A _____ of personal property is a relationship that arises when one party transfers
possession of personality to another to be used in an agreed-on manner for an agreed-on
time period.
A. Bailment
B. Transfer
C. Loan
D. Release
E. Lease
Which of the following is true regarding gifts and the imposition of conditions?
A. Gifts may be conditional.
B. Gifts may not be conditional.
C. Gifts may be conditional only if a condition precedent is involved.
D. Gifts may be conditional only if consideration is present.
E. Gifts may be conditional only if one of the parties is related by blood or marriage.
The Securities and Exchange Commission has established that any shareholder who
owns more than ______ worth of stock in the corporation can submit proposals to be
included in proxy materials.
A. $5,000
B. $4,000
C. $3,000
D. $2,000
E. $1,000
Which of the following is true regarding areas in which arbitration is used?
A. Arbitration is used in medical malpractice cases, environmental disputes,
commercial contract disputes, and insurance liability claims.
B. Arbitration is used in medical malpractice cases, environmental disputes, and
commercial contract disputes, but not in insurance liability claim disputes because those
claims are governed strictly by state regulatory law.
C. Arbitration is used in environmental disputes, commercial contract disputes, and
insurance liability claim disputes, but not in medical malpractice cases because those
cases are governed strictly by state statutory law and also state common law on
negligence.
D. Arbitration is used in medical malpractice cases, environmental disputes, and
insurance liability claim disputes, but not in commercial contract disputes because those
disputes are governed by the UCC.
E. Arbitration is used in medical malpractice cases, commercial contract disputes, and
insurance liability claim disputes, but not in environmental disputes because those
disputes are governed strictly by federal law.
Death of a corporation occurs in which of the following phases?
A. Dissolution and trial
B. Dissolution and proceedings
C. Dissolution and liquidation
D. Reforming and liquidation
E. Notification and liquidation
Which of the following is true regarding an IOU instrument containing the language
“payable on demand”?
A. The instrument is not negotiable because it does not contain an unconditional
promise or order to pay, but it may be an enforceable contract.
B. The instrument contains an unconditional promise to pay; and, therefore, the fact that
it is an IOU instrument does not affect negotiability.
C. The instrument contains an unconditional promise to pay but nevertheless is not
negotiable because it is an IOU instrument.
D. The instrument is not negotiable because the words “payable on demand” are
included; otherwise, the IOU instrument would contain an unconditional promise to
pay.
E. The instrument is not negotiable, nor could it be an enforceable contract, because it
does not contain an unconditional promise to pay.
Which of the following is false regarding the Federal Trade Commission Act?
A. It was passed when Congress passed the Clayton Act.
B. It prohibits unfair and deceptive methods of competition.
C. Any anticompetitive behavior not prohibited by the Sherman Act or the Clayton Act
is illegal under the act.
D. The language of the act permits the Federal Trade Commission to investigate
antitrust claims.
E. While the language of the act permits the Federal Trade Commission to investigate
antitrust claims, it may not bring antitrust claims against violators.
How may a buyer waive implied and express warranties?
A. A buyer may waive both implied and express warranties through (1) failing to
examine goods for which an express warranty was created by a sample or model or (2)
failing to comply with the seller’s request to inspect the goods.
B. A buyer may waive an implied warranty by failing to comply with the seller’s request
to inspect the goods, but an express warranty may only be waived by failing to examine
goods for which an express warranty was created by a sample or model.
C. A buyer may waive an express warranty by failing to comply with the seller’s request
to inspect the goods, but an implied warranty may only be waived by failing to examine
goods for which an express warranty was created by a sample or model.
D. A buyer may waive both implied and express warranties only through signing a
statement that such warranties are waived.
E. A buyer may waive implied warranties only through signing a statement that such
warranties are waived, but a buyer may waive express warranties through (1) failing to
examine goods for which an express warranty was created by a sample or model or (2)
failing to comply with the seller’s request to inspect the goods.
“Fast Food Dilemma.” Richard, who just started at his new job as an assistant manager
at a fast-food restaurant, wants to make a good impression. He thinks that things are
going great. On only the second day on the job, however, he sees his boss Jill, the
manager, slink out of the restaurant with a big box of hamburger that she puts in her car.
Jill then speeds away. Richard is fairly certain that Jill did not pay for the hamburger.
