In an auction _____, the seller is treated as making an offer to accept the highest bid.
A. without controls
B. with controls
C. without reserve
D. with reserve
E. without qualifications
The first _____ amendments to the U.S. Constitution are known as the Bill of Rights.
A. five
B. six
C. eight
D. nine
E. ten
High Maintenance. Paul, who runs a retail jewelry store, went with Jane, to whom he
was engaged to be married, to a wholesale jewelry store. Paul had no express, written
agreement with Jane by which she was his agent. In fact, Paul had told Jane not to buy
anything at the store. The wholesale jeweler, Pam, asked Paul if Jane was buying for
him. Paul did not want to embarrass Jane so he nodded in agreement. A few minutes
later Paul reminded Jane, outside the hearing of the wholesaler, that she should not
make any purchases. Paul and Jane had a big disagreement over money that evening,
and Jane broke off their engagement. The next day Jane went back to the wholesale
jeweler and purchased a string of pearls for $2,000. Jane also purchased a fur jacket for
$3,000 from a store owned by Harry that was next door to the jewelry store. She told
Harry that Paul wanted a fur jacket for a model in his store and that Paul would be glad
to pay Harry for the jacket. Which of the following is the most likely result if Pam, the
wholesale jeweler, sues Paul for the price of the pearls?
A. Pam will win assuming that she can prove that she reasonably believed, based on
Paul’s conduct that Jane was acting as his agent.
B. Pam will lose because it was her responsibility to ask Paul for written documentation
that Jane was his agent.
C. Pam will lose unless it can be established that Jane at some time in the past had
actual authority to act as Paul’s agent.
D. Pam will win only if she can show that through reasonable investigative efforts on
her part Jane cannot be located.
E. Pam will win only if she can show that Jane has no assets with which to pay for the
necklace.
Which laws used to interpret sales contracts?
A. State common law
B. The Uniform Commercial Code
C. State statutory law
D. State common law, the Uniform Commercial Code, and state statutory law
E. State common law and the Uniform Commercial Code, but not state statutory law
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
When a party signs a negotiable instrument without knowing that it is, in fact, a
negotiable instrument, the party can claim _____.
A. negligence
B. recklessness
C. malice
D. fraud in the factum
E. fraud and nonacknowledgement
Painted House. Billy had a contract to paint Jan’s house for $800 including the duty to
clean up any debris. The contract between Billy and Jan did not contain an
anti-assignment clause. Billy, who was very busy, assigned the contract, including the
right to payment and the duty to paint, to Richard who was interested in making some
extra money and had experience painting. Billy did not tell Jan about the assignment
because he did not want any trouble nor did Richard mention the assignment to her. In
fact, Richard never met Jan because he painted while she was at work. After Richard
did a good job painting the house, Jan sent a check to Billy for $800. Billy needed the
money to pay some bills, so he spent it. He thought he would have money coming in
with which to pay Richard, but that did not happen. Richard asked Jan for $800 when it
was not forthcoming from Billy. Jan refused. Richard said that he was going to sue her
and Billy. Jan called Billy and told him that he had no right to assign the contract.
Another problem involved disposal of debris. Although Richard was a good, competent
painter, he forgot and left some old paint cans at Jan’s house. Jan demanded that Billy
come and properly dispose of the paint cans because they could not simply be put in the
trash. Billy refused and told her that she would have to get Richard to dispose of the
paint cans because that was his responsibility. What would be the likely result of a
lawsuit brought by Richard against Jan to recover the $800?
A. Richard will win because Jan accepted the risk that the contract would be assigned.
B. Richard will win only so long as Billy has not been declared bankrupt because Jan
will be able to recover the amounts at issue from Billy.
C. Richard will win only so long as the assignment was for an amount under $1,000.
D. Jan will win because she had no notice that the contract had been assigned and
could, therefore, legally pay Billy.
