As long as an agent is authorized to sign a negotiable instrument on behalf of a
principal, the agent’s signature can create liability for the principal.
The laws of intellectual property protect property that is primarily the result of mental
creativity rather than physical effort.
If a buyer purchases chattel paper in the ordinary course of business and without notice
of any prior security interest, the buyer can obtain the good involved free of any
security interest.
Parties to a bailment contract can limit or expand the liability of the bailee by contract.
The implied authority of partners is determined by the partnership agreement.
If the subject matter of an offer is destroyed, the offer terminates after 10 days or notice
of the death to the offeree, whichever comes first.
As a matter of federal law, arbitration clauses are illegal in policies of insurance.
Actual notice of agency termination may not be given orally.
In order to disclaim the implied warranty of fitness for a particular purpose, the seller
must disclaim the warranty in writing.
Insolvency of either the principal or agent always terminates the agency relationship.
Simply offering a better deal is not enough to create liability for intentional interference
with contract when only a prospective contract exists.
The term “consideration” in relation to contracts involves parties acting in an ethical
manner.
A foreign company that maintains a passive website advertising the company’s services
is subject to personal jurisdiction in any state in the U.S. because the website may result
in sales in the U.S.
Real property is commonly referred to as “realty.”
If an individual has a history of not paying rent or severely damaging premises, the
landlord does not have to enter into an agreement with this person to lease premises.
If an agent commits a crime in the scope of employment for a principal without the
authorization of the principal, the principal is not liable for the agent’s crime.
If a buyer accepts nonconforming goods, the buyer may not also seek damages.
The courts generally hold that landowners have a duty to protect individuals on their
property.
A person who finds abandoned property becomes its owner.
The ultimate goal of the “polluter and user pay” approach is to phase out
environmentally harmful action through the imposition of a tax.
If one partner pays an entire judgment for a tort for which the partnership is liable, other
partners have no legal obligation to indemnify that partner.
In a multilateral free trade agreement, three or more states agree to reduce and gradually
eliminate tariffs and other trade barriers.
The SEC issues opinions regarding the worth of securities.
Under the Equal Credit Opportunity Act, creditors may not deny credit on the basis of
whether the applicant receives public assistance benefits.
Under the federal Privacy Act of 1974, a federal agency may not disclose information
about an individual to other agencies or organizations without that individual’s written
consent.
A restrictive endorsement may limit the transferability of the instrument.
If a defamation statement was originally broadcast by a company in the United States
and was rebroadcast in the United Kingdom without the consent of the originator of the
broadcast, the U.S. company may still be held liable in the United Kingdom court.
A person who applies for a domain name on the Internet must state in the application
that the name will not infringe on anyone else’s intellectual property rights.
An exception to the rule requiring consideration is promissory estoppel.
The definition of disabled individuals under the Americans with Disabilities Act
includes an individual with a record of a physical or mental impairment that
substantially limits one or more of the major life activities of such individual.
Privilege is an affirmative defense in a defamation action.
Courts interpret contracts using an objective standard.
Which of the following is false regarding rights of a trustee in a Chapter 7 bankruptcy?
A. The trustee takes possession of the debtor’s property and has it appraised.
B. If someone else holds the debtor’s property, the trustee has the power to require the
person to return that properly.
C. The trustee examines the debtor’s records but may not even temporarily take over the
debtor’s business.
D. The trustee can initiate collection actions but must also defend against creditor
actions.
E. The trustee separates the exempt property from the nonexempt property and sells the
nonexempt property.
What are the 1972 amendments to the Federal Water Pollution Control Act commonly
called?
A. The Clean-Up Water Act
B. The Remedial Water Act
C. The Clean Water Act
D. The Ambient Quality Water Standards
E. The Navigable Water Act
Parties to a ______ lease may terminate the lease at any time.
A. Allowable-term
B. Periodic-tenancy
C. Tenancy-at-will
D. Tenancy-at-sufferance
E. Definite-term
Which of the following is true if there is no agreement between a principal and an agent
regarding the amount for which the principal will compensate the agent?
A. It will be assumed that the agent agreed to work for free on a gratuitous basis.
B. The agent will be allowed to set the price which will be enforced unless it is
unconscionable.
C. The principal will be allowed to set the price which will be enforced unless it is
unconscionable.
