“Repossession.” Tina sold used vehicles. She sold a used pick-up truck to Joan and a
used convertible to Barry. She properly obtained a security interest in both vehicles.
Both Joan and Barry defaulted on payments owed to Tina for the vehicles. Tina was
under the belief that her only option was to take possession of the collateral. Tina
decided that she would repossess Joan’s pick-up at Joan’s house. Therefore, Tina slipped
into the driveway one evening at midnight and started the engine. Joan immediately ran
out and confronted Tina. Tina shoved Joan away and drove off in the pick-up truck.
Tina was able to repossess Barry’s convertible in a public parking lot with no altercation
with him.
Which of the following is true regarding Tina’s taking possession of Barry’s
convertible?
A. Tina breached the peace because she did not provide Barry prior notification that she
was going to repossess the vehicle.
B. Tina breached the peace because she took the vehicle from a public lot.
C. Tina breached the peace unless she can establish that Barry gave her prior permission
to repossess the vehicle in a public lot.
D. Tina did not breach the peace because she acted in a reasonable manner in taking the
collateral.
E. Tina did not breach the peace because Barry sustained no documented physical
injury.
If there is no room on an instrument for an endorsement or if all the room has been
taken by previous endorsements, a(n) ______ may be attached.
A. Acknowledgement
B. Blank endorsement
C. Special endorsement
D. Allonge
E. Codicil
Which of the following is not available as a remedy under Title VII?
A. Up to three years of back pay
B. Attorney fees
C. Remedial seniority
D. Court costs
E. Reinstatement
Referencing the National Ambient Air Quality Standards, which of the following are
standards that will protect the public welfare (crops, buildings, and animals) from any
known or anticipated adverse effect associated with a pollutant?
A. Conservation
B. Required
C. Primary
D. Secondary
E. Suggested
The “public disclosure” test for ethical behavior is sometimes referred to as the ______
test.
A. Television
B. Powell
C. Self-conscious
D. Golden
E. Primary
Which of the following is true in regard to precedent in relation to law in general and
arbitration?
A. Like the law in general, the law governing arbitration agreements is not a fixed set of
rules or precedents.
B. Unlike the law in general, the law governing arbitration agreements is a fixed set of
rules or precedents.
C. Law in general has a fixed set of rules or precedents, but the law governing
arbitration is not a fixed set of rules or precedents.
D. Neither the law in general nor the law of arbitration has a fixed set of precedents.
E. Both the law in general and the law of arbitration have a fixed set of precedents
except in the area of consumer law in which there is no fixed set of law or precedents.
“Used Car Sales.” Walter sells used cars. He is seeking a way to increase sales and
profits because he would like to take his girlfriend on a nice diving trip to the Grand
Cayman Islands. The first thing that Walter does is say that during the first week of
December, he will give a $500 rebate on used cars that are under two years old. To
spice things up, he also offers to sell any car on the lot that is over five years old for
$1,000 to the first three customers who can hula hoop ten hours straight on December
7th. (Hula hooping was a practice popular some years ago in which a large hoop would
be swung around by a person, usually around the waist.) Walter was not very concerned
about the hula hooping issue because he thought that no one would be able to hula hoop
for ten hours straight. Walter put an advertisement pertaining to the rebate and the hula
hoop opportunity in the local newspaper. The promotion went over very well. Although
Walter had several cars available, he ran out of cars under two years old within one day.
During the rest of the week shoppers were told that no cars of that description were
available. Sam was very angry at Walter for not having a car available that was under
two years old so that he could get a good deal and a $500 rebate. On December 7th,
while Walter was watching the hula hoopers, Sally was shopping for a car. She was in
college and did not have much money. She saw one, an older car, a real clunker, that
she liked; but she really did not know if it could be repaired sufficiently to be
dependable. Walter had not even put a price on it because he planned to have it crushed.
Sally was going to talk to her parents about it. Walter eventually approached her, and
Sally asked him if he would take $450 for the car. Walter said, “Yes, sold.” Sally tried to
explain that she needed to talk to her parents first, but Walter would not hear of it.
While Walter was still fuming from his encounter with Sally, Zack walked up and
started to criticize the nature of Walter’s inventory. Walter told him that he had great
cars. Zack pointed at an old jalopy that was banged up, had 200,000 miles on it, and a
cracked windshield. Zack said, “Sure, I’ll pay $100,000 for that car!” Walter said,
“Sold.” Zack said, “Wait a minute. I was only kidding.” Walter said, “No way.”