E. Jan will win only so long as the assignment was for an amount over $500.
Coffee shops. Bernice wants to open a chain of coffee shops and begins by asking her
friends in various states around the country to invest through the purchase of securities
in the coffee shops. Her friend Robbie says that he would like to invest but that she
should be sure that she satisfies requirements of the SEC. He tells her that she has to
provide information to the SEC involving a description of the securities, an explanation
of how proceeds will be used, information regarding the management of the company,
and other matters. He tells her that she also has to provide a document to the SEC that
will be provided as an advertising tool to potential investors who can rely on it to
decide whether they should buy securities. Bernice says that she does not want to do
that. She explains to Robbie that insofar as the coffee shop venture is concerned, she
does not want to advertise; and she wants to offer securities only to a limited number of
wealthy friends. Particularly, she has in mind Scott who has a net worth of at least $3
million and Mary, a psychiatrist. Mary recently filed bankruptcy because of some bad
decisions involving an elaborate decoration of her office. Although her income for the
past couple of years has been in the range of $80,000, business is improving based on
her recent involvement with a number of patients suffering anxiety based upon a fear of
alien invasion. Considering only the information available, which of the following is a
term that would describe Scott as an investor?
A. Approved
B. Sophisticated
C. Accredited
D. Unapproved
E. Unaccredited
Which of the following sections of the Uniform Commercial Code addresses the
requirement of a writing when a certain amount of goods are sold?
A. 2-201
B. 1-101
C. 3-102
D. 2-305
E. 4-203
Wedding Photos. Bobby took a number of wedding photos at Jill’s wedding. He was
paid as the photographer. On all of the photographs, he appropriately noted in the
bottom right-hand corner the necessary information showing that he was claiming
copyright protection. Jill came to see Bobby three years after the initial photographs
were taken and requested that he grant her permission to run off as many copies as she
wanted at the local photo shop from the pictures that she initially purchased. The photo
shop had refused to reproduce the photographs without his permission. When he
refused to give her permission to do so, Jill started a heated argument. She told Bobby
that photographs are not entitled to copyright protection. She also told him that even if
he was correct that there was some copyright protection, she was engaged in fair use;
and that, in any event, damages for copyright infringement are unavailable. If Bobby
decides to register the photographs under copyright law, how would he go about doing
so?
A. He would register by filing a form with the Register of Copyright and providing two
copies of the copyrighted materials to the Library of Congress.
B. He would register by filing a form with Register of Copyright only.
C. He would register by providing two copies of the copyrighted materials to the
Library of Congress only.
D. He would register by affixing the appropriate symbol at the bottom of the
photograph followed by the first date of publication and his name.
E. There is nothing he can do because the photographs are not subject to copyright
protection.
Which of the following is false regarding limited liability companies?
A. The limited liability company was first recognized in Wyoming.
B. Limited liability companies have the limited liability of partnerships yet are taxed
like corporations.
C. Limited liability companies must file a form with a state agency.
D. The company name must include “Limited Liability Company” or an abbreviation of
those words.
E. Owners of an LLC are referred to as members.
Refused Furniture. Selina arranges to sell furniture from her furniture store to Roland
for $3,000. Roland was supposed to give Selina a $500 deposit on February 1 and pay
the remainder in monthly installments. Selina was to deliver the furniture by February
7. Roland did not pay Selina as promised on February 1. He asked her to wait until
March 1, but she refused. She also refused to deliver the furniture. Selina was able to
sell the furniture for only $2,500 because of a downturn in the economy. Roland told
Selina that she had no right to withhold or sell his furniture and that he was suing.
Selina incurred $100 in additional amounts in advertising costs to advertise the
furniture that Roland initially purchased. Selina saved $40 in delivery costs because the
subsequent purchaser picked up her own furniture. Which of the following is true
regarding Roland’s claim that Selina had no right to withhold his furniture?
A. Roland is correct. Selina was required to deliver the furniture, but she retained the
right to sue him for any deficiency.
B. Roland is correct but only because of the special UCC exception for consumer
goods.
