A contract of an intoxicated person for necessaries will be enforced for the reasonable
value of the necessaries.
The United States is not a party to the Central American Free Trade Agreement.
An eviction may only be full, not partial.
Commission of the offense of grand larceny involves the theft of larger items as
opposed to smaller items that can be hidden, for example, in a purse.
A surety is secondarily liable to the creditor for a debtor’s debt.
Federal laws include laws passed by federal administrative agencies.
In a case where no actual damages result from the breach of a contract, the court may
award the plaintiff nominal damages.
If an investor purchased securities and suffered damages as a result of an issuer’s false
or misleading statement, the investor is entitled to bring a civil suit to recover his or her
losses.
Under the 1933 act, any security offered or sold to a permanent resident of the single
state where the issuer of the security resides and does business is exempt.
In some cases, if past consideration was given with expectation of future payment, the
court may enforce the promise.
An intended beneficiary is a third party to a contract who is intended to be directly
benefited from the contract made by the contracting parties.
If an acceptance is received after a rejection is received, the acceptance is still valid.
Under federal statutory law, Internet transactions cannot be the basis for a finding of in
personam jurisdiction.
The Sherman Act attempts to stop trusts from unfairly restricting market competition.
If an agent breaches duties owed to the principal, the principal can sue the agent; and
the principal may be entitled to a variety of contract and tort remedies beyond those
stated in the contract between the principal and agent.
The Federal Reserve has stated that Regulation E applies to e-money transactions.
For fraudulent misrepresentation to be the basis for a contract rescission, the statement
of fact need not be an actual assertion.
Interference with a tenant’s quiet enjoyment of property may be in the form of an
eviction.
Germany has a law that requires that manufacturers be responsible for their product’s
packaging, and the packaging may be disposed of in the public waste disposal system.
The state-of-the-art defense is not available in all states in strict liability cases.
Course of dealing is another term for course of performance.
In the law when both parties are equally responsible for an illegal agreement, it is
known as in pari delicto.
In order to recover under quasi-contract, there is no requirement that enrichment be
unjust.
Case law interpretations are law unless they are revoked later by new statutory law.
The Sherman Act may not be constitutionally applied to foreign companies that conduct
business in the U.S.
Unconscionability is a concept strictly limited today to the sale of goods.
When an enforceable contract does not exist, the court may grant a recovery based on
quasi-contract in order to prevent an injustice from occurring.
A franchise agreement is the same thing as a joint venture.
The fact that a bank refuses to pay an instrument means that it has been dishonored.
A covenant of quiet enjoyment is one of the covenants made by a lessee.
Section 2 of the Sherman Act prohibits all monopolies.
Assignment of personal duties is generally permitted.
Lost property legally has the same status as mislaid property.
The principal may terminate an agency coupled with an interest.
Quasi-contracts are actual contracts.
A currency or cash substitution is a relatively new development in the law arising in the
20th century.
In a[n] _____________ contract, the offeror wants a performance to form the contract.
A. Trilateral
B. Bilateral
C. Unilateral
D. Complete
E. Anticipatory
The ______ in a third-party beneficiary contract is the party to the contract who owes
something to the promisor in exchange for the promise made to the third-party
beneficiary.
A. Promisee
B. Promisor
C. Obligor
D. Obligee
E. Assignee
“Lawn maintenance.” Bob and Susan ran a lawn maintenance company for several
years. They, however, encountered a dispute regarding the allocation of profit and
agreed to discontinue their business. They cannot agree on a number of issues involving
not only profits, but also winding up the business, disposing of equipment, and other
matters. They agreed to hire an arbitrator to settle their disputes. Bob suggested that
they use a local lawyer named George to arbitrate the matter, and Susan agreed. Susan
had some medical problems and requested that the arbitration be postponed for a short
time. Bob objected to her request. George would not agree stating to Susan’s request for
a postponement stating that any arbitration proceeding must be heard within 30 days
and that the time period was nearly over. George conducted the arbitration hearing. He
refused to hear any evidence from any witnesses explaining that he only had the
authority to hear testimony from Bob and Susan. Therefore, Susan was not able to
present testimony of a property appraiser she had hired. George proceeded to rule in
favor of Bob on all counts. Susan was very discouraged and discussed the situation with
her friend Sally. Sally said “My goodness! Didn’t you know that George and Bob play
golf together every week, that Bob is married to George’s cousin, and that Bob has
loaned money to George in the past?” Susan immediately calls George and asks him
about his connection with Bob. George acknowledges those connections. He tells Sally,
however, that he was perfectly fair and that there is nothing she can do. The Federal
Arbitration Act applies.
