
B) Yes, in both cases the merchant does not bear the risk of loss.
C) No, in carrier cases the merchant always bears the risk of loss, but in noncarrier
cases the merchant does bear the risk of loss.
D) No, in carrier cases the merchant may not bear the risk of loss, but in noncarrier
cases the merchant will always bear the risk of loss.
E) No, merchant-sellers do not bear the same risk of loss under carrier and noncarrier
cases but it depends on whether the buyer is a merchant too.
Assume that a state passes a statute that prevents the disclosure of the horsepower of
automobile engines. The purpose of this law is to prevent the car companies from trying
to market cars with more horsepower than those of their competitors. This statute would
most likely be found:
A) constitutional under the state police power.
B) an unconstitutional restriction of commercial speech.
C) to violate the Equal Protection Clause under intermediate scrutiny.
D) to violate substantive due process.
E) to violate procedural due process.
Pat Painter contracts to paint Harry Homeowner’s home for $6,000. Pat would supply
all materials at a cost to Pat of $1,000. Harry breaches by refusing to let Pat paint the
house, which Pat found out before spending any money on the materials. Pat is able to
find another job that nets a profit of $4,200 during that same time that Harry’s house
was to be painted. How much can Pat recover from Harry in damages?
A) $0
B) $800
C) $1,800
D) $3,200
E) $5,000
The UCC applies to a mixed sale of goods and services:
A) whenever a sale of goods is a part of the transaction.
B) only if there is no service involved.
C) if the sale of the goods is the predominant part of the transaction.
D) only if the contract provides that the UCC applies.
E) for any mixed sale, but only if the breach was related to the good and not the service.
There were some trees growing that were cut down and cut into lumber, and used to
build a house. What type of property were the trees while growing, as lumber, and as
part of the house, respectively?
A) real, real, real
B) personal, real, real
C) personal, personal, real
D) real, real, personal
E) real, personal, real
Resale price maintenance occurs when:
A) a retailer refuses to lower its price, even though competitors have lowered their
prices.
B) a wholesaler refuses to offer volume discounts to its high-volume customers.
C) a manufacturer sells its products only to those dealers who agree to charge a certain
price for the product’s resale.
D) a manufacturer sells its products to its dealers for the same price in all states, even
though the retail market is much more competitive in some states than in other states.
E) competitors agree to sell their products for the same price.
Why is it legally permissible for a plaintiff to hold an agent liable on a contract when
the existence of the agency arrangement was not disclosed?
A) so that the outcome in a contract situation is the same as that for a tort
B) to discourage the use of undisclosed agency arrangements
C) to offset the fraud frequently present in such a situation
D) so a third party can rely exclusively on the reputation of the agent when entering
into such an agreement
E) to ensure that the principal fulfills its obligations under contracts negotiated by
authorized agents
The right of ________ requires the mortgagor to pay the full amount of the debt
(principal, interest, and other costs) incurred by the mortgagee because of the
mortgagor’s default.
A) ademption
B) circumvention
C) intervention
D) redemption
E) prevention
Article I of the United States Constitution establishes the ________ branch of
government, Article II establishes the ________ branch of government, and Article III
establishes the ________ branch of government.
A) executive; judicial; legislative
B) judicial; legislative; executive
C) legislative; executive; judicial
D) legislative; judicial; executive
E) executive; legislative; judicial
Sandy signs a negotiable instrument that orders Sally to pay $1,000 to the order of Pat
on May 4, 2011. What type of instrument is this?
A) a promissory note
B) a time draft
C) a check
D) a sight draft
E) a money order
Short-swing profits are profits made through the buying and selling of a security by a
statutory insider occurring within ________.
A) one month
B) three months
C) six months
D) nine months
E) twelve months
Under Article 2 of the UCC, what happens to the risk of loss when a buyer breaches a
contract by refusing to take delivery of conforming goods?
A) The buyer bears the risk of loss, but only for a commercially reasonable time.
B) The buyer bears the risk of loss permanently.
C) It shifts back to the seller if it had already shifted to the buyer.
D) The buyer bears the risk of loss, but only in the case of an unjustified breach.
E) The risk is on the buyer but only for a maximum by law of 7 days.
For purposes of determining the enforceability of contracts, licensing statutes can be
divided into what two general categories?
A) professional and non-professional
B) actual and quasi
C) permanent and temporary
D) revenue-raising and regulatory
E) mandatory and optional
What are the primary sources in the United States Constitution of the federal
government’s power over international affairs?
A) the Commerce Clause and the Treaty Clause
B) the Commerce Clause and the Privileges and Immunities Clause
C) the Treaty Clause and the Police Power Clause
D) the Treaty Clause and the War Powers Clause
E) the Privileges and Immunities Clause and the Supremacy Clause
Lori just purchased a brand new lawnmower for $500. When she got home and tried to
use it, it would not work. She became angry and shouted, “I’d sell this thing for $50.”
Her neighbor heard her and said, “I’ll take it,” and offered Lori the $50 in cash. Which
of the following best describes this situation?
A) This is an enforceable bilateral contract.
B) This is an express contract.
C) If Lori sells the lawnmower for $50, it would be a case of unjust enrichment.
D) This situation does not result in the creation of a contract, because it would not
objectively be believed that Lori was offering to sell her lawnmower for $50.
E) Contract formation in this case depends on whether the neighbor subjectively
thought Lori was serious.
If no time is stated in the offer, for how long is an offer open?
A) ten days
B) one month
C) fourteen days
D) six months
E) for a reasonable time dictated by the circumstances
A debtor and a creditor can enter into a(n) ________ agreement, whereby the debtor
agrees to pay the creditor for a debt that is dischargeable in bankruptcy.
A) confirmation
B) affirmation
C) reaffirmation
D) novation
E) renovation
Straight bankruptcy is another term for:
A) discharge bankruptcy.
B) liquidation bankruptcy.
C) reorganization bankruptcy.
D) a consumer debt adjustment.
E) loss bankruptcy.