First Amendment protections do not apply to corporations.
Corporations generally provide unlimited transferability of ownership interest.
A plaintiff may seek legal but not equitable remedies for violations of Title VII.
In a unilateral contract, one party’s consideration is a promise and the other party’s
consideration is an act.
An offer by a retailer to purchase seasonal goods from a wholesaler would not lapse
before an offer to purchase goods that could easily be sold all year long.
The defenses of lack or failure of consideration, breach of contract, and fraud in the
inducement in the underlying contract cannot be used against a holder in due course.
Quasi-contracts are legally the same as implied-in-law contracts.
A license is a right to use another’s property that is permanent and revocable.
Closely held corporations generally offer stock for sale to the general public.
A common-carrier delivery contract occurs if a buyer and seller execute a contract and
the seller subsequently places the goods with an independent contractor for delivery to
the buyer.
Mutual promises to marry fall within the statute of frauds.
The person creating the endorsement is the endorsee and the person receiving the
endorsement is the endorser.
A merger requires shareholder approval, but a consolidation does not.
The FTC created the Cooling-Off Rule that gives consumers three days to cancel
purchases they make from salespeople who come to their homes.
Insider trading occurs if a company employee or executive uses material inside
information to make a profit.
The Executive Branch creates statutory laws.
An insurable interest is the right to insure the goods against any risk exposure such as
damage or destruction.
All employees are agents of their employers, and all agents are employees.
A concurrent condition occurs when each party’s performance is conditioned on the
performance of the other.
An allonge is an additional piece of paper with the endorsements that must be firmly
attached to the endorsement.
A limited partnership agreement in which the partners share management
responsibilities equally but some partners are limited in regards to the amount of profit
distribution to which they are entitled.
A time instrument becomes overdue at any date after the expressed due date on the
instrument.
The U.S. Constitution explicitly allows courts to review legislative and executive
actions to determine whether they are constitutional.
Consideration is optional in every contract.
Courts are generally critical and unsupportive of ADR methods.
All real property is considered unique.
Liability attributed when the transfer of an instrument breaches a warranty associated
with an instrument is called signature liability.
Fraudulent misrepresentation has the same elements as intentional misrepresentation.
Contractual conditions may be expressly inserted into the contract by the parties but
may not be implied.
Scienter is present when the party accused of making the fraudulent assertion believed
that the assertion was false or made the claim without any regard for whether it was true
or false.
If Molly was indicted by the grand jury of murder, she could still be found not guilty in
a criminal trial.
Conforming goods are goods that conform to UCC specifications.
A note is a promise, by the maker of the note, to pay a payee.
In order to disclaim the implied warranty of fitness for a particular purpose, the seller
must disclaim the warranty in writing.
Under the UCC, the term “cover” refers to substituting goods for those due under a
sales or lease agreement when a seller or lessor provides nonconforming goods.
Business managers should only consider customers when they engage in ethical
reasoning.
The UCC defines a negotiable instrument as a written document that is signed by the
maker with an unconditional promise to pay back a sum certain in money on demand or
at a time certain.
Roofing Issues. Sally agrees to roof a house for Bob. After doing his research, Bob
chooses Sally based on her great reputation for being conscientious and doing good
work. Bob knows little about roofing and stays away from all the noise involved. Sally
provides her own tools for herself and other workers, sets her own schedule, and
charges a flat rate of $10,000 to be paid when the job is completed. Sally hires Trudy,
Glen, and Fred to help with the roofing. She pays them an hourly rate, supervises their
work, provides them with tools and materials, and sets their schedules. Curious about
what is going on there, Bob’s friend Spencer walks by the house while the roofing is
being done. Glen absent-mindedly throws some old shingles off the roof and hits
Spencer in the head resulting in him going to the local emergency room and receiving a
couple of stitches in his scalp. Spencer decides to sue all the roofers and also Bob and
Sally for his hospital expenses and for pain and suffering. Assuming Glen was
negligent, which of the following is the most likely result in a lawsuit against Sally
brought by Spencer?
A. Spencer will win because Glen was acting within the scope of his employment; and
Sally is, therefore, liable for his negligence.
B. Spencer will lose because Glen was not acting within the scope of his employment;
and Sally is not, therefore, liable for his negligence.
