Which of the following was the ruling of the court in the Case Opener regarding the
gambler who wrote bad checks to a casino to purchase markers and then tried to avoid
payment on the basis of an oral agreement by which a casino host told the gambler that
he already had sufficient remaining casino credit to receive the markers?
A. The potential oral agreement as to the markers was irrelevant to the negotiability of
the checks.
B. The oral agreement was relevant to the negotiability of the checks, but it did not
affect the gambler’s liability on the checks.
C. The oral agreement was relevant to the negotiability of the checks, and acted to
excuse the gambler from liability on the checks.
D. The oral agreement established that the checks were not negotiable instruments.
E. The oral agreement established breach of contract; therefore, while another type of
instrument would have been negotiable, the checks involved were not.
“Dream Home.” Maurice finds a dream home on the lake. He wants to buy it but is
unsure whether he can get a loan. He signs a contract with the seller that he will buy the
home provided that he can get a loan. Maurice also includes a contractual clause in the
contract with the seller that if he loses his job before the date the purchase contract is
signed, the seller will release him from any obligation. After getting a loan and buying
the home, Maurice decided that he wanted new windows. He entered into a contract
with a window contractor. The window contractor visited the home, but Maurice was
always gone. The contractor made several attempts to reach Maurice, but Maurice
would not return phone calls and made no attempt to assist the contractor with
installation.
The provision that the seller will release Maurice from any obligation if he lost his job
is referred to as which of the following?
A. A condition subsequent
B. A condition precedent
C. A bona fide condition
D. A condition concurrent
E. An exculpatory condition
When a donee beneficiary may enforce rights under a contract, it may be done so only
against the ____.
A. Promisee
B. Promisor
C. Obligor
D. Initial contracting parties
E. Assignee
Which of the following is an unforeseeable event which interrupts the causal chain
between the defendant’s breach of duty and the damages the plaintiff suffered?
A. A surprise event
B. A superseding cause
C. A relative cause
D. An unusual cause
E. Assumption of the risk
“Wedding photos.” Bobby took a number of wedding photos at Jill’s wedding. He was
paid as the photographer. On all of the photographs, he appropriately noted in the
bottom right-hand corner information showing that he was claiming copyright
protection. Jill came to see Bobby three years after the initial photographs were taken
and requested that he grant her permission to run off as many copies as she wanted at
the local photo shop from the pictures that she initially purchased. The photo shop had
refused to reproduce the photographs without his permission. When he refused to give
her permission to do so, Jill started a heated argument. She told Bobby that photographs
are not entitled to copyright protection. She also told him that even if he was correct
that there was some copyright protection, it only lasted for two years and that, in any
event, damages for copyright infringement are unavailable.
If Bobby decides to register the photographs for copyright protection, how would he go
about doing so?
A. He would register by filing a form with the Register of Copyright and providing two
copies of the copyrighted materials to the Library of Congress.
B. He only has to register by filing a form with Register of Copyright.
C. He only has to provide two copies of the copyrighted materials to the Library of
Congress.
D. He would register by affixing the appropriate symbol at the bottom of the
photograph followed by the first date of publication and his name.
E. He would register by filing notice with the Copyright Protection Office.
Which of the following is a term used to identify a person who routinely buys goods in
good faith from a person who routinely sells these goods?
A. A buyer in the typical course of business.
B. An approved buyer.
C. An approved buyer in the ordinary course of business.
D. A buyer in the ordinary course of business.
E. An exchanger in the typical course of business.
In a closely held corporation, a breach of the duty of a majority shareholder to act with
care and loyalty when selling his or her shares is known as ____.
A. Oppressive conduct
B. Majority holder misconduct
C. Minority oppression
D. Minority discrimination
E. Disloyal procedure
Barry wrote a check drawn on his account at ABC Bank for $500 made out to Susie
Smith for payment for yard work. Barry put the check properly addressed to Susie in
the U.S. mail. Through unknown means, a thief obtained the check. The thief altered the
name of the payee to Trudy Smith, and through expertly forged documents opened an
account at XYZ Bank and obtained the funds from Barry’s check along with a number
of other stolen checks. When the check was then presented to ABC Bank for payment,
ABC Bank charged Barry’s account in the amount of $500. A few days later, Susie
asked Barry for her money; and, after investigating, he became aware of the situation.