Which of the following is accurate regarding George’s refusal of a continuance based
upon Susan’s medical problem?
A. George’s statement that a hearing must be held within 30 days was correct.
B. George was prohibited by law from granting a continuance over Bob’s objection.
C. George was incorrect regarding the time in which a hearing must be held because
under the Federal Arbitration Act, the applicable time period is 60 days.
D. Under the Federal Arbitration Act, an arbitration proceeding may not be postponed
based upon illness.
E. George was probably wrong in refusing the continuance, and that could present a
basis upon which to set aside his award.
“Employee Picketing.” Warren owns a unionized business called “Warren’s” that
manufactures furniture. Employees are unhappy because they believe that during
negotiations for a collective bargaining agreement, Warren is improperly refusing to
give them a raise. The employees stop working for Warren’s business and begin
picketing. At first the employees carry signs with slogans such as “Labor Dispute –
Warren Won’t Pay a Fair Wage,” meant to inform the public that a labor dispute has
resulted because Warren is cheap. When that, however, fails to change Warren’s mind,
the employees begin staging pickets to prevent deliveries to Warren and to prevent
access to employees who want to work. They carry signs saying “No Access to Warren –
Shut Him Down.”
Which of the following is true regarding protection provided by labor law to the
picketing by the employees?
A. Both picketing designed to inform the public and picketing designed to prevent
services and deliveries to the employer are protected by federal labor law.
B. None of the picketing involved was protected by federal labor law.
C. Picketing designed to inform the public was protected by federal labor law, but
picketing that prevented the delivery of service and deliveries was not protected.
D. It is unclear whether the picketing was protected by federal law because protection
depends on whether Warren employs over 50 employees.
E. It is unclear whether the picketing was protected by federal law because protection
depends on whether Warren himself had violated labor laws.
“Wild Things.” Image Company, a company specializing in photography of exotic and
wild animals, took out a life insurance policy through ABC Insurance on its president
Bruno and also on a company-owned jeep that he drove. Bruno got a better offer from
Wild Things Company, another company specializing in the photography of exotic
animals, and went to work for them. He parted on good terms with Image Company and
taking the jeep with him under the mistaken idea that the jeep was part of his severance
benefits. Neither of the insurance policies was cancelled by Image. Unfortunately, while
photographing a lion for Wild Things Company, Bruno was attacked and eaten. His jeep
was then stolen by an unknown bystander who apparently saw the attack and took the
opportunity to take the jeep. Image Company had been in the process of contacting
Bruno in an attempt to obtain possession of the jeep but had not reacquired it at the time
of his death. Image Company had renewed the policy on the jeep reaffirming to the
insurer that its purpose was for use by Image employees because Image planned to have
possession of the vehicle shortly. Image Company filed a claim to collect on the life
insurance policy and also on the vehicle policy. ABC Insurance denied both claims.
Which of the following is a term referencing the concept that a sufficient interest must
exist on the part of an insured in order to take out a policy of insurance?
A. Insurable interest
B. Pecuniary interest
C. Financial concern
D. Financial effect
E. Profit impact
All states except ______ adhere to the admission exception to the statute of frauds.
A. Hawaii and Alaska
B. Louisiana and New York
C. Louisiana and California
D. Kentucky and Florida
E. North Carolina and Montana
A[n] ____________ mark is one that requires imagination, thought, and perception to
reach a conclusion as to the nature of the goods.
