“Big Spender.” Wally was a partner in XYZ law firm. He decided to withdraw from the
partnership because he wanted to retire early somewhere in the Caribbean. The
partnership agreement of XYZ law firm did not specify the objective or duration of the
partnership. Although Wally gave proper notice, the other partners claimed that he had
no right to withdraw. Wally was angry and decided to get even. Two days after he
withdrew and before the partnership had provided notification to any suppliers of his
departure, Wally went to the office supply store at which he typically purchased
supplies on account for the firm. He purchased several cameras, a computer, and other
items which he placed on the firm account. Wally just smiled when Sam, the manager at
the store, told Wally that he really appreciated the law firm’s business. The next day
Wally headed for the Caribbean and cannot be located. Sam later requests that XYZ
firm pay the bill for Wally’s purchases. The law firm, whose members had decided to
continue the partnership after the dissolution resulting from Wally’s resignation, refused
on the basis that Wally had no authority to make the purchases. Sam says that he did not
know that and that he expects to be paid immediately.
Which of the following is true regarding whether Wally had actual authority to bind the
partnership in regard to his purchases at the office supply store?
A. Wally did not have actual authority to bind the partnership.
B. Wally had actual authority to bind the partnership because the law firm had not
notified anyone at the office supply that he was no longer authorized to make purchases
for the law firm.
C. Wally had actual authority to bind the partnership so long as the purchases were
made within seven days of his resignation.
D. Wally had actual authority to bind the partnership so long as the purchases were
made within ten days of his resignation.
E. Wally had actual authority to bind the partnership only if he cannot be found within
one year of the date the purchases were made.
Which of the following is not a type of bond that a corporation may issue?
A. Unsecured
B. Secured
C. Equity
D. Convertible
E. Income
Which of the following created the Securities and Exchange Commission?
A. The Securities Act of 1933
B. The Securities Exchange Act of 1934
C. The Exchange Commission Act of 1932
D. The Oversight Act of 1935
E. The Stock and Bond Act of 1930
Which of the following owns a corporation?
A. Directors
B. Officers
C. Shareholders
D. Affiliates
E. The State
As discussed in the text, which of the following is true regarding Japanese law and
consumers?
A. A special Consumer Contracts Law was developed to place consumers and
businesses on a more equal footing in transactions.
B. The Civil Code has more lax requirements regarding fraud than the country’s
Consumer Contracts law.
C. The goal in regard to consumers is to form the law so that in litigation businesses are
at a distinct disadvantage in regard to consumers.
D. In order to encourage economic advancement and international investment, the goal
is to form the law so that in litigation consumers are at a distinct disadvantage in
comparison to businesses.
E. Japanese law does not recognize rights of consumers as the buyer must beware.
As a general rule, the ________ intent of the parties is not relevant when determining
whether a contract exists; rather, what is relevant is how they represented their intent
through their actions and words.
A. Objective
B. Subjective
C. Unilateral
D. Comprehensive
E. Considered
Which of the following governs consumer fund transactions in electronic fund
transfers?
A. The Electronic Fund Transfer Act of 1978.
B. The Automated Transfer Act of 1990.
C. The Electronic Banking Act of 2000.
D. The Automated Fund Transfer Regulation of 2002.
E. The Uniform Money Services Business Act of 1990.
Which of the following was the result in regard to the statute of limitations in the Case
Opener in which the plaintiff claimed that the drug Accutane caused her to develop
ulcerative colitis and irritable bowel syndrome?
A. That because the plaintiff was not warned by her doctor of specific risks caused by
the medication, the statute of limitations did not begin to run until she became aware of
an advertisement discussing the risk.
B. That because the plaintiff was warned by her doctor of specific risks caused by the
medication, the statute of limitations began to run prior to the time she became aware of
an advertisement discussing the risk; and the statute of limitations barred her claim.
C. That the statute of limitations began to run on the plaintiff’s claim when the risk of
the drug was discovered by the manufacturer, not on the date on which the plaintiff
became aware of the risk and that the statute of limitations, therefore, barred her claim.
D. That in lawsuits involving this type of drug, there is no statute of limitations because
each day the plaintiff suffers from pain results in the beginning of a new cause of
action.
E. That the defendant committed fraud preventing it from relying on the statute of
limitations.
