There are no registration requirements for trade secrets.
Contract law shows what excuses our society accepts for breaking certain types of
promises.
A financing statement is effective for no more than five months from the date of filing.
Resolving whether a promise should be enforced is the essence of contract law.
Constructive eviction occurs when a tenant moves off the premises in retaliation against
the landlord.
To vote their shares, shareholders must attend a meeting and vote in person.
A party who unintentionally uses the trademark of another is not liable for trademark
infringement.
An accountant is not liable for a misleading statement that affects the price of a security
if the accountant acted in good faith.
Under the act of state doctrine, a firm whose assets a foreign government has
expropriated may not recover compensatory damages in a U.S. court.
In a fee simple absolute, the owner has the greatest aggregation of rights, privileges,
and power possible.
The minimal acceptable standard for ethical behavior is compliance with the law.
State law other than the UETA always determines the effect of an error on an agreement
between contracting parties.
One of the primary effects of a discharge is to relieve the liability of a co-debtor.
A registration statement must state how a corporation plans to use the proceeds from the
sale of the securities.
All employment laws apply to independent contractors.
A lease is enforceable even if the premises are intended to be used for an illegal
purpose.
Corporate officers and directors owe no duty to individual shareholders.
Compensatory damages compensate the nonbreaching party for injuries or damages
sustained by that party.
A suggestive use of ordinary words may not be trademarked.
The duty owed under the mitigation of damages doctrine depends on the situation.
A collective mark distinguishes products that are likely to be of interest to collectors.
In defense against payment, an insurance company can raise any of the defenses that
would be valid in an ordinary action on a contract.
A bailee is a buyer or lessee.
U.S. laws that prohibit discrimination in employment do not apply to U.S. employees
working for U.S. firms located abroad.
A client’s negligence is never a defense to a charge of negligence against an accountant.
Unless the parties agree otherwise, the buyer must make payment at the time and place
that the goods are received.
Forcing someone to enter into a contract through fear created by threats is undue
influence.
A fiduciary relationship involves trust and confidence.
Congress cannot impose any restrictions on exports except taxes.
Courts can rely on the common law as a guide to interpreting legislation.
A written stop payment order is valid for fourteen days.
An attorney may be liable to a third party who relies on the attorney’s legal opinion to
the third party’s detriment.
Money laundering includes making “dirty” money “clean” of legitimate businesses.
A severable contract is unenforceable as a violation of public policy.
A recording statute allows deeds to be recorded to give notice to the public.
Esther and Faisal agree that Esther will fix Faisal’s car in exchange for his paying a
preexisting debt owed by Esther to Gladys. Gladys is
A.an assignee.
B.an intended beneficiary.
C.an incidental beneficiary.
D.a delegatee.
The government of Japan sets a limit on the amount of rice that can be imported from
the United States. This is
A.a dumping duty.
B.an antidumping duty.
C.a quota.
D.a tariff.
Heavy Hauling, Inc., is a public company whose shares are traded in the public
securities markets. Under the Sarbanes-Oxley Act of 2002, to ensure that Heavy
Hauling’s financial results are accurate and timely, the firm’s senior officers must set up
and maintain
A.internal “disclosure controls and procedures.”
B.external “release and reveal timetables.”
C.personal “peruse and review liability policies.”
D.public “information and discussion forums.”
Mona lives in New Jersey, but she works in New York. Mona borrows $1,000 from
National Bank, using her motorcycle as collateral. To perfect its security interest, the
bank must file its financing statement in at least
A.every state.
B.New Jersey.
C.New Jersey and New York.
D.New York.
Amelia executes a separate written instrument to amend her prior will. This separate
document is
A.a codicil.
B.a holographic will.
C.a living will.
D.a nuncupative will.
Fact Pattern 19-2
Mary’s home is in a state that has a $30,000 homestead exemption. Mary defaults on a
$60,000 debt that she owes to Nina. Mary’s home is sold at auction for $80,000.
Refer to Fact Pattern 19-2. If Nina recovers less than she is owed, she can realize the
difference from
A.any property that Mary owns.
B.only exempt property that Mary owns.
C.only nonexempt property that Mary owns.
D.property that any other member of Mary’s family owns.
Grace applies for a homeowners’ insurance policy on her house with Heroic Insurance
Company through Ian, a broker. In this transaction, Ian is
A.an agent for both parties.
