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The obligation to use reasonable efforts to minimize damage resulting from a breach is
referred as the duty to ______ one's damages.
A. Reduce
B. Remit
C. Reform
D. Mitigate
E. Migrate
Which of the following did Congress pass in an effort to prevent exploitation of small
investors?
A. The Investment Company Act of 1940
B. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990
C. The Market Reform Act of 1990
D. The Securities Act Amendments of 1990
E. The National Securities Market Improvement Act of 1996
"Disappointing Boat Purchase." Sally went to purchase a new boat. She wanted a boat
that she could use in both a nearby lake and also a boat that she could take to the coast
for use in ocean waters. Sally saw a boat that she liked and told the sales representative
at the dealership that she wanted a boat for both lake usage and ocean usage. She told
the sales representative that she particularly liked a boat that they were looking at in the
showroom. The representative told her that the dealership had the best boats in the state,
that the engine was great in the boat she liked, and that she would have no problem with
steering or with the carburetor. He said nothing at all regarding whether or not the boat
was appropriate for ocean waters. Sally purchased the boat. She immediately began to
have significant problems with it. The engine did not perform adequately, and there
were problems with the steering and carburetor among other things. Additionally, after
Sally attempted to take the boat out into ocean waters and had significant difficulty, she
discovered that it was not an ocean-going vessel. It was only appropriate for lake usage.
Which of the following is true regarding the representation of the sales representative
that the boats at the dealership were the best in the state?
A. The statement constituted an express warranty but not any other type of warranty.
B. The statement constituted a warranty of merchantability but not any other type of
warranty.
C. The statement constituted an implied warranty of fitness for a particular purpose but
not any other type of warranty.
D. The statement was opinion and did not establish any type of warranty.
E. The statement established both a warranty of merchantability and a warranty of
fitness for a particular purpose, but not any other type of warranty.
Which of the following type of liability establishes that the party must pay the amount
due on the instrument if the primarily liable party defaults?
A. A party who has transfer liability.
B. A party who has acceptor liability.
C. A party who has maker liability.
D. A party who has secondary liability.
E. A party who has recognition liability.
Which of the following is true in the event an instrument contains more than one
endorsement?
A. Each endorser is liable for the full amount to the subsequent endorser or to the
holder.
B. Only the last endorser is liable to the holder and no prior endorsers are liable to a
subsequent endorser.
C. Each endorser is liable for the full amount to the subsequent endorser, but only the
last endorser is liable to any holder.
D. The last endorser is liable to the holder, whereas subsequent endorsers are not liable
to the holder, but are responsible for reimbursing the last endorser in proportion to the
number of endorsers that exist.
E. Each endorser is liable to the holder in proportion to the number of endorsers that
exist.
When was the Magnuson-Moss Act passed?
A. 1950
B. 1955
C. 1970
D. 1975
E. 2000
In the law, when both parties are equally responsible for an illegal agreement, it is
known as ____.
A. In pari delicto
B. Procedurally unconscionable
C. An adhesion contract
D. A res ipsa contract
E. A stare decisis contract
"Grooming Losses." Wally, Beverly, and Matthew formed a partnership to groom dogs.
Because they were good friends and anticipated making a profit sufficient to
compensate all partners well, the articles of partnership did not allocate profit or losses.
Beverly was appointed managing partner. Unfortunately, the business did not go as well
as expected and the partnership incurred some losses. Matthew claimed that he should
not have to share in losses because he had groomed more dogs than anyone. Matthew
also claimed that although the partnership did not reference compensation for additional
duties, he was entitled to compensation because of his excessive work. Beverly claimed
that she should not have to share in losses because she contributed more capital than did
either of the others. Wally claimed that he should not have to cover the losses because
both Beverly and Matthew had been hiding the books from him. He demanded to
inspect the books and also to review a listing of all partnership assets and profit
statements listing distributions to partners. Beverly and Matthew denied that they had
been hiding the books and claimed complete innocence of any wrongdoing.
Is Wally entitled to a review of all partnership assets and profit statements listing the
distributions to partners?
A. Yes because partners are always entitled to an accounting.
B. Only if he can establish that one of the other partners failed to disclose a profit or
benefit earned from the partnership.
C. If he can establish that a review would be just and reasonable.
D. No, because he had not been appointed the managing partner.
E. Only if he can prove probably that one of the partners committed fraud against the
partnership.
Which of the following is an independent agency?