“Inattentive Driving.” Molly, a first year law student, decided to skip class and drive off
campus to check on her new dress for the upcoming school dance. While driving, Molly
is busy talking on her cell phone with her friend Sharon to convince her to going to the
dance with Molly’s brother who has a big crush on Sharon. Unfortunately for Molly,
there is a statute in her state outlawing talking on a cell phone while operating a motor
vehicle. Molly crashes into the side of Sam’s new convertible when she looks down to
pick up a can of soda she just dropped onto her new jeans. A police officer just down
the street comes over to investigate. Molly explains to him that it was difficult to hold
the cell phone in one hand, the soda in the other, and also drive. The officer was not
impressed. Around that time Sam comes along. He is furious regarding the significant
dent in his new car. Molly says she has insurance and that she will cover the whole
incident. Sam says that is insufficient; but Molly says that under case precedent, that is
his only remedy. The officer is annoyed because it is his lunch break. He tells Molly
that she must obey duly authorized law, and proceeds to write several citations to
her.The officer’s reference to the need for Molly to obey duly authorized law is a
reference to which of the following?
A. The historical school of law
B. Legal positivism
C. Natural law
D. Legal realism
E. Stare decisis
“Stolen Bicycle.” Donnie borrowed the bicycle of his friend Karen. She told him that
she was happy for him to use it for free, but she would appreciate him taking good care
of it. Donnie said nothing in reply. Although Donnie lived in a high crime
neighborhood, he left the bicycle unlocked on his deck. The next morning, he
discovered that the bicycle had been stolen. Donnie told Karen that he was very sorry
about the bicycle. Karen told him that she expected him to pay for it. Donnie refused on
the basis that a thief took the bicycle. Donnie told Karen that he believes he knows the
identity of the thief and that since only Karen has the right to sue to recover the
property, he has no further responsibility.
Which of the following is true regarding Donnie’s statements that he owes Karen
nothing and that only Karen has the right to take legal action against the thief?
A. He is correct.
B. He is correct that he has no liability to Karen, but incorrect that only Karen may take
legal action against the thief.
C. He is incorrect that he has no liability to Karen, but correct that only Karen may take
legal action against the thief.
D. Only if he can identify the thief beyond a reasonable doubt is he correct that he has
no further duties to Karen because only Karen has the right to take legal action against
the thief at that point.
E. He is incorrect because he has the right to take legal action against the thief, and
Donnie’s conduct indicates that he has legal liability to Karen.
Which of the following terms is used when a partner dissolves a partnership in violation
of the partnership agreement?
A. Wrongful termination
B. Untimely termination
C. Wrongful dissolution
D. Prohibited termination
E. Prohibited dissolution
The ________ standard is a measurement of the way members of society expect an
individual to act in a given situation.
A. Reasonable person
B. Above-average person
C. Without error
D. Perfect accountability
E. Reasonable accountability
Case law can be revoked by ______.
A. New statutes
B. Precedent
C. Stare decisis
D. Critical law
E. Case law cannot be revoked
Which of the following is true regarding the duty that a business owes to customers?
A. A business owes no duty to its customers other than to sell safe products.
B. A business owes an absolute duty to keep its customers safe and is strictly liable for
any harm.
C. A business only owes a minimal duty toward customers.
D. A business owes a negligence per se duty toward customers.
E. A business has a duty of care to protect their customers against foreseeable risks
about which the owner knew or reasonably should have known.
An easement or profit is ______ when it is not dependent on owning property adjacent
to the land on which the nonpossessory interest exists.
A. Express
B. Adjoining
C. In gross
D. Appurtenant
E. Prevailing
Bob sued Jane over a motor vehicle accident. Bob and Jane settled the case prior to the
trial for $1,000. The lawsuit is now ______.
A. Ripe
B. Moot
C. Cased
D. Standard
E. Remanded
Which of the following is a meeting of all creditors listed in the Chapter 7 required
schedules for liquidation?
A. A debt meeting
B. A control meeting
C. A creditors’ meeting
D. An enforcement meeting
E. A counseling meeting
Which of the following is false regarding a limited liability company?
A. A limited liability company is similar to a limited partnership insofar as the limited
partner and the limited liability company member have limited liability dependent on
the investment he or she makes.
B. A limited liability company is similar to a limited partnership in regards to receiving
the tax breaks that are often afforded to those in a partnership.
C. In a limited liability company, each member gets a say in the management of the
company, whereas in a limited partnership, only the general partners get to make
management decisions.
D. Limited liability companies are a relatively new form of business.
E. The Uniform Limited Liability Company Act has been accepted by a majority of the
states.
Which of the following are considered infants under the law in regards to criminal
activity?