C. Spencer will win because regardless of whether Glen was acting within the scope of
his employment, Sally is liable for his negligence.
D. Spencer will lose because regardless of whether Glen was acting within the scope of
his employment, Sally has no liability.
E. Spencer and Sally will split costs on a 50-50 basis.
Miracle Pill. Katie advertised that she had developed a pill for women that would result
in weight loss, wrinkle loss, and improved vitality; and for men would result in all those
things, plus hair growth. Her television advertisement showed miracle results allegedly
obtained by consumers. Katie cautioned, however, that ingestion of the pill for six
months was required before results would be evident. The pill was wildly popular. The
Federal Trade Commission, however, investigated and determined that Katie had failed
to have a reasonable basis for the claims she made in advertisements. Katie claimed that
she was merely involved in the use of generalities and clear exaggerations. The
Commission disagreed and issued a formal administrative complaint against her. After a
hearing, an order was issued by the Federal Trade Commission requiring that Katie stop
advertising and selling the pills. After losing all appeals, Katie continued selling the
pills until she was fined by the Federal Trade Commission. She has since left the
country and cannot be located. Who would have presided over the hearing involving the
administrative complaint filed against Katie by the Federal Trade Commission?
A. A state circuit court judge
B. A federal district court judge
C. An administrative law judge
D. A panel of commissioners of the Federal Trade Commission
E. All the commissioners of the Federal Trade Commission
An agent cannot represent both the principal and a third party in an agreement because
there could be a(n) ______.
A. consortium
B. disagreement
C. conflict of interest
D. delineation of interest
E. absolution
___________ is a person receiving an endorsement.
A. Allonge
B. A transferor
C. A transferee
D. An endorser
E. An endorsee
Who calls the creditors’ meeting in a Chapter 7 proceeding?
A. The trustee
B. The interim trustee
C. The bankruptcy judge
D. The district court judge
E. At least three of the creditors
Under UCC Section 208(1), which of the following refers to the history of dealings
between the parties in the particular contract at issue?
A. Trade norm
B. Course of dealing
C. Anticipated trade dealing
D. Usage of trade
E. Course of performance
Bill contracts with Judy to wash her car and then delegates the duty to Paul. Paul fails
to wash the car. Which of the following is true regarding Bill’s duty to Judy, if any?
A. Bill has no duty to Judy so long as she did not expressly object to the delegation.
B. Bill has no duty to Judy regardless of whether she objected to the delegation.
C. Bill continues to be bound to Judy to see that her car gets washed.
D. Bill continues to be bound to Judy to see that her car gets washed only if the contract
expressly prohibited delegation.
E. Bill continues to be bound to Judy to see that her car gets washed unless he already
paid Paul for the job.
Skateboard Growth. Both Bernie and John were presidents of small businesses
manufacturing and selling skateboards. Bernie’s store was called “Skateboard City” and
John’s business was called “Skateboard for Health.” Because a large sports store was
coming into town, they, along with the boards of directors decided that it would be a
good idea to combine the businesses. They decided to retain the name “Skateboard for
Health” and simply amend the articles of consolidation. Bernie was concerned,
however, with the change because he was contemplating filing a lawsuit against Hank
who had purchased 10 custom skateboards and had not paid for them. He was excited,
however, about the prospect of not being liable for a lawsuit he expects to be filed by
Greg who fell when a wheel came off on a skateboard sold by Bernie’s corporation
resulting in a serious ankle sprain and medical bills. After investigation, Bernie is aware
that the wheel was negligently attached to the skateboard. Bernie told John that one
reason he wanted to retain John’s name was to prevent Greg from being able to recover
against him. Which of the following is the appropriate term for the action taken by
Bernie and John in combining their businesses?
A. Merger
B. Consolidation
C. Mixing
D. Restructuring
E. Reforming
Which of the following is property that the true owner has intentionally placed
somewhere but has forgotten its location?
A. Lost
B. Mislaid
C. Discarded
D. Abandoned
E. Terminated
A(n) _____ is any description of the good’s physical nature or its use, either in general
or specific circumstances that become part of the contract.
A. express warranty
B. implied warranty
C. acknowledged warranty
D. claimed warranty
E. consequential warranty
In a goods-in-bailment contract, when is an insurable interest created?
