Which of the following is an act passed by Congress and serves as a major limitation on
how federal agencies are run?
A. The Agency Restriction Act
B. The Regulatory Agency Act
C. The Agency Regulation Act
D. The Administrative Procedures Act
E. The Regulatory Restriction Act
“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.
Which of the following would a court likely rule regarding the status of ABC
Corporation as a corporation?
A. That the business was a de jure corporation.
B. That the business was a de facto corporation.
C. That the business was a corporation by estoppel.
D. That the business was a veiled corporation.
E. That the business was not a corporation at all.
Under the Fair Housing Act, a landlord may not discriminate against a prospective
tenant with regard to which of the following?
A. Race, color, sex, religion, national origin, familial status, disability, or age (over 40).
B. Race, color, sex, religion, national origin, familial status, or disability.
C. Race, color, sex, religion, national origin, or age (over 40).
D. Race, color, sex, religion, disability, or national origin.
E. Race, color, sex, national origin, or age (over 40).
Which of the following is an example of an inherently dangerous activity?
A. Driving a vehicle.
B. Operating an airplane.
C. Dynamite blasting in a populated area.
D. Burning trash.
E. Babysitting.
If a[n] __________ contract exists, the administrator of an offeror’s estate must hold the
offer open until it expires in accordance with the contract.
A. Bilateral
B. Unilateral
C. Complete
D. Option
E. Controlled
Which of the following is an amendment to a financing statement that states that the
debtor has no obligation to the secured party?
A. An ending statement.
B. A termination statement.
C. A bind-up statement.
D. A release statement.
E. A reversion statement.
The words, “Pay to Allan Smith” followed by the endorser’s signature create a(n)
______ endorsement.
A. Blank
B. Allonge
C. Qualified
D. Special
E. Specific
“Not So Rich Uncle.” Bruce is attempting to convince Sally to marry him. He promises
her that if she will marry him, he will buy a new Mercedes automobile for her within
six months of the marriage and take her on a world tour within a year of the marriage
date. Sally reluctantly agrees, and they sign an agreement by which Bruce agrees to
provide the Mercedes and world tour. Bruce and Sally marry on January 1.
Unexpectedly, on March 1, Bruce’s supposedly rich uncle, Frank, dies. Frank has no
living relatives other than Bruce and has a will leaving everything to Bruce who is also
appointed executor. In attempting to settle the estate, Bruce agrees orally to pay out of
his own pocket debts of Frank totaling $10,000. Sally is concerned about Bruce’s doing
so. Bruce tells her not to worry because he will get all the money back when the estate
settles. Bruce admits to a number of friends that he agreed to settle the debts out of his
own pocket because he needed to obtain assets from the estate in a hurry and did not
want anything to slow down probate. The assets were needed in large part to satisfy his
obligations to Sally. Surprisingly, it later came to light that prior to his death Frank had
signed away all his assets to his girlfriend in Argentina. There was nothing left in the
estate for Bruce to inherit. Bruce disavowed his agreement to pay the $10,000 to
various creditors of Frank.
Which of the following is true regarding Bruce’s promises to Sally of a Mercedes and a
trip?
A. The promises fall within the statute of frauds.
B. The promises do not fall within the statute of frauds because they involve material
matters, not matters involving home and children.
C. The promises do not fall within the statute of frauds unless Sally can prove that she
would not have married Bruce without the assurance of the Mercedes and the trip.
D. The promises fall within the statute of frauds unless Bruce can prove that Sally
would have married him without the assurance of the Mercedes and the trip.
E. The promises would have fallen within the statute of frauds in earlier times in
history, but would not fall within the statute of frauds in this day and time.
“Grooming Dispute.” Joshua has a successful dog grooming business called “Tub &
Dog.” He registered the business name for trademark protection. Sandy noticed how
well Joshua was doing and opened his own business called “Tub & Dog II.” Joshua is
unhappy about Sandy’s use of the name. He is also unhappy because Sandy is copying
Joshua’s practice of tying a bright orange bandana around each dog’s neck immediately
after grooming. Joshua sued Sandy for trademark infringement based upon the name
and the use of the orange bandana. Sandy replies that one reason Joshua should not
prevail is that he is involved primarily in the sale of dog grooming products while
Joshua is involved in the grooming of dogs. Sandy claims that his use of the orange
bandana is very rare because he does very little grooming. Sandy also defends on the
basis that actual confusion among consumers does not exist. Joshua insists that he
should prevail and notes that he is considering expanding into the product sales area.
To what concept is the issue of whether Joshua intends to expand into the area of dog
grooming product sales relevant in a consideration of trademark infringement?
