Which of the following is sometimes referred to as “but for” causation?
A. Proximate cause.
B. Significant cause.
C. Actual cause.
D. Legal cause.
E. Constructive cause.
“Diving fiasco.” Mike, who owns a dive shop in the U.S., takes a group of his
customers diving in U.S. waters. Mike is aware that the area where the divers will be
visiting is occasionally visited by sharks. He is also aware that, while sting rays are
usually tame, they can become aggressive when fed. Mike did not reveal that
information to the group of divers going with him because in his experience, as soon as
customers hear of even a hint of danger, they refuse to pay and go on the trip. The
divers go down into the water, and some have squid with which to feed the sting rays.
During the dive, one of the sting rays becomes agitated and latches onto diver Susie’s
arm. Susie is so disconcerted that she drops her regulator (her breathing device) from
her mouth and is in considerable difficulty. Another diver, Billy, encounters a shark
which snaps at him. Fortunately, the shark does not bite him but does damage his diving
equipment. He is also in distress. Mike, who is in charge of the dive, does nothing but
return to the boat because the dive turned out to be more trouble than expected. Wendy,
another diver on the trip, also returns to the boat without doing anything to help the
divers in distress. Sam, on the other hand, goes to rescue the divers who are in distress.
He manages to assist them, but in the process, he pulls his back and requires medical
care. All divers return to the boat and are very unhappy with Mike.
Which of the following is true regarding whether Mike is liable for the injuries Sam
sustained in coming to the rescue of the divers in distress?
A. Mike is not liable for Sam’s injuries because Sam had no legal duty to come to the
aid of the other divers.
B. Mike is not liable for Sam’s injuries because Sam assumed the risk of harm.
C. Mike is not liable for Sam’s injuries because the shark attack constituted a
superseding cause of the injuries.
D. Mike is liable for Sam’s injuries only if he made them worse by not getting Sam
medical attention on a timely basis.
E. Mike is liable for Sam’s injuries under the danger invites rescue doctrine.
A[n] ______ occurs when a party to a contract transfers his or her duty to perform to a
third party who is not part of the original contract.
A. Transfer
B. Assignment
C. Delegation
D. Performance
E. Unenforceable occurrence
Which of the following is a question of fact?
A. Did the vehicle run the traffic light?
B. Is premeditation necessary for a first degree murder conviction?
C. Is speech protected by the First Amendment?
D. What is necessary for service of process?
E. What elements should an answer contain?
As recognized by the court in Sperry-New Holland v. John Paul Prestage and Pam
Prestage, which of the following is true regarding the consumer expectations test for
product defect?
A. That if the plaintiff, applying the knowledge of an ordinary consumer, sees the
danger and can appreciate that danger, then he cannot recover for any injury resulting
from that appreciated danger.
B. That a plaintiff cannot recover if a reasonable person would conclude that the danger
in fact of the product, whether foreseeable or not, outweighs the utility of the product.
C. That a plaintiff may only recover if the plaintiff was the purchaser of the product
causing injury.
D. That a plaintiff may only recover if consumer oriented household goods are
involved.
E. That a plaintiff may only recover if the plaintiff reasonably expected the
manufacturer to have insurance, that the manufacturer did have insurance of the type to
cover the injury at issue, and that the plaintiff had no part in causing the injury.
An individual shareholder can enter a voting trust in which he or she transfers share
titles to a trustee in exchange for a ____.
A. Voting trust certificate
B. Proxy
C. Voting acknowledgement
D. Trustee voting agreement
E. Trust acknowledgement
“Animal Care.” Susan, a licensed veterinarian, was recently elected to the U.S. Senate.
Susan is very concerned about the lack of care for homeless cats and dogs. She
proposes legislation that citizens of all states be taxed sufficiently to provide for no-kill
animal shelters that citizens in states with higher than average incomes be taxed at a
higher rate than citizens of other states. She also proposed that federal funds for state
highways be denied to any state that fails to provide assistance to low income citizens
in covering pet vaccinations. Bill, another new senator, tells Susan that, apart from the
mandated federal income tax, Congress lacks the authority to tax states because the
U.S. Constitution expressly reserves that right to the states. Sam, another senator, tells
Susan that Congress has no authority to link highway funds or any other funds with
social welfare objectives. Ellen, a clerk in the Senate, tells Susan that Congress is
absolutely prohibited from taxing residents of one state at a higher rate than citizens of
another state.
Is Bill correct?
