If a contractual duty has not been discharged or excused, the contracting party owes a
conditional obligation to perform the duty.
An affirmative action program that gives racial minorities a “plus factor” when
considered for public university admission is lawful under the ‘strict scrutiny” test of
equal protection, as long as it does not constitute a quota system.
The False Claims Act is also known as the Whistleblower Act.
Negotiation is the transfer of commercial paper by a person other than the issuer.
The Truth in Lending Act is administered by the Federal Trade Commission (FTC).
The Restatement of the Law of Contracts is not law.
A misrepresentation occurs when an assertion is made that is not in accord with the
facts.
Immanuel Kant’s philosophy is based on the premise that people can use reasoning to
reach ethical decisions.
The federal government has any power that the Constitution does not give to the states.
The right to dispose of all or substantially all of the limited liability company’s property
may not be delegated to a manager.
Revocation refers to the offeree communicating to the offeror that the offeree does not
want to accept the offer.
The Equal Employment Opportunity Commission is industry-sponsored, and is
comprised of equal numbers of members from management and from labor.
Any contract in which the parties possessed severely unequal bargaining power is an
unconscionable contract.
Most states have statutes of limitations that require an injured person to bring an action
within a certain number of years from the time he or she was injured by a defective
product.
Once an assignment is made, it is the duty of the assignor to notify the obligor so the
obligor can deliver proper performance.
To prove intentional interference with contractual relations, the plaintiff must
demonstrate the following elements: 1.) a valid, enforceable contract between the
contracting parties; 2.) third-party knowledge of the contract; and 3.) third-party
inducement to breach the contract.
In a sale or return contract, the risk of loss passes to the buyer when the buyer takes
possession of the goods.
Title VII of the Civil Rights Act of 1964 prohibits two (2.) major forms of employment
discrimination: disparate treatment discrimination and disparate impact discrimination.
Most, but not all, states have enacted a statute of frauds.
Federal law specifies where a financing statement must be filed in order for it to be
valid.
An appellate court will not reverse a finding of fact unless such finding is unsupported
by the evidence or is contradicted by the evidence.
A general partnership is also known as a limited partnership.
Ordinary household soap is an example of a cosmetic subject to Food and Drug
Administration regulation.
In the United States, the first person to invent an item or a process is given patent
protection over another party who was the first to file a patent application.
Franchise agreements normally require fees to be paid by the franchisee to the
franchisor before the start of the franchisee’s operations, but not after the business is
underway.
State antitrust laws are used to attack anticompetitive activity that occurs in intrastate
commerce.
If payment is not made on a negotiable instrument when it is due, the holder can use the
court system to enforce the instrument.
To be valid, there is no requirement that a written security agreement be signed by the
creditor.
Termination-at-will clauses in franchise agreements are generally enforceable.
As a holder, the payee of a check can either demand payment or indorse the check to
another person.
Substantial performance is performance that is complete enough that there is no breach.
Pre-organization subscription agreements, interests in oil, gas, and mineral rights, and
deposit receipts for foreign securities are examples of common securities.
When a partnership terminates, and partnership assets are in the process of liquidation
and distribution, partners who have loaned money to the partnership are paid before
other creditors.
The penalty for patent infringement can be treble damages.
A limited partnership must have one or more general partners and one or more limited
partners.
In a mortgage, the creditor is the mortgagor.
An agent who enters into a contract with a principal has two (2.) distinct obligations:
(1.) to perform the lawful duties expressed in the contract; and (2.) to meet the
standards of reasonable care, skill, and diligence implicit in all contracts.
Compensatory damages for a breach of a sales contract involving goods are governed
by federal law.
A statute of limitations establishes the period during which a plaintiff must bring a
lawsuit against a defendant.
Sally agrees to be surety for her brother Dan in his purchase of a computer from a local
dealer. The dealer extended $2,000 in credit to Dan to enable him to purchase the
computer, and took a security interest in the computer. The dealer does not file a
financing statement. Dan does not pay for the computer, because it is defective. The
dealer repossesses it and sells it for $400, a reasonable amount. If the computer dealer
seeks to recover from Sally, how much can it recover?
