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A[n] ______ is created when two parties enter into a contract with the intended end
purpose of benefiting a third party.
A. Third-party beneficiary
B. Second-party beneficiary
C. First-party beneficiary
D. Assignment
E. Creditor Beneficiary
A majority of citizens in a democracy can agree to permit certain authorities to make
and enforce rules describing what behavior is permitted and encouraged in their
community. These rules are what we refer to as the ______.
A. Electoral college
B. Community standard
C. Democratic validation
D. Stare decisis
E. Law
A contractual condition of satisfaction may be judged by either a[n] ______ or ______
standard.
A. Objective; express
B. Subjective; express
C. Objective; absolute
D. Absolute; express
E. Objective; subjective
"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. The wholesaler 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 whispered to 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 Harry sues Paul for the price of the
jacket?
A. Paul will win because he did nothing to cause Harry to believe that he would pay for
the jacket.
B. Harry will win because Jane indicated that she had apparent authority to buy the
jacket for Paul.
C. Harry will win only if he can show that through reasonable investigative efforts on
his part Jane cannot be located.
D. Harry will win only if he can show that Jane has no assets with which to pay for the
necklace.
E. Harry will win on an implied agency theory.
"The Stolen Book." Susan is told by Betty that Bob stole her business law book out of
her car. The next day Susan confronts Bob and slaps him for stealing her book. Bob had
Susan arrested for slapping him, and the local district attorney is prepared to prosecute
that matter on behalf of the state. Susan sues Bob for damages to the book and for
maliciously having her arrested. Claiming that she lied, Bob sues Betty for defamation.
Which of the following is true regarding Susan's claim against Bob for damages
involving the book and her claim that Bob maliciously had her arrested?
A. The claim for damages involving the book and also the claim that Bob maliciously
had her arrested are civil claims involving private law.
B. The claim for damages involving the book is a civil claim involving private law, but
the claim that Bob maliciously had her arrested is a civil claim involving public law.
C. The claim for damages involving the book is a civil claim involving private law, but
the claim that Bob maliciously had her arrested is a criminal claim involving public law.
D. The claim for damages involving the book is a civil claim involving private law, but
the claim that Bob maliciously had her arrested is a criminal claim involving private
law.
E. The claim for damages involving the book and also the claim that Bob maliciously
had her arrested are criminal claims involving private law.
Which of the following was the result in Samuel James Thompson v. First Citizens
Bank & Trust Co., the case in the text in which the parties disagreed as to whether an
instrument referenced as a certificate of deposit was actually negotiable?
A. The court ruled that the instrument was negotiable.
B. The court ruled that the instrument was not negotiable because it clearly stated that it
was non-transferable.
C. The court ruled that the instrument was not negotiable because it lacked the
signatures of both parties.
D. The court ruled that the instrument was not negotiable because it lacked the
signature of a bank representative.
E. The court ruled that the instrument was not negotiable because it contained a
condition precedent and was not an unconditional order to pay.
"Shaky Bicycles." Rhonda, an incorporator who filed the articles of incorporation for
ABC Corporation, a corporation set up to sell bicycles, incorrectly put the wrong street
address in the document. Helen, a manufacturer of bicycle parts, had sold a number of
parts to ABC Corporation. Unfortunately, the corporation was not making any profit,
and Helen was not paid in a timely manner. She checked the status of the corporation
and discovered Rhonda's error. Helen then claimed that the shareholders of ABC
Corporation were personally liable to her. Bernice, another creditor of ABC
Corporation, also claimed that a shareholder, Slick, was personally liable to her. Bernice
alleged that Slick committed fraud against her when he told her that ABC Corporation
was making large amounts of money, that if she would only loan $50,000 to the
corporation he would marry her, and that the corporation would make so much money
that she would be wealthy in six months. She loaned the funds, but the corporation has
been unable to pay her. Slick told her that he is sorry, but that her only avenue of
recovery is through the corporation.
Assuming ABC's corporate status is in place, which of the following is Bernice's best
theory, if any, in order to hold Slick personally liable to her?
A. That the corporate veil should be pierced because Slick committed fraud through the
corporation.
B. That in equity Slick should be held personally liable.
C. That Slick should be personally liable because of his status as a shareholder.
D. That Slick should be personally liable because he acted on behalf of the corporation
in soliciting the funds.