C. Roland is incorrect. Selina had a right to withhold the furniture.
D. Roland is incorrect but only if Selina can prove that she had no reason to believe that
he was a credit risk prior to signing the contract of sale.
E. Roland is correct because of federal consumer protection laws.
Which of the following occurs when a party gives a loan at an interest rate exceeding
the legal maximum?
A. No enforceable legal violation
B. Interest prohibition
C. Principle reduction
D. Usury
E. Plenary
What does the Fifth Amendment’s protection against self-incrimination mean?
A. That a person only has to be a witness against himself or herself is a felony is
involved.
B. That a person does not have to be a witness against himself or herself if a first
offense is involved.
C. That a person does not have to be a witness against himself or herself if prison time
is involved as opposed to a mere fine.
D. That a person does not have to be a witness against himself or herself in a criminal
case period.
E. That a person has to be a witness against himself or herself.
International Expansion. Zach wants to expand his coffee business internationally – into
Zeno, a small remote country in Africa. His best friend Zora asks him if he plans to hire
legal counsel for the expansion. Zach replies, “Of course not. The U.S. has the strictest
laws regarding contracts, employment, and business practices. So long as I’m legal here,
I’m legal anywhere. Besides, I studied up on Zeno law ten years ago, and I know it all.”
Zach proceeds and lands in jail in the remote country of Zeno for violating recently
passed laws protecting employees and mandating certain benefits. Authorities there
claim that he sexually harassed an employee, failed to pay sufficient wages, and failed
to give employees Zeno’s mandated 12 weeks of vacation per year.
Which of the following is true regarding Zach’s legal problems in Zeno?
A. Zach can rely upon the federal statutory laws of the U.S. as a defense but not his
U.S. Constitutional rights.
B. Zach is entitled to all U.S. Constitutional rights in Zeno because he is a U.S. citizen,
but he cannot rely on U.S. statutory rights.
C. Zach can rely upon the federal statutory laws of the U.S. as a defense, and he is also
entitled to all U.S. Constitutional rights in Zeno because he is a U.S. citizen.
D. Zach must obey the laws of Zeno when operating a business in Zeno and cannot rely
upon U.S. laws as a defense.
Under the UCC, _____ requires that the seller/lessor have and hold conforming goods
at the disposal of the buyer/lessee and give the buyer/lessee reasonable notification to
enable him or her to take delivery.
A. tender of delivery
B. offer of availability
C. tender of offer
D. offer of delivery
E. offer of notification
Which of the following is true regarding a valid accord and satisfaction?
A. When amounts agreed upon are paid, the debt is fully discharged.
B. When amounts agreed upon are paid, the debt is fully discharged except for any late
charges due under the original agreement.
C. When amounts agreed upon are paid, the debt is fully discharged except for any
interest due under the original agreement.
D. When amounts agreed upon are paid, the debt is fully discharged except for any late
charges and any interest due under the original agreement.
E. When amounts agreed upon are paid, the debt is fully discharged except for any late
charges or interest due under the original agreement, or for attorney fees of the creditor
that are due.
______________ are outside directors who have business contacts with the corporation.
A. Approved directors
B. Outside directors
C. Inside directors
D. Affiliated directors
E. Unaffiliated directors
In which of the following ways can an offer terminate?
A. Only by revocation by the offeror.
B. Only by revocation by the offeror, or rejection or counteroffer by the offeree.
C. Revocation by the offeror, rejection by the offeree, or destruction of the subject
matter.
D. By revocation by the offeror, but not before the offer is held open for five days.
E. Only by revocation by the offeror, but not before the offer is held open for ten days.
If a person wishes to ensure that an offer will in fact be held open for a set period of
time, the person may do so by entering into a(n) _____ contract with the offeror.
A. clear
B. explicit
C. unrevokable
D. option
E. none of these, because legally an offeree cannot guarantee that an offer will be held
open for a specific time.
When acceptance is examined under the common law, how do the basic requirements
for a valid acceptance compare with those for a valid offer?
