Which of the following is true regarding any right of inspection in regard to buyers?
A. The UCC provides for no right of inspection for buyers, and the right of inspection is
only available to the buyer if it is provided for by contract.
B. The UCC provides for a right of inspection in regard to perishable items for buyers,
but not otherwise.
C. The UCC provides for a right of inspection in regard to fragile items for buyers, but
not otherwise.
D. The UCC provides for a right of inspection if the buyer and seller have previously
had disputes in regard to shipments, but not otherwise.
E. The UCC provides for a right of inspection for buyers.
Which of the following was the result at the Supreme Court level in Food and Drug
Administration v. Brown & Williamson Tobacco Corporation, the case in the text
involving whether the Federal Food, Drug, and Cosmetic Act (FFDCA) authorized the
Food and Drug Administration (FDA) to regulate tobacco?
A. The Court ruled that the FDA had the authority to regulate tobacco because nicotine,
one of its main components, is a drug.
B. The Court ruled that the FDA had the authority to regulate tobacco because
cigarettes and smokeless tobacco are drug delivery devices of the drug nicotine.
C. The Court ruled that the FDA had the authority to regulate tobacco because the
FFDCA implies that the FDA retains the discretion to determine items within its sphere
of regulation.
D. The Court ruled that the FDA had the authority to regulate tobacco because nicotine,
one of its main components, is a drug but that the FDA exceeded the scope of its
regulatory powers in the issuance of excessively strict regulations regarding the
marketing of tobacco.
E. The Court ruled that the FDA lacked the authority to regulate tobacco because
Congress had enacted its own legislation regulating tobacco and had not extended that
right to the FDA.
Ed goes door-to-door selling magazine subscriptions. Ed knows, however, that he is
simply taking money for subscriptions and has absolutely no intention of ever arranging
for the provision of magazines. Which of the following offenses, if any, has he
committed?
A. Defalcation
B. False entry
C. False token
D. False pretenses
E. Ponzi scheme
“Cosmetic profits.” Sally is the vice president at Big Name Cosmetics Company. She
learns that the company is soon going to purchase a smaller chain of stores. It is
expected that stock in Big Name Cosmetics will rise dramatically at that point. Sally
immediately buys a number of shares of her company’s stock. She also tells her friend
Alice about the expected purchase of stores. Alice wanted to purchase stock in the
company but lacked the funds with which to do so. Although she did not have the funds
in Bank A, Alice decided to draw a check on Bank A and deposit the check in Bank B
and then proceed to write a check on Bank B to cover the purchase of the stock. She
hoped that she would have sufficient funds to deposit before the check was presented
for payment.
Of which of the following offenses, if any, is Alice guilty of by buying stock?
A. She is guilty of insider trading because she tipped information.
B. She is guilty of an insider-trading violation because she traded on tipped
information.
C. She is guilty of extortion.
D. She is guilty of larceny.
E. She is not guilty of any offense.
Which of the following is true regarding caps on punitive damages in Title VII cases
based on discrimination other than race?
A. Punitive damages are capped at $300,000 for employers of more than 500
employees.
B. Punitive damages are capped at $50,000 for employers of between 100 and 200
employees.
C. Punitive damages are capped at $25,000 for employers of between 25 and 50
employees.
D. Punitive damages are capped at $75,000 for employers of between 50 and 200
employees.
E. There is no cap on punitive damages.
Which of the following was the result on appeal in the case of Evan Rothberg v. Walt
Disney Pictures, the case in the text in which the defendant allegedly used undue
influence to obtain a release of employee benefits from a person in the hospital dying of
AIDS?
A. The court ruled that the defendant was rightfully entitled to a summary judgment
ruling in its favor because there was no direct evidence of legal undue susceptibility on
the part of the weaker party.
B. The court ruled that the defendant was rightfully entitled to a summary judgment
ruling in its favor because there was no direct evidence of application of excessive
pressure by the stronger party.
C. The court ruled that the defendant was subject to summary judgment because the
employer/employee relationship was present when the benefits at issue were granted,
and no action for undue influence could later be brought against the employer.
D. The court ruled that the plaintiff was entitled to recover as a matter of law because
there was sufficient proof of undue influence.
E. The court ruled that a jury question was presented as to whether undue influence was
present.
A ____ is a free trade area with the additional feature of a common external tariff on
products originating from outside the union.
