Defense of property cannot be a defense to a claim of battery.
The UCC does not allow a seller to cancel a contract if the buyer is in breach.
The Small Business Administration is an example of an executive agency.
Federal regulations prohibit the management of target companies from using corporate
funds to educate shareholders on the disadvantages of a takeover.
Rent ceilings are always illegal.
Group boycotts by which two or more competing sellers refuse to sell their products to
a certain customer are generally per se violations of the Sherman Act.
An express warranty is any description of the good’s physical nature or its use, either in
general or specific circumstances, that becomes part of the contract.
Copyrights protect ideas themselves.
A partner who refuses to obey the articles of partnership may be held liable for any
losses that the partnership incurs.
State courts have the power to hear all cases not within the exclusive jurisdiction of the
federal court system.
If a shipment contract is vague or ambiguous on the issue, an origin contract will be
presumed.
As a general rule, past consideration qualifies as consideration.
When doing business internationally, a foreign sales representative does the same thing
as a distributor.
When property is sold pursuant to a bailee’s lien, the proceeds are first used to pay the
bailee and to cover the costs of the sale, and then remaining proceeds go to the bailor.
The social responsibility of business consists only of the expectations employees have
of employers.
Business law consists of the enforceable rules of conduct that govern commercial
relationships.
The United States has not signed the Kyoto Agreement.
Under the UCC when a buyer alleges that goods failed to conform to contract
specifications, the buyer does not automatically have the right to reject the goods.
Federal law is the primary law addressing when an insurance company can cancel a
policy of insurance.
Officers of a corporation are hired by the shareholders.
An offer by a retailer to purchase seasonal goods from a wholesaler would not lapse
sooner than an offer to purchase goods that could easily be sold all year long.
In an ethical analysis using the WPH Framework referenced in the text, owners are the
most important stakeholders and should receive the greatest consideration in decision
making regardless of the type of problem addressed.
Receiving an instrument as a gift satisfies the requirement of taking an instrument for
value.
A reply is an answer to a counterclaim.
A draft is an order by a drawer to a drawee to pay a payee.
The Government in Sunshine Act requires that federal agencies publish in the Federal
Register places where the public can get information from the agency.
No duty to warn exists for dangers arising from either unforeseeable misuses of the
product or from obvious dangers.
Generally, unsecured parties have priority over secured creditors.
Before a debtor files for one specific type of relief, the clerk of courts must give the
debtor written notice of the other types of relief available.
The primary purpose of criminal law is to compensate a victim.
Agency law is primarily federal law.
The definition of stakeholder is the same as the definition of shareholder.
State laws in regard to protection of purchasers of used cars are preempted by federal
law.
Under the FTA, the existence of deceptive advertisements is enough alone to prove
damages for recovery when individual civil suits are filed for deceptive practices.
A donee beneficiary is a type of incidental beneficiary.
In an early neutral case evaluation, the neutral provides a binding ruling.
An artisan’s lien remains in effect regardless of whether the artisan retains the property.
An agency relationship may be created only for a lawful purpose.
For purposes of determining capacity, intoxicated persons include those under the
influence of alcohol, but not drugs.
Business ethics is the application of ethics to the special problems and opportunities
experienced by business people.
Assuming the requisite elements are proven, which of the following is a defense when it
is established that a crime is committed because the person committing the act was
threatened with immediate bodily harm or loss of life unless the offense was
committed?
A. Entrapment.
B. Necessity.
C. Justifiable use of force.
D. Duress.
E. Inescapable action.
In which of the following ways may an offeree accept a unilateral contract?
A. By making a counteroffer or by a signed writing.
B. By signed writing only.
C. By either verbal acceptance or a signed writing.
D. By performance only.
E. By performance, by a verbal acceptance, or by a signed writing.
Which of the following includes destruction of a building using an explosive device?
A. Extortion
B. Embezzlement
C. Larceny
D. Arson
E. Criminal fraud
“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.
What type of agency, if any, did Jane have to act on behalf of Paul as far as Pam is
concerned?
A. No type of agency was in effect because no written agreement was in place by which
Jane was Paul’s agent.
B. No type of agency was in effect because, in fact, Jane was not Paul’s agent.
C. An express agency.
D. An implied agency.
E. An apparent agency.
Which of the following allows a defendant to be found not guilty by reason of insanity
if he or she did not understand the nature of the act?
A. The irresistible impulse act.
B. The involuntary act.
C. The substantial capacity test.
D. The M’Naghten test.
E. The necessity defense.
Which of the following is true regarding regulation of advertising in China?
