The National Labor Relations Board lacks jurisdiction over persons employed by a
spouse or parent.
The law does not permit an oral negotiable instrument.
Which of the following is true regarding the application of negligence per se in product
liability cases based on negligence?
A. The doctrine of negligence per se is also applicable to product liability cases based
on negligence.
B. The doctrine of negligence per se is applicable to product liability cases only if they
are based on failure to warn.
C. The doctrine of negligence per se is applicable to product liability cases only if the
cases are based on design defect.
D. The doctrine of negligence per se is applicable to product liability cases only if the
cases are based on manufacturing defect.
E. The doctrine of negligence per se is never available in product liability cases.
“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 true regarding Penny’s claim that the UCC imposes no
obligation of good faith conduct?
A. Penny is correct in this instance because while the UCC generally imposes a duty of
good faith, that duty is inapplicable during the initial 30 days after a purchase when a
buyer has the right to revoke acceptance for a good or a bad reason.
B. Penny is correct in this instance because while the UCC generally imposes a duty of
good faith, that duty is inapplicable in relation to third-party financing.
C. Penny is correct only if she can establish that the goods were overpriced resulting in
the right to disregard any obligation of Good Wood.
D. Penny is correct only if she can establish that Good Wood Furniture itself failed to
act in good faith.
E. Penny is incorrect.
When a corporation is incorporated, the secretary of state usually issues a[n] ____, a
document certifying that the corporation is incorporated in the state and is authorized to
conduct business.
A. Approval of incorporation
B. Certificate of incorporation
C. Authorization of incorporation
D. Certification of legality
E. Chronicle of legality
The plaintiff must provide the defendant in a lawsuit with a copy of the complaint. That
process is called ______.
A. Summons issuance
B. Service of process
C. Service delivery
D. Subpoena delivery
E. In personam service
Which of the following is true regarding oral assignments?
A. In some cases, assignments may be made orally.
B. Assignments, regardless of the terms, are not covered by the statute of frauds.
C. The UCC requires that assignments be in writing when the amount being assigned is
greater than $1,000.
D. The UCC requires that assignments be in writing when the amount being assigned in
greater than $1,500.
E. The UCC requires that assignments be in writing when the amount being assigned is
greater than $2,000.
Which of the following is an exception to the general rule that rights to a contract
cannot be assigned when a contract is personal in nature?
A. When the only part of a contract left to be fulfilled is the payment.
B. When nothing has been done on the contract at all.
C. When no more than half the contractual duties have been performed.
D. When no more than three-fourths of the contractual duties have been performed.
E. There is no exception because rights to a contract that is personal in nature may
generally be assigned.
“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 idea that dogs have basic rights, and her plan to exceed laws involving
cleanliness and health standards is rooted in which of the following?
A. Legal positivism
B. The historical school
C. Legal realism
D. Natural law
E. Cost-benefit analysis
Which of the following includes lost profits so long as those damages are not too
speculative?
A. Punitive damages
B. Consequential damages
C. Remedial damages
D. Nominal damages
E. Control damages
Which of the following helps explain why the principle of deontology may be difficult
to apply?
A. People disagree about what duties we owe to one another and which duties are more
important.
B. People disagree about whether consequences are positive or negative.
C. People disagree about the ethics of care.
D. People disagree about what duties we owe to one another and also whether
consequences are positive or negative.
E. People disagree about what duties we owe to one another, whether consequences are
positive or negative, and about the ethics of care.
Paul lives in Florida but owns property in Tennessee for which he has not paid property
tax in several years. Assuming the state meets procedural requirements, which of the
following is true?
A. The court can exert in personam jurisdiction over the property itself and sell it to
satisfy the tax debt.
B. The court can exert in rem jurisdiction over the property and sell it to satisfy the tax
debt.
C. The court can exert both in personam jurisdiction and in rem jurisdiction over Paul
but must wait until his return to the state in order to sell the property to satisfy the tax
debt.
D. The court can exert both in personam jurisdiction and in rem jurisdiction over the
property itself and may take control of the property, but the court must wait until Paul’s
return to the state in order to sell the property to satisfy the tax debt.
E. The court has no right to sell the property to satisfy the tax debt because no
jurisdiction is present.
Which of the following is true regarding liability of a principal if a contract an agent
makes with a third party expressly excludes the principal from the contract?
A. The principal is liable on the contract because it is unconscionable to exclude a
principal from a contract.
B. The principal is liable on the contract only if the principal is an unidentified
principal.
C. The principal is liable on the contract only if the principal is a partially disclosed
principal.
D. The principal is liable on the contract unless the principal gave the agent authority in
writing to make the agreement with the third party.
