Positive abstractions that capture our sense of what is good or desirable are called
______.
A. Ethical ideas
B. Values
C. Conscience demands
D. Desirable principles
E. Action goals
What is the name of the law signed by President Bush in the wake of several corporate
accounting scandals?
A. The Sarbanes-Oxley Act
B. The Public Accounting Act
C. The Certified Public Accounting Act
D. The Whaley-Mallicoat Act
E. The Corporate Scandal Act
Which of the following is true regarding rights of the citizens of Belarus?
A. The constitution restricts movement outside of the country.
B. The defendant in a criminal case has no protection from providing evidence against
himself or herself.
C. Citizens have the right to profess any religion, but they must profess some religion.
D. The constitution limits the workweek to 30 hours.
E. Citizens accused of crimes are presumed innocent until proven guilty.
Which of the following is a clause in a lease agreement allowing the landlord to
increase the rent in association with increases in costs of living, property taxes, or the
tenant’s commercial business?
A. A rent expense agreement
B. A landlord protection clause
C. A rent escalation clause
D. An inflation clause
E. A cost clause
“Union Avoidance.” Penny owned and operated a large book store with 50 employees.
She was aware of union organization attempts. She prohibited any discussion of the
union and the distribution of literature at any time, including during employee breaks
and lunches in the employee break room. She told employees that she would refuse to
grant a raise to any employee who supported the union. Penny was extremely unhappy
when the union obtained enough support for an election. At that point, she promised
employees that she would give a $1,000 bonus to any employee who voted against the
union. Surprisingly to Penny, employees who voted overwhelmingly supported the
union. On the other hand, employees who voted failed to constitute all employees of the
book store. A number of employees were absent on the day of the election and did not
vote. Penny stated that it was her understanding that the union would not be certified as
the bargaining representative of the employees because fewer than 50% of the total
number of the store employees voted for the union. Penny further stated that, in any
event, she would not deal with the union under any circumstances.
In which of the following ways did the union likely go about establishing sufficient
employee support for a union election?
A. Through the use of signed authorization cards.
B. Through the use of petitions signed by employees.
C. Through the use of signed affidavits by union officials stating that a majority of the
employees supported the union.
D. Through telephone polls conducted by the National Labor Relations Board
indicating that the employees supported the union.
E. Through ballots mailed to the National Labor Relations Board indicating sufficient
employee support for a union.
Which of the following is false regarding the statute of frauds?
A. It relates to fraudulent contracts.
B. It does not address illegal contracts.
C. It does not exist at the federal level.
D. It requires that only certain contracts be in writing.
E. It is not a unitary government act.
When the organization in charge of proposing uniform laws proposes a statute, which of
the following is true?
A. All states must adopt the uniform statute within one year.
B. All states must adopt the uniform statute within six months.
C. The uniform statute automatically goes into effect without any action by state
legislatures.
D. A state legislature is not required to adopt the uniform statute; but if the state
legislature decides to go forward with adoption, all portions of the statute must be
adopted.
E. A state legislature can ignore the proposed uniform law, adopt it in full, or adopt it in
part.
Which of the following is false regarding trade secret protection?
A. Competitors may not discover trade secrets by doing reverse engineering.
B. Competitors may discover secrets by going on public tours of plants and observing
the use of the trade secret.
C. Lawful discovery of a trade secret means there is no longer a trade secret to be
protected.
D. A company’s client list may be considered a trade secret.
E. There is no registration of trade secrets.
A[n] ______ agreement is a clause parties include in a written agreement that states that
the written agreement accurately reflects the final, complete version of the agreement.
A. Adhesion
B. Complete
C. Parol
D. Merger
E. Consolidation
A definite-term lease is also known as a[n] ______.
A. Limited-term-lease
B. Term-for-years
C. Applied-term-lease
D. Exact-term-lease
E. Approved-term-lease
What was the result in the “Case Opener” in which a purchaser of a puppy from a
person who regularly sold puppies sued the seller for veterinarian bills after the puppy
was found to be in poor health?
A. The court found that the puppy was not a good covered under the UCC, and the
plaintiff was denied recovery.
B. The court refused any recovery to the plaintiff on the basis that the seller was not
considered a merchant under the UCC and that no implied warranties were made.
C. The buyer in essence had no remedy because the court ruled that the plaintiff’s only
remedy, which the plaintiff was unwilling to do, was return of the puppy for a refund.
