Courts have implied a private right of action for violation of Section 10(b) and Rule
10b-5.
The courts presume acceptance of a gift unless there is proof that the gift was refused.
Non-issuers of securities do not have to file a registration statement before reselling
securities they have purchased.
Contracts to commit criminal acts are voidable.
The doctrine of stare decisis provides that each court decision is independent and
should stand on its own.
Shareholders can bind the corporation to contracts.
Where there is a valid delegation of duties but the delegatee has not assumed the duties
under a contract, the delegation is called an assumption of duties.
Under the Howey test, an arrangement is considered an investment contract if there is
an investment of money by an investor in a common enterprise and the investor expects
to make profits based on the sole or substantial efforts of the promoter or others.
A “firm offer” may be made by a non-merchant seller.
The Clean Water Act forbids the filling or dredging of wetlands, unless a permit has
been obtained from the United States Army Corps of Engineers.
A will may be found to be invalid if it was made as a result of undue influence on the
testator.
A liquidated damages provision will be invalidated if it is considered to be a penalty.
The Magnuson-Moss Warranty Act requires that sellers or lessors make certain express
written warranties.
Lessees obtain title to the goods they lease.
A gift “causa mortis” is ineffective if the donor recovers from the existing illness or
peril.
“Federal question” cases are case arising under the United States Constitution, treaties,
and federal statutes and regulations.
Defense and other contractors that manufacture products to government specifications
are not usually liable if the product causes injury.
The legal process providing for a detailed pretrial procedure is called “case review.”
A voidable contract consists of an agreement between the parties, is supported by
legally sufficient consideration, is between parties with contractual capacity, and
accomplishes a lawful objective.
Food is deemed ameliorated if it consists in whole or in part of any “filthy, putrid, or
decomposed substance” or if it is otherwise “unfit for food.”
The drawee must be obligated to pay the drawer money before the drawer can order the
drawee to pay the money to a third party.
The law may permit something that would be ethically wrong.
If a contract has been breached, the law related to mitigation of damages places a
subsequent duty on the breaching party to make reasonable efforts to mitigate the
resulting damages.
The Fair Labor Standards Act applies to private, but not public, employers.
Proximate cause is also called “equitable cause.”
The term respondeat superior means “let the master answer.”
Police can give tickets or citations for misdemeanors they witness but may only affect a
warrantless arrest for felonies committed in their presence.
Under the Uniform Commercial Code, value has been given if the holder gives an
irrevocable obligation as payment.
Donovan takes his date to a sports bar to have a beer and watch the big football game.
When a play goes against the local team, the other patrons start yelling obscenities,
which greatly upsets his date. She asks the other customers to watch their language and
one of them curses at her telling her to mind her own business. She is so appalled that
she runs out of the bar crying. She can sue the bar and its patrons for intentional
infliction of emotional distress.
If an instrument is payable jointly using the word “and,” both persons’ indorsements are
necessary to negotiate the instrument.
The federal antitrust statutes are narrowly defined to reflect the government’s
enforcement policy and to allow it to respond to economic, business, and technological
changes.
A general partnership is a voluntary association of one (1) or more persons for carrying
on a business for profit.
The WTO has become the world’s most important trade organization.
In order to receive copyright protection, a work must be marked as being copyrighted.
There can be concurring decisions filed in any U.S. Supreme Court case regardless of
the type of decision.
Tender of performance is another term for completion of performance.
Applications for patents must be filed with the U.S. Patent and Trademark Office (PTO)
in Washington, D.C.
Trade secrets may be product formulas, patterns, designs, compilations of data,
customer lists, or other business secrets.
What does the mailbox rule provide?
