Trade dress refers to the overall appearance and image of a product and, is entitled to
the same protection as a trademark.
In general, secured parties have priority over unsecured creditors.
For fraudulent misrepresentation to be the basis for a contract rescission, the statement
must involve a material fact intended to mislead the other party.
An exception to the parol evidence rule occurs if a contract’s terms require that
modification be in writing.
Ethics is the study and practice of decisions about what is good or right.
Under UCC Sections 250 and 2A-513, the right to cure refers to the obligation to fix
errors in a contractual agreement, such as typographical errors.
For Free On Board (FOB) and Free Alongside (FAS) the seller carries the risk of loss to
the place of destination.
In strict liability crimes, no mens rea is required.
The rule of promissory estoppel requires consideration for all bilateral contracts to be
enforceable.
Workers’ compensation laws are primarily federal laws.
If a debtor fails to appear at the Chapter 7 creditors’ meeting, the court may refuse to
grant the bankruptcy.
Under ordinary circumstances, a party’s duty to perform the promise agreed to in a
contract is absolute.
If you sign your mother’s name to a check made out to her, you may have committed
forgery.
Officers of a corporation are hired by the shareholders.
Agency relationships must be created by expressed agreement.
Same-sex harassment is not covered by the Civil Rights Act.
Computer crimes are a relatively new kind of crime.
When copyright is at issue, proof that an item is similar is not necessarily infringement.
Agents may have contract remedies available against principals, but not tort remedies.
Directors can be removed from their positions for cause, which is failing to perform a
required duty.
Bait-and-switch advertising is when sellers advertise a low price for an item generally
unavailable to the consumer and then push the consumer to buy a more expensive item.
Consolidations today are rare.
A power of attorney is a document that gives an agent authority to sign legal documents
on behalf of the principal.
The defendant responds to a complaint with an answer.
Actual notice of agency termination may never be given orally.
For purposes of determining capacity, intoxicated persons include those under the
influence of alcohol, but not drugs.
A patent grants the holder exclusive rights for 40 years.
Duress is found when one party was forced into an agreement by the wrongful act of
another.
The head of a federal executive agency may be discharged by the president for any
reason.
Shareholders of a corporation can freely transfer their corporate shares.
The term ‘stare decisis” means “reversing the decision.”
The purpose of holder-in-due-course status is to protect the seller of goods under the
UCC.
Federal laws outlaw the manufacturing of products, which are potentially harmful.
If someone forgets to write the date on a check, the UCC allows the holder to complete
the check by writing the date as long as it is consistent with the intent of the writer.
Tender of delivery is the moment goods are picked up by the buyer.
If the worker is a regular part of the business of the employer and is paid in regular
payments according to time, that worker can be classified as an independent contractor.
Laws comparing and studying the laws in different countries is known as comparative
law.
Defense of property is a defense to the offense of battery only if the property involved
had a value of over $1,000.
Traditionally, if Sam, who is 17 years old, purchases a television from a store, signs a
11-month contract, and then drops it on the way home, Sam could return the television
and be entitled to the return of his down payment.
Which form of business organization generally provides unlimited transferability of
ownership interests?
A. Corporations
B. General partnerships
C. Limited partnerships
D. Sole proprietorships
E. Limited liability companies
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 percent 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 is acceptable in the name of a corporation to signify that the
business is a corporation?
A. Company
B. Corporation
C. Inc.
D. Company, Corporation, and Inc.
E. Company and limited, but not Inc.
Roofing Issues. Sally agrees to roof a house for Bob. After doing his research, Bob
chooses Sally based on her great reputation for being conscientious and doing good
work. Bob knows little about roofing and stays away from all the noise involved. Sally
provides her own tools for herself and other workers, sets her own schedule, and
charges a flat rate of $10,000 to be paid when the job is completed. Sally hires Trudy,
Glen, and Fred to help with the roofing. She pays them an hourly rate, supervises their
work, provides them with tools and materials, and sets their schedules. Curious about
what is going on there, Bob’s friend Spencer walks by the house while the roofing is
being done. Glen absent-mindedly throws some old shingles off the roof and hits
Spencer in the head resulting in him going to the local emergency room and receiving a
couple of stitches in his scalp. Spencer decides to sue all the roofers and also Bob and
Sally for his hospital expenses and for pain and suffering. Assuming Glen was
negligent, which of the following is the most likely result in a lawsuit against Bob
brought by Spencer?
