Under which of the following circumstances will a court refuse to uphold modifications
or limitations to remedies agreed upon by the parties?
A. When they seem to give one side a benefit.
B. When one party is a corporation.
C. When neither party is a corporation.
D. When one side was not represented by an attorney.
E. When the remedies fail in their essential purpose.
“Used Car Problems.” Marcy purchased a used car from ABC Motors. Six months later
the police seized the car from Marcy on the basis that it was a stolen vehicle. Marcy
asked for her money back from ABC Motors. The manager there told her that the car
was not stolen, but that even if it were, ABC Motors acted in good faith with no
knowledge of a theft; and that, therefore, Marcy, as a good-faith purchaser, had a good
title. ABC Motors had also sold a used car to Frank who wrote a bad check for the car
and left town, but not before selling the car to Betty. Betty purchased the car with no
knowledge of any problem with the check. ABC Motors asked Betty to return the car,
but she refused. She explained that she had given the car to her son, Billy.
What kind of title did Billy have?
A. Good
B. Void
C. Voidable
D. Absolute
E. Illegal
Which of the following is a way in which a gift differs from a purchase as a way of
transferring ownership?
A. Once delivered a gift may be taken back by the person who gave the gift whereas
that is not true when an item is purchased.
B. No consideration is needed for a gift.
C. No written contract is needed for a gift whereas it is needed for a purchase.
D. No certificate of title is needed for a gift whereas it is needed for a purchase.
E. Intent to permanently transfer title is irrelevant when gifts are concerned.
In the absence of a time condition in an offer, the offer will expire _________.
A. In forty-eight hours
B. In seven days
C. In ten days
D. In forty-five days
E. After a reasonable amount of time
Which of the following is true regarding discrimination based on sexual orientation?
A. There is a federal law specifically prohibiting discrimination based on sexual
orientation providing back pay, attorney fees, and punitive damages as available
remedies.
B. There is no federal law specifically prohibiting discrimination based on sexual
orientation, but it is considered by most courts to be included within Title VII’s ban of
discrimination based on gender.
C. There is a federal law specifically prohibiting discrimination based on sexual
orientation, but it only provides for back pay as an available remedy.
D. There are no state laws specifically prohibiting discrimination based on sexual
orientation nor is there any federal law providing such protection.
E. While there is no federal law specifically prohibiting discrimination based on sexual
orientation, some states do have laws prohibiting discrimination based on sexual
orientation.
“Accounting Advice.” Brad, a newly hired Certified Public Accountant, who barely
passed his boards, was asked by a business client, a chief executive officer, about the
effect of the Sarbanes-Oxley Act on an accounting issue. Brad assured the client that the
client should not be concerned about the Act because it is very vague, unspecific, and
difficult to understand. Brad told the CEO that in any event, the CEO could not be held
personally responsible regardless of what happened because only company business
was involved. Brad also told the CEO that there is no oversight involved with the act.
Later that same day, a coworker of Brad discovered that the CEO had been involved in
misstating some financial reports and had also destroyed financial documents to cover
up fraud. An employee at the company, Laura, had informed the coworker as well as the
SEC. When the issue was mentioned to the CEO, he immediately fired Laura.
Which of the following is true regarding Brad’s statement that the CEO could not be
held liable for violations of the act?
A. Brad is correct. Under no circumstances can a CEO be held personally responsible
for violations under the act. Any fines would be imposed upon the business entity.
B. Brad is incorrect. The act provides for harsh penalties, and a CEO who knows that
the company’s financial reports are incorrect but claims that they are truthful, can be
heavily fined. There are no penalties, however, for destruction of financial documents.
C. Brad is incorrect. The act provides for harsh penalties, and a CEO who destroys or
changes financial documents to mislead can be heavily fined. There are no penalties,
however, for misstatements of a company’s financial reports because the company is
solely responsible for its statements.
D. Brad is incorrect, but any fine against a CEO under the act cannot exceed a nominal
amount of $1,000.
E. Brad is incorrect. The act provides for harsh penalties, and a CEO who knows that
the company’s financial reports are incorrect but claims that they are truthful, can be
heavily fined. Additionally, a CEO who destroys or changes financial documents to
mislead can be heavily fined.
In a consolidation, shareholders of the new corporation create new articles of
incorporation called ____.
A. Revised articles of incorporation
B. Merged articles of incorporation
C. Articles of consolidation
D. Revised articles of consolidation
E. Independent articles of combination
When was the Federal Trade Commission created by Congress?