A) nothing, because it did not file a financing statement
B) nothing, assuming the computer is actually defective
C) $1,600
D) $1,600, but only if it has unsuccessfully tried first to collect from Dan
E) $2,000
When a contract involves the purchase of items by a minor, what is the effect of these
items being considered a necessary of life?
A) The minor’s right to disaffirm will end immediately upon reaching majority.
B) The minor will be obligated to perform the terms of the contract.
C) The minor will be obligated to pay for the items, but will only be obligated to pay
the fair value.
D) The minor will owe the duty of restoration upon disaffirmance.
E) The minor must pay full price for the items.
Which of the following is true about perfection of purchase money security interests?
A) They perfect automatically, for any type of goods, upon attachment.
B) For something other than inventory, a perfected purchase money security interest
prevails over a perfected nonpurchase money security interest in after-acquired property
if it is perfected when the debtor receives possession or with twenty days after the
debtor receives possession of the collateral.
C) There is no special treatment for purchase money security interests in inventory.
D) For consumer goods, any purchase money security interest in them perfects without
attachment.
E) The perfected purchase money security interest prevails if the purchase money
secured party gives written notice of the perfection to the perfected nonpurchase money
secured party before the debtor receives possession of the collateral.
Which of the following is not a type of formal contract recognized by the Restatement
(Second) of Contracts?
A) negotiable instrument
B) letter of credit
C) recognizance
D) gentlemen’s agreement
E) contract under seal
WorldRest Hotels has contracted with QuickBuild Construction to build a 650-bed hotel
in Downtown Dallas. Marty has entered into a lease agreement for retail space in an
adjacent building to open a gift shop catering to the hotel guests. QuickBuild was aware
of Marty’s lease agreement. QuickBuild breached its contract with WorldRest by not
completing the hotel until seven months after the contractual due date. Because the
hotel was late opening and there were seven months when the hotel had no guests,
Marty lost considerable profits in the retail shop. Marty has sued QuickBuild to recover
these lost profits. Which of the following is true?
A) Marty is a donee beneficiary of QuickBuild’s contract to build the hotel.
B) Marty cannot recover because Marty is an incidental beneficiary of the hotel
construction contract.
C) Because QuickBuild is now in debt to Marty for the lost profits, Marty is a creditor
beneficiary of the hotel construction contract.
D) Marty can recover in the situation on the basis of an assignment of rights.
E) The court would likely order QuickBuild to delegate its duties on future contracts so
that they are finished on time.
Mike works as a bartender at a local bar. Under state law, bartenders are required to be
licensed. The licensing requires the completion of an application and the submission of
a $50.00 application fee. The application does not require any special education,
training or experience, just the payment of the fee. Kathy enters Mike’s bar and orders a
round of drinks for the house. She then notices that Mike’s license is not on display
behind the bar. Kathy learns that Mike is not licensed and refuses to pay for the round
of drinks. If the bar sues, what will be the result?
A) Since this is an illegal contract, the courts will not enforce it.
B) Since Mike violated a regulatory license requirement, the contract is unenforceable.
C) Since this is a revenue-producing statute, the bar wins.
D) Since this is a revenue-producing statute, the licensing law is illegal because it has
no legitimate requirements, so Kathy wins.
E) Kathy wins because dram shop laws require bartenders to have special training and
obtain a regulatory license.
Which of the following does not terminate an offer by operation of law?
A) destruction of the subject matter
B) death or incompetency of the offeror or offeree
C) supervening illegality
D) lapse of time
E) Destruction of the subject matter, death or incompetency of the offeror or offeree,
supervening illegality, or lapse of time will terminate an offer by operation of law.
A partnership agreement:
A) must be in writing for all partnerships.
B) must be an express agreement for all partnerships, but can be either oral or in
writing.
C) may be implied from the parties’ conduct.
D) must be in writing, but only for partnerships covered under the Uniform Partnership
Act.
E) cannot be implied from the actions of the partners.
Seller and Buyer negotiate for the sale of 100 acres of land. They orally agree on a price
of $100,000, with payment to be made within 10 days and the deed delivered within
another 30 days. Buyer sends Seller a letter in which all these terms are included, along
with a check for $100,000 that the seller deposits. The seller fails to deliver a deed and
the buyer seeks to enforce the contract. Here, this contract is:
A) enforceable, because Buyer had partly performed the contract by making payment.