A. Spencer will win because as the property owner, Bob is liable for any negligence
occurring there.
B. Spencer will win because Sally is Bob’s employee and Sally, therefore, is liable for
the negligent acts of anyone working for her.
C. Spencer will win because Sally is an independent contractor for Bob and Sally,
therefore, is liable for the negligent acts of anyone working for her.
D. Spencer will lose because Glen is an employee of Sally who is an independent
contractor for Bob.
E. Spencer will win only if it can be established that both Glen and Sally are insolvent
and unable to pay any judgment.
_______________ has/have a fixed face value noted on the stock certificate.
A. No-par value shares
B. Par-value shares
C. Watered stock
D. Valued stock
E. No-valued stock
A _____ is a computer program that rearranges, damages, destroys, or replaces
computer data.
A. poison pill
B. tracker
C. drone
D. clone
E. virus
In 2011, Tyson Foods was charged with conspiracy and violation of the Foreign Corrupt
Practice Act for:
A. Selling mislabeled chicken parts to Canada
B. Bribing Mexican officials
C. Trademark infringement
D. Environmental violations
E. Securities fraud
Which of the following has the power to create a federal agency?
A. The House of Representatives
B. The Senate
C. Congress
D. The President
E. The Administrative Regulatory Agency
Which of the following was the ruling by a majority of the U.S. Supreme Court in Food
and Drug Administration Et Al. v. Brown & Williamson Tobacco Corporation Et Al., the
case in the text involving whether the Food and Drug Administration has jurisdiction to
regulate tobacco products?
A. That the Food and Drug Administration has jurisdiction over tobacco products.
B. That the Food and Drug Administration has jurisdiction over tobacco products only
to the extent that any advertisement may be directed to children.
C. That the Food and Drug Administration has jurisdiction over tobacco products only
to the extent that it may regulate warnings on packages of tobacco products.
D. That the Food and Drug Administration does not have jurisdiction over tobacco
products.
E. That the Food and Drug Administration does not have jurisdiction over tobacco
products unless deceptive advertising is involved.
A certificate of deposit is a ______ of the bank.
A. note
B. draft
C. novation
D. check
E. promissory contract
In United States v. Park, was this corporate executive defendant held criminally liable
for failing to ensure the company’s compliance with the law?
A. That the defendant could not be held liable because it could not be proven beyond a
reasonable doubt that he knew warehouse employees were failing to take proper steps
to ensure sanitary conditions.
B. That the defendant could not be held liable because it could not be proven by a
preponderance of the evidence that he knew warehouse employees were failing to take
proper steps to ensure sanitary conditions.
C. That the defendant could not be held liable because he did not personally cause the
contamination.
D. That the defendant could be held liable because he hid evidence of the offenses.
E. That the defendant could be held liable because he failed to see that those delegated
the duty to ensure sanitary conditions did their job.
Heidi decided to make extra money by offering to do investments for her friends for a
fee. She actually did no investing, but used the funds from new friends to pay off earlier
enrollees. This worked well for a while, but her scheme came to light when her supply
of new friends came to an end. She is guilty of which of the following practices?
A. Operating a Ponzi scheme
B. Operating a bait and switch scheme
C. Account kiting
D. Pretexting
E. Defalcation
A valid contract may be _____ when there is some law that prohibits the courts from
enforcing it.
A. executed
B. executory
C. unenforceable
D. notated
E. condoned
Miracle Pill. Katie advertised that she had developed a pill for women that would result
in weight loss, wrinkle loss, and improved vitality; and 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 by the Federal Trade Commission 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. Which of the following are generalities and clear
exaggerations that are allowable by the Federal Trade Commission?
