James threatens to hit Kenneth in the head with a baseball bat unless Kenneth signs a
contract agreeing to pay James $400 for his saw. Because of the threat, Kenneth signs
the contract.
a. This contract is voidable at Kenneth’s option.
b. James has committed physical duress against Kenneth.
c. This is an example of economic duress.
d. All of these.
Kohlberg believed that all people reach the third stage of moral development by
adulthood.
a. True
b. False
Jurisdiction is defined as the power or authority of a court to hear and decide a given
case.
a. True
b. False
The tort of false light imposes liability if the matter in question is objectionable to a
reasonable person, but is not necessarily defamatory.
a. True
b. False
The federal courts only have jurisdiction to hear cases involving federal law.
a. True
b. False
Participating preferred stock will:
a. share with common stock in excess earnings after preferred payments and specified
payments to common stock.
b. accumulate dividends that will be paid later.
c. participate in earnings only to the extent that all other classes do.
d. participate in earnings to the same extent as common stock.
The board determines corporate policy in a number of areas, including:
a. selecting and removing officers.
b. determining the corporation’s capital structure.
c. initiating fundamental changes.
d. declaring dividends.
e. All of these.
A defendant will be liable for all harm that can be traced back to the defendant’s
negligence.
a. True
b. False
A contractual agreement always involves either a promise exchanged for a promise or a
promise exchanged for a completed act or forbearance to act.
a. True
b. False
The minority of states require that the minor, when effecting a disaffirmance of the
contract, pay at least a reasonable amount for the use of the property or the amount by
which the property depreciated while in the hands of a minor.
a. True
b. False
Belinda has a household insurance policy, which requires that she notify the insurance
company within 30 days of any loss before she is eligible to receive payment for her
loss. The notification requirement is a condition precedent to the insurance company’s
obligation to perform, even though the notification must occur subsequent to the loss.
a. True
b. False
If an offer states that a reply must be received by a certain date, receipt is presumed in
those situations when acceptance is mailed.
a. True
b. False
If a wholesale manufacturer gets a retail outlet for its goods through merger, this is a
horizontal merger.
a. True
b. False
For a mark to be protected under federal law, it must be registered with the Patent and
Trademark Office.
a. True
b. False
A negotiation is void if the transaction in which it occurs is void.
a. True
b. False
Karen decided to sell her stair step exerciser, because she wasn’t using it as much as she
thought she would. Her friend Lydia bought it from Karen for $100. The first day that
Lydia used the exerciser, it fell apart, injuring Lydia’s ankle. Lydia:
a. can sue Karen for breach of the warranty of merchantability, because the exerciser is
not fit for the ordinary purpose intended.
b. cannot sue Karen for breach of the warranty of merchantability, because Karen did
not expressly warrant the quality of the exerciser.
c. cannot sue Karen for the warranty of merchantability because this warranty was not
implied in this situation.
d. cannot sue Karen, because they are not in privity of contract.
Administrative agencies sometimes act as if they are judicial bodies.
a. True
b. False
The Code requires that the affirmations, promises, or descriptions the seller makes be
relied on by the buyer to be an express warranty.
a. True
b. False
Controls that apply to the use of privately owned property include but are not limited to:
a. zoning.
b. eminent domain.
c. restrictive covenants.
d. All of these.
Bill orders a custom-made suit from Rooks to be delivered by Friday at 5 p.m. When
the suit is delivered to his office on Friday afternoon, he is in conference with a client.
He accepts delivery and hangs the suit in his closet. When Bill tries on the suit Saturday
evening, he discovers that the pants are cuffed. He had ordered cuffless trousers. What
can he do?
a. He cannot revoke acceptance since the cuffs are not difficult to discover.
b. He can revoke acceptance if the cuffs substantially impair the value of the goods to
him and Rooks will not remove the cuffs.
c. He can reject the goods since he had not yet accepted them prior to inspection.
d. He cannot reject the goods because the cuffs are curable.
Joanne rents a single-family house for one year starting September 1. If the house burns
down, the common law requires:
a. payment of rent only prior to the destruction.
b. payment to be suspended until the house is repaired.
c. payments to terminate.
d. payment to continue for the entire year.
The laws of the state in which a foreign limited partnership is organized govern its
organization, its internal affairs, and the liability of its limited partners.
a. True
b. False
Watson, charged with crossing the center line in his vehicle, would ordinarily have the
case heard in his states trial court of general jurisdiction.
a. True
b. False
The failure by an applicant to disclose material facts that an insurer does not know but
has a right to know is called:
a. misrepresentation.
b. concealment.
c. waiver.
d. fidelity.
Privacy protection for employees includes a federal statute prohibiting private
employers from requiring employees or prospective employees to undergo a lie detector
test.
a. True
b. False
In most states, but not under the Revised Act, cumulative voting is permissive and not
mandatory.
a. True
b. False
Because the authority given to an agent by a principal is strictly personal, an individual
agent’s death terminates the agents actual authority.
a. True
b. False
Promises made by the landlord and tenant to each other in the lease to do or not to do
certain acts are known as:
a. automatic leases provisions.
b. recordation clauses.
c. covenants.
d. reversionary clauses.
A written, integrated contract contains a provision that states it will be effective for a
“year.” The plaintiff in a lawsuit claims that a “year” is obviously 12 months. The
defendant claims that the contract meant a 10-month school year. In this case:
a. parol evidence cannot be used to explain the term, because the plain meaning of a
“year” is 12 months.
b. parol evidence cannot be used to explain the term, because it is in an integrated
document.
c. the term “year” is ambiguous, and the parties can bring in parol evidence to clarify
their intent.
d. parol evidence cannot be used, because the contract contains an express term that
could have been changed by the parties prior to the contract’s execution.
Which of the following would generally be considered to be a revenue-raising licensing
law?
a. A statute requiring that doctors be licensed.
b. A statute requiring that salespeople be licensed, but not establishing any educational
or training requirements.
c. A statute requiring public school teachers to be licensed.
d. A statute that requires insurance agents to pass a test before selling insurance in a
state.
Paul is driving a truck delivering goods for his partnership when he negligently backs
into a customer’s new car. The customer sues the partnership and recovers $11,000 in
damages. What liability do the other partners have for Paul’s actions?
a. No liability.
b. Liability based on their capital contributions.
c. Individual liability but not joint liability.
d. Joint and several liability.