E. The principal is not liable on the contract.
“Smelly Lake.” Barney, who lives on a navigable lake, is unhappy because he believes
that a local company is dumping pollutants into the lake resulting in harm to his
property and horrible odors. No one swims in the lake anymore. He calls a company
official, Warren, who tells him to mind his own business. Warren tells him that the state
has no authority, that federal investigators do not have time for Barney’s small smelly
lake, that swimming is not a concern of the government, and that any federal penalties
are negligible. Barney tells Warren that he is pushing for big penalties and that Warren
is likely to end up in jail. Warren just laughs.
Which of the following is true regarding Warren’s statement that any federal penalties
are negligible?
A. Warren is correct.
B. Warren is incorrect, and while incarceration may not be imposed under federal law,
penalties are substantial including penalties of up to $5,000 per day.
C. Warren is incorrect, and while incarceration may not be imposed under federal law,
knowingly endangering someone by violating the Clean Water Act can result in a
criminal fine of up to $150,000 for an individual and $1 million for an organization.
D. Warren is incorrect, and while fines may not be imposed, any individual knowingly
endangering someone while violating the Clean Water Act may face up to 10 years in
prison.
E. Warren is incorrect, and both incarceration and fines may be imposed.
“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 would be the correct analysis of the effect of the discovery that
Rick has a book that is not appropriate for the class?
A. Rick is stuck with the book because he objectively agreed to purchase it.
B. Rick is stuck with the book because Beverly did not commit fraud.
C. Rick is stuck with the book because Beverly subjectively thought it was the correct
book, and Rick did not openly disagree before the contract was executed.
D. Because the parties had a mutual misunderstanding, the parties did not come to a
meeting of the minds, and there is no contract.
E. Because both parties were mistaken, at Rick’s option he may return the book; but
only half of the purchase price would be required as a refund from Beverly because she
is not guilty of fraud.
“Used Car Problems.” Marcy purchased a used car from ABC Motors. Six months later
the police seized the car from Marcy on the basis that it was a stolen vehicle. Marcy
asked for her money back from ABC Motors. The manager there told her that the car
was not stolen, but that even if it were, ABC Motors acted in good faith with no
knowledge of a theft; and that, therefore, Marcy, as a good-faith purchaser, had a good
title. ABC Motors had also sold a used car to Frank who wrote a bad check for the car
and left town, but not before selling the car to Betty. Betty purchased the car with no
knowledge of any problem with the check. ABC Motors asked Betty to return the car,
but she refused. She explained that she had given the car to her son, Billy.
Assuming that the car was stolen prior to delivery to ABC Motors and without the
knowledge of any representative of ABC Motors, what kind of title did ABC Motors
have?
A. Void
B. Good
C. Voidable so long as ABC Motors can prove that it had never been charged with
dealing in stolen merchandise.
D. Voidable so long as ABC Motors can prove that none of its representatives were
negligent in disregarding evidence of the theft at any time prior to its resale to Marcy.
E. Voidable so long as no manager of ABC Motors had made an affirmative
representation that the car was not stolen.
Which of the following interprets and enforces the National Labor Relations Act?
A. The Federal Union Board
B. The Collective Bargaining Board
C. The National Labor Relations Board
D. The Mandatory Negotiations Board
E. The Federal Labor Oversight Board
“Rent Increase.” Conrad leased space for his hair salon from Brenda. After a few years,
Brenda decided to sell the building in which the hair salon was located to Greg. Brenda
told Conrad that the lease would be terminated and that whether he could stay or not
depended on what he could work out with Greg. Greg told Conrad that he could stay
only if he paid double the amount of rent he had been paying to Brenda and that if
Conrad complained, the rent would go even higher. Conrad told Greg that Brenda had
no right to make any changes and that he had the absolute right to continue paying the
same set amount to Brenda until the lease expired. The lease did not address transfers.
Which of the following is true regarding Conrad’s statement that he had an absolute
right to continue paying Brenda until the lease expired?
A. Conrad is correct.
B. Conrad is incorrect because while he has the right to pay the same amount, Brenda
has the right to assign the right to receive the payments to Greg or someone else unless
the lease terms prevent her from doing so.
C. Conrad is correct only if he gave notice to Brenda prior to the sale that he objected to
it.
D. Conrad is correct only if there is less than one year left on his lease agreement.
E. Conrad is correct because Brenda had no right to transfer ownership in the first
place.
Which of the following is true regarding the law that is relevant to bankruptcy claims?
A. Only federal statutory law is relevant.
B. Only state statutory law is relevant.
C. While bankruptcy law is state law, federal law applies to bankruptcy cases in the
sense that federal laws regarding debtor’s property and creditor claims may apply.