Meanwhile all the hula hoopers dropped out well prior to ten hours of hula hooping
except for Barbara. She completed the hula hooping and asked for her car for $1,000.
Walter refused saying that the offer was revoked. Sam and Barbara sued Walter, and
Walter sued Zack and Sally. Under the applicable law in Walter’s state, common law
will be applied, and there are no state statutes impacting the situation.
What is the most likely result in the lawsuit brought by Barbara against Walter?
A. Walter will win because he was only engaged in preliminary negotiations.
B. Walter will win because the advertisement was simply inviting customers, such as
Barbara, to make an offer.
C. Walter will win because he properly revoked the offer.
D. Barbara will win because the ad would be treated as an offer that she properly
accepted.
E. Barbara will win because she properly made an offer that was accepted by Walter
when she did the hula hooping.
Under which of the following, if any, may an individual after age 65 be subject to
termination under the Age Discrimination in Employment Act if the individual has been
employed as a bona fide executive for at least two years immediately before retirement,
and on retirement he or she is entitled to nonforfeitable annual retirement benefits of at
least $44,000?
A. The retirement exemption
B. The executive exemption
C. The forfeiture exemption
D. The guaranteed income stream exemption
E. There is no such exemption
A common law rule known as the ______ required that the seller deliver goods in
conformity with the terms of the contract, down to the last detail.
A. Tender of offer regulation
B. Superior delivery rule
C. Certain tender rule
D. Regulatory rule
E. Perfect tender rule
As a general rule, when is revocation effective?
A. When it is mailed by the offeror.
B. When it is received by the offeree.
C. One day after it is made.
D. Two days after it is made.
E. Three days after it is made
Which of the following is true regarding decisions of federal administrative law judges
appealed into the federal court system?
A. Decisions of administrative law judges are usually upheld.
B. Decisions of administrative law judges are usually denied.
C. Decisions of administrative law judges are upheld approximately 50% of the time.
D. Decisions of administrative law judges are generally upheld as a matter of law unless
a jury is requested.
E. Decisions of administrative law judges are upheld as a matter of law because there is
no right of appeal into the federal court system.
In which of the following does the franchisor provide the franchisee with the formula or
necessary ingredient to manufacture a product?
A. Distributorship
B. Manufacturing arrangement
C. Chain-style business operation
D. Approved business franchise
E. Acknowledged standards operation
“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.
According to the text, which of the following are criticisms of arbitration?
A. That arbitration is more expensive than court litigation.
B. That companies can more easily hide misdoing.
C. That it is too easy to get an arbitration award reversed by a judge.
D. That parties have less control through the arbitration process than through a judicial
action.
E. That arbitration actions are less private than judicial actions.
“Customer Uncertainty.” Wallace wanted baseball caps with the name of the firm of
which he was president, ABC Corporation, emblazoned on the front. Fran, a merchant
in specialized goods, orally agreed with Wallace that she would sell to him 200 baseball
caps at $5 each. No writing was ever made although there were a number of witnesses
to the conversation. After the caps were finished, but before they were shipped, Wallace
called to cancel the order because his firm had just announced a merger and would no
longer be known as ABC Corporation. Fran told him to forget canceling the contract
because she had just finished the caps. Wallace told Fran that she should have been
smarter and had him sign something because without a writing, she does not have a
chance in court. Fran is also having problems with other customers. A father who
voluntarily coached a youth softball league in his community called and orally ordered
150 baseball caps at a cost of $400 each to give out at a league banquet. He just wanted
a variety of caps with no name on them because players from different teams would be
at the banquet. Fran had sent a confirming letter to the coach. Fran had the caps packed
up and ready to go. Twenty days later, just before she shipped them, the coach called
and told her that there was a big feud, the banquet was canceled, and that he was
canceling the order. She believes that the coach should pay damages and that it is just
that he do so because a big order was involved. Finally, Fran plans on taking to small
claims court a merchant customer who orally ordered 500 plain T-shirts at a cost of $5
each but has not picked them up and has refused to do so after several demands.
Are there any steps Fran should take in small claims court, or before she goes,
regarding the customer who ordered the plain T-shirts?
A. No, because once the parties are in court, positions of the parties are frozen.
B. No, because once the parties are in court, only the judge can add evidence.
C. Yes, she should attempt to get the customer to admit to the judge that he ordered the
T-shirts.
D. Yes, she should dismiss the case before she is charged with sanctions.
E. Yes, she should dismiss the case before she is charged with the other party’s attorney
fees.