D. The court will appoint a magistrate to set the price.
E. Compensation will be calculated according to the customary fee in the situation.
“On the Town.” Benny began taking people on tours of historic sites in his town. That
had not been done before because no one thought there was very much in the way of
historical significance there. Benny, however, did some research; and, with a very
active imagination on his part, came up with some good stories. He started to make a
nice profit with the tours, particularly with tourists passing through the town on the way
to the mountains. Benny began to hear of some rival tour groups that were planning to
start giving tours in the area. Benny sent a memo to his secretary asking, “How can we
shut down other potential tour groups because we want all the business?” One rival
company had started operations, but Benny still had 85 percent of the business. His plan
was to run the rival out of business and prevent the start-up of any other tour operations
in his town. Benny decided that he would offer to do a free advertising brochure to any
business that would put up a poster advertising his tour group and agree not to advertise
or mention in any way any other tour group. Benny was particularly successful in
reaching that agreement with hotels and restaurants in his town because of his likeable
personality. When Prudence, who ran a rival tour group heard about Benny’s actions,
she was furious and accused him of an antitrust violation because he was trying to keep
all the tour action for himself. Benny told Prudence she was nuts and that the only
reason she had no business was that she stuck to dry historical fact on her tours and did
not do research on romantic relationships between individuals in the area in order to
‘spice-up” her tours. He also told her that he was not a monopolist because he did not
have all the business as evidenced by Prudence’s own tour service.
Which of the following is true regarding Benny’s claim that he could not have a
monopoly because Prudence was also operating a tour service?
A. He was correct.
B. He was incorrect; and if a company enjoys 70 percent of the relevant market, the
court will usually hold that the firm has monopoly power.
C. He was incorrect; and if a company enjoys 60 percent of the relevant market, the
court will usually hold that the firm has monopoly power.
D. He was incorrect; and if a company enjoys 51 percent of the relevant market, the
court will usually hold that the firm has monopoly power.
E. He was incorrect; and if a company enjoys 40 percent of the relevant market, the
court will usually hold that the firm has monopoly power.
What Western law refers to as a warranty is called a[n] _____ in Kazakhstan.
A. Agreement
B. Confirmation
C. Promise estopped
D. Pledge
E. Acknowledgment
For how long does each member at the head of the Securities and Exchange
Commission serve?
A. 5 years
B. 3 years
C. 2 years
D. 1 year
E. Eighteen months
When a party signs a negotiable instrument, which of the following is true regarding the
position of that party?
A. The party may be a maker or acceptor, but not a drawer or an endorser.
B. The party may be a maker, acceptor, or drawer, but not an endorser.
C. The party may be a drawer or maker, but not an acceptor or an endorser.
D. The party may be a maker, drawer, or endorser, but not an acceptor.
E. The party may be a drawer, maker, endorser, or acceptor.
Which of the following is false regarding checks?
A. Because of electronic fund transfers, checks are of little importance in the U.S.
today.
B. In 2009, Americans wrote billions of checks.
C. Of all the negotiable instruments regulated by the UCC, checks are the most
common type used.
D. Checks are considered negotiable instruments under Article 3 of the UCC.
E. Article 4 creates a framework controlling deposit and checking agreements between
banks and customers; and when Articles 3 and 4 conflict, Article 4 is to take
precedence.
A ______ is a written document, created by a principal, expressing his or her wishes for
an agent’s authority not to be affected by the principal’s subsequent incapacity.
A. General purpose order of authority
B. Living legal empowerment
C. Notarized order
D. Durable power of attorney
E. Lasting power of authority
Which of the following is false regarding the rights and obligations of partners?
A. Each partner can serve as an agent for the partnership.
B. As long as the partner has authority to act, each partner’s act in performing business
duties is binding on the partnership.
C. As long as the partner has authority to act, each partner’s act in making agreements
with third parties is binding on the partnership.
D. As long as one partner has authority to act and the partnership is bound by the act,
each partner has unlimited personal liability for the obligation.
E. A partner cannot serve as an agent for other partners.
Which of the following is a doctrine that allows the plaintiff to recover damages despite
proof of contributory negligence as long as the defendant had a final clear opportunity
to avoid the action that injured the plaintiff?
