Which of the following is false regarding a principal’s duties to an agent?
A. An agent can sue the principal if the principal does not fulfill duties owed to the
agent.
B. An agent may be entitled to contract remedies but not tort remedies.
C. If the principal has failed to meet duties owed to the agent, the agent can refuse to
act on behalf of the principal until the failure is remedied.
D. The principal has a duty to compensate an agent for services provided unless the
parties have agreed that the agent will act gratuitously.
E. The principal has a duty of reimbursement and indemnification to the agent for
authorized expenditures.
Which of the following are written documents signed by a party that makes an
unconditional promise to pay a specific sum of money on demand or at a certain time to
the holder of the instrument?
A. Negotiable instruments
B. Informal contracts
C. Simple contracts
D. Recognizances
E. Formal contracts
“Wrecked Furniture.” Ralph buys new furniture for his living room from Good Times
Furniture. It is agreed that the goods will be placed with a common carrier for delivery.
The contract between Ralph and Good Times is ambiguous regarding whether the seller
had the duty to deliver the goods only to the common carrier’s hands or whether the
seller had the duty to deliver the goods to Ralph’s home. Unfortunately, on the way to
Ralph’s home, through no fault of the delivery driver, the delivery truck was involved in
a collision, and the furniture was significantly damaged.
What type of contract is presumed based upon the fact that the contract was ambiguous
regarding whether the seller had the duty to deliver the goods only to the common
carrier’s hands or whether the seller had the duty to deliver the goods to Ralph’s home?
A. Transit
B. Location
C. Destination
D. Origin
E. Voidable
In return for his oral promise to pay her $100, Penny promises her uncle that she will
not violate laws against speeding for one year. Penny abides by her promise, but her
uncle refuses to pay. Which of the following is true regarding whether Penny is entitled
to the money?
A. Penny is entitled to the money because she upheld her part of the bargain.
B. Penny is not entitled to recover because she had a preexisting duty to obey laws
against speeding.
C. Penny is not entitled to recover because obeying traffic laws was actually good for
her, not something that would constitute a detriment.
D. Penny is not entitled to recover unless the agreement was put under seal.
E. Penny is entitled to recover, but only ½ of the amount, because a family member is
involved and the agreement was not in writing.
Which of the following is a contractual party who agrees to do something for the other
party?
A. Obligor
B. Obligee
C. Assignor
D. Assignee
E. Boundee
“Book Payment.” Molly and Pat signed a contract providing that “Pat will furnish the
correct used business law book for use in Molly’s business law class; and on August 15,
2013, Molly promises to pay Pat $50 for the book.” Molly took the book and planned to
pay Pat. Meanwhile, Pat properly assigned the contract Molly had signed to Jack. When
Molly went to class, however, she discovered that the book was the incorrect book.
When Jack asked Molly for payment, Molly refused. Molly told Jack that the book was
useless to her and that she was not paying either him or Pat anything for it. Jack told
Molly that he had an enforceable assignment in the form of a negotiable instrument and
that he could collect regardless of whether the book was useless. Molly did not believe
him. Since she was trying to save money on books, she also agreed to buy Tim’s U.S.
history book for $40. She had an oral agreement with Tim that he would give her the
book and that she would pay him in three days. This time Molly got the right book.
Tim, in writing, properly assigned the right to the $40 payment to Richard. Richard
asked Molly for the money. Molly admitted her agreement with Tim but told Richard
that she was not going to pay him because he did not have a negotiable instrument.
Molly also purchased a communications book from Sam promising in writing to give
him, to his order, a DVD she had in return the next day.
What is the effect of Molly agreeing to give Sam a DVD in return for the book?
A. Molly and Sam have an enforceable contract, and Molly has also satisfied the
negotiability condition regarding the form of payment.
B. Molly and Sam have an enforceable contract, but the agreement fails to satisfy the
negotiability requirement that payment be in a sum certain in money.
C. Because payment is not in a sum certain for money, Molly and Sam do not have an
enforceable contract nor does the agreement satisfy the negotiability requirement that
payment be in a sum certain in money.
D. Because payment is not in a sum certain for money, Molly and Sam do not have an
enforceable contract, but the requirement of negotiability regarding the form of
payment has been satisfied.
E. Unless Sam acknowledges in writing that the fair market value of the DVD is
equivalent to the value of the book he provided to Molly, there is no enforceable
contract nor is the agreement negotiable.
Which of the following is true regarding state and federal court jurisdiction?
A. State courts begin with exclusive jurisdiction until a federal court intervenes.
B. In all cases, state courts have concurrent jurisdiction with the federal courts.
C. Federal courts begin with exclusive jurisdiction until a state court intervenes.
D. In all cases, state courts have exclusive jurisdiction unless the state’s Supreme Court
grants jurisdiction to a federal court in the state.