A. China does not regulate advertising.
B. A draft law lessens restrictions on advertising.
C. For many years, China did not regulate advertising, but a new law is in effect
imposing strict restrictions on advertising meant to protect consumers.
D. For many years, China did not regulate advertising, but a new law is in effect
imposing strict restrictions on advertising meant to protect consumers as well as
businesses.
E. A new draft law in China does not specify the type of person that a deceptive
advertisement would affect, such as a reasonable consumer.
Which of the following is not an example of a good?
A. Consumer goods.
B. Farm products.
C. Documents of title.
D. Inventory.
E. Equipment.
Which of the following is true regarding the form of ADR known as “negotiation”?
A. The ADR process known as “negotiation” is the same as the ADR process known as
“mediation.”
B. There is only one approach to negotiation, problem-solving.
C. There is only one approach to negotiation, adversarial.
D. There are two approaches, adversarial negotiation and problem-solving negotiation.
E. There is no form of ADR known as negotiation.
“Kite Sales.” Wendy is president of a business that manufactures kites. The kites of her
company, ABC Kites, are sold to large toy stores. After Wendy learned a great deal
about kites at ABC, she started to make kites at home. She started selling kites to
friends. She also started to make inquiries regarding selling her kites to larger toy stores
in the area, and she began making a few sales to them. Her plan was to start small and
then leave ABC after she had increased sales. She did not work on her side project
while she was on the clock with ABC. Some of the directors learned about her kite sales
and accused her of wrongdoing. Wendy denied any wrongdoing and pointed out that
she did not work on her project while she was on the job with ABC.
What remedy will be imposed on Wendy, if any, for her home kite sales?
A. Nothing because Wendy did not engage in any wrongdoing.
B. She will be required to cede to the corporation all the profits she earned as a result of
the breach.
C. She will be required to cede to the corporation only profits she earned as a result of
the breach that the corporation can prove by a preponderance of the evidence it lost as a
result of her actions.
D. She will be required to cede to the corporation any profits she earned as a result of
the breach unless she can by a preponderance of the evidence prove that the corporation
lost no sales as a result of her actions.
E. She will be required to cede to the corporation half of any profits she earned as a
result of the breach.
Tina tells Barry that she will mow his yard for the summer for $800. Barry thinks about
it and drops a note in the mail to Tina telling her that he rejects her offer. He thinks
about it, however, and calls her to tell her that he accepts the offer before she receives
his rejection. Which of the following is true under the mailbox rule?
A. The offer was no longer outstanding because of the rejection.
B. Barry could not accept verbally.
C. Barry validly accepted, but his acceptance was revoked when Tina received the
rejection.
D. The acceptance was invalid because the mailbox rule requires that the time of
payment be specifically set forth before an acceptance is formalized.
E. The acceptance is valid, and the rejection has no effect.
Decisions of courts in ______ have a significant impact because more than half of U.S.
public traded corporations are incorporated there.
A. New York
B. California
C. Florida
D. Delaware
E. New Jersey
What are the trial courts in the federal court system called?
A. U.S. district courts
B. U.S. circuit courts
C. Federal circuit courts
D. Federal jurisdictional courts
E. Preemptory courts
As referenced in the case in the text, Toys “R” Us Inc., v. Canarsie Kiddie Shop Inc.,
which of the following is true regarding generic terms?
A. Generic terms are not eligible for protection as trademarks.
B. The rule that generic terms are ineligible for protection as trademarks does not apply
to words that designate an entire species of products.
C. The rule that generic terms are ineligible for protection as trademarks does not apply
to sub-classifications or varieties of goods.
D. Generic terms are eligible for protection as trademarks only if they have been used
for at least ten years.
E. Generic terms are eligible for protection as trademarks only if they have been used
for at least seven years.
“Self-Centered President.” Tina is president of “We Manage You,” a corporation set up
to manage physician practices. Tina has never been very concerned with minority
shareholders based on her belief that they have little influence over the company
because they cannot even elect a director. She is told, however, that her state just
instituted the practice of cumulative voting. An election is coming up in which 10
directors will be elected. Minority shareholders own 2,000 shares, while majority
shareholders own 8,000 shares. Tina tells her vice president, George, that she wants to
ignore minority shareholders and focus her interests on majority shareholders and the
directors. She also tells George that she wants to be particularly conscientious toward
directors because the directors appoint officers, and she does not believe that she owes
any actual duties to shareholders. She further orders George to destroy some documents
subpoenaed in a criminal investigation against the company for illegal dumping. When
George protests, Tina tells him not to worry because officers cannot be held responsible
for criminal actions so long as the actions are done as part of the duties of an officer.