A. Customs union
B. Free trade union
C. External tariff union
D. International tariff union
E. Customs trade union
“Parent Involvement.” Marcy and George, both artists, discussed forming a partnership
to paint portraits. George’s parents were interested in investing in the partnership, but
they wanted to avoid any liability. George suggested forming a limited partnership. He
told Marcy and his parents that they could do it very informally, that an oral agreement
was sufficient, and that the parents would be protected from liability. Although George
protested strongly on the basis that it was a waste of money, Marcy insisted that a
certificate of limited partnership be filed with the secretary of state. After a few months,
Marcy and George decided that they wanted to add a new partner, Betty, to the
partnership as a general partner. Betty had some expertise in the portrait field but,
unfortunately, she had also had some scrapes with local law enforcement. George’s
parents objected strenuously to the admission of Betty. Marcy and George took the
position that the parents, as limited parents, had no say in the admission of a new
partner. George’s father, who had an interest in painting and was concerned that the
partnership was not making very much money, decided to start coming to the
partnership studio to manage the business and attempt to bring it into profitability.
Which of the following is true regarding the issue of George’s father deciding to
manage the partnership?
A. Before he can undertake management duties, he must get the approval of at least one
half of all general and limited partners.
B. There is no effect on the partnership agreement.
C. He may be involved in all matters of management except strategic planning.
D. He may be involved in management; but, as a limited partner, he may not be paid
additional amounts for doing so.
E. As a limited partner, he may not be involved in management and retain limited
liability.
The first ______ of any amount deposited in a bank must be available to the depositor
on the business day following the day of deposit.
A. $100
B. $200
C. $300
D. $400
E. $500
Which of the following primarily governs the internal operations of labor unions?
A. The Taft-Hartley Act
B. The National Labor Relations Board
C. The Fair Labor Standards Act
D. The Wagner Act
E. The Landrum-Griffin Act
When trademark infringement is alleged, what is the effect of actual confusion?
A. It is not a prerequisite for the plaintiff to recover but it is a strong indication that
there is a likelihood of confusion.
B. It is a prerequisite for the plaintiff to recover.
C. It is a weak indication that there is a likelihood of confusion.
D. It is a strong indication that the plaintiff will bridge the gap.
E. It is a strong indication that there is a likelihood of confusion and also that the
plaintiff will bridge the gap.
“Partnership Disruption.” Bruce, Sandra, and Minnie want to form a partnership to
assist students with resume preparation and employment searches. Bruce asks Sandra
and Minnie if they should draw up some sort of agreement. Sandra replies that a written
agreement is not legally required and that an oral agreement will set up a partnership.
Upon the urging of Bruce and Minnie, however, Sandra agreed to a written document
which they all signed setting up the partnership. It was a simple agreement listing the
partners that did not specifically address the right to management or allocation of
profits and losses. Sandra has an opportunity to assist some students with resumes and
does so without revealing her employment to the partnership. She keeps the funds she
receives for herself. When Bruce and Minnie found out, Sandra replied that she was
doing two-thirds of the partnership work, particularly in regard to management; that
she, therefore, had two-thirds of the voting rights; and that she voted that her actions
were appropriate. The articles of partnership did not address the right to share in
management, but Bruce and Minnie strongly disagreed with Sandra.
What is the written agreement creating the partnership entered into by Bruce, Sandra,
and Minnie called?
A. Contract of partnership
B. Contract of agreement
C. Partnership articles
D. Articles of partnership
E. Clauses of the articles of partnership
“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 the most likely result if Henry refuses payment on the
promissory note that was endorsed to Richard claiming that he never signed it?
A. He will be liable because an official banking document was involved.
B. He will not be liable because a party is never liable on a negotiable instrument when
it is signed without knowledge that it is, in fact, a negotiable instrument.
C. He will be liable unless he can establish that Richard was not a holder in due course.
D. He can claim fraud in the factum, and whether he is liable or not will depend upon
whether a court determines that he should have known what he was signing.
E. He can claim fraud in the inducement, and he will not be liable regardless of whether
or not he knew what he was signing.
“Revenge.” Jane, a first year law student, while walking to school in inclement weather,
accidentally slipped on ice knocking down Greg, another first year law student,
breaking his glasses. He was very angry with Jane and let the air out of one of her car
tires. Greg also decided to sue Jane for negligence claiming as damages $300 for his
broken glasses. He decided that he already knew all about the law and did not need a
lawyer. Greg sued Jane in state court. Jane, in the same lawsuit, brought an action
against Greg for letting the air out of her tire. At the trial in state court, Jane told the
judge that a friend, Susie, told her that she saw Greg let the air out of Jane’s tire. The
judge disallowed Jane’s testimony on that issue. Susie, however, who was in the
courtroom also came and testified to that effect. The state court judge ruled in favor of
Jane. Greg said that he was not giving up and that he would seek double damages on
appeal in federal court. Jane and Greg live in different states when not attending school.
After the trial, Jane reported Greg’s action of letting the air out of her tire to the police
who said that they would proceed with a criminal action against Greg. Greg goes to see
Alex, a recent graduate who had just passed the bar, and asked Alex to represent him in
a federal court appeal.