A. 1900
B. 1914
C. 1929
D. 1934
E. 1976
Once all the terms of the contract have been fully performed, the contract is said to be
___________.
A. Executory
B. Executed
C. Anticipatory
D. Ended
E. Stopped
“Employee Picketing.” Warren owns a unionized business called “Warren’s” that
manufactures furniture. Employees are unhappy because they believe that during
negotiations for a collective bargaining agreement, Warren is improperly refusing to
give them a raise. The employees stop working for Warren’s business and begin
picketing. At first the employees carry signs with slogans such as “Labor Dispute –
Warren Won’t Pay a Fair Wage,” meant to inform the public that a labor dispute has
resulted because Warren is cheap. When that, however, fails to change Warren’s mind,
the employees begin staging pickets to prevent deliveries to Warren and to prevent
access to employees who want to work. They carry signs saying “No Access to Warren –
Shut Him Down.”
In which of the following were employees engaged when they attempted through
picketing to prevent employees from entering the premises and to stop deliveries to
Warren?
A. Informational picketing
B. Signal picketing
C. Boycott picketing
D. Strike picketing
E. Documentary picketing
What effect will the provision that the arbitration will be conducted at the company’s
home state have on the agreement?
What effect will the provision that the arbitration will be conducted at the company’s
home state have on the agreement?
A. None; only because an employee/employer relationship is involved.
B. None because Jill freely signed the agreement.
C. None because a domestic company, not an international one, is involved.
D. A court will be unlikely to enforce the agreement only if it can be proven that Jill did
not read the agreement before she signed it.
E. A court may be more likely to not enforce the agreement because of the distance and
expense involved.
In most cases, when a minor marries, she or he is considered ____.
A. Emancipated
B. Freed
C. Released
D. Disaffirmed
E. Either freed or disaffirmed depending on the circumstances
“Uncooperative Employer.” Joan requested a 12-week leave for the birth of her child.
She had 3 weeks of accrued paid sick leave time and 2 weeks of accrued paid vacation
time. Joan’s employer, Rose, requested that she take the sick leave time and vacation
time prior to any leave time under the Family and Medical Leave Act. Joan did not wish
to do so, however, and told her employer that she was entitled under the Family and
Medical Leave Act to take leave under the Act first and to save any other time. Another
employee, Frank, requested leave time under the Family and Medical Leave Act in
order to care for a seriously ill parent. He had no other sick leave or vacation time
available and immediately started using leave under the act. Unfortunately, he was
unable to return to work for 15 weeks. At that time, Rose told him that he would have to
be reassigned to a lower paying position because she had been unable to hold his job for
him and had reassigned it to Bob. Frank demanded that Bob be removed and that he be
reinstated to his previous job. To the dismay of Rose, Alice also requested leave
because she planned to take in a foster child. Rose told Alice to forget it because of all
the other employees out on leave, because voluntarily taking in a foster child did not
qualify Alice for leave, and also because she typically worked only 30 hours per week.
Which of the following is true regarding Rose’s position that Joan could be required to
take paid sick leave and vacation prior to any leave under the Family and Medical
Leave Act?
A. Rose is correct.
B. Rose could require that Joan take sick leave time prior to leave under the Family and
Medical Leave Act but not that she take vacation time prior to leave under the Family
and Medical Leave Act.
C. Rose could require that Joan take vacation time prior to leave under the Family and
Medical Leave Act but not that she take sick leave time prior to leave under the Family
and Medical Leave Act.
D. Rose could require that Joan take both vacation and sick leave time prior to leave
time under the Family and Medical Leave Act only if the company employs under 100
workers.
E. Rose could require that Joan take both vacation and sick leave time prior to leave
time under the Family and Medical Leave Act only if Joan had already taken at least
one week of vacation in the previous 12 months.
Which of the following is true regarding approval a corporation desiring to sell a
majority of its assets must obtain?
A. A corporation desiring to sell a majority of its assets must obtain approval from
officers, its board of directors, and shareholders.
B. A corporation desiring to sell a majority of its assets must obtain approval from
officers and its board of directors, but not from shareholders.
C. A corporation desiring to sell a majority of its assets must obtain approval from its
board of directors and shareholders, but not from officers.
D. A corporation desiring to sell a majority of its assets must obtain approval from
shareholders, but not from officers or its board of directors.
E. A corporation desiring to sell a majority of its assets must obtain approval from its
board of directors, but not from shareholders or officers.
An owner of a ______ has a possessory interest but not an ownership interest.
A. Conditional estate
B. Life estate
C. Leasehold
D. Future interest
E. Fee simple absolute
Which of the following provides that an acceptance is valid when it is placed in the
mailbox?