E. Because of ABC's corporate status and her responsibility to investigate the situation,
she will not be able to hold Slick personally liable to her.
"Skateboard Growth." Both Bernie and John were presidents of small corporations
involved with manufacturing and selling skateboards. Bernie's store was called "ABC
Skateboard" and John's business was called "Skateboard for Health." Because a large
sports store was coming into town, they, along with the boards of directors of the two
companies and all shareholders, decided that it would be a good idea to combine the
businesses. They decided to retain the name "Skateboard for Health." Bernie was
concerned, however, with the change because, on behalf of his company, he was
contemplating filing a lawsuit against Hank who had purchased 10 custom skateboards
and had not paid for them. He was excited, however, about the prospect of not being
liable for a lawsuit he expects to be filed by Greg who fell when a wheel came off on a
skateboard sold by Bernie's corporation resulting in a serious ankle sprain and medical
bills. After investigation, Bernie is aware that the wheel was negligently attached to the
skateboard. Bernie told John that one reason he wanted to retain John's name was to
prevent Greg from being able to recover against him.
Which of the following is true in most states regarding Bernie's concern that Hank
could not be sued for the price of the skateboards?
A. Hank cannot be sued if Hank purchased the skateboards within 30 days of the
joining of the businesses.
B. Hank can be sued only if Hank purchased the skateboards within 30 days of the
joining of the businesses.
C. Hank cannot be sued unless Hank approves in writing the joining of the businesses.
D. Hank can be sued only if Hank is notified by certified letter of the joining of the
businesses.
E. The right to sue Hank would not be lost by the joining of the corporations.
"Junk Food." Mary Dogood, a member of the school board in ABC County, is appalled
at the amount of junk food in the schools. She convinces the state legislature to pass an
ordinance that no stores may sell any unhealthy junk food within 500 feet of any school
or day care center. A teacher of political science raises the issue of whether the
regulation is valid and is told that it is a valid exercise of the jurisdiction's police power
to protect its citizens. Convenience stores balk at the regulation and challenge it in court
claiming that the law impermissibly affects interstate commerce.
What does the term "police power" reference?
A. The residual powers retained by each state to safeguard the health and welfare of its
citizenry.
B. The residual powers retained by the federal government to enforce valid laws and
regulations.
C. The powers granted to local government to enter residences without a search
warrant.
D. The powers granted to state governments to tax for the purposes of having law
enforcement.
E. The powers granted to state government to imprison citizens of other states who
commit crimes within a state.
Which of the following is a term for laws that limit the types of business activities in
which parties may legally engage on Sundays?
A. Red laws
B. Blue laws
C. True laws
D. Colonial laws
E. Christian laws
Which of the following are types of due process?
A. Procedural, substantive, and independent
B. Substantive, independent, and full faith
C. Independent, full faith, and substantive
D. Independent, full faith, and procedural
E. Procedural and substantive
What does the term "negligence per se" mean literally?
A. Pure negligence.
B. Select negligence.
C. Negligence in or of itself.
D. Absolute wrongdoing.
E. Allowable negligence.
An attorney who says that a contract lacks "the proper form" is typically referencing
which of the following?
A. The agreement lacked a proper offer.
B. The contract lacked a proper acceptance.
C. The contract lacked consideration.
D. The contract lacked a writing.
E. The contract lacked both an appropriate offer and an appropriate acceptance.
Which of the following is a person who illegally accesses or enters another person's or a
company's computer system to obtain information or to steal money?
A. Backer
B. Reacher
C. Hacker
D. Trespasser
E. Illicit user
Which of the following is true regarding the U.S.'s rank in a recent study that ranked
142 countries in terms of environmental health?
A. The U.S. was ranked 1st.
B. The U.S. was ranked 10th.
C. The U.S. was ranked last.
D. The U.S. was not ranked in the top 100.
E. The U.S. was not ranked in the top 40.
Which of the following results in an endorsement is considered qualified?
A. A special endorsement.
B. Restricted endorsement.
C. Addition of the words, "without recourse."
D. Addition of the words, "conditional entrustment."
E. Addition of the words, "trust endorsement."
Which of the following is true if a contract is disaffirmed on the basis of intoxication?
A. Each party to the contract must return the other to the condition he or she was in at
the time the contract was entered into.