Assuming adoption of the UCC, which of the following is true regarding whether the
buyer and seller may negotiate a shorter time for the statute of limitations than that
allowed by the UCC?
A. The buyer and seller may not negotiate a shorter time for the statute of limitations
than that allowed by the UCC.
B. The buyer and seller may negotiate a shorter time for the statute of limitations than
that allowed by the UCC without any limits.
C. The buyer and seller may negotiate a shorter time for the statute of limitations than
that allowed by the UCC so long as the time period is not less than one year.
D. The buyer and seller may negotiate a shorter time for the statute of limitations than
that allowed by the UCC so long as the time period is not less than six months.
E. The buyer and seller may negotiate a shorter time for the statute of limitations than
that allowed by the UCC so long as the time period is not less than two years.
Which of the following types of mergers does not require shareholder approval?
A. Short-form mergers
B. Short-term mergers
C. Access mergers
D. Required mergers
E. Specific mergers
“Chewer.” The state in which Susan lives has a statute prohibiting dogs from running at
large. All dogs are required to be on a leash whenever they are off the owner’s premises.
Susan’s dog, while not on a leash, visits the home of a neighbor down the street. While
there, the dog carries off an expensive pair of shoes belonging to Robert. The shoes are
chewed and destroyed. A neighbor informed Robert of what had happened. Robert
commented that he never should have left his $300 shoes lying on the deck in the first
place but that he expects to be repaid by Susan. Robert found out that the dog had
carried away a number of shoes and other articles in the neighborhood, chewing them to
pieces. Susan had done nothing to warn anyone. Robert thinks that she should be
punished for her activities, and perhaps that would deter her from allowing the dog to
run loose. Upon which of the following theories will Robert likely rely in seeking
recovery for the shoes against Susan?
A. Negligence per se
B. Res ipsa loquitur
C. Stare decisis
D. A fortiori
E. Actus reus
A(n) _________ occurs when one person places another in fear or apprehension of an
immediate, offensive bodily contact.
A. Battery
B. Assault
C. Assault and battery
D. Negligence
E. Strict responsibility
“Convertibles.” Barry, a new car dealer, advertised that a new brand of convertible
called Wind would be available at his dealership for the price of $10,000 each. He had
only three Wind vehicles, however; and when those were sold, he tried to convince
shoppers to purchase a much more expensive new convertible at a price of $25,000.
Kathy, a customer who decided to purchase one of the more expensive vehicles needed
financing in order to do so. She had $10,000 to pay on the car and sought a loan from
ABC Bank for the remainder. She wanted the loan for a specific amount of time. ABC
Bank offered her the loan and she agreed. The only information she received from ABC
Bank was confirmation that she borrowed $15,000 at an 8% interest rate. After
receiving several complaints, the Federal Trade Commission disapproved of Barry’s
action in regard to the Wind vehicles. After appropriate proceedings, the Commission
proceeded to issue a cease-and-desist order involving Barry’s misleading advertisement
in regard to Wind vehicles and also in regard to any other vehicles he offered for sale.
Under the Truth-in-Lending Act which of the following types of information should
Kathy have received from ABC Bank?
A. The total amount financed; and the number, amount, and due dates of payments.
B. The total amount financed; the number, amount, and due dates of payments; and the
bank policy in the event of a delinquency.
C. The total amount financed; the number, amount, and due dates of payments; and the
bank’s policy regarding selling loans to other financial institutions.
D. The total amount financed; the number, amount, and due dates of payments; the bank
policy in the event of a delinquency; and the bank’s policy regarding selling loans to
other financial institutions.
E. Only the information she received.
Which of the following was the result In Re Tower Air Inc., the case in the text in which
a debtor made repairs to an aircraft used as collateral without claiming available
insurance proceeds, later filed bankruptcy, and the bankruptcy trustee and the creditor
each claimed entitlement to the insurance proceeds?
A. The court ruled in favor of the bankruptcy trustee on the basis that regardless of
whether or not repairs were made, the right to claim the proceeds belonged to the
debtor; and the trustee succeeded to the rights of the debtor.
B. The court ruled in favor of the bankruptcy trustee on the basis that because the
debtor had already repaired the collateral, the trustee was entitled to the proceeds of the
insurance policy.
C. The court ruled in favor of the bankruptcy trustee on the basis that the trustee made
first claim to the insurance proceeds and already had the proceeds in possession when
the creditor first claimed entitlement to them.