D. While bankruptcy law is federal law, state law applies to bankruptcy cases in the
sense that state laws regarding debtor’s property and creditor claims may apply.
E. Only federal common law is relevant to bankruptcy claims.
A defendant can use the _____ defense if the idea for a crime originated not with the
defendant but with a police officer or other government official who suggested it to the
defendant, and the defendant would not otherwise have committed the crime.
A. Entrapment
B. Necessity
C. Justifiable use of force
D. Duress
E. Inescapable action
Which type of law involves incidents in which someone commits an act against the
public as a unit?
A. Criminal
B. Procedural
C. Civil
D. Natural
E. Positive
Which of the following occurs when unionized employees have a labor dispute with
their employer and boycott another employer to force it to cease doing business with
their employer?
A. A primary boycott
B. A secondary boycott
C. A signal boycott
D. A management boycott
E. An employee boycott
“Banking Problems.” Constance is a loan officer at ABC Bank. Being somewhat
dishonest, Constance tells Henry, a customer of the bank, who is wealthy and rarely
checks the status of outstanding loans and balances that she is collecting money for a
local animal shelter. She asks him to sign a pledge that he will contribute $50 to the
animal shelter. In fact, through covering pertinent terms of the document, she had him
sign a promissory note made out to her for $5,000, which she later endorsed to Richard.
After leaving the bank, Henry proceeded to one of his businesses, a used car dealership.
Taylor comes in to purchase a used car. He and Henry agree that Taylor will purchase a
car for $3,000. Martha also comes in, and she and Henry agree that she will purchase a
used car for $4,000. Both Taylor and Martha make out promissory notes payable to
Henry. At the end of the day, Henry is looking through the notes and decides that
Taylor’s was mistakenly made out for $3,000 when it should have been $3,500. Henry
mistakenly, but honestly, believes that the deal was for $3,500. Therefore, he changes
the note to reflect that Taylor owes $3,500. Henry, on the other hand, simply does not
like Martha. He decides that $4,000 was not enough for the car. Accordingly, he
changes the note to $4,500.
Which of the following is true regarding Martha’s liability to Henry?
A. Because of the fraudulent alteration, Martha is not liable to Henry for any amounts
under the promissory note.
B. Martha’s obligation will be enforced only to the amount of $4,000 if payment is to be
made to Henry; but if the note has been negotiated to another holder, Martha is liable
for $4,500.
C. Taylor’s obligation will be enforced only to the amount of $3,000 if payment is to be
made to Henry; but in the event the note is negotiated to a holder in due course, Taylor
is liable for $3,500.
D. Unless Martha has a written document from Henry to the effect that the agreement
was for $4,000 only, Martha and Henry will be legally required to split the remainder
with Martha being held responsible for $4,250.
E. Martha is liable for $4,000 regardless of whether or not Henry has negotiated the
note to another party.
A person who commits a tort is often referred to as a ___________.
A. Tortfeasor
B. Guiltfeasor
C. Criminal
D. Runaway defendant
E. Nominal defendant
Generally, unless engaged to detect __________, an accountant is not a fraud detector
unless the fraud is uncovered in the course of exercising reasonable care and skill.
A. Negligence
B. Misfeasance
C. Malfeasance
D. Fraud
E. Malpractice
What is the federal minimum wage?
A. $5.85
B. $6.00
C. $6.50
D. $7.00
E. $7.25
Which of the following is the right to insure goods against any risk exposure such as
damage or destruction?
A. An insurable interest
B. A compensable interest
C. A paid interest
D. A collateral interest
E. A valid interest
Which of the following is the principle that if an item is transferred from one person to
another, the transferee acquires all the rights to transfer or have in the item?
A. The shelter principle.
B. The transfer principle.
C. The transferee principle.
D. The transferor principle.
E. The holder principle.
From what country did equitable remedies, as applied in the U.S., grow?
A. France
B. Italy
C. England
D. Spain
E. Portugal
“Grooming Losses.” Wally, Beverly, and Matthew formed a partnership to groom dogs.
Because they were good friends and anticipated making a profit sufficient to
compensate all partners well, the articles of partnership did not allocate profit or losses.
Beverly was appointed managing partner. Unfortunately, the business did not go as well
as expected and the partnership incurred some losses. Matthew claimed that he should
not have to share in losses because he had groomed more dogs than anyone. Matthew
also claimed that although the partnership did not reference compensation for additional
duties, he was entitled to compensation because of his excessive work. Beverly claimed
that she should not have to share in losses because she contributed more capital than did
either of the others. Wally claimed that he should not have to cover the losses because
both Beverly and Matthew had been hiding the books from him. He demanded to
inspect the books and also to review a listing of all partnership assets and profit
statements listing distributions to partners. Beverly and Matthew denied that they had
been hiding the books and claimed complete innocence of any wrongdoing.