D. The court allowed the buyer to recover the contract price only, not veterinarian bills.
E. The court awarded the plaintiff the veterinary bills finding that the UCC applied and
that the seller breached the warranty of merchantability.
Private persons create ______ corporations for private purposes.
A. Public
B. Private
C. Closely held
D. Domestic
E. Publicly held
As discussed in the text, a main purpose of the statute of frauds is to prevent unreliable
_____ evidence from interfering with a contractual relationship.
A. Hearsay
B. Oral
C. Irrelevant
D. Immaterial
E. Inconclusive
Which of the following is an agency agreement created for the agent’s benefit, not for
the principal’s?
A. Agency interest principle
B. Agency coupled with an interest
C. Agency benefit interest
D. Agency compensation principle
E. Agency entitlement principle
If the owners in a tenancy by the entirety divorce, the interest becomes a ______.
A. Tenancy in common
B. Joint tenancy
C. License
D. Fee simple
E. Fee simple absolute
Which of the following does the National Labor Relations Board have jurisdiction
over?
A. Employees covered by the Railway Labor Act
B. Independent Contractors
C. Agricultural workers
D. Supervisors
E. Health care workers
Creditor beneficiaries can enforce their rights under a contract whenever the contract is
_____.
A. Fair
B. Incidental
C. Valid
D. Substantial
E. Recognizable
The Federal Trade Commission has _____ commissioners each of whom serves a
______-year term.
A. 5; 7
B. 7; 3
C. 9; 4
D. 8; 5
E. 3; 4
Which of the following is false regarding Chapter 13 of the bankruptcy code?
A. Chapter 13 permits individuals with regular income to pay their debts to creditors in
installment plans under the supervision of the court.
B. Any debtor who files under Chapter 13 could also have filed under Chapter 11.
C. Chapter 13 repayment plans are usually simpler and less expensive than Chapter 11
plans.
D. By statute Chapter 13 plans last between 36 and 60 months.
E. Individuals, partnerships, and corporations may file for a Chapter 13 repayment plan.
In a merger situation, which of the following is a term for the corporation that does not
continue to exist?
A. The declined corporation
B. The removed corporation
C. The absorbed corporation
D. The concealed corporation
E. The deceased corporation
“Environmental Concerns.” Connie, the president of a company that makes paper, has a
new interest in the environment. She recently went to a seminar on environmental
dangers and has decided to take steps to clean things up. She started at home and has
now felt compelled to change things at work. Connie had to face the fact that her
company has been cheating and is not in compliance with applicable environmental
regulations due to dumping in a nearby river. Her company has never been cited
because it employs a very large number of people in the community, including the
mayor’s wife and the chief-of-police’s brother. On her mission to clean things up,
Connie has decided to go even further than the law requires and install the very latest
environmental protections. When she announced her plan, the chair of the company’s
board of directors, Brooke, had a meeting with Connie. Brooke told Connie to analyze
the situation carefully because the cost of the additional equipment would mean no
dividend to shareholders and no raise for employees. Furthermore, Brooke told Connie
that installing all the new equipment would result in higher prices for the company’s
paper product and could bankrupt the company because of foreign competition. Brooke
hinted that Connie could be fired if she persisted. Brooke suggested that Connie just be
concerned with a minimal standard of ethics. Connie decides to go forward with her
plan to clean things up under the theory that she wants to treat others in the same
manner that she wants to be treated. Under Connie’s theory, if she did not understand
the importance of the environmental improvements, she would want them to be thrust
upon her.
Which of the following would be a stakeholder in the above company?
A. The community only
B. The shareholders only
C. Future generations only
D. The community and shareholders only
E. The community, shareholders, and future generations
Which of the following establishes how a franchise agreement will be terminated?
A. The franchise agreement
B. The Franchise Termination Act
C. The Franchisor-Franchisee Protection Act
D. The Franchisee Protection Act
E. The Franchise Wrap-Up Act
Which of the following is true regarding the type of marriage contract discussed in the
text called the muta’a?
A. It is a type of premarital contract typical to the U.S. in which the parties agree ahead
of time how property and assets should be divided in the event of divorce.
B. It is a contract by which the female agrees to a divorce if there are no children from
the marriage within five years.
C. It is a contract by which the female agrees to a divorce if there are no children from
the marriage within three years.
D. It is a temporary type of arrangement called a “responsibility marriage” in which the
female is paid to care for the male’s elderly parents.