E. In some cases, state courts have exclusive jurisdiction; in some cases, state courts
have concurrent jurisdiction with the federal courts; and state courts also have the
power to hear all cases not within the exclusive jurisdiction of the federal court system.
A[n] ______ is a statement made in court, under oath, or at some stage during a legal
proceeding in which a party against whom charges have been brought admits that an
oral contract existed, even though the contract was required to be in writing.
A. Admission
B. Submission
C. Deposition
D. Interrogatory
E. Confirmation
“Scuba Gear.” Shirley is a popular manufacturer of scuba gear. Before she allows a
store to carry her line of scuba gear, she requires that the store owner agree that her line
is the only line of scuba gear the store will carry. She also requires that if a store carries
her line of scuba gear, it must carry her line of wet suits. Sales of other manufacturer’s
gear and wet suits have begun a steady decline. She is accused of violating antitrust
laws. Shirley, however, replies that she is simply conducting good business practices.
Trudy, the president of ABC Scuba, calls Shirley and tells her that she is prepared to
bring suit against Shirley for antitrust violations. Shirley tells Trudy that although she is
not in violation, that only the government could take action against her, and that the
government is way too busy to get involved in a dispute over scuba gear.
Which of the following is true regarding Shirley’s statement that only the government
could take action against her?
A. She is correct.
B. She is correct only if she has had no other antitrust charges brought against her;
otherwise, private parties are allowed to bring suit.
C. She is incorrect although private parties are limited to injunctive relief only.
D. She is incorrect although private parties are limited to damages only and may not
recover attorney fees.
E. She is incorrect, and a prevailing plaintiff is entitled to attorney fees and damages.
Which of the following is true regarding the warranty or warranties applicable if an
instrument is not an unaccepted draft presented to a drawee?
A. Only one warranty applies, that the warrantor of the instrument is or was entitled to
payment or authorized to obtain payment.
B. Only one warranty applies, that the instrument has not been altered.
C. Only one warranty applies, that the warrantor has no knowledge that the drawer’s
signature or the draft is unauthorized.
D. Two warranties are applicable: (1) that the instrument has not been altered, and (2)
that the warrantor has no knowledge that the drawer’s signature or the draft is
unauthorized.
E. Three warranties are applicable: (1) that the instrument has not been altered, (2) that
the warrantor has no knowledge that the drawer’s signature or the draft is unauthorized,
and (3) that the warrantor of the instrument is or was entitled to payment or authorized
to obtain payment.
What does the UCC say regarding a limitation of consequential damages for
commercial losses?
A. A limitation of consequential damages for commercial losses is acceptable so long as
both parties are represented by an attorney.
B. A limitation of consequential damages for commercial losses is acceptable so long as
any consumer was represented by an attorney.
C. A limitation of consequential damages for commercial losses is prima facie
unconscionable.
D. A limitation of consequential damages for commercial losses is analyzed in the same
way as a limitation of consequential damages for personal injury.
E. A limitation of consequential damages for commercial losses is not prima facie
unconscionable.
In what state is XYZ Bank, a federally chartered bank, considered a citizen?
A. The bank is considered a citizen of any state in which it is located, meaning any state
in which the bank has branches.
B. The bank is considered a citizen of the state in which it is located, meaning the state
in which its main office as specified in its articles of incorporation is located.
C. The bank is considered a citizen only of Washington D.C.
D. The bank is considered a citizen only of the state in which it does its largest volume
of business.
E. The bank is considered a citizen of Washington D.C. and also of the state in which it
does its largest volume of business.
Which of the following are various documents used and developed during an audit and
included notes, calculations, and memorandums?
A. Calculation documents.
B. Working papers.
C. Auditing copies.
D. Accounting memoranda.
E. Client documentation.
Which of the following standards is used in applying the reasonably foreseeable users
test regarding accountant liability to third-parties?
A. Strict product liability
B. Negligence
C. Fraud
D. Breach of contract
E. Privity
For a court to enforce a promise, ______ must offer consideration.
A. The offeror but not the offeree
B. The offeree but not the offeror
C. The acceptee but not the acceptor
D. The acceptor but not the acceptee
E. Each side to the contract
“Cheap Motorcycle.” Tony, a hateful, disgruntled, business law teacher notices that a
student, Peter, who is past the age of majority, has a nice motorcycle that is for sale.
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, 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! Take it or leave it!” Tony proceeds to draw up a contract for the
sale of the motorcycle for $100 which Peter signs. Peter does some research and finds
that Tony has had several arrests for driving under the influence in a nearby town. As an
act of revenge, Peter tells Tony that unless Tony sells Peter his new Mustang
convertible for $50, he is publishing the facts about the arrests in the school newspaper.
Tony reluctantly agreed to the deal.
Which of the following is an appropriate term for the contract drawn up by Tony?