Assuming the court follows the reasoning of the case in the text, Halliburton Energy
Services Inc., v. Fleet National Bank, which of the following is true regarding whether
Barry is entitled to a return of his funds?
A. As a matter of law, the presenting bank is charged with notice of forgeries; therefore,
XYZ must take the loss, and Barry is entitled to a return of his funds.
B. That Susie, the payee, bore a risk of loss and that, although Barry is not entitled to
return of the funds, his debt to Susie is discharged.
C. That Barry is entitled to a return of only ½ of the funds because in such cases, the
collecting bank, XYZ Bank, and the drawer, Barry, must share the loss.
D. That Barry is entitled to a return of the funds only if he can establish that he notified
ABC Bank of the problem within 30 days of receiving the bank statement showing the
alteration.
E. That Barry is entitled to a refund only if he can establish that XYZ Bank failed to
exercise ordinary care in taking the instrument.
Which of the following is true regarding federal jurisdiction?
A. There is no exclusive federal jurisdiction in civil matters.
B. If a case falls within the federal jurisdiction, it may not fall within state jurisdiction.
C. Some cases fall within both federal jurisdiction and state jurisdiction, but there is no
exclusive federal court jurisdiction.
D. Some cases fall within both federal jurisdiction and state jurisdiction, but that only
occurs in criminal matters.
E. Some cases fall within both federal jurisdiction and state jurisdiction, but the federal
court system has exclusive jurisdiction over some cases.
Which of the following is a business organization governed by a group of trustees who
operate the trust for the beneficiaries?
A. A joint enterprise
B. A syndicate
C. A business trust
D. An S corporation
E. An E corporation
Susie and Sam have significant funds invested with a stock broker named Will and also
with other brokers. Susie and Sam decided to divorce. Susie was really interested in
investments, so the divorce decree provided that Susie would retain “all investment
accounts,” and Sam would receive a “cash settlement” from funds the parties had in the
bank. Six months after the divorce was final, it was discovered that Will had absconded
to parts unknown with all the money invested with him. Susie could have withdrawn
the funds at the time of the divorce, before Will left town, but she had no reason for
concern and left the funds there for investment purposes. After discovering Will’s
wrongdoing, Susie asked Sam to renegotiate the divorce agreement, but he refused.
Which of the following is the most likely result of their dispute if the court follows the
decision of the court in Simkin v. Blank, discussed in the text?
A. The original divorce agreement will be rescinded, and the parties will be required to
renegotiate the agreement because Susie and Sam were mutually mistaken in regard to
investing with Will.
B. The original divorce agreement will be rescinded, and the parties will be required to
renegotiate the agreement because the investment accounts with Will were a significant
basis of the divorce agreement, and Will’s fraud caused termination of that contract.
C. The original divorce agreement will be rescinded, and the parties will be required to
renegotiate the agreement because, regardless of whether or not Will was guilty of
fraud, the end result is that Susie did not receive the benefit of her bargain.
D. The original divorce agreement will be enforced only in part because based on their
mutual mistake in regard to investing with Will, the parties will be required to
renegotiate the part of the contract involving the investments with Will.
E. The original divorce agreement will be enforced.
A salespersons’ exaggerations that would not be classified as a warranty are known as
______.
A. Puffing
B. Falsehood
C. Innocent misrepresentation
D. Fraudulent misrepresentation
E. Improper inducement
What was the result in the case nugget, Lefkowitz v. Great Minneapolis Surplus Store
Inc., involving an advertisement for the sale of fur coats?
A. The court ruled that the advertisement was not an offer because it involved a luxury
good.
B. The court ruled that the advertisement was an offer but that the customer who was
suing had not properly accepted.
C. The court ruled that the advertisement was not an offer because it was a ridiculously
low offer which the plaintiff should have known was not to be taken seriously.
D. The court ruled that the ad was not an offer because ads are never offers, only
invitations for customers to make an offer.
E. The court ruled that the ad was an offer and that the plaintiff properly accepted it.
Which of the following refers to the extent to which, as a matter of policy, a defendant
may be held liable for the consequences of his actions?