What advice should Alex give to Greg regarding an appeal filed in federal court?
A. He should tell Greg that a federal appeal looks promising and that he will be glad to
represent Greg for an hourly rate of $400.
B. He should tell Greg that the federal appeal looks good only if Greg can get Jane to
admit she was negligent.
C. He should tell Greg that the federal appeal looks good only if Susie does not come to
testify in person.
D. He should tell Greg that the federal appeal is not possible unless Greg first gets the
trial court judge to certify the case to federal court.
E. He should tell Greg to forget about a federal court appeal because an appeal from a
state trial court would not be to federal court.
Which of the following may be issued to shareholders as proof of ownership in the
corporation?
A. Stock subscriptions
B. Stock acknowledgements
C. Paper documentation
D. Stock certificates
E. Acknowledgement documents
Bobby wants to purchase a lot next door to Sarah’s home that is owned by Sarah. Bobby
knows Sarah will not sell the lot to him because of his barking dogs that she dislikes.
Bobby agrees with Susie that Susie will purchase the lot from Sarah for him. Susie and
Sarah reach an agreement and enter into a contract whereby Sarah is to sell the lot to
Susie for a price within the scope of Susie’s authority. Susie tells Sarah nothing about
her plan to later transfer the lot to Bobby. Before title to the lot is transferred to Susie,
Bobby tells Susie that he no longer wants the lot. Susie tells Sarah about Bobby. Sarah
tells Susie that as far as she is concerned, Susie has bought a lot. Sarah says that she
plans to move anyway and really does not care whether Susie or Bobby end up with the
lot. She just wants her money and is unconcerned about barking dogs. They will be the
next owner’s problem. Which of the following is true regarding whether Susie is
personally bound on the contract with Sarah?
A. Susie is not personally bound because she was acting on behalf of Bobby.
B. Susie is personally bound unless she can establish that Sarah would not have sold her
the lot if she had known that Bobby was involved; and the contract is, therefore, void.
C. Susie is personally bound unless she can establish that Bobby has the funds with
which to pay Sarah.
D. Susie is not personally bound unless Bobby has legally filed for bankruptcy.
E. Susie is personally bound.
In cases where both parties to a contract are mistaken about either a current or a past
material fact, either can choose to ______ the contract.
A. Uphold
B. Confirm
C. Rescind
D. Refute
E. Disclaim
Transfer of collateral to a secured party is called a[n] ____.
A. Allegiant
B. Pledge
C. Transfer
D. Allonge
E. Release
Which of the following is false regarding vacation rights in other countries?
A. Similar to the U.S., employees in Ireland do not have mandated vacation rights.
B. In Luxembourg, regardless of age, employees are given 25 days of holiday, 12 of
which they must take in succession, as well as 10 paid public holidays.
C. Swedish law gives employees 5 weeks of vacation time and gives them 10 weeks
after five years of employment.
D. Denmark mandates no fewer than five weeks of paid vacation a year.
E. Spain mandates no fewer than 30 days of vacation in addition to the country’s 14
paid public ones.
A person who decides to go into business on his or her own without further formality
forms a[n] _____.
A. Individual entity
B. Sole proprietorship
C. Single entity
D. Sole entrepreneurship
E. Single entrepreneurship
Which of the following was the result in Federal Trade Commission v. Check Investors
Inc., the case in the text involving whether, in an effort to collect bad check charges, the
defendant violated the Fair Debt Collections Act through tactics such as telling check
writers that they would be arrested and prosecuted?
A. That the defendant did not violate the act because only truthful statements were
made in that the check writers were subject to arrest and prosecution.
B. That the defendant did not violate the act because the check writers committed theft
and were not, therefore, classified as consumers protected by the act.
C. That the defendant did not violate the act because the act specifically exempts
collection of bad checks.
D. That the defendant violated the act because it could only legally collect payments on
checks, not determine whether check writers were criminals and then employ law
enforcement tactics to collect.
E. That the defendant violated the act because it failed to inform the check writers that
they were constitutionally entitled to a jury trial before incarceration.
Which of the following was the result in Alexander v. Lafayette Crime Stoppers Inc.,
the case in the text in which the plaintiffs sued for collection of reward money offered
to catch a serial killer by the defending publications, and the publications defended on
the basis that the plaintiffs failed to provide notice as required by the reward offers
because the plaintiffs provided relevant information to law enforcement, not the
defendants?
A. That the plaintiffs accepted the reward offers by performance when they provided
information to law enforcement and were, therefore, entitled to recover.
B. That the plaintiffs were entitled to prevail because by law they were required to
contact law enforcement, not the defendants.