A. Adhesion
B. Valid
C. Misapplied
D. Misdrafted
E. Misdirected
“ADA Blues.” Prudence, the Human Resources Manager, at ABC Corporation was
encountering a rush of requests under the Americans with Disabilities Act. Samantha, a
receptionist, was having a birthday and turning 40. She told Prudence that while she
had not been to see a physician, she had “the blues” and needed to take every Friday off
for the next few weeks to recuperate. Samantha said that while she was able to engage
in her normal activities, her energy level was down. Prudence promptly denied her
request on the basis that the act only applies to physical disabilities. Another employee,
Trevor, asked for a private office. Trevor had been significantly burned. Prudence asked
him why he needed a private office. Trevor replied that while nothing was physically
wrong with him, he was tired of everyone treating him as if he had a disability. He said
that the treatment he received interfered with his everyday life and work activities.
Prudence denied his request explaining to him that he needed an actual documented
physical disability before being covered by the act. Finally, George, who had undergone
knee surgery, asked that Prudence put in another elevator near his work station.
Prudence explained that his office could be moved nearer to the existing elevator, but
George told her that under the Americans with Disabilities Act, she did not have the
right to dictate to him when his doctor said that he should not be climbing stairs.
Nevertheless, Prudence denied his request for a second elevator noting that no other
employees needed a second elevator. Samantha, Trevor, and George got together and
decided to go directly to federal court and sue under the Americans with Disabilities
Act to challenge Prudence’s decisions.
Which of the following is true regarding the plan of Samantha, Trevor, and George to
go directly to federal court with a claim against Prudence?
A. They will be able to do so.
B. Trevor and George will be able to go straight to court; but plaintiffs alleging
coverage based on a mental disability, such as Samantha, must first file a charge with
the EEOC or an appropriate state agency.
C. Samantha will be able to go straight to court, but Trevor and George will have to first
file a charge with the EEOC or an appropriate state agency because only plaintiffs
alleging coverage under the act based on a mental disability may go straight to court.
D. Only George must first file a charge with the EEOC or an appropriate state agency
because his claim is the only claim that would involve a substantial amount of money.
E. Samantha, Trevor, and George must all first file a charge with the EEOC or with an
appropriate state agency, and they should not be allowed to proceed in federal court
without doing so.
Which of the following are types of warranties?
A. Express warranties, implied warranties of quality, and acknowledged title warranties
B. Implied warranties of quality and express warranties, but not acknowledged title
warranties
C. Acknowledged title warranties, but not express warranties or implied warranties of
quality
D. Acknowledged title warranties and express warranties, but not implied warranties of
quality
E. Express warranties and implied warranties of quality, but not acknowledged title
warranties
The ______ is a body of law significant to business activities including sales, banking,
and warranty.
A. Federal Business Code
B. Model Business Code
C. Uniform Transactional Model
D. Uniform Commercial Code
E. Marketing Transaction Code
What do the initials ALJ represent in the administrative law arena?
A. Administrative Legal Journal
B. Agency Legal Jargon
C. Administrative Law Judge
D. Agency Legal Judge
E. Agency Law Jurisprudence
Under the UCC which of the following statements is sufficient to make a promise or
order to pay conditional?
A. “I promise to pay from the corporate account.”
B. “I promise to pay as per the contract for the sale of goods between the parties.”
C. “I promise to pay because I owe the money.”
D. “I promise to pay if the following occurs.”
E. “Borrower may pay without penalty all or a portion of the amount owed earlier than
it is due.”
“Book Sale.” Beverly offered to sell Rick a used business law book for $50. She told
him that he could use it in his upcoming business law class the next semester. In fact,
there was a problem with the book; it was several editions old. Rick was not aware of
that fact, and neither was Beverly. When Rick took the book to class and realized the
problem, he went back to Beverly requesting a refund. Beverly refused to return his
money. She claimed that subjectively she thought that the book was correct, that she did
not commit fraud, and that a binding contract existed. The book, however, is outdated
and cannot be appropriately used in the class.
Which of the following describes Rick’s role in the transaction?
A. He was the offeror.
B. He was the offeree.
C. He was the assentor.
D. He was the assentee.
E. He was the offeree and the assentee.
Which of the following was the result in the case in the text Shelby’s Inc., v. Sierra
Bravo Inc., involving the issue of whether an agreement to deposit debris and soil on
land and an alleged agreement to build a building pad and waterway came within the
statute of frauds?
A. The court ruled that the agreement did not involve an interest in land and did not
come within the statute of frauds.
B. The court ruled that the agreement did involve an interest in land and, therefore came
within the statute of frauds.
C. The court ruled that the agreement did not involve an interest in land but placed it
within the statute of frauds in order to prevent injustice.
D. The court ruled that the agreement fell within the statute of frauds but that an oral
agreement was sufficient.
