Which of the following is an example of incidental damages you might be awarded if
you are wrongfully terminated from your job?
a. The costs of psychological counseling.
b. The costs of mailing resumes to prospective employers.
c. The costs of a new wardrobe for future interviews.
d. The costs of cosmetic surgery.
To perfect a security interest in a negotiable instrument, Second State Savings and Loan
should:
a. file a financing statement.
b. take possession of the instrument.
c. do nothing. Perfection is automatic.
d. secure a court order.
Assume that in December 2006, the Environmental Protection Agency (EPA) filed an
administrative complaint against Marlin Firearms Co. alleging that the company
exceeded chromium emissions limits. The EPA proposed a $257,162 fine. Which
statement is correct concerning the administrative agency adjudication?
a. A jury decides the matter.
b. The Federal Rules of Criminal Procedure govern the admissibility of evidence.
c. The losing party has a right to appeal.
d. The parties are not represented by attorneys.
When Dudley files his Chapter 7 petition, he lists the following debts:
a. $25,000 in back child support and alimony.
b. $15,000 for liabilities incurred after drinking and driving.
c. $10,000 for past-due student loans.
d. $5,000 for past-due rent to his landlord.
e. $550 for a past-due phone bill.
How will each of these debts be treated by the bankruptcy court.
The Consumer Product Safety Commission (CPSC) is an independent federal
administrative agency. Which statement is correct about the chairperson?
a. The chairperson serves at the whim of the President and can be fired at any time.
b. The chairperson can only be fired by the President for good cause.
c. The chairperson cannot be fired by the President since the CPSC is an independent
agency.
d. The chairperson has a lifetime appointment and cannot be fired.
Denzil was one of 50,000 people defrauded of $40 in an advertising scam. His best
course of action to recover his money is to:
a. mediate the claim with the advertiser.
b. bring an individual lawsuit against the advertiser in a state appellate court.
c. bring an individual lawsuit in a U.S. District Court.
d. become part of a class action lawsuit, which might include plaintiffs who are
unaware of the lawsuit or are even unaware they were harmed.
The fraudulent conversion of property which is already in the defendant’s possession is:
a. money laundering.
b. exclusion.
c. embezzlement.
d. trespassory taking.
Which of the following must be approved by the shareholders if a company is
attempting to avoid a hostile takeover bid?
a. White knights.
b. Staggered board of directors.
c. Supermajority voting.
d. All the above.
The 14th Amendment’s Equal Protection Clause ‘strict scrutiny” test will be used when
the legislation:
a. affects an economic interest.
b. affects a person’s right to drive.
c. differentiates on the basis of race.
d. affects a person’s right to drink alcoholic beverages.
Wholesome Bread, Inc. advertised that its honey wheat bread had 25% fewer calories
than a competing brand, Valley Grains. In fact Wholesome’s bread had the same amount
of calories as Valley Grains’ bread. Wholesome Bread’s conduct:
a. does not violate the Lanham Act because of the First Amendment freedom of speech.
b. does not violate the Lanham Act because Wholesome did not act with actual malice.
c. does not violate the Lanham Act because comparative ads are exempt from the law.
d. violates the Lanham Act.
If Edmund and Kaylin have a writing mistakenly showing a sale and purchase of goods
for $10,000 when the price should have been $1,000, a court will most likely:
a. enforce the agreement, relying on oral testimony to determine the correct price.
b. only enforce the agreement as written.
c. not hear the case unless both parties are merchants.
d. not enforce the agreement since the writing did not reflect a meeting of the minds of
the parties.
Congresswoman Sloan introduced a bill in the House of Representatives. If the bill is
approved by the House committee specializing in that subject, the bill will go to:
a. a Senate committee specializing in the subject matter of the proposed legislation.
b. the full House.
c. a Conference Committee made up of representatives of both the House and Senate.
d. the voters of her state for approval.
Mike made the following offer to Mick: “I will pay you $500 if you agree to paint my
house.” Mick replied that he would. At this point, the contract is an:
a. executed, bilateral, express contract.
b. executory, bilateral, implied-in-law contract.
c. executory, unilateral, express contract.
d. executory, bilateral, express contract.