Which of the following is correct regarding Matthew’s claim to additional compensation
based upon the amount of work he was doing?
A. He is correct.
B. Based upon equitable principles he may be correct, but only if he can establish that
the other partners wrongfully refused to do their share of the work.
C. He is incorrect.
D. He is incorrect unless he can establish that he honestly did not know the law in
regard to partnerships and did the extra work believing that he would be compensated.
E. He is incorrect unless he can establish that he did at least 30% more work than any
other partner.
College president Wally contracts with Alice to teach business law. Alice does a fine job
teaching but gets mad at Wally and will not turn in grades. What type of order would
Wally seek to require Alice to abide by her contract?
A. An order of specific performance
B. A compensatory order
C. A nominal order
D. A consequential order
E. A demand order
Under UCC 2A-525(2) when may a lessor reclaim goods when a lessee in possession of
the goods is in breach?
A. When the lessor discovers the lessee is insolvent
B. When the lessee fails to make payments according to the lease terms
C. When the lessee has received at least 10 days prior notification of reclamation
D. When the lessor discovers a significant reduction in the lessee’s credit score
E. When the lessor can establish a valid contract for actual purchase of the goods
Which of the following is a version of a qualified endorsement?
A. Blank, special, and allonge.
B. Special and allonge, but not blank.
C. Special and blank, but not allonge.
D. Blank and allonge, but not special.
E. There are no qualified endorsements.
Under an installment contract when does the UCC provide that a buyer/lessee may
reject an installment of a particular item?
A. If the defects substantially impair the value of the goods regardless of whether cure
is possible.
B. If the defects cannot be cured even if defects are minor.
C. If the defects devalue the property by more than 10% and if the defects cannot be
cured.
D. If the defects devalue the property by more than 20% and if the defects cannot be
cured.
E. If the defects substantially impair the value of the goods and if the defects cannot be
cured.
“House Painting.” Susie Smith signed a check agreeing to pay, “Annie Greene, Mary
Hodge,” $1,000. The payment was for painting her house. A problem with the note was
that it spelled Annie’s last name, “Greene,” whereas Annie spells it simply, “Green.”
Annie and Mary were having a disagreement regarding how to split up the funds for
painting the house. Annie proceeded to sign the check on the back, “Annie Green,” and
presented it to Bill Brown to satisfy a debt that she owed him. Bill Brown endorsed the
check on the back, “Bill Brown, without recourse,” and gave it to his nephew, Sam, who
took it to the bank for payment. Meanwhile, Susie has stopped payment on the check
because following a rain storm, all the paint on the house looked spotted. Mary is
unhappy because she did not obtain any of the funds and stated that Annie could not
legally endorse the instrument because it misspelled her name and also because she,
Mary, did not sign it.
Which of the following is true regarding the status of Sam?
A. He is not a holder in due course because he did not provide value.
B. He is not a holder because he did not provide value.
C. He is not a holder nor is he a holder in due course because he did not provide value.
D. The fact that a gift was involved does not prevent Sam from being a holder in due
course so long as other requirements are satisfied.
E. The fact that a gift was involved does not prevent Sam from being a holder in due
course so long as other requirements are satisfied and Sam is not a minor.
If a person notifies the credit card company of a stolen card before unauthorized
charges are made, for how much can the person be held liable to the credit card
company?
A. $500
B. $300
C. $250
D. $50
E. 0
Which of the following was the result in the case in the book involving Tempur-Pedic,
the manufacturer of mattresses, when Tempur-Pedic sought to stop the sale of
mattresses that Tempur-Pedic has donated to a charity for victims of Hurricane Katrina
and attempted to recover mattresses sold by the charity involved?
A. That the charity had void title under the UCC and could not transfer good title, and
that Tempur-Pedic could recover all the mattresses both from the charity and from
third-party purchasers.
B. That the UCC did not apply because a charity was involved and that Tempur-Pedic
was entitled to a temporary restraining order pending trial because of the likelihood that
it would prevail based on fraudulent transactions.
C. That under the UCC, Tempur-Pedic was entitled to a temporary restraining order
because of the likelihood that it could show at trial that mattresses were not sold to a
good-faith purchaser.
D. That under the UCC, Tempur-Pedic would lose because the mattresses were sold to a
good-faith purchaser for value.
E. That the UCC did not apply because a charity was involved and that Tempur-Pedic
would lose because movable goods were involved.