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What does the term "FAS" when used as a shipping term represent?
A. Found as Seen
B. Fee as Selected
C. Freedom Alongside
D. Free Alongside
E. Found as Selected
Historically, why was a landlord not responsible for ensuring that leased premises were
tenantable?
A. Because judges favored lessors.
B. Because the standard of living was lower.
C. Because land was viewed as the more important element being leased.
D. Because it was believed that the free economy should take care of such matters.
E. Because of the large need for premises to lease.
"Used Car Problems." Marcy purchased a used car from ABC Motors. Six months later
the police seized the car from Marcy on the basis that it was a stolen vehicle. Marcy
asked for her money back from ABC Motors. The manager there told her that the car
was not stolen, but that even if it were, ABC Motors acted in good faith with no
knowledge of a theft; and that, therefore, Marcy, as a good-faith purchaser, had a good
title. ABC Motors had also sold a used car to Frank who wrote a bad check for the car
and left town, but not before selling the car to Betty. Betty purchased the car with no
knowledge of any problem with the check. ABC Motors asked Betty to return the car,
but she refused. She explained that she had given the car to her son, Billy.
What kind of title did Betty have?
A. Good
B. Void
C. Voidable
D. Absolute
E. Illegal
A corporation is a[n] ______ corporation in states in which it conducts business but is
not incorporated.
A. Visiting
B. Foreign
C. Interstate
D. Intrastate
E. Approved
Assuming no exception applies, which of the following is true regarding the effect of a
debtor offering to pay less money than is owed as full payment on a debt for which
there is a dispute over the amount of the debt, and the creditor agrees?
A. A liquidated debt is involved, and there is an accord and satisfaction.
B. A liquidated debt is involved, and there is an accord but no satisfaction.
C. A liquidated debt is involved, and there is neither a satisfaction nor an accord.
D. An unliquidated debt is involved, and there is an accord and satisfaction.
E. An unliquidated debt is involved, and there is an accord but not satisfaction.
Which doctrine may courts use to estop, or prevent, an offeror from revoking an offer
based on a party's taking steps in reasonable reliance on an offer?
A. Promissory estoppel
B. Consideration reliance
C. Contract enforcement
D. Ethical reasoning
E. True to form
Bank accounts, stocks, and insurance policies are examples of which of the following
types of property?
A. Tangible
B. Intangible
C. Substantive
D. Unsubstantive
E. Manifest
"Past Due Rent." Christen operated a temporary help business. Planning to open a
second office, she rented office space from Dusty. Unfortunately, her business was not
doing very well, and she decided not to open a second office. Christen was able to reach
an agreement with Doug whereby she transferred her entire interest in the leased
property to him. The agreement she had with Dusty prohibited her from transferring her
interest. Dusty, however, accepted rent payments from Doug because it was the easiest
course of action. Doug started a catering business in the space. It did well during the
holiday season, but Doug was unable to maintain bookings and became unable to pay
the rent. Dusty called Christen and asked her to pay the rental payments reminding her
that she breached the lease agreement in the first place when she transferred her
interests in the lease to Doug. Christen told Dusty to forget any payments from her and
hung up. Dusty wants to sue Christen for the lease payments and also for breaching the
lease agreement, and he also wants to sue Doug. Christen talks to Doug and he says that
he has no plans to pay Dusty because Dusty is a jerk. Doug also says that he does not
believe that he has any liability to Christen if she pays Dusty. Doug says that the
premises were acceptable but that Dusty is rude and money hungry, traits he finds
untenable.
Which of the following is true regarding the right of Dusty to collect rent payments
from Doug?
A. Dusty has no right to collect payments from Doug because the agreement he had
with Christen prohibited her transferring any rights under the lease.
B. Dusty has no right to collect payments from Doug unless Christen has been
adjudicated bankrupt by the bankruptcy court.
C. Dusty has the right to collect rent payments from Doug.
D. Dusty has no right to collect rent payments from Doug unless the agreement between
Doug and Christen gave him that right.
E. Dusty has the right to collect rent payments from Doug unless Doug had not been
making a profit while operating his business in the leased premises.
"Third-Party Woes." Trudy owed Sam $40 for a book she purchased from him. Trudy
mowed Betty's yard for $40 and agreed with Betty that Betty would pay Sam for the
book. Sam is not aware of the assignment. Betty pays no one. Trudy also mowed Bob's
yard for $40. She agreed with Bob that Bob would give the payment to Sally
representing Trudy's birthday present to Sally. Bob later refuses to do so saying that
promises to give gifts are not enforceable. He then moves out of town. Trudy tells both
Sam and Sally that she is broke and that they will have to get any amounts due from
Betty and Bob respectively. Sally is very unhappy because she wanted to buy a new
pair of sandals with the money.
