Which of the following discharge by agreements requires that both the parties return to
the other any consideration already received or pay for any services or materials already
rendered?
A. Termination by waiver
B. Novation
C. Mutual rescission
D. General release
Which of the following is true of insurable interest?
A. Sellers can retain the insurable interest to goods as long as they have the title to
them.
B. Buyers cannot place insurance on goods.
C. Buyers cannot obtain an insurable interest if they might later reject the goods.
D. Buyers can obtain insurable interest on goods that are not mentioned in the contract.
The legal term used to describe the sacrifice that each party must experience in a mutual
exchange is that party’s legal:
A. detriment.
B. consideration.
C. accord.
D. release
Which of the following is designed to encourage companies that ship, drill for, and
store oil to develop and use the most up-to-date equipment and the most effective safety
measures possible?
A. Surface Mining Control and Reclamation Act
B. Toxic Substances Control Act
C. Oil Pollution Act
D. Ocean Dumping Act
Henry, a promoter, signs a five-year lease agreement for office space for Ajax Corp.,
which has not yet been formed. After formation, Ajax moves into the office space, pays
rent and occupies it for six months, but then finding a cheaper location and moves out.
Which party is liable on the lease?
A. Henry
B. Ajax
C. No one since it was a tenancy at will
D. Both Henry and Ajax
Which of the following is true about the social contract theory?
A. It explains how to formulate values that permit a society to run smoothly.
B. It advocates a society in which people must fend for themselves.
C. It states that to live harmoniously, people must give up certain freedoms.
D. It states that people cannot be forced to adhere to rules, or be punished for not doing
so.
Stan commits securities fraud and takes $5,000,000 from a variety of investors. Stan is
convicted of a crime and then sued by the investors. Stan files for bankruptcy. What
relief will the bankruptcy filing grant Stan?
A. Automatic stay on all cash advances paid to a creditor under an open-ended credit
plan.
B. Automatic stay and discharge of any debt created with the securities fraud.
C. Automatic stay but no discharge of any debt created by the securities fraud.
D. Automatic stay and discharge of all debts incurred.
Morgan, an agent was instructed to sell Drew’s property at a specified price. A month
later the value of the property increased substantially because of zoning changes. What
is the status of the agency relationship?
A. It stands terminated.
B. It depends on what is considered reasonable.
C. It continues and is unaffected by any change what so ever.
D. It requires the agent to compensate the principal with additional compensation.
Which of the following Articles of the U.S. Constitution provides for the original
ratification of the Constitution.
A. Article I
B. Article III
C. Article VII
D. Article V
_____ refer(s) to the written application to the state for permission to form a limited
liability company.
A. Novation.
B. Estoppel.
C. Operating agreement.
D. Articles of organization.
Which of the following is true of litigation and ADR?
A. Litigation is less adversarial than ADR procedures.
B. Litigation is generally more expensive than ADR procedures.
C. ADR procedures are generally more time-consuming than litigation.
D. The use of ADR procedures makes litigation unnecessary.
_____________________ includes the freedom of the press, freedom of speech,
freedom of assembly, and freedom of religion.
A. The Bill of Rights
B. Modern Amendment
C. Articles of Confederation
D. The Federal Register
A shoplifter steals a can of soda and tries to escape. He threatens and fights the clerk
when confronted. This is an example of:
A. burglary.
B. extortion.
C. embezzlement.
D. robbery.
Linda, a currency trader for United Traders, has specific instructions not to take a
position on any currency in excess of $1 million. Linda sees what she believes to be a
sure thing and takes a $20 million position. Unfortunately, the transaction goes bad and
costs United $60 million. Does Linda have any liability to United?
A. Yes, she violated specific instructions and is liable for the loss.
B. No, this is normal market practice.
C. Yes, she engaged in insider trading.
D. No, she is protected by the business judgment rule.
_____ is aimed at understanding the laws of nature and the principles of the physical
universe without any practical goals in mind.
A. Pure research
B. Juriscience
C. Motivation test
D. Applied research
“It is possible, even easy, for the state governments in Wisconsin, Ohio, and Michigan
to alter and/or eliminate the collective bargaining rights of firefighters, police officers,
and teachers”. Why?
A. These states have voted to keep the Wagner Act out of their states.
B. The Wagner Act does not apply to state government or local government employees.
C. The rulings of the agencies constituted under the Wagner Act are not legally
binding.
D. The Wagner Act is applicable only to private organizations.
The World Intellectual Property Organization Copyright Treaty:
A. gives copyright holders the right to copy, publish, and distribute their works in any
way, including by making video copies, audio copies, and encrypted copies.
