“To the Dogs.” Alice loves all animals and is starting a new grooming business for
them. She believes that animals are very important and plans to exceed any applicable
regulations regarding cleanliness and health standards. Alice thinks, however, some
local regulations make no sense. For example, there is a local ordinance that all dogs
must be kept on a leash at all times when not in an inside area. Although Alice is
placing her business on a large lot with a fenced outside area allowing plenty of room
for dogs to run free, she plans to obey the leash regulation and all others. She is aware,
however, that some members of the community have had success in changing local
regulations by petitioning city council. Alice plans to proceed in that manner to attempt
a change in the leash law.
Alice’s plan to seek change through following what others have done in the past,
petitioning city council, is rooted in which of the following?
A. Legal positivism
B. The historical school
C. Legal realism
D. Natural law
E. Cost-benefit analysis
“Dream Home.” Maurice finds a dream home on the lake. He wants to buy it but is
unsure whether he can get a loan. He signs a contract with the seller that he will buy the
home provided that he can get a loan. Maurice also includes a contractual clause in the
contract with the seller that if he loses his job before the date the purchase contract is
signed, the seller will release him from any obligation. After getting a loan and buying
the home, Maurice decided that he wanted new windows. He entered into a contract
with a window contractor. The window contractor visited the home, but Maurice was
always gone. The contractor made several attempts to reach Maurice, but Maurice
would not return phone calls and made no attempt to assist the contractor with
installation.
The responsibility of Maurice to make arrangements to give the window installer access
to the home is referred to as which of the following?
A. A condition subsequent
B. A condition precedent
C. An implied condition
D. An express condition
E. An acknowledged condition
Assuming a proper and timely claim is made, which of the following is true regarding
the UCC’s allowance of full recovery in the event that certain types of checks are lost,
stolen, or destroyed?
A. The UCC allows for full recovery if a cashier’s check is lost, stolen, or destroyed; but
full recovery is not allowed if a teller’s check or certified check is lost, stolen, or
destroyed.
B. The UCC allows for full recovery if a cashier’s check or certified check is lost,
stolen, or destroyed; but full recovery is not allowed if a teller’s check is lost, stolen, or
destroyed.
C. The UCC allows for full recovery if a cashier’s, certified, or teller’s check is lost,
stolen, or destroyed.
D. The UCC allows for full recovery if a cashier’s check is lost, stolen, or destroyed; but
in regard to a teller’s check or certified check, full recovery is only allowed if the
instrument is lost or stolen, not if it is destroyed.
E. Because individuals are expected to properly safeguard checks, the UCC does not
allow for recovery if a cashier’s, teller’s, or certified check is lost, stolen, or destroyed.
Under the UCC contracts for the sale of goods must be in writing in order to be
enforceable if they are valued at ______ or more.
A. $100
B. $500
C. $1,000
D. $1,500
E. $5,000
Which of the following is a doctrine available to defendants whereby a defendant may
avoid liability by establishing that the plaintiff voluntarily and unreasonably
encountered the risk of the actual harm that the defendant caused?
A. Last-clear-chance doctrine.
B. Assumption of the risk doctrine.
C. Contributory negligence doctrine.
D. Res ipsa loquitur.
E. Negligence per se.
Which of the following is true regarding the use of arbitration and mediation in
e-commerce cases?
A. Increasingly, litigants are using arbitration, but not mediation, to resolve disputes in
e-commerce cases.
B. Increasingly, litigants are using mediation, but not arbitration, to resolve disputes in
e-commerce cases.
C. Increasingly, litigants are using arbitration and mediation to resolve disputes in
e-commerce cases.
D. Arbitration is allowed by federal law in e-commerce cases, but mediation is not
allowed.
E. Mediation is allowed by federal law in e-commerce cases, but arbitration is not
allowed.
What was the result in the Peerless case discussed in the text in which there were two
ships named Peerless and the parties disagreed over which ship was the subject of the
contract?
A. The court rescinded the contract.
B. The court ruled that the older ship would be identified to the contract.
C. The court ruled that the newer ship would be identified to the contract.
D. The court ruled that the defendant would be allowed to choose which ship would be
identified to the contract.