A. Huffing
B. Puffing
C. Crowing
D. Swelling
E. None of these because the Federal Trade Commission does not allow generalities and
clear exaggerations
Which of the following is true regarding buyers or lessees who want to accept
nonconforming goods and then seek monetary damages?
A. Buyers and lessees are allowed to do so in order to receive the benefit of the bargain,
but they must give the seller/lessor reasonable notice of the defect.
B. Buyers and lessees are allowed to do so in order to receive the benefit of the bargain,
and there is no requirement that they give the seller/lessor prior notice of the defect.
C. Buyers may do so in order to receive the benefit of the bargain so long as reasonable
notice of the defect is given, but lessors may not.
D. Lessors may do so in order to receive the benefit of the bargain so long as reasonable
notice of the defect is given, but buyers may not.
E. Buyers and lessors may do so only if the seller/lessee agrees to the retention of the
nonconforming goods and does not request their return.
Which amendment protects citizens from unreasonable searches and seizures and
requires a finding of probable cause to issue a warrant?
A. First
B. Third
C. Fourth
D. Sixth
E. Tenth
Which of the following was created specifically to combat white-collar crime?
A. The Racketeer Influenced and Corruption Organizations Act.
B. The False Claims Act.
C. The Sarbanes-Oxley Act of 2002.
D. The White-Collar Enforcement Act.
E. None of these.
A _____ contract is one that contains all the legal elements of a contract.
A. voidable
B. executed
C. formal
D. valid
E. approved
Third-Party Woes. Trudy owed Sam $40 for a book she purchased from him. Trudy
mowed Betty’s yard for $40 and agreed with Betty that Betty would pay Sam for the
book. Sam is not initially aware of the agreement. Betty pays no one. Trudy also
mowed Bob’s yard for $40 in return for Bob’s agreement to give the payment to Sally
representing Trudy’s birthday present to Sally. Bob later refuses to do so saying that
promises to give gifts are not enforceable. He then moves out of town. Trudy tells both
Sam and Sally that she is broke, that Sam needs to get his $40 for the book from Betty,
and that Sally is owed $40 from Bob for her birthday present. Which of the following
would be the likely result if Sally sues Trudy for the $40 promised to her for her
birthday?
A. Sally will win because Trudy is responsible for Bob’s failure to pay.
B. Sally will win only if she can prove that Bob is insolvent and unable to pay.
C. Sally will win only if she can prove that she cannot find Bob in order to serve
process on him.
D. Sally will win only if she can prove both that Bob is insolvent and unable to pay, and
that she cannot find Bob in order to serve process on him.
E. Sally will lose because Trudy had no obligation to go through with the gift.
Puppy Woes. Sam promised to sell Linda a Welsh Corgi puppy for $300 but backed out
of the deal. Linda sued Sam in state court for breach of contract. Linda asked for a jury
in her complaint. During jury selection, one juror, Ann, said that they did not think they
could be fair to Linda because Linda did not appear to be a dog lover. Linda asked that
Ann not hear the case, and the judge excused Ann. Linda also decided that another
juror, Sandy, looked at her in a grumpy manner so she asked the judge to excuse that
juror from serving. The judge did so. After the jury was chosen, Linda made a statement
to the jury, as did Sam. Linda then called to the witness stand a friend of hers, Brenda,
who heard the discussion held between Linda and Sam regarding the purchase of the
puppy. Brenda testified under questioning by Linda that she heard Linda say that she
would pay $300 for the puppy and that she also heard Sam say that he would sell the
dog for that amount. Unfortunately for Linda, Brenda also testified in response to
questioning by Sam that Sam distinctly told Linda that he would only sell the puppy to
her if Linda came with cash for the puppy within seven days. Linda did not show up
with the money for ten days and Sam had already sold the dog to someone else. The
judge ruled in favor of Sam. The challenge to the juror who said that they could not be
fair is referred to as a(n)
A. Peremptory challenge.
B. Challenge for cause.
C. Stipulated challenge.
D. Fairness challenge.
E. Approved challenge.
Which of the following is a term used to refer to laws that are contained in one
convenient location?