She explains to him that only the corporation can be charged with liability in such
cases.
Is Tina accurate that she owes no duties to shareholders?
A. Yes, she is accurate because it is the directors who owe duties to shareholders.
B. No, she is inaccurate because she owes a duty of care to shareholders although she
owes no other duties.
C. No, she is inaccurate because she owes a duty of loyalty to shareholders although she
owes no other duties.
D. No, she is inaccurate because she owes both a duty of care and a duty of loyalty to
shareholders.
E. She is partially accurate. She owes both a duty of care and a duty of loyalty to
minority shareholders, but no duties to majority shareholders because the law assumes
that they have the power to protect their own interests.
Which of the following would the absence of words “to the order of” indicate in a
goods-in-bailment contract?
A. A negotiable document
B. A nonnegotiable document
C. A shipment contract
D. An origin contract
E. Nothing, there is no such thing as a goods-in-bailment contract
“Unreliable Boyfriend.” Bobby needs a business law book. He hears that Gwen has one
for sale. Bobby asks his girlfriend Susie to buy it for him from Gwen if Susie can get it
for under $40. Susie sees Gwen in the hall and asks if she will sell the book for $30, and
Gwen agrees. They are between classes, and Susie does not mention that the book is for
Bobby although all the parties were on good terms, and the identity of the buyer should
not have affected Susie’s agreement. Later, however, Polly agrees to give Bobby her
used business law book. Bobby tells Susie that he no longer wants the book. Susie tells
Gwen about the situation with Bobby. Gwen replies that she does not care if Bobby
wants the book or not. Gwen says that she passed up a couple of opportunities to sell
the book because she thought she already had it sold and that she wants her money from
either Gwen or Bobby – she doesn’t care who pays.
What type of principal is Bobby?
A. Disclosed
B. Undisclosed
C. Partially disclosed
D. Unidentified
E. Legally nonexistent
An artisan’s lien is a claim on ______ property.
A. Real, personal, and movable
B. Personal and real, but not movable
C. Movable but not personal or real
D. Personal, but not movable or real
E. Movable and real, but not personal
“Beauty Shop Woes.” When Janice went to work as a hair stylist in Rick’s beauty shop,
she entered into an agreement with Rick whereby if she left she would not work for
another beauty shop within 50 miles for 2 years. Rick trained Janice in a number of new
techniques. After nine months, Janice was offered a great job down the street at a new
beauty shop, she quit Rick, and had a number of customers follow her down the street
to her new job. Rick claimed that she had signed a contract and had no right to go to
work at the new shop. Janice disagreed and told Rick that no judge in the country would
enforce such an agreement. Janice told Rick that she was more worried about a
customer who was threatening to sue her because her hair turned green after Janice
worked on it. Janice said that she knew that the customer’s hair was damaged; but that
she told the customer that odd results could result from a dye attempt, and had her sign
a contract that she released Janice from all liability and would not sue. The customer,
however, sued anyway.
The agreement Rick and Janice entered into is referred to as which of the following?
A. A competition agreement
B. A prohibited competition agreement
C. A covenant not to misappropriate
D. A policy agreement
E. A covenant not to compete
Which of the following was the result in Mattison v. Social Security Commissioner, the
case in the text involving the issue of whether twins conceived after the death of the
father via artificial insemination using his sperm could inherit as children under state
intestacy law thereby becoming entitled to social security survivors’ benefits?
A. That because the twins were conceived and born after the father’s death, they did not
survive him as heirs legally and were not entitled to any succession rights.
B. That because the mother had permission from the father to use the sperm after his
death, the twins were considered legal heirs and were entitled to succession rights.
C. That regardless of whether or not the mother had permission from the father to use
the sperm after his death, the twins were considered legal heirs and were entitled to
succession rights.
D. That because the twins were conceived within 30 days of the decedent’s death, they
were considered legal heirs and entitled to succession rights.
E. That because the mother was alive and the twins were conceived and born after the
father’s death, they did not survive him as heirs legally and were not entitled to any
succession rights; otherwise, had the mother been deceased, the twins would have been
entitled to succession rights in regard to the father as well as the mother.
Which of the following references a standard meaning that either the employer or the
employee may terminate the employment relationship at any time?
A. Employment-at-will
B. Unconnected employment
C. Nachfrist
D. Reasonable employment
E. Unreasonable employment
Under a strict product liability theory, who may be held liable to an injured party?
A. Manufacturers only.
B. Distributors only.
C. Retailers only.
D. Manufacturers and distributors but not retailers.
E. Manufacturers, distributors, and retailers.
Which of the following is false regarding the Consumer Product Safety Act?