A. The Acceptance Rule
B. The Contract Rule
C. The Reasonable Rule
D. The Mailbox Rule
E. The Contract Legality Rule
Which of the following is false regarding enforcement of the Sherman Act?
A. The Antitrust Division of the Department of Justice can bring criminal or civil
actions against violators.
B. If a corporation commits a crime under the Sherman Act, the corporation could face
a $10 million fine for each offense.
C. Officers and employees who are convicted under the Sherman Act face a maximum
fine of $350,000 and/or jail time of up to three years.
D. If a party is harmed by a company’s anticompetitive behavior, the party can bring a
private suit under the Sherman Act.
E. Treble damages are not available under the Sherman Act.
The Convention on the International Sale of Goods recognizes a concept by which a
buyer may give notice to the seller that delivery will be accepted beyond the time
prescribed in the contract. That concept is known as _____________.
A. Nachfrist
B. Benach
C. Offer of late performance
D. Tender of late performance
E. Stare decisis
Which of the following regulates how companies issue corporate securities?
A. The Securities Act of 1933
B. The Securities Exchange Act of 1934
C. The Depression Act of 1932
D. The Oversight Act of 1935
E. The Stock and Bond Act of 1930
Which of the following refers to an intentional failure to provide pertinent information
about a projected contract?
A. Concealment
B. Nondisclosure
C. Negligence
D. Secretion
E. Entombment
“Portraits.” Belinda, a famous portrait painter, agreed to paint Harry’s portrait for
$4,000. She also agreed to paint the portraits of Michelle’s two Corgi dogs, Baby and
Bree. Michelle agreed to pay Belinda $10,000 for the two Corgi portraits. Belinda
charged Michelle more because dogs annoyed her. Belinda met the spoiled dogs, and
they really got on her nerves. Plus, she was behind on finishing Harry’s portrait.
Belinda, therefore, assigned the right to receive the money for the dog portraits and
delegated the duty to paint the dog portraits to her assistant, Fred. He eagerly accepted
and painted the portraits. She also assigned to Fred, as payment for amounts she owed
him for various duties, the right to receive payment from Harry. The contract Belinda
had with Michelle did not address assignment in any way. The contract Belinda had
with Harry, however, prohibited the right to assign payment for services received. Harry
fancied himself as an experienced business person and insisted on that provision
because he had read somewhere that such a clause was a good idea. Belinda finished
the portrait of Harry and called him to come and pick it up. Meanwhile, a disgruntled
secretary who disliked Belinda told both Michelle and Harry about the assignments to
Fred. Michelle was furious and refused to pick up the portrait or pay anyone. Harry
likewise refused to pay for his portrait.
What would be the most likely result if Belinda sues Michelle for the $10,000 payment?
A. Belinda will win only if Fred did a good job on the portraits.
B. Belinda will win regardless of what type of job Fred did on the portraits so long as
he was a qualified portrait painter.
C. Belinda will win because Fred was employed as her assistant.
D. Belinda will win because the contract did not contain an express provision
prohibiting assignment or delegation of contractual rights and duties.
E. Michelle will win because the portrait was personal in nature and could not be
assigned.
Which of the following would be relevant areas of business law to a human resource
manager?
A. Contracts, employment and labor law, and employment discrimination
B. Contracts only
C. Contracts and labor law, but not employment discrimination
D. Employment and labor law, but not contracts
E. Human resource managers hold administrative positions and are not concerned with
areas of business law
Which of the following occurs when the parties to the agreement wish to replace one of
the parties with a third party?
A. Accord and satisfaction
B. Novation
C. Substituted contract
D. Mutual rescission
E. Alteration
The court may grant a ______ if after reviewing the evidence in the case, there is no
factual dispute and one party is entitled to judgment prior to trial.
A. Motion for judgment on the pleadings
B. Motion for summary judgment
C. Motion for sanctions
D. Motion for discovery
E. Motion for production
“Animal Care.” Susan, a licensed veterinarian, was recently elected to the U.S. Senate.
Susan is very concerned about the lack of care for homeless cats and dogs. She
proposes legislation that citizens of all states be taxed sufficiently to provide for no-kill
animal shelters that citizens in states with higher than average incomes be taxed at a
higher rate than citizens of other states. She also proposed that federal funds for state
highways be denied to any state that fails to provide assistance to low income citizens
in covering pet vaccinations. Bill, another new senator, tells Susan that, apart from the
mandated federal income tax, Congress lacks the authority to tax states because the
U.S. Constitution expressly reserves that right to the states. Sam, another senator, tells
Susan that Congress has no authority to link highway funds or any other funds with
social welfare objectives. Ellen, a clerk in the Senate, tells Susan that Congress is
absolutely prohibited from taxing residents of one state at a higher rate than citizens of
another state.