B.Grace’s agent, and not Heroic’s agent.
C.Heroic’s agent, and not Grace’s agent.
D.not an agent.
Fact Pattern 1-1
The Texas Supreme Court decides the case of Livewire Co. v. Power Corp. Of nine
justices, five believe the judgment should be in Livewire’s favor. Justice Bellamy, one
of the five, writes a separate opinion. The four justices who believe the judgment should
be in Power’s favor join in a third separate opinion.
Refer to Fact Pattern 1-1. Bellamy’s opinion is
A.a concurring opinion.
B.a dissenting opinion.
C.a majority opinion.
D.a per curiam opinion.
Tyrone draws a check payable to “Cash” and presents it to United Bank for payment.
This instrument is
A.a bearer instrument.
B.an order instrument.
C.valid but nonnegotiable.
D.void.
Frida is an employee of Green Recycled Products Company. A state statute protects
Frida from Green’s retaliation if Frida reports to state officials, or others, that Green is
involved in unsafe or illegal activity. With respect to the employment-at-will doctrine,
this is
A.an example of the doctrine.
B.an exception based on contract theory.
C.an exception based on public policy.
D.an exception based on tort theory.
Sharon, the human resources director for Tempo Corporation, attempts to comply with
the law in dealing with applicants and employees. One of the challenges Sharon faces is
that the legality of an action is
A.always clear.
B.never clear.
C.sometimes clear.
D.usually clear.
Fact Pattern 27-1
Town Transport Company (TTC) agrees to pick up two containers for Unlimited Sales,
Inc., and store their contents, to be delivered later. While TTC unloads one container,
the other disappears from TTC’s loading dock.
Refer to Fact Pattern 27-1. TTC can avoid liability
A.by proof that TTC did not convert the goods and was not negligent.
B.by proof that TTC’s warehouse is located in a high-crime area.
C.by proof that Unlimited Sales was negligent in hiring TTC.
D.under any circumstances.
Owen takes a Paisley-made pinball machine to Quality Games, Inc., for repair. Lacking
certain parts, Quality ships the game to Regal Repair Company. While in Regal’s
possession, the game is damaged. Quality can recover for the damage from
A.no one.
B.Owen.
C.Paisley.
D.Regal.
Lani is asked to serve as a witness to Mona’s will. To qualify, Lani must be
A.a collateral heir.
B.a lineal descendant.
C.eighteen years of age or older.
D.mentally competent.
Smitty, driving while intoxicated, causes a car accident that results in the death of
Tiffany. Smitty is arrested and charged with a felony. A felony is a crime punishable by
death or imprisonment for
A.any period of time.
B.more than one year.
C.more than six months.
D.more than ten days.
To assist in detecting illegal bribes, Cut Rite Contractors, Inc., and all U.S. companies,
must
A.conceal financial records that reveal past bribes.
B.keep records that “accurately and fairly” reflect financial activities.
C.make bribes through third parties rather than directly to officials.
D.permit payments to foreign officials that are unlawful in that country.
Nero and Oona negotiate a contract. Nero prints out a hard copy to review before both
parties sign the electronic form of the contract. Neither party signs the hard copy. Under
the Electronic Signatures in Global and National Commerce Act (E-SIGN Act), the
signatures can
A.be denied effect because they are in electronic form.
B.be denied effect because Nero has not signed a hard copy.
C.be denied effect because Oona has not signed a hard copy.
D.not be denied effect because they are in electronic form.
Sid rents an apartment from Town Properties, Inc. The lease, which ends on May 31,
does not include an option for renewal, and Sid and Town do not discuss whether Sid
can stay on at the end of the term. On June 1, Sid has
A.an implied option to renew the term.
B.a right to remain contingent on notice from Town.
C.a right to remain subject to notice to Town.
D.no right to remain.
Kade and Lila each press certain quantities of olive oil to sell to Mediterranean
Products, Inc., and agree to share storage costs until Mediterranean can take delivery.
The oil is commingled so that Kade’s cannot be distinguished from Lila’s. This is
A.accession.
B.confusion.
C.conversion.
D.dominion.