What type of third-party beneficiary is Sally?
A. Intended and donee
B. Creditor and incidental
C. Intended and creditor
D. Donee and incidental
E. Creditor and donee
"Miracle Face." Tara developed a great new type of face cream guaranteed to provide
total sun protection, remove wrinkles, and result in anyone looking at least ten years
younger. Her product, Miracle Face, became extremely popular in the U.S., where she
has several shops, and also in other countries to which it was shipped. Tara has a
number of individuals in other countries seeking to team with her in selling Miracle
Face. Sam, a citizen of Mexico, asks that she grant him permission to use her name and
any associated trademarks, and allow him to sell Miracle Face in Mexico. Tara has an
offer, however, from another Mexican citizen, Maria. Maria proposes that she and Tara
associate together, open a business to sell Miracle Face, and share profits and
management responsibilities. Tara has also thought about opening her own business in
Mexico in conformity with Mexican laws. She would then, hire employees in Mexico to
sell the product. Another matter Tara has considered is simply arranging for her
products to be shipped to Mexico for sale, and she is interested in the effect of any trade
agreements in effect between the U.S. and Mexico.
Assuming that Tara decides to make the deal Sam proposes, Sam would be referred to
as a(n) _____ and Tara would be referred to as a(n) ______.
A. Franchisor; Franchisee
B. Franchisee; Franchisor
C. Affiliator; Affiliatee
D. Venturor; Venturee
E. Representative Offeror; Representative Offeree
Which of the following is true regarding states adhering to the privity or near privity
rule for third party liability of accountants?
A. All the states utilize it.
B. All states except one utilize it.
C. Three-quarters of the states utilize it.
D. One-half of the states utilize it.
E. Only a few states utilize it.
With a simple delivery contract involving a merchant, when does risk of loss transfer to
the buyer?
A. When money is transferred
B. When the items are tendered
C. When the buyer takes possession
D. One day after goods are identified to the contract
E. When goods are identified to the contract
Which of the following is true regarding nontariff barriers?
A. Quotas are nontariff barriers, but embargoes are not.
B. Embargoes are nontariff barriers, but quotas are not.
C. Indirect barriers are nontariff barriers, but quotas and embargoes are not.
D. Quotas and embargoes are nontariff barriers, but indirect barriers are not.
E. Quotas, embargoes, and indirect barriers are all nontariff barriers.
"Third-Party Woes." Trudy owed Sam $40 for a book she purchased from him. Trudy
mowed Betty's yard for $40 and agreed with Betty that Betty would pay Sam for the
book. Sam is not aware of the assignment. Betty pays no one. Trudy also mowed Bob's
yard for $40. She agreed with Bob that Bob would give the payment to Sally
representing Trudy's birthday present to Sally. Bob later refuses to do so saying that
promises to give gifts are not enforceable. He then moves out of town. Trudy tells both
Sam and Sally that she is broke and that they will have to get any amounts due from
Betty and Bob respectively. Sally is very unhappy because she wanted to buy a new
pair of sandals with the money.
Which of the following would be the likely result if Sam sues Trudy for the $40 she
owes him for the book?
A. Sam will win because Trudy cannot avoid her obligations through a delegation.
B. Sam will win but only because he was not aware of the assignment.
C. Sam will win but only because the contract was for an amount under $1,000.
D. Sam will win only if Betty cannot be found for service of process.
E. Trudy will win because she delegated the duty of payment to Betty.
Contracts containing conditions affecting the performance obligations of the parties are
called ______ contracts.
A. Uncertain
B. Conditional
C. Unreasonable
D. Voidable
E. Void
"On the Town." Benny began taking people on tours of historic sites in his town. That
had not been done before because no one thought there was very much in the way of
historical significance there. Benny, however, did some research; and, with a very
active imagination on his part, came up with some good stories. He started to make a
nice profit with the tours, particularly with tourists passing through the town on the way
to the mountains. Benny began to hear of some rival tour groups that were planning to
start giving tours in the area. Benny sent a memo to his secretary asking, "How can we
shut down other potential tour groups because we want all the business?" One rival
company had started operations, but Benny still had 85 percent of the business. His plan
was to run the rival out of business and prevent the start-up of any other tour operations
in his town. Benny decided that he would offer to do a free advertising brochure to any
business that would put up a poster advertising his tour group and agree not to advertise
or mention in any way any other tour group. Benny was particularly successful in
reaching that agreement with hotels and restaurants in his town because of his likeable
personality. When Prudence, who ran a rival tour group heard about Benny's actions,
she was furious and accused him of an antitrust violation because he was trying to keep
all the tour action for himself. Benny told Prudence she was nuts and that the only
reason she had no business was that she stuck to dry historical fact on her tours and did
not do research on romantic relationships between individuals in the area in order to
'spice-up" her tours. He also told her that he was not a monopolist because he did not
have all the business as evidenced by Prudence's own tour service.