A. The Federal Deposit Insurance Corporation
B. The Consumer Product Safety Commission
C. The General Services Administration
D. The Small Business Administration
E. The Office of Personnel Management
"The Burial Emporium." Fred operates a funeral home called Fred's Burial Emporium.
Fred likes to keep things simple. He generally has one flat price with no itemization and
requires that customers purchase a complete package from him if they want any
services whatsoever. Fred also goes door-to-door selling funeral packages. He tries to
visit neighborhoods in which there has been a recent death because residents in the
neighborhood will have final arrangements on their minds. He believes and informs
customers that once customers sign a contract for burial services, there is no backing
out. Fred also obtains a good deal of business from phone solicitation. He enjoys calling
late at night, between 10 p.m. and 11 p.m., when people are tired, but before they go to
bed. He believes that if people do not feel well, they are more likely to consider funeral
arrangements. Sometimes, Fred varies his sales tactic and tells consumers he talks to on
the phone aspects of the total cost in small increments, not mentioning the total price,
believing that if they are tired, they are less likely to ask too many questions. After
some pesky consumer complaints, the Federal Trade Commission and other federal
agencies investigate Fred. He hires a good lawyer with his profits in an attempt to stay
out of trouble.
Which of the following is true regarding Fred's practice of telling potential customers
on the telephone costs in small increments without revealing the total price?
A. Under federal law there is no problem with his practice because any consumer who
does not want to talk to him can simply hang up.
B. According to a rule of the Federal Trade Commission, a telemarketer must tell the
total price of goods being sold.
C. According to a rule of the Federal Trade Commission, a telemarketer must only give
the total price if the consumer directly inquires about that matter. Therefore, it is smart
for Fred to call when people are tired and less likely to ask questions.
D. According to a rule of the Federal Trade Commission rule that is specific to funeral
home directors, direct phone solicitation may not be made; therefore, Fred is in
violation.
E. According to a rule of the Federal Trade Commission that is specific to funeral home
directors, direct phone solicitation must include the total price of any services offered;
therefore, Fred is in violation.
Which of the following is true regarding whether a seller must provide a warranty under
the Magnuson-Moss Act?
A. A seller must provide an express, full warranty.
B. A seller must provide an implied, full warranty.
C. A seller must provide at least an express, limited warranty.
D. A seller must provide at least an implied, limited warranty.
E. The act does not require that the seller provide any warranties.
"Thermal Imaging." Sam was engaged in the criminal activity of growing marijuana in
his home using heat lamps in the process. The police randomly selected his street to
search for illegal activity. Without any kind of a warrant, they used a thermal imager, an
instrument that detects heat emissions, to determine that he was possibly engaged in
illegal activity. The police immediately broke down Sam's door, searched his home, and
arrested him. The police officer in charge told Sam that he had no right to keep silent
and that he might as well confess. Sam proceeded to confess to growing marijuana and
a number of other crimes. The judge was so angry with Sam that he threw him in jail
for two months without any kind of hearing. Sam's lawyer, who just graduated from law
school, is not sure if the police acted legally in Sam's case by using the thermal imager.
Sam's lawyer also questions whether Sam had a right to remain silent, and he is
concerned that the judge has not granted Sam a hearing.
Which of the following references rights Sam had in regard to a hearing?
A. Sam's right to substantive due process.
B. Sam's First Amendment rights.
C. Sam's right to procedural due process.
D. Sam's Fourth Amendment rights.
E. Sam's Second Amendment rights.
Joan comes to Mike's law office to ask him about the law in regard to dogs running at
large in her neighborhood. Mike tells Joan that he will research the issue and get back
with her. Where should Mike look first in order to locate applicable law?
A. Restatements
B. State statutes
C. Case law
D. The state constitution
E. Executive orders
The person who makes an offer is called a[n] ___________.
A. Offeree
B. Offeror
C. Agreeor
D. Agree
E. Inquirer
"Hot Toaster." Rebecca bought a toaster from Super Store and brought it home. A friend
of hers, Greg, was at her house making toast. The toaster malfunctioned and shocked
Greg resulting in a small burn to his hand requiring medical attention. At a garage sale,
Rebecca also purchased a blender from a friend, Samantha, a nurse, with the intention
of making smoothies. Unfortunately, the blender was not powerful enough to make
smoothies. Assume that not all blenders are designed to provide the texture required for
good smoothies.
Based only on the facts presented, what type of warranty did Super Store give Rebecca
upon the sale?