A. When either party has title to the goods
B. When either party has title or a risk of loss
C. When either party has title, risk of loss, or other economic interest attached to the
goods
D. Two days after either party has title to the goods
E. Never, there is no such thing as a goods-in-bailment contract
Boat Tow. Donnie went to a new car dealership and told the salesperson, which was not
the manager, that he needed a new car that would get good gas mileage and would also
pull his big boat. The salesperson encouraged him to buy a smaller car that the
salesperson promised would pull the boat. Donnie bought the car and used it to pull the
boat. Unfortunately, the heavy pull on the car did significant damage to the car’s engine.
Donnie complained to the salesperson that denied any liability. Donnie, who had half a
semester of business law, informed the salesperson that along with the sale of the car he
also received an express warranty and an implied warranty of merchantability, and that
he could recover under either of those theories. Is Donnie correct that the car was sold
with an implied warranty of merchantability?
A. No, because there was no writing guaranteeing that warranty signed by the
salesperson.
B. No, because the salesperson was only engaged in exaggeration.
C. No, because only the manager can make such a warranty.
D. No, both because nothing was in writing and also because only the manager can
make such a warranty.
E. Yes.
Which of the following is an investment swindle in which high profits are promised
from fictitious sources and early investors are paid off with funds raised from later
investors?
A. False entries
B. False token
C. False pretenses
D. Ponzi scheme
E. Pretexting
Cheap Motorcycle. Tony, a hateful, disgruntled, business law teacher notices that a
student, Peter, who is past the age of majority, has bought a new motorcycle. Peter has
struggled through school, is in his last semester, and needs to pass business law in order
to graduate. Tony tells Peter that he would like to see Peter pass; and, in the next
sentence, Tony says that he wants to buy the motorcycle for $100, a price far below the
value of the motorcycle. Peter asks if Tony is serious about the price, and Tony replies,
“I have the power here!” Tony proceeds to draw up a contract for the sale of the
motorcycle for $100 with lots of fine print by which he can sue Peter and recover any
maintenance costs for the next five years. Seeing that he is at an advantage, Tony also
throws into the deal that Peter will mow Tony’s one acre yard for $5 all summer long.
After Tony tells Peter to either take the contract or leave it, Tony reluctantly signs.
Which of the following is true regarding the yard mowing agreement?
A. It is enforceable.
B. It is not enforceable because it is unconscionable.
C. It is not enforceable because a teacher and student are involved.
D. It is not enforceable unless it can be proven that Peter is over the age of twenty-five.
E. It is not enforceable unless Tony also signs a binding contract to pass Peter even if he
makes terrible grades.
Discuss when title and risk of loss pass to the buyer in a goods-in-bailment contract
when (a) the seller has a negotiable document of title (b) the seller has a nonnegotiable
document of title and (c) the seller has a contract or other instrument showing
ownership that is not a negotiable or nonnegotiable document of title.
Which of the following is true regarding administrative agencies?
A. There are state administrative agencies, but no federal administrative agencies.
B. There are federal administrative agencies, but no state administrative agencies.
C. There are state and federal administrative agencies, but no local administrative
agencies.
D. Administrative agencies exist only at the local county level.
E. Administrative agencies exist at the federal, state, and local level.
Which of the following may be considered a commercially reasonable manner by which
notice of dishonor can be given to a secondarily liable party?
A. Orally
B. In writing
C. Electronically
D. Orally, in writing, and electronically
E. By certified letter only
Which of the following are stakeholders of a business?
A. Owners and employees
B. Employees and customers
C. Customers, owners, and management
D. Management, owners, and employees
E. Customers, owners, management, and employees
Which of the following procedures must be followed in order to effectuate a voluntary
transfer of real property?
A. Execution
B. Delivery
C. Acceptance
D. Execution, delivery, acceptance, and recording
E. Execution and delivery, but not acceptance
When would a court consider the adequacy of consideration?