Richard asks advice of his best friend, Bruce; his girlfriend, Sally; his sister, Jenny; and
his dad, Frank. Bruce says that there are no real objective standards and that Richard
should just decide what is best for him. Sally says that Richard should focus on the
consequences and focus on the greatest benefit to all involved. She believes that it will
do no real harm for Richard to keep his mouth shut because the fast-food restaurant is
making plenty of money and probably does not pay Jill enough anyway. Plus, getting in
trouble with Jill could cause problems at work, and if Richard loses his job, Richard and
Sally might have to put off their marriage. Jenny says that on balance the rule producing
the greatest good would be to tell Jill because stealing does not generally produce the
greatest satisfaction. Richard’s dad says that as a matter of principle Richard should tell
Jill because stealing is simply wrong.
Which of the following theories most accurately fits the advice given by Frank?
A. Deontology
B. Act utilitarianism
C. Rule utilitarianism
D. Ethical relativism
E. Virtue ethics
Which of the following are considered foreseeable plaintiffs in product liability cases?
A. Users and consumers but not bystanders.
B. Users, consumers and bystanders.
C. Users but not consumers or bystanders.
D. The purchaser only.
E. The purchaser and the purchaser’s immediate family only.
Which of the following are written questions that one party sends to another to answer
under oath?
A. Interrogatories
B. Depositions
C. Inquiries
D. Subpoenas
E. Sworn assertions
Which of the following is the oldest treaty designed to protect artistic rights?
A. The Universal Copyright Convention of 1952, as revised in 1971
B. The Paris Convention of 1883
C. The 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights
D. The Berne Convention of 1886
E. The Geneva Convention of 1860
Which of the following is true regarding state courts of appeal?
A. States only have an intermediate court of appeal if there is no state Supreme Court.
B. In states that do not have an intermediate court of appeal, appeals go to the federal
court of appeals.
C. In states that do not have an intermediate court of appeal, there is no right of appeal
to any court.
D. All states in this country have intermediate courts of appeal.
E. Not all states have intermediate courts of appeal; in those states, appeals go to the
state court of last resort.
Which of the following occurs when a testator wrote a will under circumstances in
which a person the testator trusted took advantage of the testator’s weak physical or
emotional condition to persuade the testator to write the will in a particular way?
A. Undue influence
B. Fraud
C. Negligence
D. Recklessness
E. Misinformation
“Powder Room Mess.” For $300,000, Willis agrees to build a new home for Robert,
who is very picky. Willis builds the home to Robert’s specifications with one exception.
The faucets and linoleum flooring in an upstairs powder room are not exactly what
Robert specified. That was a mistake on Willis’ part, but he had not intentionally failed
to follow specifications. When Robert sees the powder room, he goes ballistic and tells
Willis that he will not pay Willis anything for the house. It will take $300 to put in
correct faucets and linoleum. Willis says that he is willing to pay $300 to put Robert in
the position he would have been in had the correct faucets and linoleum been used, but
that is all he is willing to pay.
Which of the following is true regarding the breach, if any, that occurred?
A. Willis did not breach the contract.
B. Willis materially breached the contract.
C. Willis substantially breached the contract.
D. Willis breached the contract.
E. Willis committed an anticipatory breach of the contract.
Which of the following is a term used to describe the duty of an agent to communicate
any information to the principal that the agent thinks could be important to the
principal?
A. Duty of notification
B. Duty of information
C. Requirement of conveyance
D. Constructive notification
E. Constructive information
Which of the following is a relationship between two or more persons or corporations
created for a specific business undertaking?
A. A business trust
B. A joint venture
C. A syndicate
D. A franchise
E. An enterprise
“Death.” Barbara is president and a large shareholder in Reuse It, a corporation that
sells used cellular telephones. Although the company was not insolvent, sales had been
significantly down, and Barbara decided that it would be a good idea to discontinue the
business. The board of directors agreed with her. The board members presented the
proposal to discontinue the corporation to shareholders. Initially, Willy, a disgruntled
shareholder, opposed ending the corporation. He claimed that the problem was that
Barbara had done a poor job in management. Barbara planned to go forward with the
termination of the company because a majority of the shareholders agreed. Willy,
however, came around; and upon a second vote to discontinue the corporation, the vote
was unanimous. Quill, a vice president of the corporation, was aware of a few
outstanding debts owed by Reuse It. He suggested hurrying along quietly with ending
the corporation because any claims not made before the corporation was dissolved
could be avoided. Barbara told him that she was not sure that was a good idea.
Therefore, the company proceeded with all appropriate notifications. When the time
came to liquidate the corporation, the members of the board did not want to participate.
Barbara was concerned about what action to take at that point because she really
wanted to be finished with Reuse It.