A. Assumption of risk.
B. Last-clear-chance doctrine.
C. Modified risk doctrine.
D. Modified comparative doctrine.
E. There is no such doctrine.
Picketing designed to truthfully inform the public of a labor dispute between an
employer and the employees is called ______ picketing and is protected by law.
However, ______ picketing, which prevents deliveries or services to the employer, is
unprotected behavior.
A. Truthful; boycott
B. Informational; signal
C. Acknowledged; block
D. Recognized; coercive
E. Economic; intrusive
Which of the following refers to government restriction of property use?
A. Obligatory covenants
B. Public use agreements
C. Approved use requirements
D. Restrictive covenants
E. Zoning
Which of the following is true regarding the intent needed for an intentional tort?
A. The intent at issue is not intent to harm but, rather, is intent to engage in a specific
act, which ultimately results in an injury, physical or economic, to another.
B. The intent at issue is not intent to harm but, rather, is intent to engage in a specific
act, which ultimately results in a physical injury to another. Economic injury is
insufficient.
C. The intent at issue is intent to harm that results in an injury, physical or economic, to
another.
D. The intent at issue is intent to harm that results in physical injury to another.
Economic injury is insufficient.
E. The intent at issue is not intent to harm and is not intent to engage in a specific act.
Instead, negligence will suffice.
Which of the following is a writing that indicates both a monetary obligation and a
security interest in specific goods?
A. Chattel paper.
B. Combined paper.
C. Transactional paper.
D. Monetary and secured paper.
E. Specific interest paper.
What did the U.S. Supreme Court rule in the case of Robert Gilmer v.
Interstate/Johnson Lane Corporation involving whether a claim under the federal Age
Discrimination in Employment Act was subject to arbitration?
A. That the agreement by which the plaintiff agreed to arbitrate all employment
disputes as a condition of his employment was valid.
B. That the text of the federal Age Discrimination in Employment Act prohibited
arbitration.
C. That the EEOC would be bound by the employee’s agreement to arbitrate all
employment disputes and that, therefore, requiring arbitration would be improper.
D. That compulsory arbitration improperly deprived the plaintiff of a public forum
through which to prove his claims.
E. That arbitration was an inadequate remedy because arbitrators may not fashion
equitable remedies.
Referencing the National Ambient Air Quality Standards, ______ standards are
standards necessary to protect the public health, including an adequate margin of safety.
A. Conservation
B. Required
C. Primary
D. Secondary
E. Suggested
Which of the following is true regarding how a holder may take an instrument for
value, but not become a holder in due course?
A. The UCC provides that the only method by which a holder may take an instrument
for value but not become a holder in due course is when the holder purchases the
instrument at judicial sale or under legal process.
B. The UCC provides that the only method by which a holder may take an instrument
for value, but not become a holder in due course is when the holder acquires an
instrument through taking over an estate.
C. The UCC provides that a holder may take an instrument for value, but not become a
holder in due course under the following two circumstances: (1) when the holder
purchases the instrument at judicial sale or under legal process, and (2) when the holder
acquires an instrument through taking over an estate.
D. The UCC provides that a holder may take an instrument for value, but not become a
holder in due course under the following three circumstances: (1) when the holder
purchases the instrument at judicial sale or under legal process, (2) when the holder
acquires an instrument through taking over an estate, and (3) when the holder purchases
the instrument as part of a bulk transaction not in the regular course of business of the
transferor.
E. The UCC does not recognize circumstances under which a holder may take an
instrument for value but not become a holder in due course, although under common
law, a person who acquired an instrument through taking over an estate was classified
as a holder but not a holder in due course.
A ______ is a person’s present right to future property ownership and possession.
A. Conditional estate
B. Life estate
C. Leasehold estate
D. Future interest
E. Fee simple absolute
Which of the following is not a category of exempt employees under the Fair Labor
Standards Act?
A. Executives
B. Administrative employees
C. Professional employees
D. Outside salespersons
E. Shift workers
Which of the following is true regarding international organizations?
A. The United Nations is an international organization, but the International Monetary
Fund is not.
B. The International Monetary Fund is an international organization, but neither the
United Nations nor the International Bank for Reconstruction and Development (World
Bank) are international organizations.