A) that an acceptance must be mailed in order to be effective
B) that most contracting must be conducted through the mail
C) that an acceptance is not effective until it reaches the mailbox of the offeror
D) that a properly dispatched acceptance is effective when sent, even if it does not reach
its destination
E) that all communications in connection with contract formation are effective when
sent, so long as they are properly dispatched
Go-Fer-It Corporation has made a tender offer to acquire eighty percent of the shares of
Beekin Corporation at $58 per share. Because only sixty-eight percent of Beekin’s
shares have been tendered, the board of directors of Go-Fer-It wants to raise its offer
price to $65 per share. If Go-Fer-It raises the offer price to $65, it must:
A) cancel the first tender offer and start over.
B) keep the higher offer open for at least twenty days.
C) pay the $65 to all shareholders who accepted at $58 per share.
D) not complete the merger unless at least ninety percent of Beekin’s shares are
tendered.
E) do nothing, other than advertise the increase in the offer.
Which of the following best describes a tying arrangement?
A) two companies jointly market their products of services
B) a seller requires the purchase of one product or service in order to be able to
purchase a second product or service
C) a seller sets her price according to a market index
D) a seller offers a volume discount for purchases of large quantities
E) a seller refuses to deliver merchandise until payment has been received
Most states use the ________ test to determine legal insanity.
A) objective cognitive understanding
B) subjective cognitive understanding
C) objective cognitive reasoning
D) subjective cognitive reasoning
E) intelligence quotient
A written stop-payment order can be renewed in writing for additional ________
periods.
A) one-month
B) three-month
C) six-month
D) one-year
E) three-year
If an agreement does not contain an arbitration clause, the parties may nevertheless
agree to arbitration by entering into a(n) ________ agreement.
A) submission
B) compliance
C) capitulation
D) deference
E) assent
Which of the following items can legally justify paying unequal wages based on
gender?
A) seniority
B) merit
C) quantity or quality of work
D) seniority, merit, and quantity or quality of work
E) There are no legal justifications for paying unequal wages.
If a manufacturer produces a defective product, sells it to a wholesaler, who sells it to a
retailer, who sells it to a consumer, who is injured, which parties in the chain of
distribution are potentially liable under strict liability?
A) only the manufacturer
B) only the manufacturer and the wholesaler
C) the manufacturer, the wholesaler, and the retailer
D) only the party at fault
E) only the retailer
Betty believes that she has been discriminated against because of her sexual orientation.
Although federal law does not prohibit this discrimination, Mary believes that the law
should be changed in order to make the members of society more accepting of gay
individuals. Mary’s beliefs most closely correspond to which school of jurisprudence?
A) Critical Legal Studies School
B) Natural Law School
C) Historical School
D) Sociological School
E) Psychological School
Which of the following correctly describes a certificate of deposit?
A) It is a draft that is payable by a bank.
B) It is not considered to be a negotiable instrument.
C) It is a note that is payable on demand.
D) It is a note where the depositor is the payee.
E) It is a money order where the drawee is a bank.
The World Wide Web consists of computers that support a standard set of rules for the
exchange of information called:
A) Hypertext Transfer Protocol.
B) Cyberspace Transfer Rules
C) Hypertext Transfer Rules.
D) Web Exchange Rules.
E) Netscape Navigator Rules.
Which of the following will have the lowest repayment priority?
A) a debt secured by a financing statement filed in the proper office
B) a debt secured by a financing statement that has not been filed
C) a credit purchase at Sears, made with a Sears credit card
D) a credit purchase at Sears, made with a Visa credit card
E) whichever of the above transactions was first contracted
What are the two general types of delegation of contractual duties?
A) assumption of duties and declaration of duties
B) assumption of duties and assignment of duties
C) assumption of duties and obligation of duties
D) assignment of duties and stipulation of duties
E) declaration of duties and intention of duties
Which of the following is true about corporations?
A) Corporate law is federal law.
B) Corporate law is statutory; thus, there is no common law applicable to corporations.
C) Changes to state corporate law can require the amendment of a corporation’s articles
of incorporation, even though the corporation is already in existence.