Which of the following is true of Barbara’s plan to continue with disbanding the
corporation over Willy’s objection?
A. She could not continue with her plan because unanimous approval of shareholders
was required.
B. She could proceed with her plan.
C. It is unknown if she could proceed with her plan because Willy’s agreement was
essential if he owned more than 30% of the company’s shares.
D. It is unknown if she could proceed with her plan because Willy’s agreement was
essential if he owned more than 20% of the company’s shares.
E. It is unknown if she could proceed with her plan because Willy’s agreement was
essential if he owned more than 10% of the company’s shares.
A policy of title insurance is an example of which of the following types of insurance?
A. Business loss
B. Profit loss
C. Commercial
D. Economy
E. Economic
What did the U.S. Supreme Court rule in United States v. Windsor, the case in the text
involving the constitutionality of Section 3 of the Defense of Marriage Act (DOMA)
limiting the federal definition of “marriage” to being between one man and one woman?
A. The Court ruled that Section 3 of DOMA was unconstitutional.
B. The Court ruled that Section 3 of DOMA was constitutional.
C. The Court ruled that Section 3 of DOMA was constitutional but that it would be
stricken along with the remaining sections of the law based on other sections of DOMA
that were unconstitutional.
D. The Court ruled that Section 3 of DOMA was unconstitutional but that the Court had
the authority to rewrite the offending provisions in order to bring it into compliance
with constitutional requirements.
E. The Court ruled that Section 3 of DOMA was constitutional but that it would be
stricken based on significant disagreement regarding its meaning.
When was the Interstate Commerce Act passed?
A. 1887
B. 1920
C. 1934
D. 1945
E. 1964
Assuming proper proof, which of the following represents damages a buyer or lessee
may recover in the event of a breach?
A. Incidental damages but not consequential damages or remedial damages
B. Consequential damages but not incidental damages or remedial damages
C. Remedial damages but not consequential damages or incidental damages
D. Incidental damages and consequential damages, but not remedial damages
E. Incidental damages, consequential damages, and remedial damages
Under the Consolidated Omnibus Budget Reconciliation Act, an employee has ____
days after coverage would ordinarily terminate to decide whether to maintain it.
A. 10
B. 20
C. 30
D. 60
E. 90
Regarding the “Case Opener,” what did the court rule regarding the liability of Abbott
Industries following its supply of 1.2 million tubes of bad eye medication to Altana, a
customer, for resale?
A. That Abbott industries was liable for the cost of the recall and destruction of the
defective medication, for the costs of employee overtime, and for lost future sales
because Altana was unable to meet its contractual obligations.
B. That Abbott industries was liable for the cost of the recall and destruction of the
defective medication, for the costs of employee overtime, and for lost future sales even
though Altana was able to meet its contractual obligations.
C. That Abbott industries was liable for the cost of the recall and destruction of the
defective medication and for the costs of employee overtime, but not for lost future
sales because Altana was able to meet its contractual obligations.
D. That Altana was only entitled to receive cover, meaning substitution for the defective
medication.
E. That Altana was unable to recover anything because business people take a risk that
some shipments will be bad.
“Scuba Gear.” Shirley is a popular manufacturer of scuba gear. Before she allows a
store to carry her line of scuba gear, she requires that the store owner agree that her line
is the only line of scuba gear the store will carry. She also requires that if a store carries
her line of scuba gear, it must carry her line of wet suits. Sales of other manufacturer’s
gear and wet suits have begun a steady decline. She is accused of violating antitrust
laws. Shirley, however, replies that she is simply conducting good business practices.
Trudy, the president of ABC Scuba, calls Shirley and tells her that she is prepared to
bring suit against Shirley for antitrust violations. Shirley tells Trudy that although she is
not in violation, that only the government could take action against her, and that the
government is way too busy to get involved in a dispute over scuba gear.
The requirement of Shirley that before she will sell scuba gear to a business, the
business must carry her line of wet suits is a ______ arrangement.
A. Combination
B. Tying
C. Requirements
D. Complementary
E. Joinder
Billy signs an arbitration agreement providing that he will arbitrate any disputes with
his employer, ABC Company. Billy believes that ABC Company has discriminated
against him in violation of the Americans with Disabilities Act. The EEOC also
investigated the situation and brought an action against ABC Company alleging that
ABC Company discriminated against Billy in violation of the Americans with
Disabilities Act. What is the effect of the arbitration clause in regards to the action
brought by the EEOC?
A. The arbitration clause is enforceable and binding on the EEOC.
B. The arbitration clause is enforceable and binding on the EEOC only if ABC
Company provided the EEOC with a copy of the agreement before the suit was filed.