B) unenforceable, because there is no writing signed by Seller.
C) enforceable, because Buyer sent a memorandum sufficient against himself, which
binds Seller unless Seller objects, which he did not.
D) unenforceable, because the failure to deliver the deed is fraud.
E) unenforceable because land is not within the statute of frauds unless a house is built
on it.
State limited-jurisdiction trial courts are sometimes referred to as ________ trial courts.
A) inferior
B) superior
C) subordinate
D) predominant
When a residuary gift is given to all of the testator’s descendants such that each is to
receive an equal share regardless of what generation they are in, what type of
distribution is this?
A) per stirpes
B) contingent
C) per capita
D) intestate
E) per abatement
Both the common law of contracts and the Uniform Commercial Code (UCC) permit
several writings to be ________ to form a single written contract.
A) segregated
B) antiquated
C) ameliorated
D) integrated
E) precipitated
Mike lives and works in Georgia, owning a home in Atlanta. He has lost his job and has
fallen behind on his mortgage. The bank decides to file a lawsuit for the money owed
and to foreclose on the house. What jurisdiction must be established for the court to be
able to hear both issues?
A) in personam jurisdiction
B) in rem jurisdiction
C) in rem jurisdiction regarding the debt and in personam jurisdiction regarding the
home
D) in personam jurisdiction regarding the debt and in rem jurisdiction regarding the
house
E) No jurisdiction is necessary, because the written mortgage is enough evidence for the
court to act.
What is the general reason for restrictions against insider trading under the Securities
Exchange Act of 1934?
A) Corporate insiders should not own stock in the corporation because it is a conflict of
interest.
B) Use of inside information is unfair to the other party to the transaction, and goes
against the philosophy of allowing all participants in the market to have the same
information.
C) Insider trading generally leads to lower stock prices.
D) Insider trading results in an imbalance of buyers and sellers in the market.
E) The value of a prospectus is compromised when insider trading is conducted.
The ________ makes it a crime to intercept an electronic communication at the point of
transmission, while in transit, when stored by a router or server, or after receipt by the
intended recipient.
A) Electronic Communications Privacy Act (ECPA)
B) Electronic Transmissions Privacy Act (ETPA)
C) Internet Communications Privacy Act (ICPA)
D) Internet Transmissions Privacy Act (ITPA)
E) Cyberspace Transmissions Privacy Act (CTPA)
When a promoter enters into a contract on behalf of a corporation that is not yet formed,
the corporation will become liable on the contract:
A) at the time the promoter enters into the contract.
B) when the corporation comes into existence.
C) once the corporation has elected its initial board of directors.
D) only if the corporation, once formed, agrees to be liable on the contract.
E) only in the case of a novation.
Once a strike has begun, it is legal for the employer to use which kind(s) of workers?
A) replacement workers
B) crossover workers
C) replacement and crossover workers
D) neither replacement nor crossover workers
E) management workers only
Which of the following is correct regarding courts’ treatment of contracts where certain
provisions are omitted from the contract?
A) Courts have always required all material terms to be in the contract and continue to
apply that rule today.
B) Because of the greater complexity of business and society today, courts are more
demanding than in the past that contracts contain all material terms.
C) Courts today are more lenient toward contracts with omitted terms and are more
willing to use implied terms to fill in the gaps of a contract.
D) Because it is the offeror who initially made the offer that was missing the terms, the
offeree usually has the power to supply the terms to fill in the gaps in the contract
terms.
E) Because the offer was made initially by the offeror, the offeror usually has the power
to supply the terms to fill in the gaps in the contract terms.
If employees no longer want to be represented by a union, a ________ election will be
held.
A) dissolution
B) certification
C) decertification
D) corroborating
E) deauthorization
Which of the following generally does not need to be included in the articles of
incorporation?
A) the name of the corporation
B) the number of shares of stock that the corporation is authorized to issue
C) the name of the initial registered agent
D) a copy of the bylaws
E) the names of the incorporators
Which of the following is true about ‘supramajority” requirements?
A) They can be required for voting, but not for quorums.
B) They can be required for either voting or for quorums, but such requirements must
have been included in the original articles of incorporation.