A. It enforces mandatory standards regarding product safety.
B. It usually issues product recalls on its own without the involvement of the companies
involved.
C. It conducts research regarding potentially hazardous products.
D. It educates consumers about product safety.
E. It can ban consumer products from the market.
A limited partnership is an agreement between at least ______ general partner[s] and at
least ______ limited partner[s].
A. 5; 3
B. 5; 5
C. 1; 1
D. 2; 3
E. 2; 2
What is the first step a plaintiff would establish in order to prove disparate-treatment
employment discrimination under Title VII?
A. The plaintiff would demonstrate a prima facie case of discrimination.
B. The plaintiff would show that the reason given by the employer for the
discrimination was a mere pretext.
C. The plaintiff would prove beyond a reasonable doubt that discrimination occurred.
D. The plaintiff would show that the plaintiff gave the defendant the opportunity to
remedy the situation before filing suit but that the defendant refused.
E. The plaintiff would complain to the Equal Employment Opportunity Commission.
Why are punitive damages awarded?
A. Only to punish the offender.
B. Only to deter others from committing similar offenses.
C. Only to reimburse a plaintiff for his or her losses.
D. To punish the offender and to deter others from committing similar offenses.
E. To punish the offender, to deter others from committing similar offenses, and to
reimburse a plaintiff for his or her losses.
Paul was very excited about his first new vehicle purchase. He borrowed funds from his
bank with which to purchase the car. Unfortunately, just a few days after he purchased
the vehicle, the pistons in the engine overheated causing the engine to seize rendering
the vehicle unusable. No one was injured, but Paul is very upset about his vehicle and
plans to sue based on strict liability under the theory set forth by Section 402A of the
Restatement (Second) of Torts. Which of the following is the most likely resolution of
his claim?
A. He will be allowed to proceed because the vehicle was in a defective condition.
B. He will be allowed to proceed only if he can establish that he did appropriate
research prior to purchasing the vehicle and had no reason to know that it was likely to
be defective.
C. He will be allowed to proceed so long as he is up-to-date on his loan payments.
D. He will not be allowed to proceed because there is no recovery under a strict liability
theory for solely economic damages.
E. He will not be allowed to proceed because the only avenue for this type of claim is
through a negligence action.
Unless otherwise agreed by the partners, where are records of the partnership to be
kept?
A. In a safety deposit box at the bank used by the partnership.
B. At the home of the managing partner.
C. At the location of the partnership’s principal business office.
D. At the location of the partnership’s first business office.
E. At the location of the partnership’s latest business office.
“Pet Pig Farm.” Marcy wanted to buy Lucy’s land and use it to breed small pigs to be
kept as pets. Marcy told Lucy that having water on the property was very important
although she did not mention to Lucy her plan to breed small pigs. Lucy assured her
that a spring ran through one corner of the property. Therefore, Marcy agreed to buy the
farm. Marcy, who loved pigs, assumed that the neighbors would be pleased with the
pigs being in the area. Lucy also agreed to sell Marcy a used truck for $5,000. After the
contract for the land sale was entered into, Marcy had a land survey done, and it was
discovered that actually the spring did not run through the corner of Lucy’s property.
The area in which the spring ran actually belonged to a neighbor. Additionally, when
Lucy brought Marcy the used truck, Marcy said, “That’s not the truck!” It was
discovered that Lucy, who had two trucks, thought that Marcy had bought the older
truck although Marcy thought she had purchased the newer truck. Marcy was also
surprised when she received a petition signed by all surrounding landowners objecting
to the presence of the pigs and threatening to sue Marcy for nuisance. It will cost Marcy
more than she had agreed to pay Lucy in order for Marcy to obtain a similar farm which
actually has a spring on it.
Which of the following would be the result if Marcy attempts to rescind the contract
and recover damages only on the basis of the neighbor’s objection to a pig farm?
A. Marcy may rescind the contract and recover damages because Lucy made an implied
misrepresentation.
B. Marcy may rescind the contract but may not recover damages because Lucy made an
implied misrepresentation.
C. Marcy may recover damages but may not rescind the contract because Lucy made an
implied misrepresentation.
D. Marcy may not rescind the contract nor may she recover damages because she,
Marcy, made a unilateral mistake.
Which of the following refers to the right of an offeror to revoke an offer?
A. The offeror is the “controller of his offer.”
B. The offeror is the “master of his offer.”
C. The offeror is the “proponent of his offer.”
D. The offeror is the “adjudicator of his offer.”
E. The offeror is the “arbiter of his offer.”
In India dissolution of ______ refers to the dissolving of all partners’ relationships and
the termination of the partnership business while dissolution of ______ refers to the
termination of the relationship between certain partners but the continuation of the
partnership’s business.