A. He is incorrect. The U.S. Constitution contains no such reservation.
B. He is incorrect because while the U.S. Constitution prohibits taxation in areas in
which states also tax, most states are not taxing for pet care purposes at this time.
C. He is incorrect in saying that the U.S. Constitution generally reserves the right to tax
to the states but he is correct in saying that Congress lacks the authority to tax in this
manner because Congress cannot lay taxes for any reason other than essential needs of
the federal government.
D. He is incorrect in saying that the U.S. Constitution generally reserves the right to tax
to the states but he is correct in saying that Congress lacks the authority to tax in this
manner because the president has issued an executive order prohibiting such taxation.
E. He is incorrect because the prohibition against Congress imposing taxes apart from
the federal income tax is contained in a federal statute passed by Congress, not in the
U.S. Constitution.
Which of the following is a set of rights and interests in relation to others with reference
to a tangible or intangible object?
A. Interests
B. Property
C. Transfers
D. Business
E. Commerce
“Sexual harassment ADR.” Jenny works at the Mexican fast-food restaurant which is
owned by an international company located in Mexico. Jenny is very angry with her
supervisor, Sleaze, as he has been making inappropriate sexual comments to her and
other employees. Jenny decides to sue and retains a lawyer, Brice. Brice talks with the
owners of the restaurant and is informed that Jenny signed an agreement to mediate and
also to arbitrate any claims. Jenny informed Brice about other employees who entered
into such agreements and later complained of harassment. Brice promises her that under
federal law, he is legally entitled to get copies of all documents used during any other
mediations and arbitrations and that he is also entitled to get detailed information
regarding what was said and agreed upon by them. Brice also tells Jenny that, while he
is not going to bring it up now, if they so choose, Brice and Jenny can avoid the
arbitration agreement because under a new federal law, such agreements cannot be
enforced if one of the companies involved is internationally based. He also tells Jenny
in response to her question about the possibility of mediation in her case to forget it
because mediation is pretty much the same thing as arbitration. Brice tells Jenny that an
option is to arbitrate and, if the outcome is bad at arbitration, file a court action in
federal court. Brice says that the federal court judge would not consider an arbitrator’s
decision in making a determination.
Is Brice correct that a federal law provides that arbitration agreements involving
international businesses are unenforceable?
A. He is partially correct. The law only applies to any country not a party to the North
American Free Trade Agreement.
B. He is partially correct. The law only applies to any country that has signed the North
American Free Trade Agreement.
C. He is partially correct. The law only applies to European countries.
D. He is incorrect.
E. He is correct.
A false statement of a material fact regarding ownership of business property that
results in a loss of sales is referred to as _______.
A. Slander of quality
B. Trade libel
C. Libel of title
D. Slander of title
E. Libel of sale
In determining whether a mistake of fact occurred, what of the following is true?
A. Courts look to determine whether a mistake of fact occurred at the time the contract
was concluded.
B. Courts look to determine whether a mistake of fact occurred during contract
negotiations.
C. Courts look to determine whether a mistake of fact occurred when the initial offer
was made.
D. Courts look to determine whether a mistake of fact occurred when an advertisement
was made.
E. Courts look to determine whether a mistake of fact occurred after the contract was
concluded.E. Courts look to determine whether a mistake of fact occurred after the
contract was concluded.
“Consumer Debt.” Mona had not been keeping up with her spending and bought several
expensive items. She had numerous credit cards and some unsecured loans. She had a
total of 14 creditors. All her debt was consumer debt, and Mona really wished that she
had not put all those new clothes on her credit card. Although Mona was struggling, she
did not want to file for bankruptcy because she did not want a bad credit score. Three of
her credit card companies, however, who had unsecured claims against her totaling
$14,500, signed and filed an involuntary bankruptcy petition against her under Chapter
7. Mona is unsure about how to proceed. While she is several months behind on a
number of payments, including alimony payments she believes were unfairly awarded
to her ex-husband, she does not particularly want to go bankrupt. She believe that the
creditors have been unfair in not allowing her additional time in which to pay. On the
other hand, she would really like to be rid of her excessive debt and stop collection
efforts on the part of her ex-husband.
Which of the following is true regarding the involuntary petition for bankruptcy filed by
some of Mona’s creditors?
A. Involuntary petitions are not allowed under Chapter 7.
B. At least 5 creditors must file in order for an involuntary petition to be accepted;
therefore, the involuntary petition will be dismissed in Mona’s case.