The relevant market would be considered in determining the company's ________
share.
A. Allocated
B. Consumer
C. Market
D. Presumed
E. Allowable
"Wrong Deck." Penny hires Jackson to paint her back deck. 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, because the
contract is executed.
Which of the following is true regarding Jackson's assertion that Penny must pay him at
this point if the neighbor fails to do so?
A. He is correct because an express contract existed, and he made an honest mistake for
which Penny must accept the risk.
B. He is correct because an implied contract existed, and he made an honest mistake for
which Penny must accept the risk.
C. He is correct because an implied-in-law contract existed.
D. He is correct because a valid contract existed; and, after his performance, it is
considered executed.
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, and the contract
remains executory.
Which of the following is true regarding the availability of liquidated damages in
China?
A. Liquidated damages are not available in China.
B. Through judicial mandate, China adopted the U.S. standard for awards of liquidated
damages.
C. Liquidated damages are available under the People's Republic of China Contract
Law legislation, but only in amounts of up to 20% of the actual damages incurred by
the breaching party.
D. Liquidated damages are available under the People's Republic of China Contract
Law legislation, but Chinese judicial interpretation of the law limits liquidated damages
to no more than 10 percent above the actual damages incurred by the nonbreaching
party.
E. Liquidated damages are available under the People's Republic of China Contract
Law legislation, but Chinese judicial interpretation of the law limits liquidated damages
to no more than 30 percent above the actual damages incurred by the nonbreaching
party.
How does NAFTA define "Made in the U.S.A."?
A. As a product for which at least 55 percent of the labor and components are from
Canada, Mexico, or the United States.
B. As a product for which "all or virtually all" of the components and labor are of U.S.
origin.
C. As a product for which at least 50 percent of the components and labor are of U.S.
origin.
D. As a product for which at least 75 percent of the components and labor are of U.S.
origin.
E. As a product for which at least 75 percent of the components and labor are of from
Canada, Mexico, or the United States.
Under a strict product liability theory, who is considered a reasonably foreseeable party
who may recover if injury is sustained?
A. The buyer only.
B. Only the buyer and the buyer's family.
C. Only the buyer, the buyer's family, and the buyer's guests.
D. Only the buyer and any one present in the buyer's home when injury is sustained.
E. The buyer, the buyer's family, the buyer's guests, and foreseeable bystanders.
Which of the following is true regarding the rating the World Bank gives China in
relation to the ease of doing business there?
A. China is rated in the top 10.
B. China is ranked near the middle.
C. China is ranked in the bottom 25.
D. China is ranked in the bottom 10.
E. China is ranked last.
Which of the following established GAAP?
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
Which of the following refers to special relationships in which one person has taken
advantage of his or her dominant position in a relationship to unduly persuade the other
person?
A. Fraudulent misrepresentation
B. Undue influence
C. Pressing dominance
D. Pressing persuasion
E. Relationship dominance
As expressed in the text, which of the following expresses the United Nations
declaration on hate speech?
A. The United Nations' declaration protects hate speech to the same degree as courts in
the U.S. discussed in the text.
B. The United Nations' declaration states that speech is only recognized as "hate
speech" if it is gender-based.
C. The United Nations' declaration states that speech is only recognized as "hate
speech" if it is racially based.
D. The United Nations' declaration states that hate speech is not a protected form of
expression.
E. There is no United Nations declaration on hate speech because that body expressly
determined that any decision on the matter should be postponed.
Tina negligently hits student Susie with her car. Which of the following is true?
A. Tina has no duty to come to the aid of Susie.
B. Tina has a duty to come to the aid of Susie because she negligently hit her.
C. Tina has a duty to come to the aid of Susie only if police are not on the scene within
a reasonable amount of time.
D. Tina has a duty to come to the aid of Susie only if Susie has no insurance.
E. Tina has a duty to come to the aid of Susie only if no one else is willing to do so.
Which of the following was the result in Larry S. Lawrence v. Bainbridge Apartments,
the case in the text in which the window washer argued that he was entitled to recover
against the building owner for his injuries in a fall?
