A _____ is a court order that authorizes law enforcement agents to search for or seize
items specifically described in the warrant.
A. search warrant
B. subpoena warrant
C. search authorization form
D. seek warrant
E. review authorization
Which of the following is true regarding corporations other than S corporations?
A. A corporation is not a separate legal entity.
B. A corporation may not be sued.
C. A corporation is created according to federal law.
D. Shareholders may typically be held liable for debts of the corporation.
E. The corporation must pay taxes on profits, and shareholders must pay taxes on
dividends they receive from the corporation.
What type of interest occurs when there is a right to insure goods against any risk
exposure such as damage or destruction?
A. An insurable interest
B. A compensable interest
C. A paid interest
D. A collateral interest
E. A valid interest
A contractual condition of satisfaction is considered a(n) ______ condition(s) that must
be met before the other party’s obligation to pay for the performance arises.
A. partial
B. conditional
C. express
D. implied
E. partial and express
Forbearance is _______________.
A. the promise to pay a debt on time
B. the promise to enter into a bilateral contract
C. the promise to waive consideration for a valid agreement
D. the promise to not engage in particular activities
E. an element of a valid contract
Which of the following cases is referenced in the text as a use of stare decisis as
binding precedent, in that it abolished discriminatory policies for individuals of
different racial backgrounds?
A. Curtis v. School Board
B. Laughlin v. Glover
C. Grover v. BreeBee
D. Brown v. Board of Education
E. Story v. Price
A(n) _____ is a hacker whose intention is the exploitation of a target computer or
network to create a serious impact, such as the crippling of a communications network.
A. computer offender
B. data obstructer
C. control obstructer
D. cyber terrorist
E. network thief
The Fair Labor Standards Act mandates that employees who are not excluded who work
more than ______ hours in a week be paid no less than one and one half times their
regular wage for all the hours beyond ______ that they work during a given week.
A. 30; 35
B. 35; 40
C. 40; 40
D. 45; 45
E. 50; 50
Which of the following is false regarding a principal’s duties to an agent?
A. An agent can sue the principal if the principal does not fulfill duties owed to the
agent.
B. In a successful suit against a principal, an agent is entitled to contract remedies but
not tort remedies.
C. If the principal has failed to meet duties owed to the agent, the agent can refuse to
act on behalf of the principal until the failure is remedied.
D. The principal has a duty to compensate an agent for services provided unless the
parties have agreed that the agent will act gratuitously.
E. The principal has a duty of reimbursement and indemnification to the agent for
authorized expenditures.
If the plaintiff is seeking legal damages which would put him in the same position he
would have been in had the contract been fully performed, he is suing for
_____________ damages.
A. equitable
B. compensatory
C. deserved
D. learned
E. punitive
Used Car Sales. Walter sells used cars. He is seeking a way to increase sales and profits
because he would like to take his girlfriend on a nice diving trip to the Grand Cayman
Islands. The first thing that Walter does is say that during the first week of December,
he will give a $500 rebate on used cars under two years old. To spice things up, he also
offers to sell any car on the lot that is under five years old for $1,000 to the first three
customers who can hula hoop ten hours straight on December 7th. (Hula hooping was a
practice popular some years ago in which a large hoop would be swung around by a
person, usually around the waist.) Walter was not very concerned about the hula
hooping issue because he thought that no one would be able to hula hoop for ten hours
straight. Walter put an advertisement pertaining to the rebate and hula hoop opportunity
in the local newspaper. The promotion went over very well. Although he had several on
hand, Walter ran out of cars under two years old within one day. During the rest of the
week shoppers were told that no cars of that description were available. A customer
named Sam was very unhappy when he discovered the next day that no cars under two
years old were available. On December 7th, while Walter was watching the hula
hoopers, Sally was shopping for a car. She was in college and did not have much
money. She saw one, an older car, that she liked but she really did not know if it run or
not. She was going to talk to her parents. Walter eventually approached her and Sally
asked him if he would take $3,000 for the car. Walter said, “Yes, sold.” Sally tried to
explain that she needed to talk to her parents first, but Walter would not hear of it.