A. Generic
B. Descriptive
C. Suggestive
D. Conclusory
E. Artful
“Hot Dress.” Doreen writes a check for a dress to Hot Dresses Inc., a small specialty
shop whose shares are owned primarily by Betty. Betty decided to go on an extended
European vacation and temporarily closed down the shop the day after Doreen wrote
the check. When Betty returned, she had a number of other things to do and did not take
Doreen’s check and some other checks to the bank for three months. Betty was
independently wealthy and only ran the shop as a hobby, so she had not been in need of
funds. When Betty finally took Doreen’s check to the bank, Betty requested that her
bank, ABC Bank, deposit the check into her account. When ABC Bank, however,
requested payment from Doreen’s bank, XYZ Bank, the check was dishonored because
of insufficient funds in Doreen’s account. Although Betty did not particularly need the
funds, she did not like to feel as if she had been cheated; therefore, she demanded that
Doreen make the check good.
Who is the drawer of the check Doreen presented to Betty at Hot Dresses Inc.,?
A. Doreen.
B. Hot Dresses Inc.
C. Betty, as primary owner of Hot Dresses Inc.
D. Doreen’s bank.
E. Betty’s bank.
Which of the following may an agent demand if the agent believes that he or she is not
being properly compensated?
A. Specific performance
B. Accounting performance
C. An accounting
D. A contractual documentation
E. A contractual audit
“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.
Which of the following is true regarding Penny’s assertion that the union must obtain
favorable votes from a majority of employees before winning an election and becoming
certified as the bargaining agent for the employees?
A. Penny is correct because in order to be certified as the bargaining agent, the union
must obtain favorable votes from a majority of employees, not a majority of employees
who vote.
B. Penny is correct in that the union will not immediately be certified without a
favorable vote from a majority of employees, but a second election will automatically
be held at which all employees will be required to vote.
C. Penny is correct only because her company had 50 or fewer employees. Otherwise,
the union would have been certified as the bargaining agent for the employees.
D. Penny is incorrect because her company had over 25 employees, and the union will
be certified as the bargaining agent for the employees.
E. Penny is incorrect.
Which of the following is held when someone unknowingly purchases stolen goods?
A. Void title
B. Voidable title
C. Good title
D. Examined title
E. Substantiated title
A registrant may lose registration of a domain name for Internet usage by not using it
for more than ___________ days.
A. 30
B. 60
C. 90
D. 120
E. 180
A valid contract may be valid but _____________ when there is some law that prohibits
the courts from enforcing it.
A. Executed
B. Executory
C. Unenforceable
D. Novated
E. Condoned
Inez, wishing to sell a used business law book, calls Janice and tells her that if she does
not hear from her within twenty-four hours, she will assume that Janice wishes to
purchase the book for $50. Which of the following is correct regarding the status of the
proposed book sale?
A. There is no contract because in this situation silence cannot be used to form a
contract.
B. There can be no contract because the offer was not made in person.
C. There can be no contract because the offer was not made in writing.
D. Janice can avoid there being a contract only if she can prove by preponderance of the
evidence that she did not hear about the offer before the stated expiration time.
E. Janice can avoid there being a contract only if she can prove beyond a reasonable
doubt that she did not hear about the offer before the stated expiration time.
Which of the following is not an example of a horizontal restraint of trade?
A. Price fixing
B. Resale-price maintenance agreements
C. Group boycotts
D. Trade associations
E. Joint ventures
A[n] _____ discharges the nonbreaching party from his or her obligations under the
contract.
A. Immaterial breach
B. Substantial breach
C. Material breach
D. Delineated breach
E. Crossed breach
If a computer store dumps waste behind its building in violation of local, state, or
federal environmental regulations, the resulting dispute focuses on _____ law.
A. Public
B. Preferential
C. Consensual
D. Private
E. Black letter
What happens when a buyer with a voidable title sells the goods to a third-party
purchaser who makes a good-faith purchase for value?