E. The court ruled that the agreement to deposit debris and soil on land did not fall
within the statute of frauds and that no writing was needed, but that the agreement to
build a building pad and waterway did fall within the statute of frauds requiring a
writing.
“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 would be the appropriate location for publication of the
proposed rules assuming they are accepted by the agency?
A. The Congressional Review
B. The Congressional Record
C. The Agency Periodical
D. The Comment and Review Forum
E. The Federal Register
In a[n] _____, the investor resident is a shareholder in the corporation owning an
apartment building and receives a permanent lease on one unit of the facility upon
acquiring stock.
A. Condominium
B. Unit investment
C. Association
D. Cooperative
E. Alignment
Which of the following systems originated from the English legal system?
A. Civil law
B. Asian law
C. Statutory law
D. Inquisitorial law
E. Common law
Only the state can challenge a de facto corporation’s existence as a corporate entity in a
suit called an action of ____.
A. Quo facto
B. Quo jure
C. Quo warranto
D. Sine qua non
E. Res ipsa
The UCC defines a[n] _____ as the passing of title from the seller to the buyer for a
price.
A. Sale
B. Consignment
C. Lease
D. Title swap
E. Ownership
Which of the following is an instrument payable to cash or whoever is in possession of
the instrument?
A. A bearer instrument.
B. A delivery instrument.
C. An order instrument.
D. A transfer instrument.
E. An acknowledgement instrument.
In most states a person is given full legal capacity to enter into contracts when he or she
becomes ______ before reaching the age of majority.
A. Emancipated
B. Freed
C. Released
D. Employed
E. Acknowledged
What was the result at the Supreme Court level in Wyeth v. Levine, the case in the text
in which the defending drug company took the position that the plaintiff’s jury verdict
on her state law claim alleging that the defendant improperly labeled a drug was
preempted by federal law and should be overturned?
A. That the case should be dismissed because the defendant could not be subjected to
both federal and state law.
B. That the case should be dismissed because it was impossible for the defendant to
comply with both state and federal law.
C. That the case should be dismissed because complying with state law would obstruct
the purposes and objectives of federal drug labeling regulation.
D. That the jury verdict would be upheld because the defendant could have complied
with its state and federal law obligations.
E. That the jury verdict would be upheld because Wyeth failed to submit evidence that
the plaintiff was guilty of comparative negligence.
Which of the following is true regarding federal acts regulating securities transactions?
A. The Securities Act of 1933, the Securities Exchange Act of 1934, and the Anti-Fraud
Securities Act of 2001 are all federal acts regulating securities transactions.
B. The Securities Exchange Act of 1934 and the Securities Act of 1933 are federal acts
regulating securities transactions, but the Anti-Fraud Securities Act of 2001 is not.
C. The Anti-Fraud Securities Act of 2001 and the Securities Exchange Act of 1934 are
federal acts regulating securities transactions, but he Securities Act of 1933 is not.
D. The Anti-Fraud Securities Act of 2001 and the Securities Act of 1933 are federal acts
regulating securities transactions, but he Securities Exchange Act of 1934 is not.
E. The Securities Act of 1933 is a federal act regulating securities transactions, but the
Securities Exchange Act of 1934 and the Anti-Fraud Securities Act of 2001 are not.
“Cheap Principal.” Jason, who is very knowledgeable regarding computers, agrees to
purchase computers for Nick’s business. Jason is retained for that purpose only, he is
paid a set rate for the job, and Nick exercised no control over the manner in which
Jason did his work. Jason purchased computers from ABC Computers without any
mention of Nick. The computers worked well and were not defective in any way.
Unfortunately, Nick did not pay ABC Computers on a timely basis. Jason, therefore,
paid ABC Computers out of his own pocket because he wanted to be able to do
business with ABC Computers in the future and also because his name was on the
invoice. Jason asked Nick for reimbursement, but Nick refused. Nick claimed that if
Jason had only waited, ABC Computers might have agreed to take less.
Which of the following likely represents Jason’s status in regards to his employment
with Nick?
A. He was an independent contractor.
B. He was an employee.
C. He had a special status called employee-contractor, a term used to represent a
contractor with some responsibilities indicating status as an employee and some
responsibilities indicating otherwise.
D. He was an express contractor.
E. He was an implied contractor.
Which of the following is true regarding the Uniform Commercial Code?
A. It does not affect the making of an agreement and only applies after an agreement is
formed.
B. It applies only in situations not addressed at all by the common law.
C. It applies only to clarify common law in situations in which the common law is
unclear.
D. It applies in all situations involving agreements.
E. Some elements of a contract under the common law have been modified under the
UCC for contracts for the sale of goods.
Which of the following is a term for a requirement that a minimum number of directors
be present at a meeting for decisions made at the meeting to be valid?
A. Quorum
B. Substantial group
C. Adequate group
D. Adequate assembly
E. Substantial assembly