While Walter was still fuming from his encounter with Sally, Zack walked up and
started to criticize the nature of Walter’s inventory. Walter told him that he had great
cars. Zack pointed at an old jalopy that was banged up, had 200,000 miles on it, and a
cracked windshield. Zack said, “Sure, I’ll pay $10,000 for that car.” Walter said, “Sold.”
Zack said, “Wait a minute. I was only kidding.” Walter said, “No way.” Meanwhile all
the hula hoopers dropped out well prior to ten hours of hula hooping except for
Barbara. One minute before the ten hours were up, Walter yelled out “I revoke!”
Barbara completed the hula hooping anyway and asked for her car for $1,000. Walter
refused saying that the offer was revoked. Sam was very angry and sued Walter for not
having a car available that was under two years old so that he could get a good deal and
a $500 rebate. Additionally, Barbara sued Walter, and Walter sued Zack and Sally.
Which of the following is the likely result in the lawsuit brought by Sam complaining
that Walter ran out of cars available for a rebate?
A. Sam will win because Walter was required to have sufficient cars on hand for anyone
who requested one.
B. Sam will win because a rebate was involved.
C. Sam will win because Walter should have run another ad revoking the offer.
D. Sam will lose because he did not properly accept the offer.
E. Sam will lose because court would interpret the intent of Walter as being to invite
readers to make an offer that Walter was free to reject.
Marcy’s Mom. Marcy’s mother, Sue, did not want her to date until she was older. She
also wanted Marcy to attend law school. Just before Marcy started her freshman year in
college, Sue told Marcy that if Marcy would refrain from dating until she received her
law degree, then Sue would pay off all Marcy’s school loans and throw in an extra
$50,000. Marcy agrees and states, “Thanks, Mom, and by the way, when I graduate I’m
throwing you a big party for all you’ve done for me!” Sue smiles and hugs Marcy.
Marcy finished law school and asked for payment of her loans, the $50,000 in cash, and
for a car. Sue said, “No way – I know you went out on some dates during law school,
and I never agreed on the car.” Marcy said those were just study nights and that her
mother had never objected to Marcy’s frequent statements that she wanted a car upon
graduation. Sue asks about the party. Marcy tells her that she is nuts because there is no
way Marcy can afford a party since Sue has backed out of the deal. After some serious
negotiation Marcy and Sue settled their dispute with Sue agreeing to pay for half of
Marcy’s school loans and for all the expenses of Marcy’s upcoming wedding, and to
forget about Marcy throwing a party for her. Was there sufficient consideration to
support Marcy’s agreement to throw a party for Sue?
A. Yes, sufficient consideration was present.
B. No, there was insufficient consideration because Sue did not promise anything in
exchange.
C. No, there was insufficient consideration because Marcy’s agreement was illusory.
D. No, because throwing a party is not of a monetary value such as to constitute
consideration.
E. No, because close relatives are involved.
Which of the following is defined as the series of legal steps a secured party takes to
protect its rights and collateral from other creditors who wish to have their debts
returned through the same collateral?
A. Perfection.
B. Filing.
C. Noticing.
D. Financing noticing.
E. Arrangement.
Any description of a good’s physical nature or its use that becomes part of a contract is
a(n) __________________.
A. express warranty
B. implied warranty
C. acknowledged warranty
D. claimed warranty
E. consequential warranty
Susan, a resident of Illinois, ran a traffic light while traveling in Michigan and did
significant damage to Paul’s car. Paul obtains a judgment against her, but Susan has no
insurance and no assets except for a farm in Alabama. Which of the following is true?
A. A court in Michigan can exercise in rem jurisdiction over the farm and authorize its
sale. Any excess over Paul’s amount of damages would go to Susan.
B. A court in Illinois can exercise quasi in rem jurisdiction over the farm and authorize
its sale. Any excess over Paul’s amount of damages would go to Paul for his trouble.
C. A court in Alabama can exercise in rem jurisdiction over the farm and authorize its
sale. Any excess over Paul’s amount of damages would go to Susan.
D. A court in Alabama can exercise quasi in rem jurisdiction over the farm and
authorize its sale. Any excess over Paul’s amount of damages would go to Susan.
