All states allow the remedy of rescinding a contract for the sale of goods while still
allowing the remedy of suing for damages.
a. True
b. False
After Ashley was denied credit for a new car, she checked her credit report with
Equifax. The report showed that several credit cards had been issued to her recently,
and they had large, unpaid balances. Ashley had not applied for or received these cards.
She found out that someone had stolen personal information she had entered onto her
computer and used the information to fraudulently obtain the credit cards. Ashley:
a. is a victim of identity theft.
b. is protected under the Identity Theft and Assumption Deterrence Act.
c. can seek restitution in court.
d. All of the above.
Wrongful discharge claims are generally based upon all EXCEPT:
a. public policy.
b. criminal law.
c. contract.
d. tort law.
An agreement may violate public policy even if the agreement does not require a party
to commit a crime, tort, or violate a statute.
a. True
b. False
Retaliation means that an employer has done something that would deter a reasonable
worker from complaining about discrimination.
a. True
b. False
An indorser who writes “without recourse” above her signature on a negotiable
instrument is not liable for payment.
a. True
b. False
To raise revenues, the City of St. Cloud required restaurants to purchase a special
permit if they wanted to serve food in an open-air patio. (This is in addition to he
sanitation inspection license.) While at Hola Taco, a restaurant in St. Cloud, a customer
notices that Hola Taco’s permit expired. This mean the customer is not legally required
to pay for her food.
a. True
b. False
Provisional patents are good for one year.
a. True
b. False
Jim agreed to show Donna’s car to a potential buyer. Donna was not able to be home
since she had to attend a meeting. After showing the car, Jim left the keys in it and the
car was stolen. Which statement is correct?
a. Since Jim is a gratuitous agent, he will only be liable for the loss of the car if his
conduct constitutes gross negligence.
b. Since Jim is a gratuitous agent, he will be liable for the loss of the car if his conduct
constitutes ordinary negligence.
c. Since Jim is a gratuitous agent, he has no liability for the car.
d. Since Jim is a gratuitous agent, he is strictly liable for the loss of the car.
The common law governs contracts for:
a. services.
b. real estate.
c. employment.
d. All of the above.
Martin, Human Resources Director for Spring Co., sent Lynn the following signed
letter: “This letter confirms our offer to you. We will pay for your moving expenses, up
to $1,500. Your starting date will be February 1, and you will become eligible for health
care benefits as of May 1. You will receive a starting salary of $36,500 annually, with
reviews and eligibility for increases at six months, 12 months, and annually thereafter.
Vacation will be for two weeks a year after one year. Spring fired Lynn eight months
after she started to work, and Lynn sued arguing the letter constituted a memorandum of
an oral contract for employment for five years. Is the letter sufficient to satisfy the
statute of frauds?
a. Yes, to satisfy the statute of frauds, a memorandum is sufficient if it evidences an oral
contract between the parties and is signed by the defendant.
b. Yes, the memorandum is signed by the defendant and states with reasonable certainty
the subject matter and essential terms of the agreement.
c. No, to satisfy the statute of frauds, the memorandum must contain all essential terms
of the contract.
d. No, the letter was not formal enough to satisfy the statute of frauds.
Which of the following are tasks of the National Labor Relations Board?
a. To adjudicate claims that an employer has committed an unfair labor practice.
b. To adjudicate claims that a union has committed an unfair labor practice.
c. To decide whether a particular union is entitled to represent a group of employees.
d. All the above are tasks of the National Labor Relations Board.
Boris sky dives out of a plane and gets hung up in a tree, hopelessly suspended and
swinging precariously in his parachute from the branches of the tree. Natasha sees that
he is in trouble and comes to his rescue. Once Boris is safely on the ground, he
gratefully promises to give Natasha half of his life savings. When he changes his mind,
Natasha will probably be unsuccessful in enforcing his promise.
a. True
b. False
Jill was a limited partner in a retail business that was sued by a customer who fell in the
store. The customer claimed the business was negligent in caring for its floors. Which
statement best describes Jill’s potential liability?
a. Jill has no potential liability to the customer.
b. Jill can be held personally liable to the customer since she is a partner.
c. Jill can only be liable to the amount of her investment.
d. Jill is personally liable, but the woman must first collect from the general partners
before collecting from Jill.
Statutory law is to legislative bodies as common law is to:
a. England.
b. precedent.
c. courts.
d. administrative regulations.
Which of the following statements is incorrect concerning arbitration?
a. The losing party in an arbitration can file an appeal in a District Appellate Court.
b. Arbitration is almost always cheaper and faster than litigation.
c. Arbitrators may be biased toward the “larger party who may be a repeat client.
d. Parties to a contract cannot be forced to arbitrate unless the contract specifies it.
