When measured in dollars, street crime costs society more than twice as much as
white-collar crime.
a. True
b. False
Charlene Brown has possession of a check made out to the order of Charlene Brown
(herself) which she received in payment for writing a manuscript for her publisher.
Charlene is a holder in due course and the publisher cannot claim any “real defenses to
payment. Charlene has an unconditional right to be paid for the check.
a. True
b. False
Which of the following is generally covered under casualty insurance?
a. Employee theft or embezzlement
b. Disability
c. Transportation insurance
d. Vandalism to property
Assume that Joel signs a promissory note to Andrew, who in turn negotiates the
instrument to Luke. Of the three, Joel is the only person who has primary liability.
a. True
b. False
Turtle World orders 200 small sea turtles from Reptile World. After the sea turtles had
been identified to the contract but before the risk of loss had passed to Turtle World, the
turtles were released into the ocean by a militant animal rights group who broke into
Reptile World to set the animals free. Under this scenario
a. Turtle World cannot successfully sue because the contract is void.
b. Turtle World can cover, then win a judgment against Reptile World for the difference
between the contract price and the cover price, plus incidental and consequential
damages, minus expenses saved.
c. Turtle World can successfully sue for specific performance because sea turtles are
everywhere.
d. Turtle World is entitled to a judgment for compensatory damages, but not
consequential damages.
A vertical allocation of customers or territory
a. is a per se violation of Section 1 of the Sherman Act.
b. is a rule of reason violation of the Sherman Act.
c. is not a violation of the Sherman Act.
d. is illegal if it adversely affects one party over the other.
The accounting firm of Griggs, Macon, and Fiurre audits the financial records of
Chasse, a public company. The Sarbanes-Oxley Act prohibits the accounting firm from
providing consulting services to Chasse on human resource matters.
a. True
b. False
Which of the following statements regarding the Foreign Intelligence Surveillance Act
(FISA) is true?
a. To spy on people located in the United States who are communicating abroad, the
government needs a warrant.
b. FISA was enacted in 1978, but its provisions were greatly strengthened in the
aftermath of the 9/11 terrorist attacks.
c. Under the FISA, the government does not need to notify defendants if the evidence
being used against them in court was gathered in FISA surveillance.
d. To spy on people located in the United States who are communicating abroad, the
government must obtain permission from a secret Foreign Intelligence Surveillance
Court.
Which of the following is most likely to constitute fraud?
a. A false prediction that a painting’s value will rise.
b. A false statement that a used car is “the best deal in town.”
c. A false statement that a $30,000 car attracts members of the opposite sex.
d. Silence as to a toxic waste problem on real property that the buyer would not
reasonably find.
Under Regulation D, institutions such as banks and insurance companies are considered
to be what type of investors?
a. accredited
b. unaccredited
c. restricted
d. unrestricted
Bisha created a new recipe for a sandwich spread and applied for a patent to protect her
trade secret. She is likely to receive this patent.
a. True
b. False
Wendell, new to the area, selects a doctor from the telephone book and visits that doctor
to have a splinter extracted. Unbeknownst to Wendell, the doctor has never passed the
state licensing exams. Later, when Wendell discovers the truth, he refuses to pay his
bill. If the doctor sues for recovery of the fee, will the court support the doctor’s claim?
a. Yes, it was up to Wendell to verify the doctor’s qualifications prior to having the
splinter extracted.
b. No, the court is likely to take the position that it is not in the public’s best interest to
enforce contracts with unlicensed doctors.
c. It depends on whether Wendell’s injury healed properly.
d. Yes, it is unconscionable that Wendell would not pay a bill he owed.
Criminal defendants have the right to a lawyer at all the important stages of the criminal
process.
a. True
b. False
Crops are considered identified when they are planted.
a. True
b. False
Under the UCC, a merchant is frequently held to a higher standard of conduct than a
non-merchant.
a. True
b. False
Police Officer Paul apprehends a wanted criminal and then demands the $10,000
reward offered by Crime Stoppers. Which of the following statements is true?
a. Police Officer Paul is not entitled to the reward because past consideration is never
valid consideration.
b. Police Officer Paul is entitled to the reward because he puts his life on the line every
day.
c. Police Officer Paul is not entitled to the reward because he was under a pre-existing
duty to make the arrest.
d. Police Officer Paul is not entitled to the reward but may have an argument under
promissory estoppel.
An agreement between two parties to pay a lesser amount to settle an unliquidated debt
is
a. enforceable, as there is consideration.
b. unenforceable, as there is no consideration.
c. enforceable in only some states.
d. unenforceable as a violation of public policy.