A. The purchaser gets good title.
B. The purchaser gets voidable title.
C. The purchaser gets void title.
D. The purchaser gets reclaimable title.
E. The purchaser gets good-faith title.
Under which of the following does the court determine the percentage of the fault of the
defendant with the defendant then being liable for that percentage of the plaintiff’s
damages, with no requirement that the defendant be more than 50% at fault?
A. Assumption of the risk.
B. Last-clear-chance.
C. Modified comparative negligence.
D. Pure comparative negligence.
E. Both modified comparative negligence and last-clear-chance.
Which of the following was the result in Continental T.V. Inc., v. GTE Sylvania Inc., the
U.S. Supreme Court case in which Continental argued that Sylvania violated the
Sherman Act by restricting the location of retailers that could sell its product?
A. The court upheld the continued used of the bright line per se rule of illegality for all
vertical restrictions.
B. That the rule-of-reason should always be applied when vertical restrictions are
involved.
C. That the rule-of-reason standard should be applied in a vertical restriction case unless
departure from the rule is justified based upon a demonstrable economic effect.
D. That a per se rule of illegality is applied in a vertical restriction case unless departure
from the rule is justified based upon a demonstrable economic effect.
E. That the per se rule of illegality is applied in a vertical restriction case only when a
manufacturing defendant is involved; otherwise, the rule-of-reason test applies.
“Secretary Visits.” Carol wrote a will leaving half of her assets to her husband, Bruce,
and half to her adult daughter from a previous marriage, Amy. Carol, however, found
out that Bruce had been spending a lot of time with his secretary, Sharon. Angrily, Carol
typed on a new piece of paper that she stapled to her will, “You skunk, Bruce, you take
nothing. Amy gets it all.” She then signed her name. Carol then took the will to her best
friend, Betsy, who signed as a witness verifying that Carol meant for Bruce to take
nothing. Carol was struck by lightning a few days later and died. Bruce told Amy that
the revision to the will meant nothing because, for one thing, it was not prepared by a
lawyer.
Which of the following is true regarding Bruce’s statement that the revision to the will
meant nothing?
A. Regardless of whether or not the change was made by a lawyer, it was ineffective
because in order to revise a will, the initial will must be revoked and a completely new
will written.
B. The revision to the will was ineffective because it was not done by a lawyer.
C. The revision to the will was ineffective, not because it was done by Carol, but
because it improperly expressed personal opinion of an individual which by law must
be absent from a will.
D. Assuming other requirements are met, the change to the will is not objectionable on
the basis that it was done by Carol or on the basis that it expressed a personal opinion
regarding Bruce.
E. The change to the will is not objectionable so long as Amy can prove by a
preponderance of the evidence that Bruce was indeed having an affair with Sharon.
“Pet Flicks.” Jill went to work as an independent contracting photographer for Exotic
Pet Flicks, a company specializing in photographing exotic pets, such as monkeys and
snakes, with their owners. The company’s home office was in California, but Jill
worked in Florida. Before she started work, Jill signed an agreement to arbitrate any
dispute she had with the company. The arbitration agreement provided that in the event
of a dispute, Jill would completely cover the cost of the arbitration; that she could only
receive up to $150 in damages regardless of her claims, punitive or otherwise; and that
any arbitration would be conducted at the company’s home office. The agreement also
provided that the arbitrator was not bound to strictly follow the official court rules of
evidence. Jill signed the agreement because she really needed a job and liked animals.
Her only previous animal photography experience, however, had been with cats and
dogs. Jill’s contract provided that she would be paid $100 per shoot and that the
company would take steps to ensure her safety. One day she was called in to
photograph a skunk and its owner. She was told by the receptionist at Exotic Pet Flicks
that the skunk had been altered so that it could not spray. Jill felt safe. Unfortunately,
the skunk had not been altered. Just as she was starting to shoot, the skunk became
upset. It ran over, sprayed Jill, and in the resulting commotion, Jill’s expensive camera
was knocked over and broken. Plus, Jill’s outfit was ruined and she stank for days. Jill
wants to sue Exotic Pet Flicks for $5,000 to cover the cost of her camera, her clothing,
and her general stinkiness for several days. Jill says that she cannot afford to pay for the
arbitration.