A. The basic requirements for a valid acceptance are materially different from those for
a valid offer.
B. The basic requirements for a valid acceptance parallel those for a valid offer.
C. The basic requirements for a valid acceptance are different from those for a valid
offer only because an offer must be in writing.
D. The basic requirements for a valid acceptance are different from those for a valid
offer only because an acceptance must be in writing.
E. The basic requirements for a valid acceptance are different from those for a valid
offer only because an offer must be revoked immediately but acceptance can be
withheld for a reasonable period of time.
A contract is _____ if one or both of the parties have the ability to either withdraw from
the contract or enforce it.
A. voidable
B. executory
C. implied
D. executed
E. void
The term _____ refers to the fact that an agreement is so unfair that it is void of
conscience.
A. unreasonable
B. outrageous
C. unconscionable
D. unrealistic
E. unbelievable
Machine Malfunction. Bruno, the president of a corporation operating work out
facilities, convinced the board of directors to approve a large purchase of a type of
fitness machine called “Perfect Body.” Bruno had carefully investigated the machine
and did a presentation to the board on its purported benefits. Unfortunately, after the
purchase, it was announced that “Perfect Body” was actually a very dangerous machine
that should not be used. The manufacturer of “Perfect Body” went bankrupt, and the
corporation lost $200,000 on the purchase of the machines. The shareholders are furious
and want to sue Bruno and the directors. The board of directors agrees to allow Frances,
the ringleader of the shareholders, to purchase stock of the company at below its fair
market value. She purchases a considerable amount of stock on that basis, but says that
the shareholders plan to continue with an action against Bruno and the board members.
Which of the following is a term for stock issued to individuals below its fair market
value?
A. No-par stock
B. Reduced stock
C. Watered stock
D. Less-value stock
E. Unapproved stock
_________________ are considered eligible employees under the Family and Medical
Leave Act.
A. Those who have worked at least 25 hours a week for each of 12 months prior to the
leave
B. Those who have worked at least 30 hours a week for each of 12 months prior to the
leave
C. Those who have worked at least 35 hours a week for each of 12 months prior to the
leave
D. Those who have worked at least 40 hours a week for each of 12 months prior to the
leave
E. Those who have worked at least 40 hours a week for each of 24 months prior to the
leave
Under the Privacy Act, an individual may have the right to:
A. see federal agency records about themselves.
B. to amend an inaccurate agency record.
C. to sue the government for statute violations.
D. see and amend federal agency records.
E. see and amend federal agency records as well as sue the government for statute
violations.
A(n) ______ occurs when a party to a contract transfers her duty to perform to a third
party that is not part of the original contract.
A. transfer
B. assignment
C. delegation
D. performance
E. unenforceable occurrence
Penny is investigating what she needs to do to legally to open a dog grooming business
in her city. Which of the following would govern the business?
A. State statutes
B. City ordinances
C. Model laws
D. State statutes, city ordinances, and model laws
E. State statutes and city ordinances, but not model laws
A statement in which a company agrees to stop disputed behavior but does not admit
liability is called a(n) _____.
A. certified agreement
B. approved order
C. sealed compromise
D. consent order
E. administrative acknowledgement
________________ expands the definition of sex discrimination based on gender.
A. The Civil Rights Act of 1964-Title VII
B. The Pregnancy Discrimination Act of 1987
C. The Age Discrimination in Employment Act of 1967
D. The American with Disabilities Act of 1990
E. The Equal Pay Act of 1963
Which of the following is not an element that a party must meet to be considered a
holder in due course?
A. The party must be a holder of a complete and authentic negotiable instrument.
B. The holder must take the instrument for value.
C. The holder must take the instrument in good faith.
D. The holder must take the instrument without notice of defects.
E. The holder must either pay for the instrument or receive it as a gift.
The laws created by the legislative branch are referred to as:
A. Administrative Codes
B. Statutes
C. Uniform Rules
D. Executive Orders
E. Secondary Laws