A. To verify property was sold at the fair market value.
B. To verify that the sale of assets was not done to avoid payment to creditors.
C. To verify that one party gave a promise for an act of another party.
D. To verify that each party gave a valid promise to the other party.
E. The court never considers the adequacy of consideration.
Disappointed Applicant. Polly, who had a regular driver’s license to operate an
automobile, decided that she really wanted to drive a tractor-trailer truck. She thought
that it would be nice to earn money while seeing the country. Polly had all applicable
training and went to her state’s department of motor vehicle office to take the test
required in order to obtain a license to drive a tractor-trailer truck. While taking the test,
in an effort to relieve stress, Polly was stretching her neck and looking around at the
other nervous test takers. The proctor for the exam saw her and accused her of
stretching and straining to look at the exam answers of other test takers. Her application
to drive a tractor-trailer was denied. The local agency department head was also furious
with Polly and proceeded to revoke her regular automobile driver’s license as well.
Applicable statutes provide as follows: (1) “the DMV may suspend or revoke the
privilege of any person to operate a motor vehicle upon any of the grounds which
authorize the refusal to issue a license”; (2) “the DMV may refuse to issue a license to
any person who has “committed any fraud in any application.” Polly hears that you
have just finished business law and asks for advice. She says that she had decided that
she does not really want to drive a tractor-trailer truck because of her neck problems but
that she really would like to have her license to operate a regular automobile reinstated.
The statutes setting forth the authority of the agency are called ______ statutes.
A. enabling
B. authorization
C. enforcement
D. dedicated
E. final
If an instrument is not an unaccepted draft presented to a drawee, which of the
following presentment warranties is applicable?
A. That the warrantor of the instrument is entitled to payment.
B. That the instrument has not been altered.
C. That the warrantor has no knowledge that the drawer’s signature or the draft is
unauthorized.
D. That the warrantor of the instrument is entitled to payment, that the instrument has
not been altered, and that the warrantor has no knowledge that the drawer’s signature or
the draft is unauthorized.
E. The warrantor of the instrument is entitled to enforce the instrument and that the
warrantor has no knowledge that the drawer’s signature or the draft is unauthorized, but
not that the instrument has not been altered.
The ________________ establishes how a franchise agreement will be terminated.
A. franchise agreement
B. Franchise Termination Act
C. Franchisor-Franchisee Protection Act
D. Franchisee Protection Act
E. Franchise Wrap-Up Act
Under the UCC, the seller must bring a lawsuit on a breached contract within ______
years of when the breach occurred or when the seller became aware of it.
A. one
B. two
C. three
D. four
E. six
Which of the following is true regarding a secured party’s interest in proceeds?
A. A secured party automatically has an interest in proceeds for a limited amount of
time.
B. A secured party has an interest in proceeds only if the proceeds are taken into the
possession of the secured party.
C. A secured party has an interest in proceeds only if a financing statement is filed on
the proceeds.
D. A secured party has an interest in proceeds if the secured party takes the proceeds
into the possession of the secured party or if the secured party files a financing
statement on the proceeds.
E. The secured party may not acquire a security interest in proceeds unless a new
agreement regarding the proceeds is reached with the debtor.
Chewer. The state in which Susan lives has a statute prohibiting dogs running at large.
All dogs are required to be on a leash whenever they are off the owner’s premises.
Susan’s dog, while not on a leash, visits the home of a neighbor down the street. While
there, the dog carries off an expensive pair of shoes belonging to Robert. The shoes are
chewed and destroyed. A neighbor informed Robert of what had happened. Robert
commented that he never should have left his $300 shoes lying on the deck in the first
place but that he expects to be repaid by Susan. Robert found out that the dog had
carried away a number of shoes and other articles in the neighborhood, chewing them to
pieces. Susan did nothing to warn anyone. Robert thinks that she should be punished for
her activities, which would perhaps deter her from allowing the dog to run loose. Which
of the following theories will Susan likely use to defend herself?
A. Assumption of the risk.
B. Comparative negligence.
C. Res ipsa loquitur.
D. Negligence per se.
E. Res ipsa loquitur and negligence per se.
Refused Furniture. Selina arranges to sell furniture from her furniture store to Roland
for $3,000. Roland was supposed to give Selina a $500 deposit on February 1 and pay
the remainder in monthly installments. Selina was to deliver the furniture by February
7. Roland did not pay Selina as promised on February 1. He asked her to wait until
March 1, but she refused. She also refused to deliver the furniture. Selina was able to
sell the furniture for only $2,500 because of a downturn in the economy. Roland told
Selina that she had no right to withhold or sell his furniture and that he was suing.