A. Area laws
B. Codes
C. Classifications
D. Filings
E. Reports
Which of the following is a tort?
A. A civil or criminal action in state court.
B. A civil or criminal action in state court or federal court.
C. A breach of contract.
D. A wrong or injury to another, other than a breach of contract.
E. None of these.
Angry employee. Martin is in charge of payroll and other expenses for ABC, Inc. He
becomes very angry with his boss Adam because Adam started dating Martin’s
girlfriend Stacy. Martin decided to quit but not before he got some extra money from
ABC, Inc. Martin wrote five checks from the account of ABC, Inc. to pay off the five
credit card companies that Martin owed money. The credit card companies took the
checks without reason to be suspicious as to the source of payment. The checks to the
credit card companies in total amounted to $30,000, and each check was in an amount
under $10,000. Martin also made out ten checks on the account of ABC to twenty
alleged employees who did not really exist. Each of these checks was in the amount of
$5,000. Martin took the checks, endorsed and cashed the checks in the names of the
various fake employees, and kept the cash. Finally, Martin discovers through office
gossip that Adam has been looking for another job with XYZ, Inc. located in a
neighboring state and that Adam is supposed to go there for an in person interview in a
few weeks. Martin sets up an interview with XYZ, Inc. pretends to be Adam, and
induces XYZ, Inc. to give him, posing as Adam, a check for $5,000 as a signing bonus.
Martin immediately endorses the check pretending to be Adam and pockets the cash.
Finally, Martin leaves town heading for the Caribbean. Is XYZ, Inc. entitled to a refund
from its bank for the check the bank paid to Martin posing as Adam?
A. Yes, because Martin forged Adam’s name.
B. Yes, because Martin posed as an imposter in regard to Adam.
C. Yes, because the XYZ, Inc. has a cause of action against Martin and can likely get a
default judgment.
D. No, because of the imposter rule.
E. No, because of the fictitious-payee rule.
Which of the following is true regarding the protection of “fighting words” under the
First Amendment?
A. Fighting words are unprotected speech under the First Amendment.
B. Fighting words are protected speech under the First Amendment only if they are
uttered by an individual citizen, not by a corporate representative.
C. Fighting words are protected speech under the First Amendment only if they involve
political activity.
D. Fighting words are protected speech under the First Amendment only if they are
made in connection with a protest march.
E. Fighting words are protected speech under the First Amendment only if they are
made in conjunction with self defense.
Insurance. Susan, a trained nurse, was recently elected to the U.S. Senate. Susan is very
concerned about the lack of insurance for many children and also working adults who
cannot afford the insurance premiums. She proposes legislation that states are taxed
sufficiently to provide health insurance coverage to children and that federal funds for
state highways are denied to any state that does not also provide insurance coverage for
uninsured adults. She also proposed that states with citizens earning higher than average
incomes be taxed at a higher rate than other states. Bill, a senator, tells Susan that
Congress lacks the authority to tax in this manner because the U.S. Constitution
expressly reserves that right to the states. Ellen, another senator, tells Susan that
Congress has no authority to link highway funds or any other funds with social welfare
objectives. Sam, an administrative assistant, tells Susan that Congress is prohibited
from taxing residents of one state at a higher rate than citizens of another state. Which
of the following is true regarding Bill’s statement?
A. He is incorrect. The U.S. Constitution contains no such reservation.
B. He is partially correct. The U.S. Constitution prohibits taxation in areas in which
states also tax, but most states are not taxing for insurance purposes at this time.
C. He is incorrect in saying that the U.S. Constitution expressly reserves the right to tax
to the states, but he is correct in saying that Congress lacks the authority to tax in this
manner because Congress cannot lay taxes for any reason other than essential needs of
the federal government.