Will Jill likely be bound by the arbitration provision that she can only receive $150 in
damages?
A. Yes, she signed the agreement.
B. She will likely be bound only if the company can show that it has not made a
substantial profit in the past 12 months.
C. If an arbitration award on that basis is appealed, a federal district judge would likely
find the provision unenforceable.
D. She can avoid the provision if she testifies that she did not read it before signing the
agreement.
E. She will likely be bound unless she can show that the company made a
misrepresentation to her.
“Surprise Arrival.” Gracie was surprised and pleased to find that she was pregnant. She
worked as a waitress at Good Food and was aware that Groucho, her employer, had
allowed employees who were ill for reasons that were not work related to take paid time
off. For example, her friend Craig was off with pay for two months after suffering a
mild heart attack, and her friend Bonnie was off work for three months when she ran
her personal watercraft into a dock and broke her leg. Gracie, therefore, happily told
Groucho about her pregnancy. He very angrily told her that, as set forth in the employee
handbook, pregnancy was completely voluntary; that she was not entitled to a dime
when she was off work; and that she would be lucky if he even allowed her to continue
working at all because she would not be as cute when she gained weight. According to
Groucho, being slender was a bona fide occupational qualification for females as well
as males. He said that he serves families, and he does not want the kids asking
embarrassing questions of their parents regarding Gracie’s condition. Gracie was very
angry and threatened to sue. Groucho told her, however, that he had business law back
in 1980 and that discrimination based on pregnancy is not even covered by Title VII.
Which of the following is true regarding Gracie’s entitlement to be paid for time she is
medically required to be off for pregnancy?
A. Courts have ruled that while an employer cannot fire a pregnant employee based on
the pregnancy, employers do not have to pay the employee for time off because
pregnancy is a voluntary condition; and Gracie is, therefore, not entitled to paid time
off.
B. All employers covered by Title VII must pay employees for the time they are
medically required to be off work for pregnancy; and Gracie is, therefore, entitled to at
least some paid time off.
C. All employers covered by Title VII must pay employees half their pay for the time
they are medically required to be off work for pregnancy; and Gracie is, therefore,
entitled to at least some paid time off.
D. Employers under Title VII must treat temporary disability caused by pregnancy the
same as any other temporary disability; and since Groucho paid employees who were
off based upon other temporary disabilities, he should be required to pay Gracie as well.
E. Courts have ruled that employers only have to pay employees for time they are
medically required to be off for pregnancy if the employee handbook provides for such
payments; and Gracie is, therefore, not entitled to paid time off.
Which of the following was the result in Bend Tarp and Liner Inc., v. Bundy, the case in
the text in which the plaintiff filed a lien and instituted foreclosure proceedings in
connection with a dispute involving payment for a pond liner following the defendant’s
refusal to pay based on an alleged tear in the liner?
A. That the plaintiff installed a defective liner and was not entitled to foreclose.
B. That the plaintiff properly installed the liner and was entitled to foreclose.
C. That the plaintiff properly installed the liner but was not entitled to foreclose because
a section of the wall of the pond collapsed and the liner did not serve the purpose for
which it was requested.
D. That although the plaintiff had installed a defective liner, the plaintiff was entitled to
foreclose because the defendant did not object to the lien within 10 days.
E. That although the plaintiff had installed a defective liner, the plaintiff was entitled to
foreclose because the defendant did not object to the lien within 30 days.
Which of the following is false regarding contracts for necessaries entered into by
minors?
A. A minor cannot disaffirm contracts for necessaries.
B. A minor can disaffirm a contract for necessaries, but the minor will still be held
liable for the reasonable value of the necessary.
C. A contract for a necessary is a contract that supplies the minor with the basic
necessities of life.
D. The purpose of holding minors liable for necessaries is to ensure that minors are able
to obtain the basic necessities of life when their parents will not provide them.
E. Whether something is considered a necessary is related to whether the minor’s
parents are willing to provide the item in question for the minor.