C. Only 3 creditors may file an involuntary petition, but their aggregate claims must be
$20,100; therefore, the petition will be dismissed in Mona’s case.
D. The petition was properly filed because 3 or more creditors with unsecured claims
totaling $14,425 or more signed the petition for involuntary bankruptcy.
E. The petition was properly filed because only 2 or more creditors with secured or
unsecured claims totaling at least $10,500 must sign a petition for involuntary
bankruptcy.
Which of the following is true regarding distinguishing an offer from an invitation to
negotiate?
A. Whether an offer in fact existed is a question of law.
B. Whether an offer in fact existed is a question of fact.
C. Whether an offer in fact existed is a mixed question of law and fact.
D. Whether an offer in fact existed depends solely on whether the alleged offer included
a specific price.
E. Whether an offer in fact existed depends solely on whether an acceptance of the
alleged offer was made immediately so that the offeror knew he or she was bound.
Which of the following was the result in State v. Warner, the case in the text involving
whether an electronic transfer qualified as a “draft” or “other written statement” for
purposes of establishing a violation of state law?
A. That an electronic transfer qualified as a draft or other written statement for purposes
of establishing a violation of the state law at issue.
B. That an electronic transfer did not qualify as a draft or other written statement for
purposes of establishing a violation of the state law at issue.
C. That an electronic transfer qualified as a draft or other written statement for purposes
of establishing a violation of the state law at issue only if it could be established that a
bank official described the transaction as a “draft.”
D. That an electronic transfer qualified as a draft or other written statement for purposes
of establishing a violation of the state law at issue only if it could be established that a
bank official described the transaction as a “negotiable.”
E. That the issue of whether the instrument was a draft or other written statement was
irrelevant because the state law at issue was unconstitutional.
Which of the following is the lien of a judgment that arises when a motion for a new
trial has been denied?
A. Attorney’s lien
B. Common law lien
C. Consummate lien
D. Possessory lien
E. Denial lien
“Self-Centered President.” Tina is president of “We Manage You,” a corporation set up
to manage physician practices. Tina has never been very concerned with minority
shareholders based on her belief that they have little influence over the company
because they cannot even elect a director. She is told, however, that her state just
instituted the practice of cumulative voting. An election is coming up in which 10
directors will be elected. Minority shareholders own 2,000 shares, while majority
shareholders own 8,000 shares. Tina tells her vice president, George, that she wants to
ignore minority shareholders and focus her interests on majority shareholders and the
directors. She also tells George that she wants to be particularly conscientious toward
directors because the directors appoint officers, and she does not believe that she owes
any actual duties to shareholders. She further orders George to destroy some documents
subpoenaed in a criminal investigation against the company for illegal dumping. When
George protests, Tina tells him not to worry because officers cannot be held responsible
for criminal actions so long as the actions are done as part of the duties of an officer.
She explains to him that only the corporation can be charged with liability in such
cases.
How many votes will the minority shareholders have in the election?
A. 2,000
B. 4,000
C. 6,000
D. 10,000
E. 20,000
Belinda orders a certain type of hybrid rose for her wedding. A disease sweeps through
that type of rose, and the florist could only obtain the roses at great cost if at all. Which
of the following is the appropriate term for the florist’s best defense?
A. Commercial unreasonableness
B. Commercial impracticability
C. Substantial hardship
D. Unforeseen circumstances
E. Unreasonable bride
“Yard Mowing.” Paula agreed to mow John’s yard once a week for $50 per week
throughout the summer. Paula, however, was having trouble getting her money from
John. On one occasion, he in handwriting gave her in IOU saying “I, John Jones, owe
Paula Smith $50.” A couple of weeks later, John did not have the money to pay Paula
what he owed her, and he handwrote the following on a piece of paper and gave it to
her: “I, John Jones, promise to pay Paula Smith or to bearer, the sum of $100 on
Monday, July 22, 2013.” Paula quit mowing John’s yard; and, disgusted with John,
Paula assigned both documents to Vince. When Vince presented the documents to John,
John refused to pay on the basis that after inspecting the yard, he decided that Paula was
doing a poor job. Vince told him the documents constituted negotiable instruments, but
John pointed out that he had not signed the documents with his signature at the end.
Considering only the issue of terminology, not the issue of handwriting or whether
Paula properly performed, which of the following is true regarding whether the
language “I, John Jones, owe Paula Smith $50” is insufficient to establish elements
required for a negotiable instrument?
A. The language is sufficient because it acknowledges the debt, and that is the only
required standard.