D. He is incorrect in saying that the U.S. Constitution expressly reserves the right to tax
to the states, but he is correct in saying that Congress lacks the authority to tax in this
manner because the president has issued an executive order prohibiting such taxation.
E. He is incorrect because the prohibition is contained in a federal statute passed by
Congress, not in the U.S. Constitution.
Assume the Securities and Exchange Commission prosecutes someone for insider
trading. That prosecution is an example of __________ law.
A. criminal
B. procedural
C. civil
D. natural
E. positive
Which of the following was passed largely in response to business scandals of the
2000s, such as Enron?
A. RICO.
B. The False Claims Act.
C. The Sarbanes-Oxley Act of 2002.
D. The Medicare Recovery Act.
E. The Healthcare Fraud Act.
Patty, who lives in East Tennessee, developed a new type of printer that required very
little ink. As a merchant, she entered into contracts to sell the printer to a number of
merchants of office supplies in the East Tennessee area for a charge of $600 each. She
further entered into a number of contracts with merchants in other states and also in
foreign countries. For printers sold in states other than Tennessee and for printers sold
outside the U.S., she charged $1,001 each. Patty was a trusting soul who did not require
that her arrangements be in writing because she believed that a person’s word was his or
her bond. She did, however, send a confirming memo to each client to which she
received no objections. Patty manufactured a number of printers; but unfortunately, due
to a downturn in the economy, a number of her buyers refused to proceed on their
contracts, with several claiming that the contracts were unenforceable because they
were not in writing. Which of the following is true regarding whether the contracts with
clients in the U.S. outside of Tennessee were required to be in writing?
A. Because the contracts were for amounts priced at $500 or more, they were required
to be in writing and signed by the buyer.
B. Because the printers were sold outside Patty’s home state, no writing was required.
C. Because the contracts were for amounts priced at $1,000 or more, they were required
to be in writing and signed by the buyer.
D. Because the contracts were for amounts priced at $500 or more, they were required
to be in writing; but Patty’s memo was sufficient to satisfy the requirement.
E. Because the contracts were for amounts priced at $1,000 or more, they were required
to be in writing and signed by the buyer; but Patty’s memo was sufficient to satisfy the
requirement.
Diving Fiasco. Mike, who owns a dive shop in the U.S., decides to take a group of his
customers diving in U.S. waters. Mike is aware that sharks occasionally visit the area
where the divers will be visiting. He is also aware that, while sting rays are usually
tame, they can become aggressive when fed. Mike does not reveal that information to
the group of divers going with him. The divers go down into the water, and some have
squid with which to feed the sting rays. During the dive, one of the sting rays becomes
agitated and latches onto diver Susie’s arm. Susie is so disconcerted that she drops her
regulator (her breathing device) from her mouth and is in considerable difficulty.
Another diver, Billy, encounters a shark, which snaps at him. While the shark does not
actually bite Billy himself, the attack results in damage to his diving equipment. Mike,
who is in charge of the dive, does nothing to help and leaves the other divers to return
to the boat because the dive turned out to be more trouble than expected. Wendy,
another diver on the trip, also returns to the boat without doing anything to help the
divers in distress. Sam, on the other hand, goes to rescue the divers who are in distress.
He manages to do so but in the process he pulls his back and requires medical care. All
divers are very unhappy with Mike. Billy and Susie are annoyed that Mike did not
come to their assistance. Which is true regarding Mike’s duty to provide assistance to
them during the dive?
A. Mike had no duty to provide any assistance to them.
B. Mike had a duty to come to their aid because he arranged the dive and was charging
them.
C. Mike had a duty to come to their assistance only if he had specifically agreed to do
so prior to the dive.
D. Mike had a duty to come to their assistance only if they were minors.
E. Mike had a duty to come to their assistance only if no one else did so.
Which of the following occurs when parties agree that they simply wish to discharge
each other from their mutual obligations and, therefore, rescind or cancel the contract?
A. Accord and satisfaction
B. Novation
C. Substituted contract
D. Mutual rescission
E. Alteration