A. The window washer was entitled to workers' compensation as an employee.
B. The window washer was entitled to a recovery in tort based on the inherently
dangerous activity at issue and the defendant's failure to take sufficient precautions.
C. The window washer was entitled to recovery for breach of contract.
D. The window washer was not entitled to recover because he took insufficient
precautions for his own safety.
E. The window washer was entitled to no recovery based on his status as an
independent contractor.
What type of notice must a party who wishes to replace noncomforming goods and cure
within the time set for performance give the other party?
A. Notice within 1 day of delivery
B. Notice within 5 days of delivery
C. Notice within 10 days of delivery
D. There is no set time so long as notice is given prior to the time set for performance
E. Prompt notice
Which of the following may endorse an instrument made payable to a legal entity such
as a partnership?
A. The managing partner only.
B. The financial officer only.
C. The bookkeeper only.
D. The treasurer only.
E. Any authorized representative.
The idea that we should interact with other people in a manner consistent with the
manner in which we would like them to interact with us is called the ______.
A. Equalization Rule
B. Ethical Realization Rule
C. Silver Rule
D. Golden Rule
E. Ten Commandments Rule
Which of the following prohibits the use of manipulative devices to bypass SEC rules?
A. Section 15(a)
B. Section 10(b)
C. Section 5
D. Rule 2
E. Rule 2(5)
"Fixture Mishap." Trudy owns a hardware shop that also sells expensive bathroom
fixtures. Theresa, a whiz with tools, purchased for $400 some expensive powder room
fixtures for her bathroom. Trudy had only one set of the fixtures Theresa wanted.
Although Theresa noticed a slight discoloration on one of the faucets, she went ahead
with the contract because Trudy indicated that she would remedy the situation should
the problem become worse. Because they were friends and attended the same church,
Trudy gave Theresa 90 days in which to pay. A month later and before she paid for the
fixtures, Theresa called Trudy and told her that the fixtures were corroding, the
discoloration had worsened, and the fixtures looked terrible. Trudy told her that she
would get replacements, but six months later they had not arrived. Trudy told Theresa
that they were on back order. At that point, Theresa purchased fixtures elsewhere for
$500 and informed Trudy that she could pick up the corroded fixtures at her front door.
Trudy picked up the fixtures. They were obviously defective, but Trudy was able to
resell them for $100. Trudy told Theresa that she would have gladly provided fixtures
that would not corrode if she had only a bit more time, that Theresa should have given
her a chance to do so, and that as far as Trudy is concerned, Theresa owes $300. Is
Trudy likely correct in that she owes Theresa no obligation?
A. Yes, Trudy is correct but only because a consumer transaction with a nonmerchant is
involved.
B. Yes, but only because the fixtures were incorporated into real property.
C. Yes, because that is the only remedy she must provide under any circumstances.
D. Yes, but only because the fixtures had not yet been paid for by the buyer.
E. No, because Theresa had the right to revoke acceptance and cover.
Which of the following would constitute the privacy tort of false light?
A. Attributing characteristics or beliefs to a person that he or she does not possess.
B. Disclosing private facts about a person in order to obtain some sort of personal gain.
C. Defaming a person with actual malice.
D. Defaming a public figure.
E. Defaming a public figure for personal gain.
Penny, a bit of a hypochondriac, decides that she should have MRIs covering her whole
body and insists that her doctor order them. Penny tells her doctor that she is not
concerned about cost because she has great insurance. Which of the following is the
appropriate and recognized term for the problem associated with her behavior as far as
an insurer is concerned?
A. Hypochondria neurosis
B. Hypochondria psychosis
C. Moral hazard
D. Medical excessiveness
E. Unfair persuasiveness
Which of the following was the result in Penny Garrison et al. v. The Superior Court of
Los Angeles, the case in the text in which the plaintiffs sought to sue a residential care
facility and avoid the effect of a durable power of attorney by which the decedent's
daughter signed agreements to arbitrate disputes involving the facility?
A. That the durable power of attorney was ineffective because it did not grant the holder
authority to enter into arbitration agreements and that the arbitration agreements,
therefore, were unenforceable.
B. That the durable power of attorney was ineffective because it did not specifically
give the daughter authority to enter into agreements involving health care and that the
arbitration agreements, therefore, were unenforceable.
C. That the durable power of attorney was ineffective because it was revoked after the
decedent became ill and that the arbitration agreements, therefore, were unenforceable.
D. That the durable power of attorney was effective but that the arbitration agreements
were void as against public policy.
E. That the durable power of attorney was effective and that the agreements to arbitrate
would be upheld.