B. The language is insufficient because it only acknowledges the debt and is not a
promise to pay.
C. The language is sufficient only because the instrument is in an amount under $500.
D. The language is sufficient because it acknowledges the debt and is also a promise to
pay.
E. The language is sufficient because it acknowledges the debt and is unconditional.
Which of the following is true regarding the obligation, if any, of a consumer who
discovers that a company has sent the consumer unsolicited merchandise through the
U.S. mail?
A. The consumer may treat the merchandise as a gift.
B. The consumer may only treat the merchandise as a gift if it has a value of under $25;
otherwise, the consumer must call the seller and ask if the seller would like to cover
return postage.
C. The consumer may only treat the merchandise as a gift if it has a value of under $50;
otherwise, the consumer must call the seller and ask if the seller would like to cover
return postage.
D. The consumer may only treat the merchandise as a gift if it has a value of under
$100; otherwise, the consumer must call the seller and ask if the seller would like to
cover return postage.
E. The consumer must return the merchandise.
In the U.S., which of the following are the two most important sources of contract law?
A. Case law and the Restatement of Law, Contracts.
B. Case law and the Uniform Commercial Code.
C. The Uniform Commercial Code and the Convention on Contracts for International
Sales of Goods.
D. Case law and the Convention on Contracts for International Sales of Goods.
E. The Convention on Contracts for International Sales of Goods and the Restatement
of the Law, Contracts.
Assuming the bank is not negligent, in the case of multiple forgeries by the same
wrongdoer, what is the effect of a customer’s failure to ever notify the bank of the first
forgery in regard to subsequent forgeries?
A. There is no effect because each forgery stands on its own.
B. The customer is barred from recovering on the subsequent forgeries.
C. The customer may recover on a subsequent forgery if it is reported to the bank
within 5 days after the statement showing the subsequent forgery is received by the
customer.
D. The customer may recover on a subsequent forgery if it is reported to the bank
within 10 days after the statement showing the subsequent forgery is received by the
customer.
E. The customer may recover on a subsequent forgery if it is reported to the bank within
15 days after the statement showing the subsequent forgery is received by the customer.
“New Agency.” Debby just got a job as an assistant in a new federal agency called the
Accounting Commission that was set up to regulate the accounting and auditing
profession. The agency is headed by commissioners who serve for fixed terms and can
be removed only for cause. No more than a majority of the commissioners may be from
the same political party. The agency is getting ready to issue rules. The enabling
legislation that set up the Accounting Commission specified that the agency could make
rules but said nothing about the form of the rules. Debby’s boss, Blaire, gave her some
proposed rules and asked her to be sure that they were published and to take care of the
next step in the approval process. Blaire also told her that at this point she was not very
interested in hybrid rule making.
Which of the following is the appropriate agency classification for the Accounting
Commission?
A. Executive
B. Independent
C. Administrative
D. Legislative
E. Judicial
Which of the following gives preference to shareholders to purchase shares of a new
issue of stock?
A. Acknowledged rights
B. Superior rights
C. Preemptive rights
D. Selective rights
E. Benefit rights
Which of the following is an exception as to when a secondary obligation needs to be in
writing?
A. The primary-purpose rule
B. The resulting-fact rule
C. The main-purpose rule
D. The delineated rule
E. The personal-obligation standard
Which of the following occurs when a person reaches the age of majority and states,
either orally or in writing, that he or she intends to be bound by the contract entered in
to as a minor?
A. Implied ratification
B. Express ratification
C. Express novation
D. Implied novation
E. Express ratification if the statement is in writing but nothing if the statement is only
oral
Which of the following was the result in District of Columbia v. Wayne Singleton, the
case in the text involving whether the doctrine of res ipsa loquitur applied to a
negligence action involving a single-vehicle accident?
A. That the doctrine of res ipsa loquitur applied to absolve the defendant from liability.
B. That the doctrine of res ipsa loquitur applied to establish the defendant’s liability to
the plaintiff.
C. That the doctrine of res ipsa loquitur applied to prevent the defendant from invoking
the doctrine of comparative fault.
D. That the doctrine of res ipsa loquitur to the motor vehicle accident at issue because it
applies only in litigation involving strict liability.
E. That the doctrine of res ipsa loquitur did not apply because the plaintiff failed to
eliminate sufficiently other causes of the accident.