C. That defendants did not receive acceptance of the reward offer and that, therefore, no
contract was formed.
D. That defendants revoked the reward offer before it was accepted and that, therefore,
no contract was formed.
E. That reward offers cannot constitute offers and that, therefore, no contract was
formed.
Which of the following is true regarding the rights of an incidental beneficiary to a
contract to sue to recover incidental rights?
A. An incidental beneficiary may sue to enforce incidental contractual rights so long as
those rights have vested.
B. An incidental beneficiary may sue to enforce incidental contractual rights only if the
incidental beneficiary was once a creditor beneficiary.
C. An incidental beneficiary may sue to enforce incidental contractual rights only if the
incidental beneficiary was once a donee beneficiary.
D. An incidental beneficiary may sue to enforce incidental contractual rights only if the
incidental beneficiary is also a second-party beneficiary.
E. An incidental beneficiary cannot sue to enforce a contract which provided incidental
benefits.
“Overextended Debtor.” For his home, Dennis purchased a big screen television from
ABC Electronics and financed the purchase through ABC Electronics. Later, because
Dennis had bought a boat, a new car, an expensive engagement ring for his girlfriend,
and some other items, he was unable to continue making payments on the television.
The manager from ABC Electronics called 60 days after the sale and asked Dennis to
return the television. Dennis refused on the basis that ABC Electronics never perfected
its interest in the television. He also explained that he had later granted a secured
interest in the television along with his other goods to XYZ Credit in return for a loan.
No financing statement was filed on behalf of ABC Electronics although XYZ Credit,
with no knowledge of any interest of ABC Electronics, did file a financing statement.
In a dispute between Dennis, ABC Electronics, and XYZ Credit regarding entitlement
to the television, who is likely to win and why?
A. ABC Electronics will prevail because, as a seller of consumer goods, it did not need
a perfected security interest in order to prevail against other creditors.
B. ABC Electronics will prevail because it had a perfected security interest.
C. XYZ Credit will prevail because although ABC Electronics had a perfected security
interest, it did not file a financing statement.
D. XYZ Credit will prevail because a luxury good was involved and, although ABC
Electronics had a perfected security interest, it did not file a financing statement as
required within 10 days of the sale.
E. XYZ Credit will prevail because it had a perfected security interest in a greater
amount of goods than did ABC Electronics.
Under the UPA, which of the following is in first place for payment when liquidated
assets of a partnership are distributed?
A. Payment of refunds or loans to partners for loans made to the firm.
B. Payment to partners of the capital they invested.
C. Payment of profits distributed to partners on the basis of the partnership agreement.
D. Payment to creditors of the partnership.
E. Payment of bills of lading.
Which of the following governs partnerships in most states in the absence of an express
agreement?
A. The Joint Partnership Act
B. The Uniform Joint Agreement Act
C. The Uniform Partnership Act
D. The Associated Partnership Act
E. The Joint Agreement Act
Which of the following was the result in the case in the text Wesley Locke v. Ozark City
Board of Education, in which an umpire was injured by an angry parent and sued
claiming that he was an intended third-party beneficiary under a contract the defending
board of education had with the Alabama High School Athletic Association requiring
police protection which was not provided?
A. The umpire won as a matter of law because he was an intended third-party
beneficiary to the contract between the defending school board and the athletic
association, and the defendant had an absolute nondelegable duty to provide protection
ensuring that no one was hurt.
B. The umpire won as a matter of law because although he was not an intended
third-party beneficiary to the contract between the defending school board and the
athletic association, the defendant had an absolute nondelegable duty to provide
protection ensuring that no one was hurt.
C. The defending school board won as a matter of law because although the umpire was
an intended third-party beneficiary to the contract, only the athletic association could
proceed with a lawsuit.
D. The defending school board won as a matter of law because the umpire was not an
intended third-party beneficiary to the contract.
E. The case was remanded for trial on the issue of whether adequate police protection
was provided in view of the fact that the plaintiff was an intended third-party
beneficiary to the contract between the school board and the athletic association.
In the area of employee testing, which of the following shows a statistical relationship
between test scores and objective criteria of job performance?
A. Content validity
B. Criterion-related validity
C. Construct validity
D. Object validity
E. Performance validity
Which of the following provides that a portion of a copyrighted work may be
reproduced for purposes of criticism, comment, news reporting, teaching, scholarship,
and research?
A. The Limited Use Doctrine
B. The Copyright Use Doctrine
C. The Fair Use Doctrine
D. The Trade Use Doctrine
E. The Approved Use Doctrine
With a[n] ______ instrument, payment can be made only at a specific time designated
in the future.
A. Time
B. Demand
C. Recourse
D. Nonrecourse
E. Immediate