A. Partnership; the firm
B. Interests; partnership
C. The firm; interests
D. The firm; partnership
E. Interests; the firm
List the advantages and disadvantages of a sole proprietorship form of business.
What does a reference to the ‘social responsibility of business” mean? Should
businesses consider community expectations, and why or why not?
Mona markets a bell that she claims will automatically quiet a crying baby. Mona
advertises on television that the bell has a certain tone that babies love and shows a
baby suddenly stop crying when the bell is rung. She charges $50 for each bell for
which she incurs $1 in manufacturing charges. The bell was very popular for a few
months, but she has started to get complaints; and the Federal Trade Commission has
investigated her advertisement regarding the bell. Mona claims that her advertisement is
not deceptive. The Federal Trade Commission, however, claims that her advertisement
satisfies the three elements necessary for a deceptive claim. What are those three
elements?
Cindy and Clowie have a dispute regarding ownership of a dog, Rascal. Cindy removed
Rascal’s tags in order to give him a bath. Knowing what was coming, Rascal made a run
for it and ended up at Clowie’s home down the street. When Cindy saw Clowie walking
Rascal, she demanded his return. Clowie refused. A lawyer in the neighborhood
suggested either a neutral case evaluation or mediation in an attempt to resolve the feud.
Describe mediation and neutral case evaluation. Which would you suggest and why?
What does the Federal Consumer Credit Protection Act state regarding the amount that
may be garnished from a pay check?
Wallace’s only daughter, Bernice, married Donny, a young man that Wallace intensely
disliked. Wallace believes that Bernice and Donny will divorce, but perhaps not before
Wallace’s death. Wallace would like to prevent Donny from obtaining any stock in
Wallace’s company. What should Wallace consider?
Mona and Jill wish to start a partnership to sell hand woven sweaters. Jill’s parents
would like to invest, but they do not wish to be subject to liability for losses in excess of
their capital contribution. Jill’s mother tells Mona and Jill that if she invests, she expects
to have a significant say in the management of the business. Should Mona, Jill, and
Jill’s parents enter into a limited partnership with the parents being limited partners, and
why or why not? Would a limited liability company be a good option, and why or why
not?
According to the text, what is required by the duty of accounting an agent owes to a
principal?
What are four advantages of ADR over traditional litigation as set forth in the text?
Maurice wishes to purchase a small restaurant named “Tasty Burger” in his community
from Todd who tells Maurice that, while he loves the teenagers who have frequented his
establishment, he is tired of flipping burgers and wants to spend more time fishing on
the lake. Maurice has Todd sign a covenant not to compete prohibiting Todd from
opening a restaurant within 25 miles of Tasty Burger for one year. Assuming that the
covenant was drafted properly, is it likely to be enforced, and why or why not? Also,
discuss arguments for and against covenants not to compete in the sale of a business.
Set forth what the Drug-Free Workplace Act requires and limitations the U.S.
Constitution places on private employers as far as drug testing is concerned.
Set forth the eight real defenses and explain their significance.
What is meant by the term employment-at-will? Discuss whether you ethically believe
employment-at-will should be retained in the U.S. or whether employees should be
required to exhibit fairness whenever a decision is made to fire an employee.
Andy, a newly licensed certified public accountant, performed an audit for ABC
Corporation. Shortly after the audit, a number of company officials were indicted for
fraud. Andy tells his boss, Shirley, that he is not concerned because he had no duty
under GAAS or GAAP to detect fraud and that so long as those obligations were met,
he had no duty to do more. He says that auditors are not expected to have perfect
judgment. Set forth what the initials GAAS and GAAP represent. Additionally, discuss
whether Andy is correct on the following issues, and why or why not:
1) His contention regarding compliance with GAAS and GAAP completely satisfying
auditing obligations.
2) His contention regarding the obligation of auditors in relation to fraud.
3) His contention that auditors are not required to have perfect judgment.
Which groups owe a duty of care to the corporation, and what does that duty require?
Set forth and describe the three specific types of injuries under the Robinson-Patman
Act.
List and discuss the tests used to determine whether a party is an intended or incidental
beneficiary.
What is generally the next step for an aggressor after acquiring a substantial number of
the target corporation’s shares and why?
Set forth the elements required for the existence of a landlord-tenant relationship.
In regard to the rule used in determining the obligations of a minor on disaffirmance of
a contract, discuss both the traditional rule and also the modification of the rule applied
in a number of states today, set forth which of the rules you support, and why.