C. The International Bank for Reconstruction and Development (World Bank) and the
International Money Fund are international organizations, but the United Nations is not
an international organization.
D. The United Nations and the International Monetary Fund are international
organizations, but the International Bank for Reconstruction and Development (World
Bank) is not.
E. The United Nations, the International Monetary Fund, and the International Bank for
Reconstruction and Development (World Bank) are all international organizations.
Which of the following is false regarding means by which an instrument may be
cancelled by a person entitled to enforce it?
A. Consideration is necessary before a cancellation, a form of contractual agreement, is
effective.
B. A party may cancel an instrument by simply writing “paid” on the instrument.
C. A party may cancel an instrument by intentionally destroying the instrument.
D. A party may cancel an instrument by intentionally mutilating the instrument.
E. A party may cancel an instrument by giving the instrument to the obliged party.
Under the UCC, when is an acceptance effective?
A. When dispatched.
B. When received.
C. When received only if acceptance by electronic means is made, otherwise on
dispatch.
D. When dispatched only if the U.S. mail is used, otherwise on receipt.
E. When dispatched only when the telephone is used, otherwise on receipt.
“Accountant Dissatisfaction.” Paul agreed to perform accounting services for Teresa,
and they entered into a contract setting forth the terms of their agreement. Teresa
wanted Paul to review her financial information and her system of internal controls.
Teresa became dissatisfied with Paul’s work after he reported some irregularities in her
financial statements. Paul, on the other hand, claimed that he had adequately performed
his duties and that, at the most, any mistakes that he made were minimal.
The contract that Paul and Teresa entered into setting the scope of Paul’s duties is
referred to as a[n] ___________.
A. Engagement letter
B. Accounting contractual letter
C. Auditing contractual letter
D. GAAP letter
E. GAAS letter
“Fighter.” Willy, a ninety-year-old wild bronco rider in the rodeo, had a will leaving all
his possessions to a girlfriend, Linda, age twenty-two. During a rodeo, Willy was placed
on a particularly wild bronco named “Fighter.” During the ride, Grumpy the clown
yelled out to Willy that Linda had suggested that particular horse. Willy was very
grumpy about that because he was having trouble controlling Fighter. Nevertheless,
Willy prevailed and collected the prize. Willy was so excited that he felt himself having
a heart attack. Just before he died, he yelled out, “Linda, you had me put on that crazy
horse, and I’m revoking my will. I’m dying, and I’m leaving everything to my other
girlfriend, Candy.” A number of witnesses heard his statement; and Grumpy, who had
always liked Candy more than Linda, promptly wrote down Willy’s statement. Linda
knew nothing about Candy and was very upset. She told Candy that Candy could have
nothing because Willy’s written will was still in effect. She also told Candy that Willy
was suffering from a mental illness and did not know what he was doing when he stated
that Candy should take everything. Willy’s daughter, Monique, age 65, also entered the
discussion stating that Linda had unfairly coerced Willy into writing a will leaving her
everything.
Which of the following is true regarding Linda’s claim that Candy was entitled to
nothing because Willy was suffering from a mental illness and did not know what he
was doing when he stated that Candy should take everything?
A. Whether he was suffering from a mental illness is irrelevant because for other
reasons, his statement granting Candy any possessions is invalid.
B. Linda is correct if Willy had undergone any treatment for any form of mental illness
within the last year.
C. Linda is correct if Willy had undergone any treatment for any form of mental illness
within the last six months.
D. Linda is incorrect because the existence of mental illness is irrelevant to a person’s
capacity to make a will.
E. Linda is correct if it can be established that Willy had a serious enough mental illness
that he was not of sound mind and lacked capacity to make a will.
Which of the following is a term referencing the failure of either the tenant or the
landlord to perform a condition stated in the lease?
A. Forfeiture
B. Violation
C. Refusal
D. Negation
E. Surrender
“Four Paws Protection.” Congress set up a new agency to more closely regulate testing
of personal and cosmetic products on animals. Legislation was passed naming the
agency the “Animal Protection Commission,” and setting forth the function of the
agency and its specific powers. Congress provided the agency with the power to make
rules, investigate violations, and adjudicate charges of wrongdoing. The agency
proceeded to properly give notice and issue rules. The rules provided for civil as well as
for criminal penalties. Agency personnel issued an order for ABC Co. to attend a
hearing regarding its animal testing and to bring to the hearing all company documents
pertaining to animal testing. ABC Co. resisted on the basis that the agency had no
power to compel its attendance at a hearing or to require it to provide any documents.
