The rule of mitigation of damages requires that a party injured by a breach of contract
must:
a. take any and all steps possible to reduce the damages that will be sustained because
of the breach.
b. discharge the contract before filing suit for breach.
c. hire someone else to perform the contract.
d. take reasonable steps to reduce the damages that would otherwise be sustained
because of the breach.
If instrument is negotiable, it can be:
a. paid on demand.
b. cancelled by the maker.
c. assigned by contract.
d. transferred by negotiation.
Trespass applies to:
a. personal property only.
b. land only.
c. both personal property and land.
d. only government-owned property.
Theoretically, the relationship between a franchisor and a franchisee is one of:
a. parent and subsidiary.
b. an “arm’s-length” relationship between two (2) independent contractors.
c. an “arm’s-length” relationship between two (2) partners.
d. an “arm’s-length” relationship between two (2) joint tenants.
A rule requiring that a franchisor provide a disclosure statement to all prospective
franchisees was adopted by the:
a. UCC.
b. Franchise Tax Board.
c. Securities and Exchange Commission.
d. Federal Trade Commission.
An action for injunctive relief may be granted:
a. if money is due and payable.
b. if the breach consists of doing a prohibited act.
c. if the breach would cause nominal damages.
d. if the breach would cause consequential damages.
If an officer diverts a corporate opportunity, the corporation may recover from the
officer:
a. triple damages for breach of a fiduciary duty.
b. the profits of which the corporation has been deprived.
c. past wages for the time period in question.
d. any and all funds used to divert the corporate opportunity.
Warren brought his television in for repairs. After Warren left the store, gunmen came in
to rob the proprietor. As they ran out, Warren’s television was knocked over and
destroyed. Warren demanded that the proprietor of the store compensate him for the fair
market value of the television. The bailee:
a. is liable, since the goods were not returned to Warren in proper condition.
b. is liable, since the bailee did not prevent the gunmen from damaging the television.
c. is not liable, since this was a mutual-benefit bailment.
d. is not liable, since the damage was caused by the act of a third party.
Conspiracy means ____ committing a criminal act.
a. thinking about
b. an agreement aimed at
c. thinking with others about
d. all of the above
A president of a corporation does not have the authority to:
a. make a long-term employment contract.
b. mortgage a corporate property.
c. release a claim of the corporation.
d. perform any of the above acts.
In determining whether limited use of copyrighted material may be permitted as “fair
use,” courts will consider:
a. the purpose and character of the use, including whether such use is of a commercial
nature or is for nonprofit educational purposes.
b. the nature of the copyrighted work.
c. the amount and substantiality of the portion used in relation to the copyrighted work
as a whole.
d. all of the above.
In the absence of a fixed duration provision, a joint venture will ordinarily terminate:
a. upon completion of the project.
b. at the will of any participant.
c. as specified in the joint venture agreement.
d. any of the above.
Voir dire examination is used in connection with:
a. determining whether the pleadings are valid.
b. jury selection.
c. deciding whether to appeal a trial court decision.
d. none of the above.
Statements or declarations of an agent:
a. will not bind the principal.
b. will bind the principal if the statements were made by an agent while transacting
business within the scope of agency authority.
c. will not bind the principal if made after performance of the transaction concerned.
d. none of the above.
Under the U.S. Constitution:
a. “persons” are expressly protected.
b. particular rights of “persons” are expressly protected.
c. certain rights of “persons” have been implied by the Supreme Court.
d. both b and c.
Which of the following is beyond the enforcement power of an agency?
a. requiring proof of compliance with agency regulations
b. issuing a cease-and-desist order
c. convicting of criminal violations
d. imposing civil penalties
To ensure that audit partners do not become entrenched, Sarbanes-Oxley requires audit
firms to change audit partners at least once every __________ years.
a. three (3)
b. five (5)
c. seven (7)
d. ten (10)
The obligation of a cosigner is discharged by:
a. the minority status of one of the parties.
b. the majority status of one of the parties.
c. the court’s declaration of the contract’s provision of necessaries.
d. the payment of the debt.
Law is:
a. a body of religious principles held by all members of society.
b. a body of principles that society establishes to keep things running smoothly.
c. always the result of case-law decisions.
d. derived solely from the United States Constitution.
The duties of an employee are determined primarily by the contract of employment
with the employer.
A professor knew a colleague who was quite ill. The professor applied for life insurance
on the colleague’s life and named himself as beneficiary. Because of a similarity in the
names of the professor and the colleague, an error was made and the policy was
issued.The professor also sold his car to a student. When the student drove away, it was
clear that the student was an extremely reckless driver. The professor decided not to
cancel his property insurance policy that he had maintained on the vehicle that he sold
to the student. Shortly thereafter, the colleague died and the student demolished the car.
The professor applied for insurance benefits under both policies and each of the insurers
resisted payment. Decide both cases.
The parties may agree that the adequacy of performance under a contract is to be
determined by a third party.
An offer is effective only if it is communicated by the offeror in person.
A board of directors may enter into any contract or transaction necessary to carry out
the business for which the corporation was formed.
Homeowner’s insurance is a combination of the standard fire insurance policy and
comprehensive personal liability insurance.
An exclusion of warranties made in the manner specified by the Uniform Commercial
Code is not unconscionable.
A general agent is authorized by the principal to do all acts that can be delegated
lawfully to a representative.