B. The intoxicated person must be returned to the condition he or she was in at the time
the contract was entered into, but that is not true for any other party.
C. Any party other than the intoxicated person must be returned to the condition he or
she was in at the time the contract was entered into.
D. So long as the contract was objectively fair, neither party must be returned to the
condition he or she was in prior to the time the contract was entered into.
E. So long as the contract was subjectively fair in the opinion of the intoxicated party,
neither party must be returned to the condition he or she was in prior to the time the
contract was entered into.
Which of the following is true regarding the right of a personal creditor of a partner to
seize specific items of partnership property?
A. A creditor may do so only after giving all partners at least 90 days advance notice.
B. A creditor may do so only after giving all partners at least 60 days advance notice.
C. A creditor may do so only after giving all partners at least 30 days advance notice.
D. A creditor may seize specific items of partnership property only if the items are
located in the office of the creditor involved.
E. A creditor may not seize specific items of partnership property.
Which of the following occurs when purchased goods are in some kind of storage under
the control of a third party, such as a warehouseman?
A. A goods-in-bailment contract
B. A simple delivery contract
C. An average delivery contract
D. A conditional sales contract
E. A goods-in-transfer contract
Which of the following is true regarding state approval of mergers?
A. There is no requirement that the state approve mergers.
B. After reviewing the plan to see that legal requirements are met, the secretary of state
issues a certificate to grant approval.
C. The secretary of state must approve mergers so long as corporate entity at issue has
sufficient assets.
D. The secretary of state must approve mergers so long as creditors of the corporate
entity at issue do not remain unpaid.
E. The secretary of state must approve mergers so long as no more than 10% of either
company's shareholders object.
Which of the following is true regarding whether an employer must continue the health
insurance benefits of an employee on leave under the Family and Medical Leave Act?
A. The employer must continue health insurance benefits.
B. The employer is not required to continue offering health insurance benefits to an
employee on leave even if the employee is willing to pay the premiums.
C. The employer must continue making health insurance benefits available, but the
employee on leave must pay all the premiums.
D. The employer must continue to pay at least one half of the premiums.
E. The employer must continue health insurance benefits only if the employer has made
a profit in the last year.
"Green Gold." Martin owned a factory in which he manufactured furniture. Martin had
some extra space in the factory and decided to use heat lamps to grow marijuana. He
smuggled the marijuana into the hands of dealers by hollowing out the furniture and
placing the marijuana inside and by putting the marijuana in drawers, etc. Law
enforcement became suspicious and unexpectedly burst into the building without a
warrant, discovering the marijuana. Martin asked the agent in charge about the lack of a
warrant. The agent told him that Fourth Amendment protections did not extend to
businesses. Martin was charged with growing marijuana. Martin refused to testify at
trial. At his trial, however, the judge excluded any evidence obtained from the search,
and Martin was declared not guilty because there was no evidence against him. The
agent was very angry and arrested Martin immediately for the same offense as he was
walking down the courthouse steps from the first trial. The agent tells Martin that he
should be tried again because the judge was incorrect. Martin is placed in a holding cell
and immediately calls his attorney in an attempt to get out of jail free.
Upon which of the following defenses would Martin's lawyer rely upon in regards to
the second charge after Martin was found not guilty?
A. The defense of double jeopardy
B. The Fifth defense
C. The Single Trial defense
D. The Eighth Amendment
E. The Sixth Amendment
"Secretary Visits." Carol wrote a will leaving half of her assets to her husband, Bruce,
and half to her adult daughter from a previous marriage, Amy. Carol, however, found
out that Bruce had been spending a lot of time with his secretary, Sharon. Angrily, Carol
typed on a new piece of paper that she stapled to her will, "You skunk, Bruce, you take
nothing. Amy gets it all." She then signed her name. Carol then took the will to her best
friend, Betsy, who signed as a witness verifying that Carol meant for Bruce to take
nothing. Carol was struck by lightning a few days later and died. Bruce told Amy that
the revision to the will meant nothing because, for one thing, it was not prepared by a
lawyer.
Which of the following is true regarding the effectiveness of Betsy's signature?
A. It is not an effective attestation because she did not witness Carol sign the will.
B. It is effective.
C. It is effective only if Betsy had seen Carol's signature before and could identify the
signature as Carol's.