A. An express warranty
B. An implied warranty of merchantability
C. An implied warranty of fitness for a particular purpose
D. An acknowledged warranty
E. A warranty of trade usage
"Refused Furniture." Selina arranges to sell furniture from her furniture store to Roland
for $3,000. Roland was supposed to give Selina a $500 deposit on February 1 and pay
the remainder in monthly installments. Selina was to deliver the furniture by February
7. Roland did not pay Selina as promised on February 1. He asked her to wait until
March 1, but she refused. She told him that the contract was canceled, and she refused
to deliver the furniture at all. Selina was able to sell the furniture for only $2,500
because of a downturn in the economy. Roland told Selina that she had no right to
withhold or sell his furniture and that he was suing. Selina also incurred $100 in
additional amounts in advertising costs to advertise the furniture that Roland initially
purchased. Selina saved $40 in delivery costs because she did not have to deliver the
furniture to Roland. The subsequent purchaser picked up her own furniture.
Which of the following is true regarding any deduction in damages to which Roland is
entitled?
A. Roland is not entitled to any deduction because he was the breaching party.
B. Roland is entitled to a deduction for the delivery expenses only if he can show that
Selina agreed in writing to deduct those in the event of a breach.
C. Roland is entitled to a deduction for the delivery expenses only if he can establish
that Selina either knew or should have known that he would be unable to pay for the
furniture.
D. Roland is entitled to a deduction for the delivery expenses because that was a
savings to Selina.
E. Roland is entitled to a deduction for the delivery expenses because Selina breached
the contract by not delivering the furniture to him and then pursuing an action for
damages.
Which of the following person orders the drawee to pay?
A. Maker
B. Acceptor
C. Drawer
D. Endorser
E. Promisor
When parties form an agency relationship by making a written or oral agreement, the
agency is known as a[n] ____.
A. Expressed agency
B. Implied agency
C. Apparent agency
D. Ratification
E. Endorsement
Which of the following was the result in Ackerman v. Sobol Family Partnership, LLP
the case in the text involving whether the plaintiffs were bound by representations of
their attorney regarding settlement that they had not approved?
A. That the agreement entered into by plaintiffs' attorney would not be enforced
because the plaintiffs had not lead the opposing defense attorneys reasonably to believe
that the plaintiffs' attorney had full and final authority to settle the litigation.
B. That the agreement entered into by plaintiffs' attorney would not be enforced because
the plaintiffs had not signed it.
C. That the agreement entered into by plaintiffs' attorney would not be enforced because
the plaintiffs had not given the attorney express authority to enter into the agreement.
D. That the agreement would be enforced because the plaintiffs' attorney had express
authority to enter into the agreement.
E. That the agreement would be enforced because the plaintiffs' attorney had apparent
authority to enter into the agreement.
Although some states allow for longer terms under certain circumstances, for how long
do directors typically serve?
A. Three years
B. Two years
C. One year
D. Four years
E. Five years
Which of the following is not necessarily a means may an agency relationship be
terminated?
A. Fulfillment of purpose
B. Occurrence of a specific event
C. Revocation of authority
D. Insolvency of the principal
E. Renunciation by the agent
"Hot Toaster." Rebecca bought a toaster from Super Store and brought it home. A friend
of hers, Greg, was at her house making toast. The toaster malfunctioned and shocked
Greg resulting in a small burn to his hand requiring medical attention. At a garage sale,
Rebecca also purchased a blender from a friend, Samantha, a nurse, with the intention
of making smoothies. Unfortunately, the blender was not powerful enough to make
smoothies. Assume that not all blenders are designed to provide the texture required for
good smoothies.
Under the UCC which of the following rights, if any, does Greg have in most states
against Super Store?
A. None because he did not buy the toaster.
B. None because he has no privity.
C. None because he was not married to Rebecca.
D. He may sue but only if Rebecca joins in the suit with him.
E. He likely has a right to sue.
Which of the following chapters is used as a reorganization of the debtor's financial
affairs under supervision of the bankruptcy court?
A. Chapter 7
B. Chapter 9
C. Chapter 11
D. Chapter 14
E. Chapter 15
"Exemptions." Sidney is injured in an automobile accident and cannot work. She cannot
pay her bills and files for bankruptcy relief under Chapter 7. Federal exemptions apply,
and she lists as exempt $25,000 in equity in her residence; interest in a vehicle of
$2,000; interest in jewelry of $400; and retirement funds in her individual retirement
account. Her creditors filed an objection to all claimed exemptions except for the home
equity claim.
What is the status of the exemptions she claimed in the car and jewelry?
A. Both exemptions will likely be granted because their type and value are within
allowable federal exemptions.