Dru, a U.S. citizen, is the owner of Egret, Inc. Egret’s competitors include Feathered
Friends Company (FFC), which is owned by Greg and Huey. The Bill of Rights
embodies a series of protections for Dru against types of interference by
A.FFC and its other competitors only.
B.FFC, Greg, Huey, others, and the government.
C.Greg, Huey, and other private individuals only.
D.the government only.
Fact Pattern 26-3
Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a
new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to
Fay, who buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100
shares. They know that Fay got her information from Dhani. When Eureka publicly
announces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
Refer to Fact Pattern 26-3. If Dhani is liable under the Securities Exchange Act of 1934,
it will be because the information on which he based his purchase of Eureka stock was
A.a forward-looking forecast.
B.not material.
C.not yet public.
D.not yet TRUE.
DeLouse Plastics Corporation pays its executives an excessive amount relative to other
employees and to what executives at competitive companies are paid. This is most
likely to be challenged as
A.illegal and unethical.
B.illegal only.
C.neither illegal nor unethical.
D.unethical only.
Uri is an employee of Verity Security Services. For Uri to obtain the benefits of federal
wage-hour requirements, Verity must be engaged in
A.business activity.
B.employment at will.
C.international commerce.
D.interstate commerce.
Guaranty Bank receives a check drawn on the account of Get-Rich Industries, Inc., one
of the bank’s customers, at 3 p.m. Friday. Garry, the presenter of the check, is not one of
the bank’s customers. The bank uses deferred posting with a 2 p.m. cutoff hour. If it
decides to dishonor the check, it must do so by midnight
A.Saturday.
B.Sunday.
C.Monday.
D.Tuesday.
Fact Pattern 27-1
Town Transport Company (TTC) agrees to pick up two containers for Unlimited Sales,
Inc., and store their contents, to be delivered later. While TTC unloads one container,
the other disappears from TTC’s loading dock.
Refer to Fact Pattern 27-1. These facts give rise to
A.a presumption of intentional or negligent conversion by TTC.
B.a presumption of theft by a third party.
C.a presumption of theft by TTC.
D.Unlimited Sales’s liability for the container’s loss.
Pola wants to transfer a check to Quin. The check is defective if it
A.has been previously dishonored.
B.has no irregularities on its face.
C.is not overdue.
D.is so complete that no element of negotiability is lacking.
When Jeff’s car breaks down, he asks Kwik Tow, Inc., to tow it from its location to
Loyal Repair Shop. There is no discussion of a price, and Jeff and Kwik do not sign any
documents. After the tow, Kwik sends Jeff a bill. With respect to Jeff’s obligation to pay
the bill, this is
A.an express contract.
B.an implied contract.
C.a quasi contract.
D.no contract.
Fact Pattern 26-2
Sid, a director of Tech Software Company, learns that a Tech engineer has developed a
new, exciting video game. Sid buys Tech stock and tells his friend Uri, who also buys
Tech stock. When the new game is released three weeks later, Sid and Uri sell their
stock for a big profit.
Refer to Fact Pattern 26-2. Regarding Sid’s profits on the purchase and sale of Tech
stock, under Section 16(b) of the Securities Exchange Act of 1934 Tech may recapture
A.all of Sid’s profits.
B.half of Sid’s profits.
C.10 percent of Sid’s profits.
D.none of Sid’s profits.
Lexy and Mort act as the incorporators for NuGame Corporation. After the first board
of directors is chosen, subsequent directors are elected by a vote of NuGame’s
A.board of directors.
B.employees.
C.officers.
D.shareholders.
Violet negotiates with Urban Credit Corporation to obtain a loan for $85,000 to buy a
home. During the negotiations, Urban Credit orally misrepresents the terms, but
provides the required documents, which accurately state the terms. Violet does not read
the documents. The party or parties most likely liable for a violation of the law is
A.neither party.
B.Urban Credit.
C.Urban Credit and Violet.
D.Violet.
Idle Investments, Inc., and Harbor Bank are secured parties with security interests in
property owned by GR8 Manufacturing Corporation. Priority between these security
interests is generally determined by
A.the amount of the claim.
B.the custom in the trade.
C.the time of perfection.
D.the time the security agreement was signed.
Nadia is a shareholder of Open Air Productions, Inc. Nadia could normally exercise
appraisal rights if Open Air participated in
A.a share exchange.
B.a dissolution.
C.a takeover.
D.a winding up.