A. Proximate cause.
B. Actual cause.
C. Cause in fact.
D. Significant cause.
E. Legal cause.
Which of the following is false regarding the question presented in the Case Opener
regarding Facebook’s status as a corporation?
A. Its corporate status allows it to sue and be sued.
B. Its corporate status allows it to enjoy existence for up to 100 years.
C. Its corporate status allows it to acquire property.
D. Its corporate status allows it to make contracts.
E. Its corporate status allows it to make charitable donations.
Which of the following is true regarding recovery under a mechanic’s lien?
A. Filing a lien automatically ensures that a contractor will receive some money.
B. Even if a contractor performs deficient work, a mechanic’s lien may be enforced.
C. Federal law governs enforcement of mechanic’s liens.
D. There is no requirement that a contractor give a debtor notice of a foreclosure.
E. Any excess funds from a sale to pay the lien go to the debtor.
Which of the following may cause the dissolution of a partnership?
A. Only an act of the partners
B. Only the operation of the law
C. Only an act of the court
D. An act of the partners, an operation of the law, or an act of the court.
E. An act of the partners and an operation of the law, but not an act of the court.
The person who agrees to the terms of an offer made by the other party is called the
_________.
A. Offeree
B. Offeror
C. Agreeor
D. Agree
E. Inquirer
Which of the following causes of action stem from contract theory?
A. Breach of warranty.
B. Negligence.
C. Strict liability in tort.
D. Failure to warn.
E. Failure to warn and breach of warranty.
Which of the following are sometimes called “unintentional-discrimination” cases?
A. Disparate-treatment cases
B. Disparate-impact cases
C. Sexual harassment cases
D. All of these
E. Disparate-treatment cases and disparate-impact cases, but not sexual harassment
cases.
Once a voluntary liquidation proceeding under Chapter 7 is filed, the debtor’s
prepetition assets form the ____.
A. Corpus
B. Remainder
C. Residual estate
D. Bankruptcy estate
E. Relinquished asset pool
Which of the following is true regarding the result in the Case Opener, the case
involving whether FedEx illegally refused to collectively bargain with single-route
drivers on the basis that they were independent contractors, not employees?
A. To determine whether the FedEx drivers should be classified as employees or
independent contractors, the court applied federal statutory law.
B. The court found that FedEx did not exercise the degree of control necessary for the
relationship to be considered employer-employee.
C. The court found that at times the drivers acted as employees and that other times
they acted as independent contractors and that they would, therefore, be classified as
independent contractors.
D. The court found that at times the drivers acted as employees and that other times
they acted as independent contractors and that they would, therefore, be classified as
employees.
E. The court found that all the rights and duties of employees as agents applied to their
relationship with FedEx.
“Skateboard Growth.” Both Bernie and John were presidents of small corporations
involved with manufacturing and selling skateboards. Bernie’s store was called “ABC
Skateboard” and John’s business was called “Skateboard for Health.” Because a large
sports store was coming into town, they, along with the boards of directors of the two
companies and all shareholders, decided that it would be a good idea to combine the
businesses. They decided to retain the name “Skateboard for Health.” Bernie was
concerned, however, with the change because, on behalf of his company, he was
contemplating filing a lawsuit against Hank who had purchased 10 custom skateboards
and had not paid for them. He was excited, however, about the prospect of not being
liable for a lawsuit he expects to be filed by Greg who fell when a wheel came off on a
skateboard sold by Bernie’s corporation resulting in a serious ankle sprain and medical
bills. After investigation, Bernie is aware that the wheel was negligently attached to the
skateboard. Bernie told John that one reason he wanted to retain John’s name was to
prevent Greg from being able to recover against him.
Which of the following is the appropriate term for the action contemplated by Bernie
and John to combine the businesses under the name “Skateboard for Health”?
A. Merger
B. Consolidation
C. Asset purchase
D. Restructuring
E. Reforming
“Courtroom Surprises.” Wilma agrees to sell Wally her house for $200,000. Wilma,
Wally, and the house are all located in Tennessee. She also orally agrees to sell her used
car to Wally for $1,000. Wilma and Wally discuss the fact that the house needs some
repairs. Wilma gives Wally a key and tells him to do whatever he wants with the house.
