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Mary is an agent for ABC Photography, owned by Phil. Without disclosing her agency
status, Mary agrees by contract to take Polly's wedding photographs. When Phil finds
out, he explains the agency relationship he has with Mary to Polly and says that he
wants to take the photographs because a lady he wants to ask out on a date is expected
to be at the wedding. When Polly finds out, she says "No way - I choose Mary." Which
of the following is true regarding the rights of the parties?
A. Polly has a right to insist that Mary take the photographs because Polly's contract
required Mary's services.
B. Phil has a right to take the photographs only if his contract with Mary expressly
provides that he can take over her photo shoots.
C. Phil has a right to take the photographs.
D. Phil has a right to take the photographs only if the contract is in an amount over
$500.
E. Phil has a right to take the photographs unless the contract Mary has with Polly is in
writing in which case Polly has the right to insist that Mary take the photographs.
"Chewer." The state in which Susan lives has a statute prohibiting dogs from running at
large. All dogs are required to be on a leash whenever they are off the owner's premises.
Susan's dog, while not on a leash, visits the home of a neighbor down the street. While
there, the dog carries off an expensive pair of shoes belonging to Robert. The shoes are
chewed and destroyed. A neighbor informed Robert of what had happened. Robert
commented that he never should have left his $300 shoes lying on the deck in the first
place but that he expects to be repaid by Susan. Robert found out that the dog had
carried away a number of shoes and other articles in the neighborhood, chewing them to
pieces. Susan had done nothing to warn anyone. Robert thinks that she should be
punished for her activities, and perhaps that would deter her from allowing the dog to
run loose.
What type of damages would Robert seek in order to punish Susan and to deter her
actions in regard to letting the dog run free?
A. Punitive.
B. Compensatory.
C. Nominal.
D. Liquidated.
E. There are no such damages available.
Title VII of the Civil Rights Act applies to employers who have ______ or more
employees for ______ consecutive weeks within one year and who are engaged in a
business that affects commerce.
A. 15; 20
B. 50; 20
C. 15; 30
D. 20; 50
E. 20; 52
Which of the following occurs in a CIF agreement?
A. Risk of loss occurs when goods are identified to the contract.
B. Risk of loss occurs when the goods are delivered to the buyer.
C. Risk of loss remains with the seller for 5 days after the sale.
D. Risk of loss remains with the seller for 5 days before the sale.
E. The seller puts the goods in possession of a carrier before the risk passes to the
buyer.
Which of the following are directors who are not officers or employees of the
corporation?
A. Approved directors
B. Outside directors
C. Inside directors
D. Affiliated directors
E. Unaffiliated directors
Sally contracted with Ben, who operates a farm in Guatemala, for the importation of
some great coffee beans for her coffee shop. The contract provided that Ben would be
sure the coffee arrived by September 1st, in time for an open house Sally had planned.
Sally was not worried because Ben had always delivered on a timely basis in the past.
Ben was busy and was late getting the beans in transit. The beans did not arrive until
September 2nd. Sally shipped them back and refused to pay. Ben sued. What is Sally's
best defense?
A. That Ben failed to substantially perform.
B. That Ben failed to materially perform.
C. That Ben violated the perfect tender rule.
D. That Ben's beans were not that good and that she decided to go with another brand.
E. She has no defense because he was only one day late, and she should pay.
"Check Cashing Business." Susan owns and operates a check cashing business. A
regular customer, Bob, comes in and cashes a $2,000 check issued by ABC Trucking.
The day after Susan cashed the check, she received a notice from ABC Trucking that
some checks had been stolen. It was later discovered that the checks she cashed for Bob
had been stolen. At the time she took the check, Susan was very busy with several
customers in line. She simply glanced at the check and cashed it. A reasonable
examination would have revealed that the check had been materially altered and
changed from the amount of $200 to $2,000. Susan decided that she needed to hire
some people to help her because she also had a problem with another check. On the
same day that she took Bob's check, she took a check from another customer, Maurice.
It was later discovered that the check, which was four months old, was the subject of a
dispute between Maurice and the issuer of the check for whom Maurice had done some
work. The issuer claimed that the work was improperly done. Both ABC Trucking and
the issuer of the check to Maurice had stopped payment on the checks. Susan claimed
that as a holder in due course, she was entitled to payment on both checks.
What is the effect of the alteration of the check on Susan's status as a holder in due
course?
A. The alteration has no effect because a holder is not charged with examining an
instrument presented for payment.
B. The alteration will likely prohibit her from being a holder in due course.
C. The alteration will affect her status as a holder in due course only if she had been put
on notice of prior criminal behavior in the past on the part of Bob.
D. The alteration will affect her status as a holder in due course only if the issuer can
establish that it was not negligent in allowing a thief to gain access resulting in the
alteration.
E. On the basis that the law does not want to unduly burden holders, the alteration will
affect her status as a holder in due course only because the instrument was written for
an amount in excess of $500.