Most states recognize some form of comparative negligence.
a. True
b. False
Concerned that the Chapter 11 bankruptcy procedures were harming the creditors of
small businesses, Congress added some provisions in 2005 to change the process for
businesses with less than $2 million in debt. Which of these provisions was included in
that revision?
a. Small businesses have only 21 days to file a reorganization plan.
b. Small businesses do not have to declare debts of less than $5,000.
c. The courts have only 45 days to confirm or reject the plan or reorganization.
d. All creditors of small businesses are treated as equals and proceeds are distributed
proportionately to secured and unsecured creditors.
In which case does the buyer receive no title to the goods he purchases?
a. Owner has good title. Max steals the goods and sells them to buyer.
b. Owner has good title. Max purchases the goods using deception. He then sells them
to buyer who gives value and acts in good faith.
c. Owner has good title. Max purchases the goods using fraud. He then sells them to
buyer who is not a BFP.
d. All of the above.
e. Both a and c.
Common stock is last stock in line for any corporate payouts, including dividends and
liquidation payments.
a. True
b. False
With respect to United States patents and copyrights, GATT:
a. expressly excludes controversies involving patent and copyright violations.
b. will allow the United States to assess tariffs against a country that refuses to honor
U.S. copyrights or patents.
c. imposes sanctions against any country refusing to honor another signatory country’s
patents or copyrights.
d. requires retribution to be paid to the United States by any country ignoring U.S.
patents or copyrights.
Which of the following statements regarding a negligence case is correct?
a. A plaintiff must show that the defendant’s act was both the factual cause of her injury
as well as a foreseeable injury.
b. A plaintiff must show that the defendant’s act was the factual cause of her injury even
if the injury was not foreseeable.
c. A plaintiff must show that the defendant’s act created a foreseeable danger even if it
was not the factual cause of her injury.
d. A plaintiff does not have to show that the defendant’s act either created a foreseeable
danger or that the act was the factual cause of her injury.
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
Precision had a contract to supply Higgins, Co. with 500 medical instruments for
delivery in three months. Several weeks later Higgins reads in the Wall Street Journal
that Precision has been sued for selling defective instruments. Higgins could:
a. require written assurances from Precision.
b. sue Precision for damages immediately.
c. “cover.”
d. declare the contract is breached.
The bank who lends money in exchange for a mortgage on the borrower’s house is
considered to be the:
a. mortgagee.
b. mortgagor.
c. profitor.
d. profitee.
Which of the following questions could an interviewer safely ask a candidate in a job
interview?
a. Are you a United States citizen?
b. When did you graduate from college?
c. Could you carry a 100-pound weight, as required by this job?
d. Are you married?
Express warranties must be in writing so they can be proven in court.
a. True
b. False
Judicial review is the power of the federal courts to declare a statute or governmental
action void.
a. True
b. False
Hankrin Corp. is incorporated under Delaware law and has its principal place of
business in Annapolis. For personal jurisdiction purposes, it is considered a resident
only of Maryland.
a. True
b. False
Dodger bought an insurance contract from Liberty Farm Co. The policy contained a
clause stating that all claims for losses had to be reported within 45 days after the date
of the loss or the claim would be barred. Time is stated to be of the essence. Dodger
sustained a covered farm loss, but did not report it to Liberty Farm until 50 days later.
Liberty Farm denied coverage for the claim. If Dodger sues, who wins?
a. Dodger wins; the contract was substantially performed.
b. Liberty Farm wins; there was failure of a condition subsequent.
c. Dodger wins; courts will not enforce a time-of-the-essence clause.
d. Liberty Farm wins; the impossibility doctrine applies.
Office Plus, an office supply store, ordered 600 blank CDs from Curtis Co., a
manufacturer of computer products. Office Plus placed the order using a preprinted
purchase order form; Curtis acknowledged the order by sending a preprinted acceptance
form back to Office Plus. Unlike Office Plus’ form which says nothing about packaging,
Curtis’s form specifies that the CDs will be packaged in cases of 10 CDs per box, 10
boxes per case. Which statement is correct?
a. The UCC does not cover computer CDs.
b. Curtis’s packaging term is a different term which materially changes the offer. There
is no contract.
c. Curtis’s packaging term is an additional term and therefore a part of the contract
unless Office Plus promptly objects to the term.
d. The UCC does not cover the contract because both parties are merchants.
UCC Section 2-204 provides three important rules that enable parties to make a contract
quickly and informally. These include all but which of the following?
a. The parties may make a contract in any manner sufficient to show that they reached
an agreement.
b. A writing sufficient under the statute of frauds may be a simple memo, a letter, or
informal note, but need not itself be a contract.
c. The UCC will enforce a deal even though it is difficult to say exactly when it was
formed.
d. A court may enforce a bargain even though one or more terms were left open.