Maia wrote a check which said, “Pay to the order of Kevin Mathews $10.97. The next
line of the check stated, “One thousand ninety-seven Dollars. In applying the rules of
interpretation, how much should the drawee pay?
a. Nothing; when the instrument is ambiguous it is declared non-negotiable.
b. Ten dollars and 97 cents. Numbers control over words.
c. One thousand, ninety-seven dollars or $1,097.00. Words control over numbers.
d. Parol evidence would be needed to determine the purpose of the check.
Henry David Thoreau felt that war was unjust and therefore refused to pay his taxes
when the United States declared war on Mexico. Thoreau felt that there was a higher
law than the law of the land. Which theory of jurisprudence was he applying?
a. Legal Positivism.
b. Natural Law.
c. Legal Realism.
d. Common Law.
Ethel’s Exercise World plans to order three weight machines from Pete’s Push, Pedal
and Pull, Inc. for a total of $15,000. Pete’s demands that Ethel’s friend, Moneybags, a
wealthy independent businesswoman (not connected with Ethel’s business in any way)
promise to pay Pete’s for the three machines if Ethel’s Exercise World does not. Which
of the promises in this problem must be in writing to be enforceable?
a. The promise made by Ethel’s Exercise World to buy the weight machines.
b. Moneybag’s promise to pay if Ethel’s Exercise World doesn’t.
c. Both Moneybag’s promise and Ethel’s Exercise World’s promise.
d. None of the promises in this problem need to be in writing.
When a party to a contract intentionally makes the terms of a contract unclear, it is
called:
a. vagueness.
b. duress.
c. ambiguity.
d. mistake.
Oxtron, Inc. substantially performed its obligations under a service contract. Oxtron is
entitled to receive:
a. the full contract price.
b. substantially nothing.
c. the fair market value of its performance.
d. the full contract price minus the value of the defects.
If the subject of the contract includes issues that may be controversial, it is best to:
a. keep lawyers out of the negotiation, so relationships are not strained.
b. deal with them up front before the relationship is strained.
c. deal with them one at a time, as the problems arise.
d. state your position up front and stand firm when the other party objects.
The Occupational Safety and Health Administration (OSHA) has proposed rules aimed
at reducing repetitive-stress injuries. ATC, Inc. disagrees with the proposed rules. ATC,
Inc. should challenge the proposed rules in court to prevent them from becoming final
rules.
Harold and Zack have pooled their money together to buy real estate but have filed no
formal papers to form a business. Harold, a lawyer, handles all the legal matters and
Zack, a real estate broker, finds buyers for the property they have subdivided. Harold
and Zack are engaged in a:
a. partnership.
b. close corporation.
c. limited liability company.
d. business trust.
Felicity brought a lawsuit under Section 11 of the 1933 Act against Mojo Corp. She will
have to prove that:
a. she relied on the registration statement.
b. Mojo was negligent in preparing the registration statement.
c. there was a material misstatement or omission in the registration statement and she
lost money.
d. All of the above.
Which of the following is an example of a purchase money security interest in
consumer goods?
a. A doctor purchasing a computer on credit to create a Webpage to make services and
information available to her patients.
b. A doctor purchasing on credit a blood glucose monitor to check his own blood sugar
levels.
c. A doctor purchasing a TV/VCR unit on credit to place in her office waiting room.
d. A doctor purchasing an exercise bike for his employees to use over the lunch hour.
Under the Americans with Disabilities Act, a person with a disabling illness:
a. is not considered disabled once the illness is being managed with medicines.
b. is not considered disabled unless there is no known cure.
c. is considered disabled, but only at times when hospitalization is required for
treatment.
d. is considered disabled, even if the illness is under control.
Which of the following acts resulting in injury would be negligence per se?
a. Janet driving 40 mph over the posted speed limit.
b. Ted keeping explosives in his private, locked garage without complying with state
law regulating the storage of such materials.
c. A retailer selling glue containing benzene to a 14-year-old boy in violation of state
law.
d. All the above acts are negligence per se.
Barb has been a children’s day care provider for several years in the small town of
Sallton. She has decided to give it all up and move to the big city for excitement and
adventure. She sells her business to Ken, agreeing not to open a competing business
within five miles of Sallton for a period of nine months. After five months of the big
city life, Barb is broke and moves back to Sallton. She opens a small day care business.