E. The court ruled that the plaintiff would be allowed to choose which ship would be
identified to the contract.
“The Big Sale.” Christy, the owner of ABC department store, needed to hire a number
of employees in a hurry because of a big summer sale she was planning. Bob was hired
by Christy to run a cash register and to assist customers with taking large purchases to
their cars. Bob encountered a particularly annoying customer, Frank. Frank started
complaining the minute he saw Bob. Frank complained about having to wait for Bob to
assist him with carrying his television purchase to his car, about the merchandise in the
store, and about the quality of the store’s employees. Bob tried to control himself while
he carted Frank’s television to the car. The final straw, however, came when Bob told
Frank that he should get the earring out of his ear, cut his hair, and act professionally.
Bob threw the television to the ground and punched Frank in the nose. Frank did
investigation and discovered that Bob has been fired from his previous three jobs for
taking violent action against customers. Two of his former employers are willing to
testify that if Christy had called them, they would have disclosed Bob’s tendencies to
her. Bob listed the former employers on his application, but because she was in a hurry
to hire employees, Christy did not take the time to check with the former employers.
Another problem confronting Christy during the big sale is that Susie, a long-time
employee of Christy who had never caused any problem before, accidentally, but
negligently, dropped a box on the foot of Greg, a customer. Greg had to have an X-ray
and is threatening to sue both Christy and Susie.
Which of the following is true regarding Christy’s liability, if any, for her own conduct
in regards to Frank’s injury?
A. Christy would likely be held liable for negligent hiring.
B. Regardless of whether she did anything to directly cause injury to Frank, Christy
would likely be held liable on a strict liability theory because her customer was injured.
C. Christy would likely be held liable for breach of customer warranty.
D. Christy would likely be required to split the damages with Bob because Bob was her
employee.
E. There is no theory on which Christy could be held liable for her own conduct in this
situation.
Which of the following is presumed to be a reasonable amount of time when
considering whether an offer has expired?
A. Forty-eight hours.
B. Seven days.
C. Ten days.
D. Forty-five days.
E. There is no set amount of time, and what constitutes a reasonable amount of time
varies depending upon the subject matter of the offer.
Which of the following references a brief ad that may be issued by an issuer during the
waiting period?
A. An advertisement
B. A special offering
C. An unsolicited offering
D. An approved offering
E. A tombstone advertisement
Which of the following is true regarding punitive damages in product liability cases?
A. They are not available in product liability actions.
B. The amount of the punitive-damage award is determined by the wealth of the
defendant only.
C. The amount of the punitive-damage award is determined by the maliciousness of the
action only.
D. The amount of the punitive-damage award is determined by the wealth of the
defendant and also by the maliciousness of the action.
E. Punitive damages are meant to compensate the plaintiff for injury and to make the
plaintiff whole.
Under which of the following are accountants civilly liable for misstatements and
omissions of material facts made in registration statements the SEC requires?
A. Section 11 of the Securities Act of 1933
B. Section 10 of the Securities Act of 1934
C. Section 12 of the Securities Act of 1934
D. Section 13 of the Securities Act of 1935
E. Section 12 of the Securities Act of 1933
Which of the following is the term used for the requirement of the Federal Trade
Commission that advertisers have a reasonable basis for claims made in
advertisements?
A. Ad substantiation
B. Ad verification
C. Proof of ad veracity
D. Illustration of ad veracity
E. Acknowledgement of ad veracity
Which of the following is true regarding what a plaintiff must do in order to recover
damages under the Securities Act of 1933 after purchasing a security covered by a
registration statement containing false information or missing information?
A. A plaintiff must prove reliance on the registration statement.
B. A plaintiff must prove privity with the accountant at issue.
C. The plaintiff must establish reliance and privity.
D. The plaintiff must establish reliance on the financial statement, privity with the
accountant, and also that the securities were purchased in an initial public offering.
E. The plaintiff does not have to prove reliance on the financial statement nor must the
plaintiff prove contractual privity.