In reliance on her promise to sell the house, Wally sells his home, gets a loan, and has a
new roof put on Wilma’s house because of leaks that needed to be repaired to prevent
further damage. When presented with the written agreements of sale for the home and
the car, however, Wilma refuses to sign either. Wally sues, and the case proceeds to
trial. Wilma tells the judge in court under oath that she orally agreed to sell the house
but that she changed her mind before signing and that she believes she has protection
under the statute of frauds. She tells the judge that no agreement was ever made
regarding the car and that she also has protection under the statute of frauds regarding
that matter.
Which of the following is true regarding Wilma’s statement to the judge that the
agreement to sell the car was covered by the statute of frauds?
A. She was correct.
B. She was incorrect because while the UCC has a provision regarding writings for the
sale of certain goods, that provision is not a part of the statute of frauds.
C. She was incorrect because the statute of frauds provision involving the sale of goods
only applies to goods costing over $1,500.
D. She was incorrect because the statute of frauds provision involving the sale of goods
only applies to goods costing over $2,000.
E. She was incorrect because the statute of frauds provision involving the sale of goods
only applies to goods costing over $5,000.
The ancient ____, or law of merchants, of ______ recognized that agreements could be
paid for with documents that promised payment and that these documents themselves
could then be circulated as a substitute for money.
A. Lex mercatoria; England
B. Lax trade; England
C. Lex merchantia; France
D. Lax merchant; Italy
E. Lexi merchant; France
Which of the following is false regarding partnership property rights?
A. Any property brought into the partnership is considered property of the partnership.
B. Any property acquired by the partnership is considered property of the partnership.
C. Any property in the name of an individual partner that was purchased with
partnership funds is considered partnership property.
D. A partner may use partnership property to pay a personal debt.
E. Each partner has the right to possess partnership property.
According to the text, which of the following is true regarding defenses to an arbitration
award under the United Nations Convention on the Recognition and Enforcement of
Foreign Arbitral Awards?
A. The only defense recognized is that the losing party did not receive notice of the
arbitration.
B. There are no recognized defenses.
C. The only two recognized defenses are (1) that the arbitrator acted outside the scope
of her or his authority when making the decision and (2) that one of the parties to the
agreement did not have the authority to enter into a legal contract.
D. The only two recognized defenses are (1) that one of the parties to the agreement did
not have the authority to enter into a legal contract and (2) that the losing party did not
receive notice of the arbitration.
E. The only three recognized defenses are (1) that the arbitrator acted outside the scope
of her or his authority when making the decision; (2) that one of the parties to the
agreement did not have the authority to enter into a legal contract; and (3) that the
losing party did not receive notice of the arbitration.
Which of the following consists of the substantive and procedural rules created by
administrative agencies involving applications, licenses, permits, available information,
hearings, appeals, and decision making?
A. Executive law
B. Congressional law
C. Administrative law
D. Enabling law
E. Rule law
Which of the following references goods that are in some kind of storage so the seller
cannot transfer physical possession of them?
A. Goods in transit
B. Goods in bailment
C. General to contract
D. Stored pending payment
E. Stored in transit
Investor-owners of a corporation are called which of the following?
A. Profit owners
B. Profit and loss owners
C. Approved investors
D. Limited partners
E. Shareholders
Which of the following was the result on appeal in California v. Safeway, the case in the
text involving whether an agreement between grocers to share revenues during the term
of a labor dispute violated antitrust laws?
A. The court ruled that the agreement was legal because it came within the
non-statutory labor exemption to antitrust laws.
B. The court ruled that the agreement was legal because it came within the statutory
labor exemption to antitrust laws.
C. The court ruled that the revenue-sharing agreement was not immune from antitrust
scrutiny.
D. The court ruled that because the revenue-sharing agreement was not within the
non-statutory exemption to antitrust laws, it was illegal as a matter of law with no
further inquiry necessary.
E. The court ruled that although the agreement came within the statutory exemption to
antitrust laws, additional inquiry was needed in order to determine whether the
agreement constituted a per se violation which is illegal even in the face of an
exemption.
Under the _____, an accountant is liable to known third-party users of the accountant’s
work product and also to those in the limited class whose reliance on the work the
accountant specifically foresaw.
A. Ultramares rule
B. Class test
C. Reliance rule
D. Restatement test
E. Carroll rule