The President has the power to remove the chairperson of the Consumer Product Safety
Commission, an independent administrative agency, if the President disagrees with the
chairperson’s actions.
a. True
b. False
Sprock is a holder in due course on an instrument issued by Klingon. Which of the
following defenses could be successfully raised by Klingon?
a. Forgery
b. Prior payment
c. Breach of contract
d. Fraud in the inducement
The duty of fair representation created by the NLRA requires that
a. a union treat all members fairly, impartially and in good faith.
b. a union must pursue any members grievance against the employer.
c. an employer, in communications with employees during a union organizing effort,
must fairly represent the effects it believes a union will have on the company.
d. the NLRB certify only proposed bargaining units that it thinks the union can properly
represent.
In January, Erwin told David, his nephew, that he would give him a car when he
graduates from college. David graduated in May. If Erwin refuses to give David a car,
David can sue him for breach of an inter vivos gift.
a. True
b. False
When two parties incur the liability of a partnership without actually being partners, it
is referred to as
a. partnership by apparent authority.
b. a wrongful association.
c. a charitable partnership.
d. partnership by estoppel.
Kent Weston wrote a check for $500 payable to the order of Chester Jones. Chester
indorsed the back of the check as follows: “Chester Jones.” The check is now
a. order paper.
b. bearer paper.
c. a cashier’s check.
d. special paper.
Amy Hudson has been trying to purchase Glen Cappel’s antique desk for some time, but
Glen has been reluctant to sell. One evening Glen said to Amy, “Okay, I’ll sell the desk
for $550.” Amy replied, “Thank you, Glen. I accept.” The agreement was not reduced to
writing, but Glen and Amy did shake hands. Two days later, Amy sent Glen a letter
outlining the terms of the agreement, and stating that she would deliver $550 cash
according to the agreement within ten days. The letter was signed, “Best regards, Amy.”
Later, Amy had second thoughts, and refused to go through with the purchase. Nothing
had been exchanged at this point. Glen
a. can enforce the contract against Amy because the statute of frauds is satisfied under
this situation.
b. cannot enforce the contract against Amy because her signature was inadequate
without her last name under the statute of frauds.
c. cannot enforce the contract against Amy because he did not sign the letter.
d. can enforce the contract because they shook hands on the agreement.
A national magazine published an article about a famous television star. The television
personality is upset because the information contained in the story is not correct. If the
actress sues the magazine,
a. she will need to show that the magazine has a history of being “reckless” with facts
on a regular basis.
b. she will need to show that the magazine either knew the story was false or acted with
reckless disregard of the facts.
c. she will need to show that the magazine failed to attempt to verify the story by trying
to contact her or her agent before the story was printed.
d. she will need to show that the magazine could have discovered that the story was
false but failed to do so.
Lacy set her textbook under her chair in her business law class and then forgot to take it
with her when she left the classroom. A janitor later discovered the textbook and gave it
to the Dean of the Business College. In this situation,
a. the college is a constructive bailee, obligated to return the textbook to Lacy, and until
it does, it is liable for harm to the property.
b. the college is a bailee by agreement because holding items in a lost and found box is
generally part of the college-student agreement when the student enrolls for classes.
c. the college is responsible for the discovered textbook because in this situation, the
college is subject to implied warranties unless the college has disclaimed such
warranties in the student handbook.
d. this is a bailment for the sole benefit of the bailee.
Ralph is a professional football player. He signs a valid contract with the Jets. Later, the
Giants offer him more money, so he signs a contract with them. If the Jets sue Ralph,
what would the most likely result be?
a. The court will order Ralph to play with the Jets.
b. The court will order Ralph to play with the Jets, but Ralph is entitled to be paid the
amount he negotiated under the Giants contract.
c. The court will issue a preliminary injunction barring Ralph from playing with any
team other than the Jets during the course of the lawsuit.
d. The court will order Ralph to pay compensatory damages in the amount of the
difference between the two contracts.
Which of the following is an advantage of a corporation?
a. It is easy to form a corporation.
b. It requires little expense to form a corporation.
c. It offers limited liability for its shareholders.
d. It is a flow-through tax entity.
An Environmental Impact Statement must be prepared for every major federal action
that significantly affects the quality of the environment.
a. True
b. False
Warranty liability is the liability of someone who gives payment on a negotiable
instrument.
a. True
b. False
Ron operates a garbage pickup business. He contracts to pick up garbage from an
apartment complex for the next 52 weeks at a price of $150 per week. Unexpectedly,
the landfill center where Ron takes the garbage to dispose of it, files for bankruptcy. As
a result, Ron must travel an additional 100 miles to the nearest landfill center, turning
Ron’s expected profit into a loss of $40 per week. Ron’s best argument in support of his
petition to be discharged from the contract is
a. the mail box rule.
b. commercial impracticability.
c. frustration of purpose.
d. true impossibility.
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.
Great State Bank claimed that Wiles Accounting committed fraud in the preparation of
an audit. To hold the accounting firm liable, which of the following elements must be
established?
a. Knowledge or reckless disregard of the truth
b. A fiduciary relationship
c. Failure to exercise due care
d. An executed engagement letter