D. It is effective only because a change to a will is involved which has less stringent
requirements for the signature of a witness than that required for an original will.
E. It is ineffective only because Carol's attempted change is ineffective.
Which of the following is true regarding an agreement to commit a crime or a tort?
A. An agreement to commit a crime is enforceable and deemed legal so long as the
substance of the agreement was deemed a crime after the agreement was entered into,
but an agreement to commit a tort is unenforceable.
B. An agreement to commit a tort is enforceable, but an agreement to commit a crime is
unenforceable.
C. An agreement to commit a crime is unenforceable, and an agreement to commit a
tort is unenforceable unless a business tort is involved in which case the agreement is
enforceable.
D. An agreement to commit a crime is unenforceable, and an agreement to commit a
tort is unenforceable unless a privacy tort is involved in which case the agreement is
enforceable.
E. An agreement to commit a crime is unenforceable, and an agreement to commit a tort
is unenforceable.
Which of the following types of insurance protects members of specific professions
from liability associated with their professional acts?
A. Business liability
B. Licensed
C. Trained liability
D. Professional liability
E. Consumer
"Employee Problems." Harold, who is 97 years old, runs a successful hardware store.
He never had any trouble with dishonest employees in the past. Unfortunately, he hired
an assistant accountant, Renee, who had significant financial problems and began to
steal from Harold. Renee came in early and took the rubber stamp of his signature that
Harold kept in an unlocked drawer along with some checks and used the signature
stamp to create a check payable to her. She then took it to the bank and cashed it.
Harold, who was diligent in examining his bank statements, noticed the unauthorized
check to Renee. He also noticed an unauthorized check cashed by Susie, another
employee. Susie did not know about the stamp in the unlocked drawer and instead
broke into Harold's personal office, stole checks from a locked cabinet, and skillfully
forged his name. Harold immediately informed his bank about the check involving
Renee. He held off, however, on informing the bank about Susie, who was twenty five,
because he knew she had incurred some significant vet bills for her Corgi dogs, Baby
and Bre. Harold also thought he might ask Susie for a date. Harold, who was honest,
told the bank manager what he suspected had happened involving Renee taking his
stamp and checks from the unlocked drawer. The bank manager told Harold that the
bank was not required to reimburse Harold because Harold was responsible for his own
losses. A few weeks later, Harold asked Susie out on a date. She told him that she
couldn't go because she had started dating her veterinarian. Harold is very grumpy and
tells the bank manager about the unauthorized check to Susie 35 days after he received
his bank statement and discovered the forgery. Unfortunately, when Harold opened his
next bank statement, it was discovered that after she wrote the first check, there had
been several other forgeries by Susie. The bank was notified of those forgeries within
15 days of when Harold received his bank statement. The bank refused to reimburse
Harold for the checks written by Susie again claiming that he was responsible for his
own losses. Becoming grumpier by the minute, Harold institutes litigation against the
bank.
Which of the following is correct regarding whether the bank will legally have to accept
responsibility for the check presented by Renee?
A. The bank has no responsibility to repay Harold on the basis that because Renee was
an employee, the check was not considered forged.
B. The bank will be required to repay Harold because the check was forged.
C. Harold will have to bear the loss because the check was paid before the bank had
notice of the forgery.
D. Harold will not have to bear the loss because the forgeries were by an employee;
otherwise, he would have had to bear the loss.
E. The bank will likely not be required to repay Harold because Harold's negligence in
leaving the rubber stamp with his signature readily available likely substantially
contributed to the forged signature.
Which of the following are values in the WPH process of ethical decision making?
A. Freedom only
B. Security only
C. Efficiency only
D. Freedom and security, but not efficiency
E. Freedom, security, and efficiency
"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 whether Trevor is covered under the act?
A. He is not covered under the act because, by his own admission, he has no actual
physical disability.
B. He will only be covered under the act if he can establish that he has a documented
mental disability due to the belief of others that he is handicapped.
C. He would likely be covered under the act because he is regarded as having an
impairment so long as he can establish that he is substantially limited in performing a
major life activity.
D. He would not be covered under the act unless he can establish an actual physical
disability within the previous one year because that is required to come within the
section of the act pertaining to perceptions of disability.