B. makes it illegal to use technological means to bypass or override programs designed
to prevent access to a copyrighted work.
C. guarantees that copyright holders will be allowed to use the Internet to post their
works with full copyright protection.
D. granted limited immunity to persons who duplicate copyrighted works on the
Internet, as long as those users do not profit from the copying process.
The Crown Corp. offers to buy the voting stock of the L&N Corp. with the intention of
acquiring L&N and changing its management. To avoid being taken over by Crown,
L&N asks the Spendle Corp. to outbid Crown. In this situation:
A. L&N is a hostile bidder, Crown is the target, and Spendle is a white knight.
B. L&N is a friendly suitor, Crown is a hostile bidder, and Spendle is the target.
C. L&N is the target, Crown is a hostile bidder, and Spendle is a white knight.
D. L&N is the target, Crown is a friendly suitor, and Spendle is a hostile bidder.
Matrix, Inc. contracts with Smalltown Economic Development Corp. to build a factory
in Smalltown that will employ 10,000 workers. Matrix later breaches this contract.
Smalltown citizens who are unemployed sue Matrix for breach of its contract. Matrix’s
best defense to citizen suits involves the legal doctrine of:
A. unenforceable contracts.
B. executed contracts.
C. privity of contract.
D. implied-in-fact contract.
An option contract:
A. removes the possibility of revocation through death or insanity of the offeror.
B. is valid only if in return for the agreement to hold the offer open, the offeror
receives no money or something else of value from the offeree.
C. is a contract that permits a party to lease real property while at the same time
holding an option to purchase that property.
D. is an agreement that binds an offeror to a promise to hold open an offer with no time
limit specified.
Time Zone sells to Gary for $4000 a designer jeweled watch which has a real gold
band. Later Gary finds that the band is just polished with golden color and the watch
does not have any real jewels and could be bought in the local store for $20. Gary can
sue Time Zone for:
A. consequential damages.
B. exemplary damages.
C. nominal damages.
D. speculative damages.
Which of the following is true of warranties of indorsers?
A. The indorser is not entitled to enforce the instrument.
B. The indorser warrants that the instrument is subject to a defense of any party that
can be asserted against the indorser.
C. The indorser warrants that he/she has knowledge of the bankruptcy of the maker,
acceptor, or drawer.
D. The indorser warrants that there has been no alteration or other irregularity.
If there are no modern court decisions or statutes dealing with an issue in dispute, the
court hearing the case:
A. will apply common law.
B. will inevitably devolve.
C. will be unable to decide the case.
D. will ask the U.S. Supreme Court for an advisory opinion.
John knows that the Franklin Partnership, in which John is a partner, is interested in
purchasing a particular tract of land for a business location. Can John lawfully have his
aunt buy the land so that she may resell the land to Franklin Partnership?
A. No, it violates John’s duty of care.
B. Yes, assuming the price to Franklin was a fair market price.
C. No, it violates John’s duty of loyalty.
D. Yes, the aunt is not a Franklin partner and has no loyalty to it.
When shareholders join together in a temporary arrangement, it is called a:
A. voting trust.
B. cumulative voting arrangement.
C. shareholder proposal.
D. pooling agreement.
The only individuals specifically excluded from filing under Chapter 11 are ____.
A. commodity brokers and stockbrokers
B. chartered accountants.
C. lawyers and judges.
D. real estate developers.
Homeruns Co. manufactures baseball bats. It withdrew deals from a few retailers who
refused to put a particular price tag, as decided by Homeruns Co, on the bats. This act
of Homeruns Co.:
A. violates the per se rule.
B. is legal under the quasi-RPM arrangement.
C. violates the rule-of-reason standard.
D. is legal under the RPM agreement.
Robert is interested in leasing Bill’s property. Robert must include all of the following
essentials into the lease agreement, except:
A. a definite agreement as to the extent and bounds of the leased property.
B. a definite and agreed term.
C. a definite agreement about the purchase options of the property.
D. a definite and agreed price of rental and manner of payment.
If Tano dies without a will, he dies:
A. testate.
B. intestate.
C. interstate.
D. testator.
Catherine and Jacob have a written contract to buy and sell “100 cases of widgets.”
After signing the contract they orally agree to modify the contract to “1,000 cases of
widgets.” If they are in litigation concerning the amount of widgets involved in the
contract, can evidence of the oral change be introduced into evidence?
A. No, since this violates the parol evidence rule.
B. Yes, since both signed the original contract.
C. Yes, since this is an exception to the parol evidence rule.
D. No, since this violates the best evidence rule.