Which of the following is true regarding Sam’s statement?
A. Sam is correct.
B. Sam is correct only if the state is making efforts to put social programs into effect
and is not acting unreasonably in refusing to provide other needed services.
C. Sam is partially correct in saying that Congress has no authority to link highway
funds with social services, but any other funds may be linked to social services by
executive order.
D. Sam is partially correct in saying that Congress has no authority to link highway
funds with social services, but other funds may be linked to social services by an act of
Congress.
E. Sam is incorrect.
“Bad Check.” Mindy, a bank teller, saw that customer Fred did not have sufficient funds
in his account to cover a check presented for payment. Mindy was new and was
confused about what to do with the check. She asked the bank manager, Trevor, about
any available options. Trevor told her that the bank was required by law to dishonor the
check, that the check should be returned to the holder with a notation that it had been
dishonored, and that it could not be presented again. Mindy asked Trevor if there were
any policies the bank could institute to provide customers with overdraft protection, and
Trevor answered that those were prohibited by law.
Which of the following is true regarding Trevor’s statement that once the check had
been dishonored, it could not be presented again?
A. He was correct.
B. The holder can attempt to resubmit the check at a later date.
C. The holder may attempt to resubmit the check at a later date only if all endorsers of
the check have been notified of the dishonor.
D. The holder may resubmit the check only if notice is given to the drawer.
E. The check may be presented again for payment only if notice has been given both to
endorsers and the drawer.
“Horse Tracks.” Martha, Greg, and Prudence decided to form a corporation called
Horse Tracks to raise horses. They all began the corporate creation process by arranging
for necessary capital and financing. They raised capital from their friends by making
deals whereby their friends would purchase stock in the new corporation. After the
corporation was formed, a problem arose with a contract for feed that Martha, Greg,
and Prudence had entered into while organizing the corporation. Belinda, the seller of
the feed claimed that she had not been fully paid and threatened to sue the corporation.
The contract Martha, Greg, and Prudence had with Belinda did not reference liability
after the new corporation came into legal existence. Martha, Greg, and Prudence asked
for a novation, but were uncertain as to whether that would occur.
Which of the following describes the friends who agreed to buy stock?
A. Promoters
B. Subscribers
C. Novators
D. Subscriptioners
E. Acceptors
Which of the following practices does the Clayton Act identify that are not covered
under the Sherman Act?
A. Attempts to monopolize
B. Mergers
C. Vertical price fixing
D. Horizontal price fixing
E. Bid rigging
“Trick or Treat?” Penny has significant credit card debt following her diving trip with
her boyfriend, Sam, to the Grand Cayman islands. Some of the diving trips cost more
than she expected, and these extra expenses were unforeseen. Penny recently took a
business law class and thought that she might be able to find a way out of her troubles.
She owed $2,000 to Credit Card Company A and $3,000 to Credit Card Company B.
She also owed $2,000 to the local dive shop for diving equipment she purchased for the
trip. Penny is in negotiations with the dive shop over that amount because she had a
problem with a mask fogging on the trip and had to replace it while on the trip at a
charge of $100. While the mask issue did not significantly interfere with the trip, Penny
thought that she should get at least some deduction on the overall bill. Penny called
Credit Card Company A and told them that she was a poor student and could not afford
to pay the entire $3,000 she owed. The representative of Credit Card Company A, who
was working her last day, told Penny just to pay $50, and that would be considered
payment in full. The representative sent Penny an e-mail to that effect. Penny was very
pleased and went right out and quit her job at the campus bookstore because she did not
really like dealing with student problems and thought that with the reduction from
Credit Card Company A, she would have no problem in regard to having extra money.
Although her parents supplied her with a large monthly allowance, Penny had the job at
the bookstore so that she would have more money for clothes shopping and fun
activities. In relation to Credit Card Company B, Penny called up and once again pled
her case as a poor student. She talked Credit Card Company B into taking a used car
with a blown-up engine worth around $1,000 in exchange for the debt. Penny did not lie
about the value of the car, but she made it sound as good as possible. Transfer details
regarding the car were worked out through e-mail. Finally, Penny sent the dive shop a
check for $1,000 marked “paid in full.” Much to her surprise and pleasure, the dive
shop did indeed cash the check. Penny, however, was distraught to find that within 30
days, Credit Card Company A sent her a bill for $1,950; Credit Card Company B sent
her a bill for $3,000; and from the dive shop she received a check for $1,000 along with
a bill for $2,000. Faced with all these claims, Penny decided to look for work. She
ended up two weeks later with a job selling beauty products that she liked much better
than the bookstore job. It did not require dealing with pesky students. Assume all credit
card company representatives had authority to make the agreements at issue.