C. The arbitration clause is enforceable and binding on the EEOC only if Billy is the
only employee in the company who has allegedly been discriminated against under the
Americans with Disabilities Act.
D. The arbitration clause is not binding on the EEOC.
E. The EEOC can avoid the arbitration clause only if it can show that it prosecuted
ABC Company in the past and that ABC Company is a repeat offender.
In a conditional sales contract, a contract is a ______ when the seller and buyer agree
that the buyer may return the goods at a later time.
A. Sale-on-approval contract
B. Sale-or-return contract
C. Condition-or-sale contract
D. Return-or-purchase
E. Return-or-sale
“Furniture Store Woes.” Manny was hired by John to deliver furniture purchased from
John’s furniture store, Good Furniture. John had authorized Manny to drive the delivery
truck home from work, but Manny was not authorized to use the truck for any personal
errands. Manny decided to help his friend Helen move believing that John would never
find out. Unfortunately, while moving Helen’s furniture to her new home, Manny was
speeding and hit Bobby’s vehicle in the rear causing whiplash to Bobby. Bobby is
threatening to sue both John and Manny. Then, on his way to work in the same truck the
next day, Manny again bumped a car driven by Joan who is threatening to sue both
Manny and John. John also has another problem involving Connie, his niece, an
aspiring interior designer who John hired to provide design services to customers. Both
Connie and John were aware that customers would likely have no interest in the
services of Connie if they knew she had no experience and no training in design.
Therefore, they inflated her accomplishments to customers telling them that she had
both training and experience. In reliance on those claims, Beth agreed to have Connie
do the interior design work for her new business building while Beth was out of town
on an extended business trip. Unfortunately, Connie did a terrible job. For example, she
put in purple carpeting and painted the walls orange. Beth was outraged when she
returned. She found out from Sandy, a disgruntled employee of John, that Connie
actually had no training or experience in interior design. Sandy wants to sue both
Connie and John.
If John pays for the damage to Joan’s car, does he have any remedy against Manny?
A. If John covers Joan’s damages, then John may receive full reimbursement from
Manny based upon the right of indemnification.
B. If John covers Joan’s damages, then John is not entitled to any reimbursement from
Manny.
C. If John covers Joan’s damages, John is only entitled to reimbursement from Manny
for 50% of whatever he paid.
D. Any recovery John receives from Manny will be based upon principles of
comparative negligence.
E. Any recovery John receives from Manny will be based upon principles of
contributory negligence.
Which of the following holds the principal-employer liable for any harm caused by the
agent-employee during the time that the agent-employee is working for the principal?
A. Vicarious liability
B. Responsible liability
C. Comparative liability
D. Contributory liability
E. There is no such concept
“Painted House.” Billy had a contract to paint Jan’s house for $800 including the duty to
clean up any debris. The contract between Billy and Jan did not address assignment in
any way. Billy, who was very busy, assigned the contract, specifying that it included the
right to receive the money and the duty to paint the house, to Richard who was
interested in making some extra money and had experience painting. Billy did not tell
Jan about the assignment because he did not want any trouble nor did Richard mention
the assignment to her. In fact, Richard never met Jan because he painted while she was
at work. After Richard did a good job painting the house, Jan sent a check to Billy for
$800. Billy needed the money to pay some bills, so he spent it. He thought he would
have money coming in with which to pay Richard, but that did not happen. Richard
asked Jan for $800 when it was not forthcoming from Billy. Jan refused. Richard said
that he was going to sue her. Jan called Billy and told him that he had no right to assign
the contract. Another problem involved disposal of debris. Although Richard was a
good, competent painter, he forgot and left some old paint cans at Jan’s house. Jan
demanded that Billy come and properly dispose of the paint cans because they could
not simply be put in the trash. Billy refused and told her that she would have to get
Richard to dispose of the paint cans because that was his responsibility. Jan called
Richard who told her that he was busy and that clearing out the paint cans was Billy’s
responsibility.
What would be the likely result of a lawsuit brought by Richard against Jan to recover
the $800?
A. Richard will win because Jan accepted the risk that the contract would be assigned.
B. Richard will win only so long as Billy has not been declared bankrupt because Jan
will be able to recover the amounts at issue from Billy.
C. Richard will win only so long as the assignment was for an amount under $1,000.
D. Jan will win because she had no notice that the contract had been assigned and
could, therefore, legally pay Billy.
E. Jan will win only so long as the assignment was for an amount over $500.