Bob properly filed for a patent on a new machine with the U.S. Patent and Trademark
Office. Alice who had been working on the same type of machine was furious when she
learned about Bob's filing. She presented proof that she had actually invented the
machine first but had not yet prepared the paperwork for filing at the time of Bob's
filing. Assuming no wrongdoing on the part of either party and that they developed the
machine independently, which of the following is the correct resolution of the dispute?
A. Alice will win and possess all rights to the patent under common law because she
first invented the machine.
B. Bob will win and possess all rights to the patent under common law because he was
the first to file for a patent.
C. Under common law, Alice and Bob will share rights to the patent on a 50-50 basis.
D. Under the America Invents Act, Alice will control rights to the patent because she
was the first to invent.
E. Under the America Invents Act, Bob will control rights to the patent because he was
the first to file.
Which of the following is a term for profits kept by a corporation for reinvestment?
A. Added earnings
B. Retained earnings
C. Approved income
D. Added profit
E. Saved profit
Assume a business person who owns a computer equipment store is delinquent in
paying rent to the landlord. The resulting dispute focuses on _____ law.
A. Public
B. Preferential
C. Consensual
D. Private
E. Black letter
Which of the following is false regarding limited liability companies?
A. Members need not be citizens of the U.S.
B. Limited liability companies have the limited liability of corporations yet may be
taxed like partnerships.
C. A limited liability company is formed by filing articles of organization in the state in
which members want to establish their LLC.
D. For purposes of jurisdiction, an LLC is considered a citizen of every state in which
its members reside.
E. Owners of an LLC are referred to as incorporators.
"Powder Room Mess." For $300,000, Willis agrees to build a new home for Robert,
who is very picky. Willis builds the home to Robert's specifications with one exception.
The faucets and linoleum flooring in an upstairs powder room are not exactly what
Robert specified. That was a mistake on Willis' part, but he had not intentionally failed
to follow specifications. When Robert sees the powder room, he goes ballistic and tells
Willis that he will not pay Willis anything for the house. It will take $300 to put in
correct faucets and linoleum. Willis says that he is willing to pay $300 to put Robert in
the position he would have been in had the correct faucets and linoleum been used, but
that is all he is willing to pay.
Willis' offer to put Robert in the position he would have been in had the proper faucets
and linoleum been used is based on the measure used for what type of damages?
A. Nominal
B. Punitive
C. Compensatory
D. Liquidated
E. Consequential
Which of the following is a partnership agreement in which company members hold
transferable shares, while all the goods of the company are held in the names of the
partners?
A. A joint stock company
B. A joint corporation
C. A joint partnership
D. A collusive partnership
E. A collusive corporation
When a contract is voidable, it may be ______.
A. Chargeable
B. Rescinded
C. Deassented
D. Reassented
E. Uncharged
A[n] ______ is a special draft that orders the bank to pay a fixed amount of money on
demand.
A. Note
B. Promissory note
C. Check
D. Acknowledgment draft
E. Promissory draft
When two parties at different levels in the manufacturing and distribution process make
an agreement that restrains trade, they have made a ______ restraint against trade.
A. Horizontal
B. Corresponding
C. Lateral
D. Vertical
E. Regulatory
"Big Spender." Wally was a partner in XYZ law firm. He decided to withdraw from the
partnership because he wanted to retire early somewhere in the Caribbean. The
partnership agreement of XYZ law firm did not specify the objective or duration of the
partnership. Although Wally gave proper notice, the other partners claimed that he had
no right to withdraw. Wally was angry and decided to get even. Two days after he
withdrew and before the partnership had provided notification to any suppliers of his
departure, Wally went to the office supply store at which he typically purchased
supplies on account for the firm. He purchased several cameras, a computer, and other
items which he placed on the firm account. Wally just smiled when Sam, the manager at
the store, told Wally that he really appreciated the law firm's business. The next day
Wally headed for the Caribbean and cannot be located. Sam later requests that XYZ
firm pay the bill for Wally's purchases. The law firm, whose members had decided to
continue the partnership after the dissolution resulting from Wally's resignation, refused
on the basis that Wally had no authority to make the purchases. Sam says that he did not
know that and that he expects to be paid immediately.
Which of the following is true regarding whether the law firm is liable for purchases
made by Wally?
A. The law firm is liable for the purchases because it had not provided notification to
the office supply that Wally was no longer authorized to make purchases for the firm.
B. The law firm is liable for the purchases because Wally's authority continued for
seven days after his resignation.
C. The law firm is liable for the purchases because Wally's authority continued for ten
days after his resignation.
D. The law firm is liable for the purchases only if Wally was treated inequitable during
the winding-up process.
E. The law firm is liable for the purchases only if Wally cannot be found within one
year of the date the purchases were made.
Which of the following is a reference to being a party to a contract?
A. Being in privity of contract.
B. Being in association with contract.
C. Being in connect to contract.
D. Being in affiliation with contract.
E. Being connected by contract.
Which of the following, if any, is an authorization of a shareholder to allow someone
else to vote in his or her place?