What is Penny’s best argument in attempting to avoid obligations to Credit Card
Company A?
A. That she reasonably relied to her detriment and that she should be able to enforce the
company’s promise under a theory of promissory estoppel.
B. That her promise did indeed constitute consideration because of the theory of moral
consideration, and Credit Card Company A clearly expressed its concern with student
debt.
C. That her promise did indeed constitute consideration because it allowed Credit Card
Company A to report forgiveness of debt rather than default on its financial reports.
D. That because of unforeseen circumstances, she should be able to avoid the debt.
E. That the debt became illusory based on the promise made by Credit Card Company
A.
Which of the following are penalties under the Sarbanes-Oxley Act for the willful
violation of the section requiring the retention of working papers?
A. There are no penalties because the Sarbanes-Oxley Act does not require the retention
of working papers.
B. Accountants may be fined but not imprisoned.
C. Accountants may be fined or imprisoned for up to ten years, but not both.
D. Accountants may be fined, imprisoned for up to ten years, or both.
E. Accountants may be fined, imprisoned for up to five years, or both.
Which of the following types of property is land and anything attached to it?
A. Real
B. Personal
C. Valued
D. Appraised
E. Substantive
“Miracle Face.” Tara developed a great new type of face cream guaranteed to provide
total sun protection, remove wrinkles, and result in anyone looking at least ten years
younger. Her product, Miracle Face, became extremely popular in the U.S., where she
has several shops, and also in other countries to which it was shipped. Tara has a
number of individuals in other countries seeking to team with her in selling Miracle
Face. Sam, a citizen of Mexico, asks that she grant him permission to use her name and
any associated trademarks, and allow him to sell Miracle Face in Mexico. Tara has an
offer, however, from another Mexican citizen, Maria. Maria proposes that she and Tara
associate together, open a business to sell Miracle Face, and share profits and
management responsibilities. Tara has also thought about opening her own business in
Mexico in conformity with Mexican laws. She would then, hire employees in Mexico to
sell the product. Another matter Tara has considered is simply arranging for her
products to be shipped to Mexico for sale, and she is interested in the effect of any trade
agreements in effect between the U.S. and Mexico.
If Tara ships Miracle Face to Mexico for sale, she would be involved in the _____ of
goods.
A. import
B. franchising
C. licensing
D. export
E. affiliating
“ADA Blues.” Prudence, the Human Resources Manager, at ABC Corporation was
encountering a rush of requests under the Americans with Disabilities Act. Samantha, a
receptionist, was having a birthday and turning 40. She told Prudence that while she
had not been to see a physician, she had “the blues” and needed to take every Friday off
for the next few weeks to recuperate. Samantha said that while she was able to engage
in her normal activities, her energy level was down. Prudence promptly denied her
request on the basis that the act only applies to physical disabilities. Another employee,
Trevor, asked for a private office. Trevor had been significantly burned. Prudence asked
him why he needed a private office. Trevor replied that while nothing was physically
wrong with him, he was tired of everyone treating him as if he had a disability. He said
that the treatment he received interfered with his everyday life and work activities.
Prudence denied his request explaining to him that he needed an actual documented
physical disability before being covered by the act. Finally, George, who had undergone
knee surgery, asked that Prudence put in another elevator near his work station.
Prudence explained that his office could be moved nearer to the existing elevator, but
George told her that under the Americans with Disabilities Act, she did not have the
right to dictate to him when his doctor said that he should not be climbing stairs.
Nevertheless, Prudence denied his request for a second elevator noting that no other
employees needed a second elevator. Samantha, Trevor, and George got together and
decided to go directly to federal court and sue under the Americans with Disabilities
Act to challenge Prudence’s decisions.
Which of the following is true regarding any duty of Prudence to provide Trevor with a
private office?
A. She would not have to provide him with a private office because he is not covered by
the Americans with Disabilities Act.
B. She would not have to provide him with a private office because the only
accommodation mandated for those with his condition is time off for counseling.
C. She would not have to provide him with a private office because the act only
contemplates accommodation through the placement of additional equipment to assist
those with disabilities.
D. She would absolutely have to provide him with a private office.
E. She would likely be required to provide him with a private office unless it can be
established that the accommodation requested is not reasonable and would place an
undue burden on the company.
Which of the following has as its primary role to establish the procedures that must be
followed whenever a new chemical is about to be introduced into the market?
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