The National Strike Board prevents employers and unions from engaging in illegal and
unfair labor practices.
John Locke and Jean-Jacques Rousseau proposed a ‘social contract” theory of morality.
Legal scholars following the Historical School of jurisprudence look to past legal
decisions (precedent) to solve contemporary problems.
An accommodation party who signs an instrument guaranteeing payment is secondarily
liable on the instrument.
Acceptance of goods can be revoked in fewer circumstances than goods can be initially
rejected.
Because of the importance of most matters considered by boards of directors, they
cannot use committees in conducting their business.
Embezzlement requires a taking of property by force.
In a consignment, the risk of loss remains with the consignor.
Because of the formality required by the Statute of Frauds, a contract must have been
drafted by an attorney in order to meet the Statute of Frauds requirements.
Originally, sales transactions in the United States were guided by the principle of
caveat emptor.
A shareholder exercising his or her appraisal right can have the corporation petition the
court to determine the value of shares, if the shareholder believes that the corporation
has set the value too low.
Even industries that are not intellectual property-intensive are still highly dependent on
their intellectual property rights.
A person who is aware that a hired contractor is unlicensed but allows the contractor to
continue working is in all cases barred under equitable principles from raising a claim
regarding the lack of licensure to avoid payment.
According to the business judgment rule, corporate directors and officers are liable to
the corporation and its shareholders for even honest mistakes of judgment.
An offeree’s acceptance must be equivocal.
In determining the fair distribution of marital property, the court may consider the
occupation of each spouse.
An indorsee who does not comply with the instructions of a restrictive indorsement is
liable only to the maker for any losses that occur.
From the perspective of Title VII, there is nothing inappropriate in asking a female job
applicant if she plans on having children.
A corporation can operate as the only general partner in a limited partnership.
The same individual may simultaneously hold more than one office in a corporation.
Synergistic agency occurs when an agent acts for two or more different principals in the
same transaction.
Title VII of the Civil Rights Act of 1964 prohibits any form of gender discrimination
where sexual favors are requested in order to obtain a job or be promoted. This is called
esse quam videri discrimination.
A defendant is not liable for injuries caused by a superseding or intervening event for
which he or she is not responsible.
The objective theory of contracts provides that it is the offeror who determines whether
a contract has come into existence.
The state’s highest court is always called the State Supreme Court.
A limited partner who permits his or her name to be used as part of the partnership
name automatically becomes liable as a general partner.
A preexisting duty can arise out of an existing contract.
Public corporations are formed pursuant to state law.
Limited liability companies are treated as an artificial person who can sue or be sued,
enter into and enforce contracts, hold title to and transfer property, and be found civilly
and criminally liable for violations of law.
In terms of the “good faith” requirement for becoming a holder in due course, the good
faith test applies to the transferor of the instrument, as well as the holder.
When a party improperly assigns the same contract rights to more than one assignee,
the American rule provides that the earliest assignment in time prevails.
Negotiable instruments often serve as record-keeping devices.
A commons is a court order directing the defendant to appear in court and answer the
complaint.
The defense of assumption of the risk assumes that the plaintiff had knowledge of the
specific risk and voluntarily assumed the risk.
A threat of future harm is not actionable as an assault.
No form of living things can ever be patented.
John is a member of a religion that recognizes Monday as its holy day; thus, John is not
supposed to work on Monday. John’s job requires him to work on Monday occasionally.
How must John’s employer handle this conflict in the work schedule?
A) The employer must let John off from work on Monday.
B) The employer need not let John off from work on Monday.
C) The employer must make a reasonable accommodation for John.
D) The employer must make any special arrangements with John based on religion.
E) The law does not cover this situation.
A contract can be formed:
A) from an offer made in anger.
B) from an offer made in jest.
C) as a result of preliminary negotiations.
D) as a result of an expression of opinion.
E) A contract cannot be formed from an offer made in anger, from an offer made in jest,
as a result of preliminary negotiations, or as a result of an expression of opinion.
Most businesses conduct e-commerce by using websites on the Internet. Each website is
identified by a unique Internet domain ________.
A) tag
B) name
C) trademark
D) service mark
E) patent
Will and other students are angry because they went to Canada over the summer and
felt that they were treated unfairly when they were stopped for a traffic violation. They
want to lobby their state legislature to pass a law forbidding any commerce with
Canada by anyone in the state. Would such a law be enforceable?
A) yes, because states have the right, along with the United States Congress, to regulate
trade within their borders
B) yes, because states have the exclusive right to regulate trade within their borders
C) yes, but only if the state first made a demand on Canada to remedy the situation, and
Canada refused to do so
D) no, because the state would not have authority under the United States Constitution
to pass such a law
E) no, but only because Canada adjoins the United States
Under the UCC, if a person has a voidable title to goods, to whom can they transfer title
to?