E. A court in Alabama can exercise quasi in rem jurisdiction over the farm and
authorize its sale.Any excess over Paul’s amount of damages would go to Paul for his
trouble.
The legal ability to enter into a binding contract is _____.
A. disaffirmance
B. capacity
C. ratification
D. usury
E. a covenant not to compete
Even if they would normally have to be in writing, if applicable criteria are met, oral
contracts for _____ goods are enforceable.
A. retailed
B. wholesale
C. collateral
D. consumer
E. customized
Convertibles. Barry, a new car dealer, advertised that a new brand of convertible called
Wind would be available at his dealership for the price of $10,000 each. He had only
three Wind vehicles, however; and when those were sold, he tried to convince shoppers
to purchase a much more expensive new convertible at a price of $25,000. Kathy, a
customer who decided to purchase one of the more expensive vehicles needed financing
in order to do so. She had $10,000 to pay on the car and sought a loan from ABC Bank
for the remainder. She wanted the loan for a specific amount of time. ABC Bank offered
her the loan and she agreed. The only information she received from ABC Bank was
confirmation that she borrowed $15,000 at an 8% interest rate. After receiving several
complaints, the Federal Trade Commission disapproved of Barry’s action in regard to
the Wind vehicles. Claiming that his advertisement was misleading, the Commission
proceeded to issue a cease-and-desist order prohibiting deceptive advertising involving
Wind vehicles and also in regard to any other vehicles Barry offered for sale. What type
of loan was Kathy seeking from ABC Bank?
A. An open-end credit line
B. A closed-end credit line
C. An approved line
D. A line of credit
E. A direct line
Which of the following is the way people and businesses are located on the web?
A. Through product names
B. Through Internet names
C. Through domain names
D. Through trademark names
E. Through search engines
Creaky and Toady. Beverly decides to go on a great trip to Hawaii. She needs someone,
however, to take care of her two dogs, Creaky and Toady, while she is gone. Creaky has
hives, and Toady passes gas frequently because of a digestive problem.
Beverly hires Frank three months in advance and they reach a contractual arrangement
whereby he will be paid $200 for keeping the dogs for two weeks. Frank comes over
two months before Beverly is set to leave, takes one look at Creaky and Toady, and
declares that they are too creepy to be around. Beverly then hires Alice who agrees to
care for Creaky and Toady. Two weeks before Beverly is set to leave, however, Alice
calls and tells her that she just broke both her legs in an automobile accident, sustained
other injuries, and has been put on bed rest for two months. Finally, Alice hires Betty to
care for the dogs and heads off to Hawaii where she has a great time. Unfortunately,
when Beverly returns home, she finds that Betty fell in love with Creaky and Toady and
has absconded with them. It was a month before Beverly was able to get a court order
requiring their return. Which of the following is true regarding Alice’s refusal to keep
Creaky and Toady?
A. She is discharged from performance because of frustration of purpose.
B. She is discharged from performance because of impossibility of performance.
C. She committed a material breach.
D. She failed to substantially perform but only committed an immaterial breach.
E. She is guilty of only a nominal breach because she had a good excuse for breaching.
Yard Mowing. Paula agreed to mow John’s yard once a week for $50 per week
throughout the summer. Paula, however, was having trouble getting her money from
John. On one occasion, he in handwriting gave her an IOU stating “I, John Jones, owe
Paula Smith $50″ which he signed at the end. A couple of weeks later, John did not
have the money with which to pay Paula for additional mowing, and he handwrote the
following on a piece of paper and gave it to her: “I, John Jones, promise to pay Paula
Smith or to bearer, the sum of $100 on Monday, July 22, 2012.” Paula quit mowing
John’s yard, and disgusted with John, Paula assigned both documents to Vince. When
Vince presented the documents to John, John refused to pay on the basis that after
inspecting the yard, he decided that Paula was doing a poor job. Vince told him the
documents constituted negotiable instruments, but John disagreed. Disregarding the
issue of whether Paula properly performed, is the statement “I, John Jones, promise to
pay Paula Smith or to bearer, the sum of $100 on Monday, July 22, 2012,” without a
signature anywhere else on the document, sufficient to satisfy negotiability
requirements?