C) They are automatically required for quorums of shareholders meetings, and voting at
such meetings, when approving mergers, consolidations, or the sale of substantially all
of the assets of the corporation.
D) They can be required for either voting or for quorums, and if the requirement is
added in an amendment to the articles of incorporation or corporate bylaws, the vote
approving the amendment must pass by the same supramajority as the new
supramajority requirements contained in the amendment being voted on.
E) They can be required for either voting or for quorums, and if the requirement is
added in an amendment, a simple majority vote approving the amendment is all that is
required for the amendment to become effective.
Mike and Kathy have been dating for a while but after a big fight, Kathy breaks off the
relationship. Mike tries to call but Kathy won’t take his calls. Finally Mike decides to
teach her a lesson and sues her for breaking his heart asking for damages. Assume that
there is no recognized cause of action for breaking of one’s heart.
A) Because there is no cause of action available, Kathy can ignore the complaint and
summons and suffer no consequences.
B) If Kathy doesn’t answer the complaint, she will nevertheless win when the judge
reads the complaint and dismisses it.
C) Kathy should answer the complaint and file a motion for a judgment on the
pleadings, which she will win.
D) Kathy should answer the complaint and file a motion for a summary judgment,
which she will win.
E) Kathy should answer the complaint and file a motion for a j.n.o.v., which she will
win.
What is the legal significance of a contract being declared to be an installment contract?
A) The right to cure lasts for a longer period.
B) The seller does not have a right to cure.
C) The buyer’s payment obligations are relaxed.
D) The perfect tender rule is altered in that it is more difficult for a buyer to reject the
entire order.
E) The same common carrier must be used for each shipment.
Assuming that there are legitimate grounds for any of the following lawsuits, the threat
to bring which lawsuit(s) would constitute grounds for duress?
A) a civil lawsuit
B) a criminal lawsuit
C) either a civil lawsuit or a criminal lawsuit
D) neither a civil lawsuit nor a criminal lawsuit
E) a civil lawsuit or a lawsuit brought pursuant to administrative law
The concept of standing requires that:
A) parties appear in person in order to present their cases.
B) a plaintiff have a stake in the outcome of a case.
C) parties must always be represented by a properly admitted member of the bar.
D) both parties must always be given a chance to appeal once a judgment has been
entered.
E) the defendant be given adequate notice of the plaintiff’s complaint.
Which of the following is an illegal subject of collective bargaining?
A) work assignments
B) location of plants
C) corporate reorganizations
D) safety rules
E) discrimination
The court’s decision in Brown v. Board of Education had what effect on the decision
made in Plessy v. Ferguson?
A) It followed precedent.
B) It applied the doctrine of stare decisis.
C) It applied the principle of preemption.
D) It showed that precedent can be overruled and is not binding in every situation.
E) It showed that the United States Constitution is not subject to interpretation.
Which of the following is not an agency of the United Nations?
A) the United Nations Educational, Scientific, and Cultural Organization
B) the International Monetary Fund
C) the International Organization for Trade Equalization
D) the International Fund for Agricultural Development
E) the United Nations International Children’s Emergency Fund
If a corporation commits an “ultra vires act,” which of the following is not an available
remedy?
A) The shareholders may sue for an injunction prohibiting the act.
B) The shareholders may sue the corporate officers or directors for damages.
C) The state attorney general may bring criminal charges against the corporate officers
and/or directors.
D) The state attorney general may sue to dissolve the corporation.
E) The corporation itself can sue its officers or directors for damages.
What is required to have a quorum to hold a shareholder’s meeting?
A) Unless otherwise provided in the articles of incorporation, if a majority of shares
entitled to vote are represented at the meeting in person or by proxy, there is a quorum.
B) Unless otherwise provided in the articles of incorporation, if two-thirds of shares
entitled to vote are represented at the meeting in person or by proxy, there is a quorum.
C) Unless otherwise provided in the articles of incorporation, if three-fourths of shares
entitled to vote are represented at the meeting in person or by proxy, there is a quorum.
D) Unless otherwise provided in the articles of incorporation, if a minority of shares
entitled to vote is represented at the meeting in person or by proxy, there is a quorum.
E) Unless otherwise provided in the articles of incorporation, if one-fourth of shares
entitled to vote are represented at the meeting in person or by proxy, there is a quorum.