A. Any child five and under.
B. Any child ten and under.
C. Any child twelve and under.
D. Any child sixteen and under.
E. Any person under the age of majority.
Executive agencies tend to focus on ______ regulation whereas independent agencies
are more often focused ______ regulation.
A. Social; economic
B. Political; safety
C. Social; political
D. Safety; social
E. Economic; safety
_____ principle requires that World Trade Organization member states treat like goods
coming from other World Trade Organization member states on an equal basis.
A. The normal trade relations
B. The like treatment
C. The quantitative restrictions
D. The nondiscriminatory
E. The fairness
A merger between two or more companies producing the same or similar products is a
______ merger.
A. Horizontal
B. Vertical
C. Conglomerate
D. Joining
E. Predatory
Which of the following references a profit made by a statutory insider from the
purchase and sale of their own company stock within a six-month period?
A. Short-swing profits
B. Short-term profits
C. Insider profits
D. Insider profiting profits
E. Contempt profits
Signatories to ______ agree to accept wills of other signatories for probate, as to
matters of form, if such wills are executed with the provisions of the convention.
A. The Convention on Uniform Wills
B. The Convention Providing for a Uniform Law on the Form of an International Will
C. The Convention on Uniform Wills and Trusts
D. The Convention Approving Uniformity on the Form of International Wills and Trusts
E. The Convention for Recognition of Foreign Wills
Which of the following was the result in the case in the text, Novamedix Limited v.
NDM Acquisition Corporation and Vesta Healthcare Inc., in which the plaintiff claimed
that a settlement agreement was a contract for the sale of goods breached by the
defendant because a type of medical slipper involved in the settlement agreement could
not be resold?
A. That the transaction would not be treated as a contract for the sale of goods because
the predominant purpose of the settlement agreement was to settle a patent infringement
lawsuit.
B. That the transaction would not be treated as a contract for the sale of goods because
it was a mixed type of transaction.
C. That the transaction would not be treated as a contract for the sale of goods because
of the involvement of medical treatment issues.
D. That the transaction would be treated as a contract for the sale of goods because the
essential nature of the agreement was the exchange of slippers for the release of a legal
right.
E. That the transaction would be treated as a contract for the sale of goods because it
was a mixed type of transaction.
Which of the following is a term for a person who contracts with another to do
something for the other person, but is not controlled by the other nor subject to the
other’s right to control with respect to his physical conduct in the performance of the
undertaking?
A. An employee
B. An independent contractor
C. An authorized contractor
D. A task-specific contractor
E. A partial contractor
Which of the following is the secretive and wrongful taking and carrying away of the
personal property of another with the intent to permanently deprive the rightful owner
of its use or possession?
A. Robbery
B. White-collar burglary
C. Larceny
D. Arson
E. Criminal fraud
Which of the following permits qualified issuers to register securities that they will sell
on a delayed or continuous basis in the future?
A. Delayed registrations
B. Continuous registrations
C. Approved registrations
D. Shelf registrations
E. Acknowledged filings
What does the term “parol” in the “parol evidence rule” mean?
A. Words establishing penalties
B. Speech or words, specifically words outside the original writing
C. Oral speech as opposed to written words
D. Written words as opposed to oral speech
E. Signature required
A(n) ______ is a transaction in which the payment of a debt is guaranteed by personal
property owned by the debtor.
A. Approved transfer
B. Approved guarantee
C. Secured transaction
D. Effected transaction
E. Guaranteed debt
Contracts that are drafted so that one person’s obligations under the contract do not arise
until the happening of a certain event are called ______ contracts.
A. Invalid
B. Conditional
C. Preventable
D. Temporary
E. Convertible
The court may grant a ______ if after reviewing the pleadings, the judge determines
that the only reasonable decision is in favor of the moving party.
A. Motion for judgment on the pleadings
B. Motion for summary judgment
C. Motion for sanctions
D. Motion for discovery
E. Motion for production
Which of the following is false regarding Chapter 12 of the bankruptcy code?
A. A family farmer under Chapter 12 must have regular annual income.
B. The family farmer’s gross income must be at least 50 percent farm-dependent.
C. At least 50 percent of the family farmer’s debt must be farm-related.
D. The debt must be under a certain debt cap.
E. Congress modeled Chapter 12 after Chapter 7 relief.
How are directors typically chosen after the incorporation process?
A. By majority vote of the shareholders.
B. By majority vote of all officers.
C. By a two-thirds vote of shareholders.
D. The president appoints them in his or her discretion.
E. By a unanimous vote of the shareholders.