Ken sues on the noncompete clause. What is the most likely result?
a. Ken wins. The agreement is enforceable.
b. Barb wins. The agreement is denying her the right to do the only thing she knows
how to do.
c. Barb wins. The agreement is not enforceable because it is not ancillary to a legitimate
bargain.
d. Barb wins. The agreement is not reasonable as to time.
Reformation is:
a. a type of restitution
b. a form of quantum meruit.
c. a form of quasi-contract.
d. uncommon.
Wright Company contracted with the city of St. Louis to train and employ
disadvantaged youths. If Wright fails to fulfill the contract and is sued by one of the
disadvantaged youths, the youth would:
a. win, as he is an intended beneficiary.
b. win, as he is a donor beneficiary.
c. lose, as he is a creditor beneficiary.
d. lose, as he is an incidental beneficiary.
International copyright protection:
a. is automatic for works created in member countries of the Berne Convention.
b. is granted for the life of the author plus 70 years under the Berne Convention.
c. is not yet available for computer programs.
d. lacks any enforcement capability for overseas infringement of works authored in the
United States.
Mega Corp is negotiating a collective bargaining agreement with a union. The company
claims it is not financially able to pay the wage increase the union is demanding. Which
statement is correct?
a. The union has a legal right to inspect the financial records of the company to verify
that the employer cannot pay the proposed wage increase.
b. It is an unfair labor practice if the employer claims it cannot pay the higher wages but
refuses to allow the union to inspect its financial records.
c. Both of the above are correct.
d. None of the above.
Explain the origins of equity and its place in contemporary American law.
Manuel, in conducting an audit, must rely most heavily on rules found in generally
accepted accounting principles (GAAP).
The power to create laws regulating international commerce is given jointly to
Congress and the states under the U.S Constitution.
For a security interest to attach, there must be an agreement.
If the United States sets a limit on the number of cars that can be imported, this action is
a form of tariff.
Countywide Metals is a small company that incorporates in the state in which it is doing
business and plans to offer and sell $100,000 worth of stock only to residents of the
county in which it is doing business. Discuss the requirements Countywide must meet
for registering its securities.
Big Corporation is served with a subpoena to turn over business records to an
administrative agency. What are three possible legal grounds the company can raise to
avoid producing the requested records?
Pizazz, Inc. leased the 34th floor in an office building in downtown Chicago. This
contract is governed by Article 2A of the UCC.
What are the three main purposes of the federal Bankruptcy Code? How are these
purposes supported and fostered in the Code?
The Fallwater Partnership wants to incorporate and is considering using a DPO. Explain
what a DPO is and discuss the advantages and disadvantages of this course of action.
A limited liability company, unlike a Subchapter S corporation, can have members that
are corporations, partnerships, or nonresident aliens.
The UCC requires sellers to give written warranties.
The Securities Act of 1933 established the Securities and Exchange Commission.
Bagsby owns a business selling insects for organic gardening. Bagsby is seeking a loan
from First Natural Bank. The loan officer is asking that the loan be secured by Bagsby’s
inventory of insects, now owned or hereafter acquired. In order to do this, a new
security agreement will need to be signed each time Bagsby gets new insects or sells his
insects.
Masterview, Inc. purchased a new computer system, which included some computer
programs. When Masterview developed financial troubles, two competing creditors of
Masterview claimed the right to repossess the computer system and the programs. The
UCC distinguishes ‘software from “goods and treats them differently for some purposes,
which would be important in this situation.
A color cannot be trademarked since it cannot be kept from use by other businesses.
Megan agrees to sell Nancy her Rolex watch but they do not specify a price. In such a
case, the court would not enforce the agreement because all of the essential terms are
not present.
A partnership is a taxable entity, separate from the partners.
Suppose that Emmett impersonates a famous clown. He goes into an advertising agency
and convinces the manager to issue a check to him in the name of the famous clown,
purportedly as part of a fund-raising campaign for a nursing home for old retired
clowns. If Emmett negotiates the check to a check-cashing store by forging the name of
the famous clown, then the ad agency will be able to argue that the bank must
reimburse the account because the bank paid a check on a forged signature.
Under the “perfect tender rule” the buyer may reject the goods if they fail in any respect
to conform to the contract.