A. The possibility of bridging the gap
B. The possibility of twin competition
C. The possibility of building the bridge
D. The possibility of sweeping the product
E. The possibility of actual confusion
Actual cause is also known as ______.
A. Proximate cause
B. Legal cause
C. Cause in fact
D. Cause for certainty
E. Proximately related cause
What did the court conclude in the Case Opener, the case in which the plaintiff claimed
that her repossessed vehicle was not sold in a commercially reasonably manner and that
she was wrongly left with a deficiency?
A. That showing that the sale grossed more than 50% of the vehicle’s value established
that the sale was commercially reasonable.
B. That good faith in selling the vehicle as a matter of law established commercial
reasonableness.
C. That the secured party failed to prove that its sale of the vehicle conformed with
established trade practices.
D. That there was no obligation on the seller to engage in a commercially reasonable
sale because the plaintiff was in default.
E. That while not every aspect of the sale had to be commercially reasonable, the seller
failed to show that sufficient advertisement of the sale was accomplished thereby
rendering the sale itself commercially unreasonable.
A local Chamber of Commerce plans a seminar on “the social responsibility of business
in our community.” What does that term reference?
A. The responsibility of business to make profit for shareholders.
B. The responsibility of business to have annual meetings.
C. The expectations that the community imposes on firms doing business inside its
borders.
D. The expectations of employees regarding wage rates.
E. The expectations of management in regard to adequate utility resources.
Under the UCC buyers and lessees may recover goods identified in the contract if the
seller or lessor becomes insolvent within ______ after receiving the first payment due
under the agreement.
A. 5 days
B. 10 days
C. 15 days
D. 30 days
E. 60 days
Which of the following was left the responsibility of identifying which specific
behaviors were prohibited under the Sherman Act?
A. Congress which amends the Sherman Act from time to time to set forth additional
specific offenses.
B. State legislatures.
C. Local governing bodies.
D. The courts.
E. Both state legislatures and local governing bodies.
When, if ever, will a party’s negligence block a party from escaping liability for an
unauthorized signature?
A. Any type of negligence will result in a party being liable for an unauthorized
signature.
B. The issue of negligence will not as a matter of law block a party from escaping
liability for an unauthorized signature.
C. A party who is negligent may not escape liability for an unauthorized signature if the
party whose signature was forged behaved so negligently as to substantially contribute
to the making of the forgery.
D. A party’s negligence will make the party liable for an unauthorized signature only if
the negligence amounts to a finding of recklessness.
E. A party’s negligence will make the party liable for an unauthorized signature only if
the negligence rises to the level of gross negligence.
Which of the following was the result on appeal in Royal Crown Companies Inc., v.
McMahon, the case in the text in which the former president of a subsidiary of Royal
Crown sued claiming that an agreement regarding severance pay was breached?
A. The court ruled that a golden parachute contract is void as against public policy and,
therefore, unenforceable.
B. The court ruled that a severance agreement, regardless of whether it is considered a
golden parachute contract, is contrary to the employment at will principle and,
therefore, unenforceable.
C. The court ruled that while severance agreements approved by a majority of
shareholders are valid, the severance agreement in the case was not so approved and
was, therefore, invalid.
D. The court ruled that the agreement would be enforced but only because it was not
considered a golden parachute contract.
E. The court ruled that the severance agreement was valid and enforceable and that it
made no difference that it was considered a golden parachute agreement.
Which of the following is true regarding rights of partners in regard to a rightful
dissolution of a partnership?
A. All partners can demand that the partnership be wound-up but only the managing
partner may participate in the wind-up.
B. The partners may continue the partnership upon majority vote.
C. If the partners unanimously agree, they can continue the business using the
partnership’s name.
D. Rightful dissolution is by act of a partner only.
E. Rightful dissolution is by act of court only.
GAAS was established by which of the following?
A. The American Institute of Certified Public Accountants
B. The American Institute of Auditors
C. The Financial Accounting Standards Board
D. The American Accounting and Auditing Standards Board
E. The Federal Accounting Standards Board
A state implementation plan established following the establishment of National
Ambient Air Quality Standards must address the means by which the state is going to
ensure that the pollutants in the air within its boundaries will meet the primary National
Ambient Air Quality Standards within ______ of their establishment.
A. Three years
B. Two years
C. Eighteen months
D. Twelve months
E. Nine months
“Used Car Commission.” William promised to sell Helen’s car for her, but he wanted a
commission of 10%. Helen signed an instrument promising to pay William a 10%
commission if he sold her car. William assigned the agreement to Phil. Helen’s car was
sold and the buyer paid Helen. A dispute ensued between Helen and William regarding
whether William found the buyer or the buyer found Helen. When Phil asked Helen for
payment on the instrument, Helen refused. William, Helen, and Phil settled their dispute
without going to court and Helen wrote Phil a check for $3,000. Phil endorsed the
check on the back by signing his name planning to take it to the bank the next day.