D) One requirement of corporate status is that a corporation’s stock must be owned by a
large number of shareholders.
E) There are no closely-held corporations.
Which of the following describes a shareholder’s preemptive rights?
A) the right to purchase shares of another shareholder pursuant to a “buy-and-sell”
agreement
B) the right to purchase a pro-rata portion of any additional shares issued by the
corporation
C) the right of shareholders to override actions of the board of directors
D) the right of shareholders to remove members of the board of directors without cause
E) the right of shareholders to call special meetings
Most public accounting firms are organized and operated as ________.
A) sole proprietorships
B) general partnerships
C) limited partnerships
D) “S” corporations
E) limited liability partnerships
Sam and Dave are alone in a room when Sam accuses Dave of being a thief. In fact,
Dave has never stolen anything in his life. If Dave is upset and sues Sam:
A) Dave will have a successful cause of action for slander.
B) Dave will have a successful cause of action for libel.
C) Dave will have a successful cause of action for disparagement.
D) Dave will have a successful cause of action for slander, libel, or disparagement.
E) Dave will lose the lawsuit.
The power of the president to issue executive orders:
A) is expressly provided for in the U.S. Constitution.
B) was granted to the president in an early Supreme Court decision.
C) is derived from express delegation from the legislative branch and is implied from
the U.S. Constitution and state constitutions.
D) is subject to a two-thirds approval of the Senate.
E) exists only because it has never been challenged.
If management desires to solicit proxies from shareholders, it must:
A) file the proposed proxy, proxy statement and other solicitation material with the
Securities and Exchange Commission, and obtain SEC approval at the same time that
the materials are sent to shareholders.
B) file the proposed proxy, proxy statement and other solicitation material with the
Securities and Exchange Commission at least thirty days in advance of the time that the
materials are sent to shareholders.
C) file the proposed proxy, proxy statement, and other solicitation material with the
Securities and Exchange Commission at least ten days in advance of the time that the
materials are sent to shareholders.
D) file the proposed proxy, proxy statement, and other solicitation material with the
Securities and Exchange Commission at least ten days in advance of the time materials
are sent to shareholders, but only if financial statements will be distributed.
E) not file anything with the Securities and Exchange Commission, unless the SEC
receives complaints about the materials that are distributed.
When, generally, are equitable remedies available?
A) They are usually the first remedy that a court will try to apply.
B) They are required to be used alongside any legal remedy.
C) They are only awarded when a breach of contract case has been appealed.
D) They are used when the legal remedy does not adequately compensate the
non-breaching party.
E) They are awarded only if specific performance cannot be awarded.
Which of the following pleadings and procedural requirements make it more difficult to
bring class-action securities lawsuits?
A) the Securities Exchange Act of 1933
B) the Securities Exchange Act of 1934
C) the Private Securities Litigation Reform Act of 1995
D) the Tax reform Act of 1976
E) the Sarbanes Oxley Act of 2002
If a partner has the power, but not the right, to withdraw from a partnership, this means
that:
A) the partner cannot withdraw from the partnership.
B) the partner can withdraw from the partnership only with court approval.
C) the partner can withdraw from the partnership, but could be liable for any resulting
losses to the other partners.
D) the partner can withdraw from the partnership without any liability or penalty.
E) the partner cannot withdraw from the partnership unless the other partners agree.
Which of the following is true about attachment and perfection of security interests?
A) A security interest may be either attached or perfected, but not both.
B) A security interest must be perfected before it can attach.
C) A security interest may be enforced by the creditor, even if it has not been perfected,
so long as it has attached.
D) Attachment generally gives the same rights to the secured party as perfection.
E) Security interests in goods other than consumer goods are usually automatically
perfected.
A limited liability company’s operating agreement may provide that a member’s
ownership interest may be evidenced by ________ issued by the LLC.
A) common stock
B) preferred stock
C) a certificate of interest
D) a certificate of intent
E) a certificate of membership
As changed in the 2005 Act, which of the following are the first unsecured claims to be
paid?