D. The court ruled that the creditor was entitled to the full insurance proceeds, without
consideration of the amount of the debt, on the basis that it had a secured interest.
E. The court ruled that the creditor was entitled to the proceeds of the insurance policy
up to the amount of the debt on the basis that it had a secured interest.
Which of the following applies to cases in which the defendant has violated a statute
enacted to prevent a certain type of harm from befalling a specific group to which the
plaintiff belongs?
A. Res ipsa loquitur.
B. Negligence per se.
C. Statutory shop act.
D. Comparative negligence.
E. Assumption of the risk.
Which of the following is true when an offer authorizes a certain mode of acceptance
but does not require it, and an offeree attempts to accept the offer through a method
other than the authorized means?
A. The acceptance becomes a counteroffer that the original offeror may or may not
accept.
B. There is no contract, and the attempted acceptance is of no effect.
C. There is a contract only if the acceptance is received by the time that acceptance
through the authorized means would have been received.
D. The contract is not formed until the acceptance is received by the offeror.
E. Authorizing but not requiring a certain type of acceptance has no effect, and the
mailbox rule applies.
Which of the following is true regarding the type of currency needed to satisfy the
currency requirement for negotiability in this country?
A. U.S. dollars is the only satisfactory currency
B. U.S. dollars or English pounds are the only satisfactory currency
C. U.S. dollars, English pounds, or Euros are the only satisfactory currency
D. U.S. dollars, English pounds, Euros, and Japanese yen are all satisfactory currency
E. U.S. dollars, English pounds, Euros, Japanese yen, and gold are all satisfactory
currency
“Consumer Debt.” Mona had not been keeping up with her spending and bought several
expensive items. She had numerous credit cards and some unsecured loans. She had a
total of 14 creditors. All her debt was consumer debt, and Mona really wished that she
had not put all those new clothes on her credit card. Although Mona was struggling, she
did not want to file for bankruptcy because she did not want a bad credit score. Three of
her credit card companies, however, who had unsecured claims against her totaling
$14,500, signed and filed an involuntary bankruptcy petition against her under Chapter
7. Mona is unsure about how to proceed. While she is several months behind on a
number of payments, including alimony payments she believes were unfairly awarded
to her ex-husband, she does not particularly want to go bankrupt. She believe that the
creditors have been unfair in not allowing her additional time in which to pay. On the
other hand, she would really like to be rid of her excessive debt and stop collection
efforts on the part of her ex-husband.
Which of the following is true regarding the claims of Mona’s ex-husband for alimony?
A. Any efforts to collect on the past due alimony are stayed by the bankruptcy
proceeding, and the claim for alimony is subject to discharge.
B. Any effort to collect on the past due alimony are stayed by the bankruptcy
proceeding, but alimony payments are nondischargeable.
C. Efforts to collect on past due alimony payments accrued prior to the filing of the
bankruptcy petition are stayed, but efforts to collect on alimony payments accruing after
the filing of the bankruptcy petition are not stayed; and alimony payments are
nondischargeable.
D. Efforts to collect on past due alimony payments accrued only after the filing of the
bankruptcy petition are stayed, but efforts to collect on alimony payments accrued
before the filing of the bankruptcy petition are not stayed; and alimony payments are
nondischargeable.
E. Legal action to collect alimony is not subject to the stay, and alimony payments are
nondischargeable.
Brandy, the president of ABC Communication., and Sam orally agreed that Sam would
work as a computer programmer for ABC Co. for a three-year period. Their oral
agreement also covered other matters such as his pay and the availability of one week
of paid vacation. On the day he talked with Brandy, Sam signed an employee handbook
including a provision that his employment was at will, meaning that at any time he
could quit or the company could discharge him. A month later, Sam received a
three-year contract for employment with ABC Co. in the mail incorporating the amount
of his salary and other issues he had discussed with Brandy. Sam signed it and mailed it
back, but he changed the vacation provision to three weeks instead of one week. Bobby,
the human resources manager for ABC Co., called Sam up after Bobby received the
agreement and told Sam that the contract was only a draft for discussion purposes and
that he was actually firing Sam because he seemed too focused on vacation. Assuming
the court follows the reasoning of the court in the dispute discussed in the text involving
Michael Gallagher and Medical Research Consultants, which of the following would be
the most likely result in the dispute between Sam and ABC Co. if Sam claims he had a
three-year contract of employment?