ABC Co. also claimed that agencies do not have the power to impose criminal
penalties. The agency proceeded to issue a ruling that ABC Co. cease all activity based
upon its refusal to cooperate.
Which of the following is the correct term for legislation passed by Congress specifying
the name, functions, and specific powers of the Animal Protection Commission?
A. Enabling legislation
B. Enacting legislation
C. Approving legislation
D. Administrative regulation
E. Agency regulation
Which of the following regulates pesticides?
A. The Toxic Substances Control Act
B. The Federal Insecticide, Fungicide, and Rodenticide Act
C. The Hazardous Chemical Act
D. The Illegal Toxic Substances Act
E. The Health and Environment Control Act
Which of the following is true regarding the status of a common carrier in relation to
the seller?
A. The common carrier is an agent of the seller.
B. The common carrier is an employee of the seller.
C. The common carrier is both an employee and an agent of the seller.
D. The common carrier is a true carrier of the seller.
E. The common carrier is an independent contractor.
Which of the following are the most common types of rule making done by agencies?
A. Formal and hybrid
B. Informal and hybrid
C. Formal and informal
D. Informational and informal
E. Informational and formal
What is the most common way a sales contract is breached? Discuss the available
remedies of a buyer in the event a seller does not provide goods described in the
contract along with UCC provisions regarding the consequences of a revocation of the
contract.
What is meant by the concept of confusion in terms of acquiring ownership, and when
and how is it applied?
Set forth the first four classes of priority claims among unsecured creditors in a Chapter
7 bankruptcy case in order of priority.
List the two primary functions served by the National Environmental Policy Act and set
forth the responsibilities of the Council on Environmental Quality.
In your opinion, should the law require that consideration be in an amount similar in
value to the item or services being transferred in order for a contract to be enforceable?
Discuss why or why not.
What options does the UCC give states in regard to warranties extending to third-party
beneficiaries of warranties, and which option have most states adopted?
Explain the type of conduct generally referenced by the term “criminal fraud” and list
the three elements generally involved in establishing criminal fraud.
Assume a jurisdiction has a law that all residential swimming pools must have a fence
that is at least six feet tall surrounding the swimming pool. Cindy has a pool in her
backyard; but it was built only a few months ago, and Cindy has not had the extra
money with which to build the fence. Unfortunately, one of the neighborhood children
goes swimming in the pool and drowns. The parents of the child sue Cindy. Discuss
how they would likely go about proving their case and the elements that would be
required.
Set forth the circumstances under which leave is available under the Family and
Medical Leave Act.
List the seven factors set forth in the text from the Sperry-New Holland v. Prestage
case, involving injuries caused by a combine, that a trial court may find helpful when
balancing a product’s utility against the risk the product creates.
How is a limited partnership created and what is the consequence if proper procedures
are not followed?
Set for the four activities referenced in the text that may constitute a violation of the
Racketeer Influenced and Corrupt Organizations Act (RICO).
Christen who just turned eighteen is out with several friends. They decide to see a
movie, but it is sold out. Christen hid in the back of the theatre and yelled “Fire” as
loudly as she could. Everyone ran out of the theatre, and a number got in their vehicles
and left. Christen and her friends thought that seeing the movie was now possible.
Unfortunately, a theatre employee saw Christen yelling, called the police, and she was
arrested. Christen told the police officers that she was only exercising her free speech
rights. She also told the police that the theatre employee lied and that she personally
saw him stealing popcorn. The theatre employee told Christen that he was going to sue
for defamation, and she told him that she would win based on her right to free speech.
Discuss whether or not Christen is right on both counts and why.
What must a party prove in order to obtain money damages based on a fraudulent
misrepresentation when damages are sought?
Identify where a trademark is registered, what one should do when requesting
registration, and what the governmental office involved would then do. Identify
circumstances under which a trademark will not be accepted for registration.
List the six express corporate powers set forth in the text.
List the exceptions to title warranties.
Set forth the five situations under which a buyer gets only voidable title in a sale.