Sally goes to have her hair trimmed and agrees to pay $40 to the stylist. While there,
Sally decides that she would also like highlights. The stylist informs her that highlights
will cost an additional $30. Sally agrees to the price, gets the highlights, but refuses to
pay the extra amount. What is the likely result in a dispute between Sally and the stylist
and why?
A. The stylist will win because she did additional work in exchange for the extra
payment; and, therefore, Sally’s promise was supported by valid consideration.
B. The stylist will win because she did additional work in exchange for the extra
payment; and, therefore, a valid unilateral contract existed.
C. The stylist will win unless Sally can show that she had previously received both a
trim and highlights for $40. If she can prove that she previously received both for $40,
then the past expectations rule applies.
D. Sally will win because the stylist had a preexisting duty to have Sally’s hair look as
good as possible.
E. Sally will win because there was no valid consideration in exchange for the
highlighting.
“New Furniture.” Penny purchased $3,000 worth of furniture from Good Wood
Furniture. Through an arrangement with Good Wood, Penny financed the purchase
through a financing company called Let Us Help You. Twenty-nine days after the goods
were delivered to her, Penny had a disagreement with Let Us Help You regarding the
amount of interest she would be required to pay. She notified Good Wood on that day
that she was rejecting the goods. Good Wood claimed that she did not properly reject
the furniture and also that she failed to act in good faith, an obligation imposed equally
on all parties to a transaction. Penny says that she properly rejected; that, although the
UCC imposes no duty of good faith, she acted in good faith; and that, in any event, she
had an absolute right to return the goods.
Which of the following is the correct regarding Good Wood’s contention that the duty of
good faith is imposed on all parties equally?
A. Good Wood is incorrect because the UCC imposes no duty of good faith.
B. Good Wood is incorrect because the UCC mandated duty of good faith requires
honesty in fact in regard to all transactions regardless of the parties involved.
C. Good Wood is incorrect because the UCC mandated duty of good faith imposes a
higher duty than honesty of fact in regard to sellers, that of reasonable negotiation
considering the position of buyers.
D. Good Wood is incorrect because the UCC mandated duty of good faith imposes a
higher duty than honesty of fact in transactions involving amounts in excess of $500,
that of reasonable conduct considering all circumstances.
E. Good Wood is incorrect because the UCC mandated duty of good faith imposes a
higher duty than honesty in fact on merchants, that of reasonable commercial standards
of fair dealing.
“On the Town.” Benny began taking people on tours of historic sites in his town. That
had not been done before because no one thought there was very much in the way of
historical significance there. Benny, however, did some research; and, with a very
active imagination on his part, came up with some good stories. He started to make a
nice profit with the tours, particularly with tourists passing through the town on the way
to the mountains. Benny began to hear of some rival tour groups that were planning to
start giving tours in the area. Benny sent a memo to his secretary asking, “How can we
shut down other potential tour groups because we want all the business?” One rival
company had started operations, but Benny still had 85 percent of the business. His plan
was to run the rival out of business and prevent the start-up of any other tour operations
in his town. Benny decided that he would offer to do a free advertising brochure to any
business that would put up a poster advertising his tour group and agree not to advertise
or mention in any way any other tour group. Benny was particularly successful in
reaching that agreement with hotels and restaurants in his town because of his likeable
personality. When Prudence, who ran a rival tour group heard about Benny’s actions,
she was furious and accused him of an antitrust violation because he was trying to keep
all the tour action for himself. Benny told Prudence she was nuts and that the only
reason she had no business was that she stuck to dry historical fact on her tours and did
not do research on romantic relationships between individuals in the area in order to
‘spice-up” her tours. He also told her that he was not a monopolist because he did not
have all the business as evidenced by Prudence’s own tour service.
What must be proven against Benny in order to establish that he violated antitrust laws
through conduct involving monopolization?
A. Only that he had market power.
B. That he (1) possessed market power and (2) unfairly achieved the market power.
C. The he (1) possessed market power and (2) used the market power unfairly.
D. That he (1) possessed market power, (2) that he unfairly achieved the market power,
and (3) that he used the market power for abuse.
E. That he (1) possessed market power, and (2) unfairly achieved the market power or
used the market power for abuse.
Which of the following are the steps in order of the life cycle of a partnership?
A. Performance, formation, winding up, dissolution, termination or continuation.
B. Formation, performance, winding up, dissolution, termination or continuation.
C. Formation, performance, termination, winding up, dissolution or continuation.
D. Performance, formation, dissolution, winding up, termination or continuation.
E. Formation, performance, dissolution, winding up, termination or continuation.