A) claims of “gap” creditors
B) claims for wages and salary
C) claims for contributions to employee benefit plans
D) unsecured claims for domestic support owed to the spouse, former spouse, or child
of the debtor
E) fees and expenses of administering the estate
One corporation can acquire all the shares of another corporation through a share
________. In this arrangement, both corporations retain their separate legal existence,
with the parent corporation owning all the shares of the subsidiary corporation.
A) collaboration
B) partnership
C) compendium
D) exchange
E) amalgamation
A driver stopped at a convenience store to run inside briefly. The driver left the engine
running and forgot to set the parking brake. The car suddenly started rolling toward two
small children, and Vicki, a bystander, pulled the two children out of the way of the
rolling car. Vicki is injured in the process. Can Vicki recover from the driver of the car?
A) yes, because of the Good Samaritan rule
B) no, because of an intervening event
C) no, because of assumption of the risk
D) yes, because the driver set up the dangerous situation
E) no, because of the negligence per se rule.
What is the difference between the common law and the UCC regarding who carries the
risk of loss?
A) Under the common law the seller always carried the risk of loss, but under the UCC
it varies depending on the circumstances.
B) Under the common law whoever held title carried the risk of loss, but under the
UCC it varies depending on the circumstances.
C) Under the common law the buyer always carried the risk of loss, but under the UCC
it varies depending on the circumstances.
D) Under the common law only a party who fails to insure the goods carries the risk of
loss, but under the UCC both parties carry the risk of loss.
E) There is no difference, under both the common law and UCC whoever holds title to
the goods, also carries the risk of loss.
John contracts to buy $600 of medical supplies from Tim. The contract states the
shipping term is ex-ship. The goods are lost in transport. Tim argues that a shipment
contract was created and therefore he is not responsible for the lost shipment. John
argues that a destination contract was created and therefore he is not responsible. Who
is right and why?
A) John is right because ex-ship creates a destination contract.
B) John is right because the UCC presumes that contracts are destination contracts and
parties may not make agreements to the contrary.
C) Tim is right because ex-ship creates a shipment contract.
D) Tim is right because the UCC presumes that contracts are shipment contracts and
parties may not make agreements to the contrary.
E) John and Tim are both incorrect because ex-ship means that the carrier is responsible
for the lost goods.
States may require environmental impact studies for proposed developments based on:
A) a delegation of power from the National Environmental Policy Act (NEPA).
B) the Fourteenth Amendment “equal protection” clause.
C) the Fifth Amendment “due process” clause.
D) a delegation of powers from the Environmental Protection Agency.
E) state police powers.
Which of the following is true regarding the definitions of “reasonable” and
“commercial reasonableness” in Articles 2 and 2A of the UCC?
A) The UCC specifically defines those terms in section 2-103.
B) The UCC defines those terms in the context of common usage only.
C) The UCC defines those terms by reference to a special UCC glossary.
D) The UCC does not specifically define the terms. Instead, their meaning is
determined by reference to such matters as the course of performance or the course of
dealing between the parties, and usage of trade.
E) The UCC specifically defines “reasonable,” but not “commercial reasonableness.”
A contract of ________ is a preprinted form whose terms the consumer cannot
negotiate and must sign in order to obtain a product or service.
A) collusion
B) dilution
C) dissolution
D) adhesion
E) corroboration
The Securities Exchange Act of 1934 covers the following except:
A) trading of certain securities following their initial issuance.
B) regulation of securities exchanges.
C) initial issuances of securities that are exempt under the 1933 Act.
D) ongoing periodic financial reporting by companies listed on national exchanges.
E) provisions that assess civil and criminal liability on violators.
“Benefit of the bargain” is descriptive of which type of damages?
A) compensatory damages
B) punitive damages
C) reliance damages
D) liquidated damages
E) injunctive damages