A) a good faith purchaser in the ordinary course of business
B) an ordinary good faith purchaser
C) an entrusted purchaser
D) a good faith purchaser for value
E) to any non-merchant purchaser
With regard to an automobile accident, the type of automobile insurance coverage that
pays for the damage caused by the insured to another driver’s car is called:
A) collision insurance.
B) comprehensive insurance.
C) liability insurance.
D) no fault coverage.
E) “all-risk” coverage.
Assume that a car owner contracts with a mechanic to have his engine overhauled. The
mechanic mistakenly used original equipment quality piston rings in doing the
overhaul, whereas the contract had called for the use of premium quality rings that are
better than original equipment quality. Assume that the rings used by the mechanic
should not affect the performance of the car. Which of the following is true?
A) This is a substantial performance, and the owner must still pay something to the
mechanic.
B) This is a material breach, and the owner must still pay something to the mechanic.
C) This is a substantial performance, and the owner owes nothing to the mechanic.
D) This is a material breach, and the owner owes nothing to the mechanic.
E) This is a novation, and the owner owes nothing to the mechanic.
The most common form of ADR is ________.
A) trial
B) litigation
C) arbitration
D) mediation
E) conciliation
What does the term “mitigation” refer to in connection with damages?
A) the calculation of lost profits in determining damages
B) the duty of the breaching party to make a damages payment as soon as practical
C) the combination of the different kinds of damages into a single dollar amount
D) the duty of a non-breaching party to make reasonable efforts to reduce damages
E) the requirement of the non-breaching party to allow the breaching party one final
chance to perform the contract before being entitled to collect damages
Real Wood Company, a furniture manufacturer, acquires a chain of retail furniture
stores. What type of a merger is involved?
A) a backward vertical merger
B) a forward vertical merger
C) a horizontal merger
D) a conglomerate merger
E) a market extension merger
A limited partnership has two (2.) types of partners: (1.) ________ partners; and (2.)
________ partners.
A) general; limited
B) express; implied
C) general; unlimited
D) executive; associate
E) express; silent
In a check transaction, the party who has a checking account and writes the check is the
________, the financial institution upon which the check is written is the ________,
and the party to whom the check is written is the ________.
A) drawee; drawer; payee
B) drawer; drawee; payee,
C) payee; drawee; drawer
D) payee; drawer; drawee
E) drawer; payee; drawee
Which of the following is not one of the five major theories of ethics?
A) ethical absolutism
B) ethical relativism
C) ethical fundamentalism
D) utilitarianism
E) Kantian ethics
The acceptance-upon-dispatch rule is more commonly called the ________ rule.
A) common carrier
B) postal
C) mailbox
D) UPS
E) FedEx
In a creditor beneficiary situation, who are the parties to the contract that creates the
creditor-beneficiary relations?
A) the original debtor and the second-hand purchaser of the item connected with the
debt
B) the original creditor and the second creditor
C) the original creditor and the original purchaser of the item connected with the debt
D) the original creditor and the second-hand purchaser of the item connected with the
debt
E) the second creditor and the original purchaser of the item associated with the debt
Any passage of an instrument other than its issuance and presentment for payment is
considered a(n):
A) delegation.
B) assignment.
C) designation.
D) transfer.
E) denomination.
Which of the following statements regarding a partnership is true?
A) A partnership is an involuntary association.
B) To be valid, a partnership must have a written partnership agreement.
C) A partnership is a separate tax-paying entity for federal tax purposes.
D) Partners in a partnership have personal liability much like that of sole proprietors, in
the sense that partners and sole proprietors have personal liability for business debts and
other legal obligations of the business.
E) All of the partners in a partnership have limited liability.
A(n) ________ takes an instrument free of many defenses that could be asserted against
the original payee.
A) holder in due course
B) holder through negotiation
C) bona fide purchaser
D) good faith purchaser
E) assignee
A statute that allows a finder of lost or mislaid property to obtain good title is what kind
of statute?
A) an escheat statute
B) a fixture statute
C) a “losers-weepers” statute
D) an estray statute
E) an accession statute
A defendant who believes that he or she has been injured by the plaintiff can file a(n)
________ against the plaintiff in addition to an answer.
A) interpleader action
B) declaratory judgment
C) cross-complaint
D) motion for summary judgment
E) motion for judgment on the pleadings
Under what circumstances must a dissenting shareholder pay for the court costs and
appraisal costs in connection with a corporation’s petition of the court to determine the
value of the shares?
A) under no circumstances
B) if the dissenting shareholder acted arbitrarily or in bad faith, in disputing the amount
that the corporation had determined to be the fair value of the shares
C) if the amount determined as the fair value by the court is higher than the amount the
corporation had determined
D) if the amount determined as the fair value by the court is either higher or lower than
the amount the corporation had determined
E) in all circumstances where the dissenting shareholder has objected to the amount the
corporation had determined is the fair value
Which of the following would terminate an offer?