E. He would not be covered under the act unless he can establish an actual physical
disability within the previous six months because that is required to come within the
section of the act pertaining to perceptions of disability.
Which of the following is true if a seller engages in price discrimination in order to
compete in good faith with another seller's low price?
A. That is not a defense, and the seller has violated the Clayton Act.
B. That is not a defense, and the seller has violated the Sherman Act.
C. That is a valid defense to price discrimination called the meeting-the-competition
defense.
D. That is a valid defense to price discrimination called the
legitimate-price-discrimination defense.
E. That is a valid defense to price discrimination called the meet-the-offense defense.
Which of the following is a definition for consideration?
A. Being cordial in the negotiation of contracts.
B. Refraining from unethical behavior in the negotiation of contracts.
C. Being cordial and refraining from unethical behavior in the negotiation of contracts.
D. The bargained-for exchange.
E. A contract negotiated in person as opposed to by telephone or e-mail.
When the depositary bank is the same bank as the payor bank, the check is referred to
as a[n] ____.
A. On-us item
B. Combined item
C. Condensed item
D. Unitary item
E. Uniform item
"Inattentive Driving." Molly, a first year law student, decided to skip class and drive off
campus to check on her new dress for the upcoming school dance. While driving, Molly
is busy talking on her cell phone with her friend Sharon to convince her to going to the
dance with Molly's brother who has a big crush on Sharon. Unfortunately for Molly,
there is a statute in her state outlawing talking on a cell phone while operating a motor
vehicle. Molly crashes into the side of Sam's new convertible when she looks down to
pick up a can of soda she just dropped onto her new jeans. A police officer just down
the street comes over to investigate. Molly explains to him that it was difficult to hold
the cell phone in one hand, the soda in the other, and also drive. The officer was not
impressed. Around that time Sam comes along. He is furious regarding the significant
dent in his new car. Molly says she has insurance and that she will cover the whole
incident. Sam says that is insufficient; but Molly says that under case precedent, that is
his only remedy. The officer is annoyed because it is his lunch break. He tells Molly
that she must obey duly authorized law, and proceeds to write several citations to
her.Which of the following is true regarding Molly's predicament?
A. Molly can be given a ticket and prosecuted criminally by government officials, but
she cannot be sued for a civil violation.
B. Molly can be sued for a civil action and must pay for Sam's car, but she cannot be
prosecuted for a criminal violation.
C. Molly can be sued in a civil action by Sam, and she can also be prosecuted by the
government for a criminal violation.
D. So long as Molly has insurance and can pay for Sam's vehicle damage, she cannot be
prosecuted in a civil or criminal action.
E. Sam can prosecute Molly in a criminal action, but he cannot sue her in a civil action.
Which of the following is a consideration of courts in determining whether a person is
an incidental or intended beneficiary?
A. The courts ask if a reasonable person in the position of the party in question would
believe the contracting parties intended to benefit the party in question.
B. The courts ask if it is substantially certain that the contracting parties intended to
benefit the party in question.
C. The courts ask if it can be proven beyond a reasonable doubt that the contracting
parties intended to benefit the party in question.
D. The courts ask if the party in question paid something for the rights.
E. The courts ask if the party in question paid at least $500 for the rights.
What was the result in Stewart Lamle v. Mattel Inc., the case in the text in which the
plaintiff claimed that in discussions Mattel agreed to a three-year license agreement to
distribute a board game the plaintiff created, and that the agreement was confirmed by
Mattel through an email, but that Mattel later wrongfully refused to enter into a written
contract and follow through with the deal?
A. That as a matter of law the oral agreement was not enforceable because there was no
writing.
B. That it was up to a jury to decide if fairness mandated that Mattel be required to
follow through with the admitted deal.
C. That it was up to a jury to decide matters including whether the parties intended to be
bound by the oral agreement and whether an email contained the material terms of the
oral contract.
D. That as a matter of law the parties intended to be bound by the oral agreement and
that the email involved, sent by an agent of Mattel, contained the material terms of the
oral contract thereby binding Mattel to the agreement.
E. That no writing was required because the agreement did not come within the statute
of frauds.
A[n] ______ beneficiary is a third party who benefits from a contract in which the
promisor agrees to give a gift to the third party.
A. Creditor
B. Donee
C. Incidental
D. Promised
E. Avowed