E. It is a temporary type of arrangement called a “pleasure marriage” in which the
female is paid for sexual intimacy.
________ torts occur when the defendant takes an action that is inherently dangerous
and cannot ever be undertaken safely, no matter what precautions the defendant takes.
A. Criminal
B. Liability
C. Intentional
D. Negligent
E. Strict-liability
A(n) ______ is a provision in a contract that mandates that all disputes arising under the
contract must be settled by arbitration.
A. Binding arbitration clause
B. Court-annexed arbitration clause
C. Approved mediation/arbitration clause
D. Consolidated merger clause
E. ADR neutral clause
What type of dispute resolution process is med-arb?
A. A process in which the parties agree to start out in mediation and, if the mediation is
unsuccessful on one or more points, to move on to arbitration.
B. A process in which the parties agree to start out in arbitration and, if the arbitration is
unsuccessful on one or more points, move on to court-annexed ADR.
C. A process in which the parties agree to start in mediation and move to litigation if the
mediation is unsuccessful.
D. A process in which the parties agree to start in arbitration and move to litigation if
the mediation is unsuccessful.
E. A special type of blended mediation and arbitration applicable only in the medical
malpractice arena.
“Lottery Winnings.” Frank, a hypochondriac who was also very compulsive, was
having minor surgery to repair a bone spur on his foot. He had just purchased a lottery
ticket for a chance at the grand prize of $30,000,000. He always kept lists of the
numbers of his lottery tickets with him in his billfold. Frank’s girlfriend, Bubbles, went
with him to the hospital. While in the waiting room, Frank said to her, “Bubbles, I may
not make it out of this bone spur surgery. Take my lottery ticket. If I don’t make it, I
hope you win and live it up; but please don’t get another boyfriend.” Bubbles replied, “I
could never be happy without you.” A nurse saw and heard the whole exchange. Frank
came out of the surgery just fine but with a sore foot. While he was recuperating that
evening, Bubbles watched the lottery drawing and discovered that Frank’s ticket was
indeed the winning ticket. She immediately moved out and collected the winnings.
Frank saw her on television with her new boyfriend, George. She appeared to be very
happy. He checked the numbers and discovered that she won off of his ticket. Frank
says that the lottery money is his.
Which of the following is true regarding rightful ownership of the lottery money?
A. Frank’s gift was automatically revoked when he recovered, and the lottery ticket and
any proceeds are validly his.
B. Although the gift was not automatically revoked on his recovery, Frank has the right
to revoke the gift and recover the lottery proceeds.
C. The gift was not automatically revoked on his recovery; and since Frank did not
revoke the gift prior to Bubbles cashing the ticket, he has no rights to any funds.
D. Frank has the right to all funds only because Bubbles has a new boyfriend.
E. Frank has no rights because once he gave the tickets to Bubbles, he gave up all his
rights to them.
“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 true regarding whether Harold will have to bear the loss on
the first forged check by Susie?
A. Harold will not have to bear the loss because the forgeries were by an employee;
otherwise, he would have had to bear the loss.
B. Harold will not have to bear the loss because the check was forged.
C. Harold will have to bear the loss because he did not notify the bank of the forgery
within the time limit required.
D. Harold will have to bear the loss because the check was cashed before he notified the
bank.
E. Harold will have to bear the loss because the check was forged.
A company that sends its products to a foreign marketplace for sale has engaged in
______.
A. Importation
B. Subsidization
C. Exportation
D. Foreign transaction
E. Foreign distributing
A[n] ______ lease is created for a recurring term, such as month to month; and it may
last for an indefinite time period.
A. Allowable-term
B. Periodic-tenancy
C. Tenancy-at-will
D. Tenancy-at-sufferance
E. Definite-term
Which of the following was the court’s ruling on appeal in First State Bank & Trust
Company of Shawnee v. Wholesale Enterprises Inc., the case in the text involving
whether the implied warranty of title should be extended to subsequent purchasers?
A. That the implied warranty of title did not extend to subsequent purchasers.
B. That the implied warranty of title did extend to subsequent purchasers.
C. That the implied warranty of title extended only to subsequent purchasers who
purchased within 12 months.
D. That the implied warranty of title extended only to subsequent purchasers who
purchased within 4 years.
E. That the implied warranty of title extended only to the first three subsequent
purchasers, but no further.