A. Approval
B. Acknowledgement
C. Proxy
D. Permissive voucher
E. There is no such document because a shareholder may not allow someone else to
vote in the shareholder's place.
Under sections of the UCC, sellers and lessors have the right to ______ or fix problems
with nonconforming goods.
A. Cure
B. Defend
C. Deduct
D. Reject
E. Renounce
"Fish Fiasco." Matt agreed to be a limited partner in Susie and Bill's business of
importing tropical fish. Susie and Bill were general partners. Matt contributed $10,000
to the partnership as his capital contribution. The partnership made a profit of $30,000
the first year. Matt was paid nothing. When he inquired, Susie told him that a limited
partner was only entitled to a share of profits as approved by the general partners and
that perhaps things would be better the next year. The next year, however, importation
was banned because of a fish disease, and the partnership lost money and owed debts of
$60,000. At the end of the year, Susie and Bill asked Matt to contribute $20,000 to
cover the debts. When Matt complained about the amount, Bill told him that he and
Susie were being overly reasonable and that he was legally liable for an even larger
percentage. In an attempt to keep the business afloat, Matt told Susie and Bill that they
should consider suing a customer who had not paid a large account. Susie and Bill
replied, however, that they were morally opposed to lawsuits and that they had the final
say on litigation.
Which of the following is true regarding Matt's entitlement to share in profits?
A. During the first year of business, a limited partner is not legally entitled to a share of
the profits.
B. During the first year of business, a limited partner is only entitled to a share of the
profits at the discretion of the general partners.
C. A limited partner is generally entitled to a share of the profits, but during the first
year of business, a limited partner is only entitled to one-half of whatever the share
would normally have been.
D. During the first year of business and also in subsequent years, a limited partner has a
right to share in the profits.
E. A new limited partner is only entitled share in the profits after a partnership has been
successful for three consecutive years.
Which of the following was true prior to the landmark 1916 case of MacPherson v.
Buick Motor Company?
A. Negligence was rarely used as a theory of recovery for an injury caused by a
defective product because of the difficulty of establishing the element of duty.
B. Negligence was rarely used as a theory of recovery for an injury caused by a
defective product because of the difficulty of establishing causation.
C. Negligence was often used as a theory of recovery because of the ease in
establishing privity of contract.
D. Causes of actions against manufacturers of products were barred federal law.
E. Causes of actions against manufacturers of products were barred by an amendment
to the U.S. Constitution that has since been repealed.
How was the process of judicial review established under which courts review
legislative and executive actions to determine whether they are constitutional?
A. By vote of the U.S. Senate
B. By vote of the U.S. House of Representatives
C. By vote of both the U.S. Senate and the U.S. House of Representatives
D. By early common law
E. By executive proclamation
What does the establishment clause of the First Amendment provide?
A. Government cannot make a law prohibiting the free exercise of religion.
B. Government cannot make a law establishing a religion.
C. Government cannot make a law referencing religion in any manner.
D. Government must establish laws respecting religion in order to prevent disruptive
behavior such as terrorism and to allow free-exercise by the majority.
E. That only religions recognized when the First Amendment was passed are entitled to
recognition and protection.
Mediation programs are underway in _____ of state courts.
A. More than one-third
B. More than one-half
C. More than 75%
D. Less than one-half
E. Less than 10%
With a simple delivery contract, when does title transfer to the buyer?
A. When money is transferred
B. When the items are delivered
C. When the buyer takes possession
D. One day after goods are identified to the contract
E. When goods are identified to the contract
A ______ estate is the most complete estate a person may have.
A. Conditional
B. Life
C. Leasehold
D. Future interest
E. Fee simple absolute
A[n] ______ trust is a trust created while the settlor is alive or by will.
A. Actual
B. Express
C. Implied
D. Resulting
E. Congruent
As set forth in the text, which of the following is true regarding respondeat superior in
Iraq?
A. Iraq applies the same concept of respondeat superior as the U.S.
B. Iraq's law is influenced in part by classical Islamic law which suggests that those
who cause harm should repair it.
C. Iraqi law contains no exceptions under which respondeat superior principles are
permitted.
D. Through a specific enactment, government municipalities may not be held liable for
acts of employees.
E. The concept of respondeat superior is irrelevant in Iraq because civil actions for
injury are not allowed.
Which of the following occurs when a plaintiff establishes a prima facie case in an
action alleging disparate-treatment discrimination in employment in the form of an
illegal discharge?
A. The plaintiff wins.
B. The burden shifts to the defendant to articulate a legitimate, nondiscriminatory
reason for the discharge.
C. The burden shifts to the defendant to establish beyond a reasonable doubt that
discrimination did not occur.
D. The burden remains with the plaintiff to prove discrimination beyond a reasonable
doubt, a special standard in disparate-treatment cases.
E. The burden remains with the plaintiff to establish damages to a reasonable certainty.