If it is generally accepted in the trade that a certain product is always preassembled, the
failure of the seller to deliver the goods in that condition would be a breach of the ____.
A. Implied warranty of merchantability
B. Implied warranty of fitness for a particular purpose
C. Implied warranty of trade usage
D. Express warranty of integrity
E. Implied warranty of quality
The Federal Reserve System consists of ______ central banks.
A. Six
B. Eight
C. Twelve
D. Twenty
E. Thirty
Assuming requirements are met, which of the following, if any, is a way that a
corporation can avoid double taxation?
A. By forming a C corporation.
B. By forming a D corporation.
C. By forming an S corporation.
D. By forming an F corporation.
E. A corporation cannot avoid double taxation.
“Miracle Pill.” Katie advertised that she had developed a pill for women that would
result in weight loss, wrinkle loss, and improved vitality; and that for men would result
in all those things plus hair growth. Her television advertisement showed miracle results
allegedly obtained by consumers. Katie cautioned, however, that ingestion of the pill for
six months was required before results would be evident. The pill was wildly popular.
The Federal Trade Commission, however, investigated and determined that Katie had
failed to have a reasonable basis for the claims she made in advertisements. Katie
claimed that she was merely involved in the use of generalities and clear exaggerations.
The Commission disagreed and issued a formal administrative complaint against her.
After a hearing, an order was issued requiring that Katie stop advertising and selling the
pills. After losing all appeals, Katie continued selling the pills until she was fined by the
Federal Trade Commission. She has since left the country and cannot be located.
Who would have presided over the hearing involving the administrative complaint filed
against Katie by the Federal Trade Commission?
A. A state circuit court judge
B. A federal district court judge
C. An administrative law judge
D. A panel of commissioners of the Federal Trade Commission
E. All the commissioners of the Federal Trade Commission
Why did equitable remedies come into being?
A. To fashion remedies when the existing laws did not provide any adequate ones.
B. To supplement compensatory damages with punitive damages.
C. To provide a way to award nominal damages.
D. To provide a way to award consequential damages.
E. To provide a way to award certain parties liquidated damages.
Which of the following is true regarding the Revised Model Business Corporation Act?
A. It has been adopted at least in part in over half of the states.
B. It has been fully rejected in over half of the states in favor of the Model Business
Corporation Act.
C. It has been adopted fully by seventy-five percent of the states.
D. It has been rejected in over half of the states in favor of the Model Corporate Act.
E. There is no Revised Model Business Corporation Act.
How does a court go about determining whether a claimant holding a mechanic’s lien or
a secured party has priority to a good?
Cindy sold her old used automobile to Bruce for $1,000. Cindy told Bruce to come and
take the car and that the transfer would be complete. Is Cindy correct, and why or why
not?
Describe a sublease. To whom is a sublessee liable in the event that the sublessee fails
to pay rent? Can the original lessor hold the sublessor liable in the event a sublessee
fails to pay rent?
Set for the circumstances under which the parol evidence rule would not apply and
parties would be allowed to explain or supplement a written contract.
Set forth the circumstances under which an offer may not be revoked.
Brice just finished a residence in internal medicine and wants to go into practice with
Horace and Joyce. Brice tells you that while he needs to practice with other physicians
for call coverage and for other reasons, he does not want to be liable should the other
physicians be found guilty of malpractice. You discuss various incorporation options
with him, but he tells you that he would like to form a partnership. What business form
would you recommend to him and why?
What is usually the effect if a person who is in good health lies about their age on an
application for life insurance and the misrepresentation is discovered at the time of the
person’s death?
Discuss when specific performance is available as a remedy against a seller or lessor
when the sale of goods is involved, and what is involved if specific performance is
decreed.
Discuss the rights of corporations, if any, to due process. Also discuss whether
corporations have protection with regard to the Fourth Amendment, and in what
manner.
Contrast the requirement of consideration for modification of contracts under the
common law and under the UCC.
Discuss the rights of a surety and a guarantor including rights when multiple co-sureties
or guarantors owe the debtor’s obligation to a creditor.