Unfortunately, Phil lost the check which was found by Helen and cashed by the local
bank. Helen then left town.
Before Phil endorsed the check it was a[n] ______ instrument; and after he endorsed it,
the check was a[n] _____ instrument.
A. Order; order
B. Order; transactional
C. Order; bearer
D. Transactional; bearer
E. Bearer; bearer
What was the result in the case opener involving the lawsuit against the sperm bank for
providing sperm with a genetic defect?
A. The lawsuit was dismissed because of the court’s decision that sperm is not a
product.
B. The lawsuit was dismissed because of the court’s decision that the plaintiffs had
suffered no damages.
C. The lawsuit was dismissed because of the court’s decision that the sperm was not
defective.
D. The lawsuit was not dismissed, and the court ruled that a sperm bank could be sued
under product liability laws.
E. The lawsuit was not dismissed although the court ruled that the plaintiff could
proceed only under a negligence theory.
Which of the following describes investment banking firms that purchase securities
from the issuing corporation with the intent of selling them to brokerage houses, which
then sell them to the public?
A. Underwriters
B. Offerors
C. Issuers
D. Accredited purchasers
E. Unaccredited purchasers
Which of the following is true regarding disclaimers of the implied warranty of
merchantability?
A. Any attempt to disclaim the implied warranty of merchantability is per se
unconscionable, but a court will enforce the disclaimer if the buyer is another merchant
and is fully informed of the disclaimer.
B. Any attempt to disclaim the implied warranty of merchantability is per se
unconscionable, and a court will refuse to enforce the disclaimer.
C. Under some situations, a disclaimer of the implied warranty of merchantability may
be made within 10 days after a sale.
D. A disclaimer of the implied warranty of merchantability may be done orally.
E. By federal law, there is no requirement that the term “merchantability” be used in
any disclaimer.
Which of the following is a document that gives an agent authority to sign legal
documents on behalf of the principal?
A. Order of authority
B. Power of order
C. Legal empowerment
D. Power of attorney
E. Respondeat superior
Which of the following regulates any chemicals or mixtures whose manufacture,
processing, distribution, use, or disposal may present an unreasonable risk of harm to
human health or the environment?
A. The Toxic Substances Control Act
B. The Federal Insecticide, Fungicide, and Rodenticide Act
C. The Hazardous Chemical Act
D. The Illegal Toxic Substances Act
E. The Health and Environment Control Act
Assurances by one party that the other party can rely on its representations of fact are
referred to as which of the following?
A. Consensual promises
B. Contractual promises
C. Warranties
D. Affirmances
E. Engagements
Which of the following is the part of the Uniform Commercial code governing contracts
for the sale of goods?
A. Article 2
B. Article 3
C. Article 4
D. Article 5
E. Article 7
Which of the following is true regarding federal regulation of toxic substances?
A. The Toxic Substances Control Act is the only federal act regulating toxic substances.
B. The Federal Insecticide, Fungicide, and Rodenticide Act is the only federal act
regulating toxic substances.
C. Three federal acts regulate toxic substances: The Hazardous Chemical Act, the Toxic
Substances Control Act, and The Pesticide Regulation Act.
D. The primary federal acts for regulating toxic substances are The Hazardous
Chemical Act and The Toxic Substances Control Act.
E. The primary federal acts for regulating toxic substances are the Toxic Substances
Control Act and the Federal Insecticide, Fungicide, and Rodenticide Act.
Which of the following is true regarding the sources of laws that interpret sales
contracts?
A. Three sources of laws that interpret sales contracts exist: state common law, the
Uniform Commercial Code, and state statutory law.
B. Two sources of laws that interpret sales contracts exist: state common law and the
Uniform Commercial Code.
C. Two sources of laws that interpret sales contracts exist: the Uniform Commercial
Code and state statutory law.
D. Two sources of laws that interpret sales contracts exist: state common law and state
statutory law.
E. The Uniform Commercial code is the only source of law interpreting sales contracts.
What was the result in the case discussed in the text Andrus v. State Department of
Transportation, and City of Olympia in which the plaintiff sued because a job offer was
allegedly revoked?
A. The plaintiff won because the city had validly offered him a job and had no right to
revoke it.
B. The plaintiff won because, while there was no contract, the court ruled that the city
was not allowed to mislead him on equitable grounds and also on grounds of unlawful
discrimination.
C. The defendant won because it had truly received a bad reference.
D. The defendant won because the plaintiff had not specifically accepted the job.
E. The defendant won because the purported job offer contained insufficient
information to be considered reasonably certain in regard to its terms.