A. Yes, because it is in handwriting.
B. Yes, it is sufficient regardless of whether it is in handwriting or not because it
contains an unconditional promise to pay.
C. No, because it was not signed at the bottom.
D. Yes, but only if John later signed another document confirming that he meant the
handwritten statement to constitute his signature.
E. The issue of the instruments being handwritten does not prevent either from being
considered negotiable.
Wrong Deck. Penny hires Jackson to paint her back deck on her house. She agrees to
pay him $200 for the job, and he accepts, sight unseen. They enter into the agreement
on Tuesday, and he is to paint the deck on Saturday. When Jackson arrives, neither
Penny nor her neighbor is at home. He mistakenly paints the neighbor’s deck. Penny
calls him the next day and asks him why he did not paint her deck. He informs her that
he did paint the deck. It is then discovered that he mistakenly painted the neighbor’s
deck. Penny tells him not to worry because the neighbor will be required to pay him.
Jackson says that if the neighbor does not pay, then he expects all of his funds from
Penny. Which of the following is true regarding Jackson’s assertion that Penny must pay
him?
A. He is correct because an express contract existed.
B. He is correct because an implied contract existed.
C. He is correct because an implied-in-law contract existed.
D. He is correct because a valid contract existed.
E. He is incorrect unless he can somehow establish that Penny gave him poor directions
or was otherwise at fault in informing him which deck to paint.
Which is not covered under Article 2(A) of the UCC?
A. Real property
B. Cars
C. Equipment
D. Machines
E. None of these as they are all covered
What type of liability occurs when a person signs a negotiable instrument?
A. Warranty liability
B. Payee liability
C. Signature liability
D. Primary liability
E. Secondary liability
Which of the following are rights of corporate directors?
A. The right of compensation and participation
B. The right of participation and inspection
C. The right of inspection and compensation
D. The right of indemnification and participation
E. The right of compensation, participation, inspection, and indemnification
A(n) ______ is a written federal court order signed by a bankruptcy judge stating that
the debtor is immune from creditor actions to collect debts.
A. discharge
B. release
C. grant of immunity
D. relinquishment
E. abandonment
Venue is determined by:
A. State statute.
B. The trial judge.
C. The jury.
D. U.S. Constitution.
E. Case law.
______________________ begins when the SEC declares the registration statement
effective, and ends when the issuer sells all securities offered or withdraws them from
sale.
A. The posteffective period
B. The acknowledgement period
C. The approved period
D. The sell period
E. The investment period
Congress makes comprehensive changes to bankruptcy law in the ______________.
A. Bankruptcy Amendments of 2005
B. Bankruptcy Fraud Protection Act of 2007
C. Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
D. Bankruptcy Fraud and Consumer Shield Act of 2006
E. Insolvency Protection Amendments of 2006
Which of the following consists of the fruits of one’s mind?
A. Theoretical property
B. Cognitive property
C. Intellectual property
D. Protected property
E. Tradable property
Assume a businessperson who owns a computer equipment store is delinquent in
paying rent to the landlord. The resulting dispute entails __________ law.
A. public
B. preferential
C. consensual
D. private
E. black letter
Which of the following is true when the designation FAS is used?
A. The buyer, at the buyer’s expense, delivers the goods alongside the ship before the
risk passes to the buyer.
B. The buyer, at the seller’s expense, delivers the goods alongside the ship before the
risk passes to the buyer.
C. The seller, at the seller’s expense, delivers the goods alongside the ship before the
risk passes to the buyer.
D. The seller, at the buyer’s expense, delivers the goods alongside the ship before the
risk passes to the buyer.
E. The common carrier, at the carrier’s expense, delivers the goods alongside the ship
before the risk passes to the buyer.
An agreement in which the debtor gives the secured interest to the secured party is a(n)
________________________ agreement.
A. collateral
B. secured
C. debtor
D. protected
E. security
After initially receiving notice of dishonor, when must parties other than a collecting
bank give notice of dishonor to a secondarily liable party?
A. Before midnight of the next day
B. Within 48 hours
C. Within 7 days
D. Within 10 days
E. Within 30 days