A. ABC Co. will win because even if a three-year oral agreement for employment was
made, it would not have been enforceable because the statute of frauds requires that
agreements that cannot be completed within one year be in writing. Further, the draft
Sam returned was not signed by ABC Co.
B. ABC Co. will win because although the three-year oral agreement for employment
was initially enforceable, Sam reopened negotiations by altering the later contract to
provide that he was to receive three weeks of vacation.
C. ABC Co. will win because as a matter of law, no other document can alter the
provisions of an employee handbook.
D. A jury will decide if Brandy orally agreed to a three-year contract; and, if so, Sam
gets his job back along with the extra weeks of vacation.
E. As a matter of law, since the contract was sent to Sam, he received a guarantee of
employment for three years; but he does not get the extra weeks of vacation he inserted.
Which of the following occurs when an aggressor gradually accumulates the target
company’s shares?
A. Controlled acquisition
B. Timed acquisition
C. Gradual acquisition
D. Beachhead acquisition
E. Pirate acquisition
Contract law is said to be based on a[n] ___________ theory, meaning that the
existence and interpretation of the contract is based on the outward manifestations of
intent by the parties.
A. Subjective
B. Objective
C. Interpretive
D. Appearing
E. Unilateral
Which of the following are less serious crimes punishable by fines or imprisonment of
less than one year?
A. Misdemeanor.
B. Felony.
C. Petty offenses.
D. Tort offenses.
E. Any business related crime.
A[n] ______ misrepresentation results from a false statement about a fact material to an
agreement that the person making the statement believed to be true.
A. Wrongful
B. Innocent
C. False
D. Misleading
E. Illegal
“Adult Floaters.” Bruce and Jimmy are both involved in businesses that manufacture
bathing suits for ladies with small personal flotation devices implanted to assist with
swimming. They both ship the suits to different states around the country. Bruce and
Jimmy get together and decide to raise their prices. They decide that since they are the
only two manufacturers of this type of suit, if they both stick together and raise prices to
an agreed upon amount, then consumers will be forced to pay that amount. They want
to make a lot of money before anyone else jumps into the market. A disgruntled
secretary of Bruce finds out about the agreement and sends out letters to consumers
revealing it.
In attempting to establish a violation of the Sherman Act, what type of trade violation
would the government most likely allege?
A. A vertical restraint
B. A horizontal restraint
C. A corresponding restriction
D. An agreed restriction
E. A rule-of-reason restriction
“Carpet Woes.” Beau went shopping at ABC Carpet. He saw some carpet he liked but
could not make up his mind. The manager at ABC Carpet wrote down the proposed
purchase price for him along with a statement that the price would be good for three
months. Two months later Beau went back to ABC Carpet to purchase the carpet.
Unfortunately, the price had gone up. Beau showed the manager his writing and
guaranteed price, but the manager said that the offer was no longer good. Although he
had to pay more than the ABC manager had initially promised, Beau proceeded to
purchase his carpet from XYZ carpet, and he also contracted with XYZ to do the
installation. Unfortunately, Beau almost immediately started to have problems with the
carpet. Beau told the sales manager for XYZ Carpet that he was planning on bring suit
for breach of warranty. The sales manager, however, told him that breach of warranty
provisions only applied to sales of goods and that the carpet purchase was for
installation, a service.
Which of the following is true regarding the enforceability of the offer made by the
manager at ABC Carpet?
A. ABC Carpet is not bound by the offer because Beau did not provide any
consideration.
B. ABC Carpet is bound by the offer, but only for a period of seven days.
C. ABC Carpet is bound by the offer, but only for a period of ten days.
D. ABC Carpet is bound by the offer only if Beau can establish reliance.
E. ABC Carpet was bound by the offer.
Which of the following is not a situation under which men and women may be paid
different wages under the Equal Pay Act?
A. When payment is made pursuant to a seniority system.
B. When payment is made pursuant to a merit system.
C. When payment is made pursuant to a system which measures earnings by quantity or
quality of production.
D. When the differential is based on any factor other than sex.
E. When the parties sign a waiver.
Which of the following is a type of contract that falls within the scope of the statute of
frauds?
A. Contracts whose terms prevent possible performance within one year
B. Contracts involving the provision of services
C. Contracts involving the provision of any goods
D. Contracts involving any debt
E. Contracts involving services in relation to computer equipment
A seller engages in _______ when it sells the same goods to competing buyers for
different prices.
A. Price gouging
B. Price discrimination
C. Predatory pricing
D. Discriminatory pricing
E. Competitive pricing