The contract entered into with a client when an accountant is hired to perform a task is
referred to as a[n] ______________.
A. Accounting contract
B. Accounting and auditing agreement
C. Engagement letter
D. Procurement letter
E. Performance letter
“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.
What is the effect of the instruments being written by hand?
A. Handwriting does not prevent the instruments from being considered negotiable only
because neither Paula nor John would be considered merchants in the transactions at
issue.
B. Handwriting does not prevent the instruments from being considered negotiable only
because John would not be considered a merchant in the transaction at issue, and
Paula’s status as a merchant is irrelevant.
C. Handwriting does not prevent the instrument from being considered negotiable only
because Paula would not be considered a merchant in the transaction at issue, and
John’s status as a merchant is irrelevant.
D. Handwriting does not prevent the IOU instrument from being negotiable, but it does
prevent the other instrument from being negotiable.
E. The issue of the instruments being handwritten does not prevent either from being
considered negotiable.
Limited partnerships are also known as which of the following?
A. General partnerships
B. Limited liability partnerships
C. Special partnerships
D. Specific partnerships
E. Both limited liability partnerships and specific partnerships
Yolanda found a better job and quit Robert’s employment. Yolanda, however, wants to
sue Robert because she believes that he may have terminated her employment in the
future based on age discrimination. At this point, which of the following would be
Robert’s best defense to a lawsuit filed by Yolanda in the state in which she worked?
A. That Yolanda lacks standing.
B. That the court lacks in personam jurisdiction.
C. That the state’s long-arm statute does not apply.
D. That a default judgment is appropriate.
E. That the case is moot.
A[n] ______ is an irrevocable right to use some part of another’s land for a specific
purpose without taking anything from it.
A. Appurtenance
B. Profit
C. Easement
D. Fixation
E. Joint use
Which of the following occurs when, instead of canceling a contract, the parties
substitute a new agreement in place of the original?
A. Accord and satisfaction
B. Novation
C. Substituted contract
D. Mutual rescission
E. Alteration
“Accounting Advice.” Brad, a newly hired Certified Public Accountant, who barely
passed his boards, was asked by a business client, a chief executive officer, about the
effect of the Sarbanes-Oxley Act on an accounting issue. Brad assured the client that the
client should not be concerned about the Act because it is very vague, unspecific, and
difficult to understand. Brad told the CEO that in any event, the CEO could not be held
personally responsible regardless of what happened because only company business
was involved. Brad also told the CEO that there is no oversight involved with the act.
Later that same day, a coworker of Brad discovered that the CEO had been involved in
misstating some financial reports and had also destroyed financial documents to cover
up fraud. An employee at the company, Laura, had informed the coworker as well as the
SEC. When the issue was mentioned to the CEO, he immediately fired Laura.
Which of the following is true regarding the Act and Laura’s firing?
A. The act does not provide protection for whistle-blowers such as Laura.
B. The act provides protection for whistle-blowers only if it can be shown that a
significant amount of money, in excess of $5,000, was involved in the incident
involved.
C. The act provides protection for whistle-blowers only if it can be shown that a
significant amount of money, in excess of $10,000, was involved in the incident
involved.
D. The act provides protection for whistle-blowers who work for an accounting firm,
but not for any other employees.
E. Laura’s whistle-blowing would be protected under the act, and her firing was illegal.
What was the result at the U.S. Supreme Court level in Goodyear Dunlop Tires
Operations, S.A. v. Brown, involving whether a court in North Carolina could exercise
jurisdiction over the defendant tire manufacturer and its subsidiaries who were based in
Turkey and France? (The underlying lawsuit involved the deaths of North Carolina
residents in France when a bus in which they were riding allegedly overturned due to
problems with its tires.)
A. The Court ruled that based on the stream of commerce theory, the North Carolina
court could exercise general jurisdiction over the foreign defendants.
B. The Court ruled that based on the stream of commerce theory, the North Carolina
court could exercise specific jurisdiction over the foreign defendants.
C. The Court ruled that based on the general contacts theory, the North Carolina court
could exercise general jurisdiction over the foreign defendants but not specific
jurisdiction.