Selina incurred $100 in additional amounts in advertising costs to advertise the
furniture that Roland initially purchased. Selina saved $40 in delivery costs because the
subsequent purchaser picked up her own furniture. Which of the following is true
regarding any right of Selina to recover the additional advertising fees she incurred
from Roland?
A. She is entitled to recover the damages if she can show that Roland agreed to pay
such damages in his contract with her.
B. She is entitled to recover the damages if she can show that Roland orally agreed to
pay such damages.
C. She is entitled to recover the damages if she can show that Roland has a history of
breaching contracts of sale.
D. Selina will be able to recover the damages so long as they were reasonably incurred
because of Roland’s breach.
E. She is not entitled to recover the fees because she had no right to resell the furniture.
Which of the following was the result in Eric Lucier and Karen A. Haley v. Angela and
James Williams, Cambridge Associates LTD., and Al Vasys, the case in the text
involving a home inspection that allegedly failed to reveal a bad roof, in which some
defendants moved for partial summary judgment seeking enforcement of a limit of
liability clause contained in the contract at issue?
A. That the limitation of liability would be upheld.
B. That the limitation of liability would be partially upheld.
C. That the limitation of liability would be enforced only if it could be established that
the plaintiffs actually read the agreement prior to signing.
D. That the limitation of liability would not be enforced because it was usurious.
E. That based on the circumstances involved, the limitation of liability clause was
unconscionable and would not be enforced.
Under the UCC, how may an acceptance be made?
A. Only be writing.
B. Only orally or by a writing.
C. Only by electronic communication or by writing.
D. Only by facsimile or by mail.
E. By any reasonable means of communication.
The equal dignity rule is based upon the _____________.
A. statute of writings
B. statute of frauds
C. documentation rule
D. enforcement rule
E. common rule
Under the UCC, items are _____ if they exist physically.
A. merchandise
B. real
C. tangible
D. movable
E. saleable
If a manager has business transactions in one of the European Union countries and
wants to terminate an agency relationship, he or she would want to have access to
knowledge about which of the following?
A. Chapter IV of the Agency Relationship Law
B. Chapter VII of the Employment Relationship
C. Article VI of the European Union Regulations
D. Article VII of the European Union Regulations
E. Section X of the Agency Regulations
Scruffy. Samis engaged in the criminal activity of growing marijuana in his home. A
couple of police officers while randomly passing through the neighborhood saw Sam go
to the mailbox. They thought that he looked a little scruffy, and they were concerned
that they had not made a sufficient number of arrests in the past month. They decided to
“check out” Sam. Therefore, they immediately broke down Sam’s door, searched his
home, and arrested him. The police officer in charge told Sam that because marijuana
was involved, he lost his rights against self-incrimination and that he might as well
confess. Sam proceeded to confess to growing marijuana and a number of other crimes.
The judge was so angry with Sam that he threw him in jail for two months without any
kind of hearing. Sam’s lawyer questions whether Sam had lost his right against
self-incrimination. Which of the following is true on that issue?
A. Sam did not lose his right against self-incrimination.
B. The office was correct. Sam lost his right against self-incrimination because
marijuana was involved.
C. Sam lost his right against self-incrimination because he did not immediately ask for a
lawyer.
D. Sam lost his right against self-incrimination because he did not immediately say he
raised his right against self-incrimination.
E. Sam lost his right against self-incrimination both because marijuana was involved
and also because he did not immediately ask for a lawyer.
In order to be upheld in court, an agency’s fact finding must be supported by which of
the following?
A. Substantial evidence
B. A rational basis
C. Any evidence
D. Reasonable evidence
E. Non-hearsay evidence
Which of the following is true regarding agent liability when a third party gets a
judgment against a previously undisclosed principal?
A. The agent is freed from liability to the third party.
B. The agent remains liable to the third party.
C. The agent is freed from liability to the third party unless the principal refuses to pay.
D. The agent is freed from liability to the third party unless the principal files for
bankruptcy.
E. The agent is freed from liability to the third party unless a contract for personal
service was involved.