A) a revocation by the offeror
B) a rejection by the offeree
C) a counteroffer by the offeree
D) a revocation or a rejection by the offeree
E) a revocation by the offeror, a rejection by the offeree, or a counteroffer by the offeree
In Krysa v. Paine, where Paine’s Car Company was found to have committed fraud in
the sale of a truck to Krysa, what did the court rule regarding the punitive damages
award?
A) Punitive damages are not available in a fraud action based on a contract.
B) Punitive damages are limited to 9:1 in all cases.
C) Punitive damages are allowed at 9:1 in cases involving personal injury, but in
contracts must adhere to a 3:1 ratio.
D) Punitive damages of 27:1 are permitted in cases of extreme fraud.
E) Punitive damages should never have a cap or their function as a deterrent and
punishment would be lost.
Zora was driving, talking on her cell phone to her boyfriend, and drinking a soda all at
the same time. Her boyfriend made her angry at the same time that she spilled her soda.
Because of the distractions, Zora momentarily took her eyes off the road, ran into
Zach’s yard, and smashed his brand new customized Jaguar. Zora only had $15,000 in
insurance for property damage. The damages to Zach’s Jaguar totaled $15,000. Zora
begged her insurance company to offer Zach the limits of the policy and settle the
lawsuit. Her insurance company refused to do so. Not surprisingly, Zach sued Zora.
Zach got a judgment against Zora for $25,000. Her insurance company paid the
$15,000 in insurance and left Zora to pay the rest. What should Zora do?
Betty is a director of the Yazula Corporation. Yazula wants to buy a tract of land on
which to build a new factory. Betty owns such a tract of land, and sells it to Yazula
without disclosing to Yazula that she owns the land. Betty is paid the fair market value
of the land. How is Betty’s action best described?
A) Betty has violated the duty prohibiting self-dealing.
B) Betty has violated the duty prohibiting usurping a corporate opportunity.
C) Betty has violated the duty prohibiting competition with the corporation.
D) Betty has violated the duty prohibiting insider trading.
E) Betty has not violated any duty.
Which of the theories of the social responsibility of business includes obligations of a
business to parties other than shareholders?
A) corporate citizenship
B) stakeholder interest
C) stakeholder interest and corporate citizenship
D) moral minimum, stakeholder interest and maximizing profits
E) moral maximum, stakeholder interest, and corporate citizenship
Janet pulls her car into a line for a car wash. Janet says nothing and her car is washed
by the employees there. Janet then refuses to pay for the car wash, stating that there is
no contract. What would the results be in a lawsuit over this situation?
A) Janet wins; because she said nothing, there can be no contract.
B) The car wash wins; this is an express, unilateral contract that has been accepted.
C) Janet wins; because the car wash made no promise to wash her car, there is no
contract.
D) The car wash wins; this is an implied-in-fact contract that has been accepted.
E) Janet wins because she never signed a document authorizing the car wash.
Burger Prince is one of the largest hamburger chains in the nation, and fiercely
competitive with the well-known chain of Captain Hook Seafood House restaurants.
Captain Hook has recently introduced a new line of hamburgers in order to expand
beyond seafood. Burger Prince received information that it believed was reliable
indicating that the Captain Hook’s burgers contained substantial amounts of filler.
Burger Prince then ran advertisements saying that its pure beef burgers were better than
the Captain Hook’s burgers that used filler. Which of the following is true?
A) Burger Prince is liable for product disparagement because the statement about the
use of filler was false.
B) Burger Prince would be liable for invasion of privacy if the formula for Captain
Hook’s burgers was not publicly available.
C) This is a case of slander.
D) Captain Hook will not be able to win a product disparagement case here.
E) This is an example of intentional interference with contractual relations.
Corporations generate over ________ percent of the United States’ gross business
receipts.
A) twenty-five
B) forty-five
C) sixty-five
D) eighty-five
E) ninety-five
A party who is making a motion for summary judgment is asserting that:
A) most of the factual evidence is in his or her favor, so the judge, rather than the jury,
should decide the factual disputes.
B) the factual disputes are relatively simple and straightforward such that a full detailed
judgment is not necessary in the case.
C) the case can be decided solely on the information contained in the complaint and the
answer.
D) a jury is not needed in deciding the case because there are no relevant facts that are
in dispute.
E) a jury is needed, and the defendant should not be dismissed without a trial on the
merits.
Which of the following is true about “tying” arrangements?
A) Tying arrangements are always illegal.
B) Tying arrangements are always legal.
C) Tying arrangements are legal for companies without monopoly power, and illegal for
companies with monopoly power.
D) Tying arrangements are illegal, unless there is a justifiable reason for the seller to
have the tying arrangement.
E) Tying arrangements are legal, so long as the purchaser is not harmed.