D. The Court ruled that based on the general contacts theory, the North Carolina court
could exercise specific jurisdiction over the foreign defendants but not general
jurisdiction.
E. The court ruled that the North Carolina court could not exercise jurisdiction over the
defendants.
Which of the following is true if a partner commits a tort within the scope of his or her
partnership duties?
A. All partners have common liability.
B. All partners have joint and several liability.
C. All partners are liable in accordance with the percentages used for the allocation of
profits.
D. All partners are liable in accordance with the percentages used for the allocation of
losses.
E. All partners are liable in accordance with the percentage of their capital
contributions.
Which of the following contains summaries of common law rules in a particular area of
the law?
A. U.S. Code
B. State Administrative Codes
C. Executive Proclamations
D. Case Reporters
E. Restatements of the Law
What does protection against “double jeopardy” mean?
A. The government cannot try a person more than once for the same crime.
B. The government cannot try a person more than twice for the same crime.
C. The government must have double proof to prosecute a person twice for the same
crime.
D. The government must show that at least two people were injured by the defendant in
order to justify trying the defendant twice for the same crime.
Which of the following was the result at the U.S. Supreme Court level on the issue of
whether, in order to address global climate change, the Clean Air Act authorizes the
EPA to issue regulations involving the emission of greenhouse gases from new motor
vehicles?
A. The Court held that the Clean Air Act authorizes the EPA to regulate greenhouse gas
emissions from new motor vehicles in the event that it forms a judgment that such
admissions contribute to climate change.
B. The Court held that the Clean Air Act authorizes the EPA to regulate greenhouse gas
emissions from new motor vehicles in the event that Congress determines that such
gasses significantly contribute to global climate change but that since Congress has
made no such determination, the EPA is powerless to act on the issue.
C. The Court held that regardless of whether any determination is made as to the danger
posed by such emissions, the Clean Air Act authorizes the EPA, in the director’s
discretion, to regulate greenhouse gas emissions from new motor vehicles.
D. The Court held that the EPA lacks the authority to regulate greenhouse gas emissions
from new motor vehicles.
E. The Court held that the EPA lacks the authority to regulate greenhouse gas emissions
from new motor vehicles unless vehicle manufacturers request guidance on the issue.
Which of the following is a federal law that protects the quality of the water we drink?
A. The Federal Water Pollution Control Act
B. The Safe Drinking Water Act
C. The Water Control Act
D. The Water Use Act
E. The Water Safety Act
Which of the following would be the most appropriate cause of action, if any, against
Annette based upon the farm animals and the music?
A. Trespass to property.
B. Harassment.
C. Private nuisance.
D. Negligence.
E. No cause of action is appropriate because Annette is entitled to use her property as
she sees fit.
Which of the following is the term that describes wrongful behavior in a criminal
action?
A. Mens rea.
B. Actus reus.
C. Res judicta.
D. Stare decisis.
E. Carpe diem.
Which of the following is a corporation that has not substantially met the requirements
of the state incorporation statute, but courts recognize it as a corporation for most
purposes to avoid unfairness to third parties who believed it was properly incorporated?
A. A de jure corporation
B. A de facto corporation
C. A corporation by estoppel
D. A corporation by reservation
E. An inactive corporation
Which of the following is true regarding activities of the Public Company Accounting
Oversight Board?
A. The Board ensures that auditors and public accounting firms compile accurate and
truthful financial reports for the companies they audit, but it has no responsibility in
regard to whistle-blowing protection.
B. The Board requires that companies devise a system that allows employees to report
suspicions of unethical behavior, but it does not address financial reports prepared by
auditors and public accounting firms.
C. The Board requires that the universalization test be used as the primary ethical
guideline and also mandates protection for whistle-blowers who report suspicious
activity involving financial reports.
D. The Board ensure that auditors and public accounting firms compile accurate and
truthful financial reports for the companies they audit and also requires that companies
devise a system that allows employees to report suspicions of unethical behavior.
E. The Public Company Accounting Oversight Board was abolished during the Obama
administration and no longer exists.