B. The exemption claimed for the jewelry will likely be granted; but in order to
ascertain the status of the vehicle, further information is needed in regard to whether it
is used in business.
C. The exemption claimed for the vehicle will likely be granted, but the exemption
claimed for the jewelry will likely be disallowed because no exemption may be claimed
for jewelry.
D. The exemption claimed for the vehicle will likely be granted, but the exemption
claimed for the jewelry will likely be disallowed because a federal exemption may only
be claimed for jewelry consisting of a wedding band worth less than $400.
E. The exemption claimed or the jewelry will likely be allowed, but the exemption
claimed for the vehicle will likely be denied because the federal exemption for a vehicle
is limited to $1,000.
Which of the following is true regarding whether the shape of a product or package may
be a trademark?
A. The shape of a product may be a trademark if it is nonfunctional but the shape of a
package may not be a trademark.
B. The shape of a product may be a trademark if it is functional but the shape of a
package may not be a trademark.
C. The shape of a product or package may be a trademark if it is functional.
D. The shape of a product or package may be a trademark if it is nonfunctional.
E. The shape of a package may be a trademark if it is nonfunctional, but the shape of a
product may not be a trademark.
What key piece of information does an aggressor generally need in order to gain control
of a target corporation through proxies?
A. A list of target shareholders
B. A list of target officers
C. A list of members of the board of directors of the target
D. The income statements of the target
E. The balance sheet of the target
Which of the following is true regarding the duty of care, if any, that one partner owes
to another?
A. The duty of care is not involved in the law of partnership.
B. The duty of care is owed by each partner to the partnership itself, but partners do not
owe a duty of care among themselves.
C. Partners owe a duty of care among themselves, but only in regard to transactions
involving over $5,000.
D. While partners owe a duty of care to each other, a partner who makes an honest
mistake in fulfilling responsibilities to the partnership will not be held liable for the
mistake.
E. Partners owe a duty of care to each other, and a partner is liable to other partners on a
strict liability basis for any mistakes or errors made.
Parties not in ______ usually do not have rights to a contract.
A. Acknowledged contract
B. Diverse contract
C. Privity of contract
D. Close contract
E. Privileged contract
"Blow up." Jeanie is hauling gas in the back of her pick-up truck for her personal
watercraft. She is planning a lake party and thinks she will need a lot of it. On the way
home, Jeanie stops at the automatic teller machine at her bank and exits her car. Holly
pulls behind her and negligently rear-ends Jeanie's pick-up. The truck explodes and
results in the bank building burning to the ground. The bank sues Holly for negligence
claiming that Holly should have to pay for the entire bank building. The bank claimed
that it should be able to recover under the res ipsa loquitur doctrine.
Which of the following is true regarding the bank's claim that it should be able to
recover under the res ipsa loquitur doctrine?
A. The bank is correct because under that doctrine defendants are liable for any harm
caused.
B. The bank is correct only if Holly has sufficient insurance to cover the bank burning.
C. The bank is correct only if it can be established that Holly was a repeat driving
offender.
D. The bank is incorrect because the issue here is causation, not whether there was a
lack of due care.
E. The bank is incorrect because res ipsa loquitur is a defense.
Once a trademark is registered today, when must it be renewed for the first time?
A. Between the first and second year.
B. Between the second and third year.
C. Between the third and fourth year.
D. Between the fourth and fifth year.
E. Between the fifth and sixth year.
Which of the following, if any, references regulations passed primarily on health
considerations with the assumption that once standards have been established,
industries will be forced to develop the technology to meet the standards?
A. Technology-driven
B. Technology forcing
C. Application assuming
D. Invention dependant
E. There are no regulations passed without known technology to implement them
because such regulations would be unconstitutional.
If a surety or guarantor pays the debtor's obligation to the creditor, the surety or
guarantor has a right to ______, which means that the surety or guarantor is entitled to
all the rights that the creditor had against the debtor.
A. Subrogation
B. Reimbursement
C. Contribution
D. Recoupment
E. Securement
In regard to developing countries which of the following is not true regarding offshore
partnerships?
A. They combine the strengths of firms that operate in developing countries and firms
that operate in countries that are foreign to the developing countries.
B. Firms in developing countries use offshore partnerships to gain international
exposure.
C. Firms in developing countries use offshore partnerships to gain technological
competence.
D. Foreign firms use offshore partnerships to gain the opportunity to enter developing
markets.
E. Offshore partnerships are rarely used for workers because workers from offshore
partnerships tend to be highly priced.
