In most states, a corporation’s bylaws can negate preemptive rights.
Strict liability is liability without fault.
A limited partnership is one in which the partners share management responsibilities
equally, but some partners are limited in regards to the amount of profit distribution to
which they are entitled.
A durable power of attorney is legally binding after the principal becomes
incapacitated.
Intermediate courts of appeal in the state court system exist in all states.
An “instructed authorization” occurs if the means by which an acceptance can be
communicated to the offeror is expressly stated in the offer.
Subleasing of leased property by the tenant to another party is permissible unless
specifically prohibited by the lease.
If a violation of federal securities laws is serious enough to merit criminal prosecution,
the Fraud Section of the Securities and Exchange Commission prosecutes the action.
The term “natural law” is another word for “legal positivism.”
Every partner is considered to be an agent of the partnership.
If a partner has authority to act and the partnership is bound by the act, each partner has
unlimited personal liability for the obligation.
The insured party in insurance law is the party who makes a payment to an insurance
company, called a premium, in return for insurance coverage.
In Australia a third party can sue for breach of contract.
The decision of a state supreme court is binding on a lower state court located in the
state.
An accountant who commits fraud is liable to those parties he or she reasonably should
have foreseen would be injured through a justifiable reliance upon the fraudulent
information.
Convertible bonds allow shareholders to exchange their bonds for shares of company
stock.
Mail fraud is a federal crime.
A plaintiff may only recover under Section 11 of the Securities Act of 1933 if the
plaintiff can establish that the plaintiff purchased securities in an initial public offering.
All negotiable documents may be in electronic format.
Consent, if proven, is a defense to battery.
The Fair Labor Standards Act covers employers engaged in intrastate commerce or the
production of goods for interstate commerce.
A bank has given value for a negotiable instrument to the extent that the bank has a
security interest in the instrument.
The UCC pertains to all business transactions.
A commercial general liability policy provides protection against intentional wrongful
acts committed by an insured.
Some states allow innkeepers to avoid strict liability for their guests’ personal property
by providing them with a safe in which they may keep their valuables.
The UCC recognizes the concept of unconscionability.
Implied assumption of the risk occurs when the plaintiff expressly agrees, usually in a
written contract, to assume the risk posed by the defendant’s behavior.
Rent can be defined as the compensation paid to the landlord for the tenant’s right to
possession and exclusive use of the premises.
While an agent owes duties to a principal, the principal owes no duties to an agent.
A contract overturned due to having illegal subject matter or for being illegal to perform
is generally declared voidable.
The person who fails to make payments is said to have defaulted on a loan.
An owner cannot deprive landowners downstream of the use of the water by diverting it
elsewhere.
Russia has modified the Russian Civil Code to reflect the freedom of assignments found
in the American Uniform Commercial Code.
Under ordinary circumstances, a party’s duty to perform a promise agreed to in a
contract is absolute.
Which of the following is another name for apparent agency?
A. Simplified agency
B. Equitable agency
C. Agency by law
D. Agency by estoppel
E. Approved agency
The arbitrator typically provides a decision within ____ days of an arbitration hearing.
A. 10
B. 25
C. 30
D. 90
E. 120
What does the free-exercise clause of the First Amendment provide?
A. Government cannot make a law prohibiting choice in relation to religion.
B. Government cannot make a law establishing a religion.
C. Government cannot make a law referencing religion in any manner.
D. Government must establish laws respecting religion in order to prevent disruptive
behavior such as terrorism and to allow free-exercise by the majority.
E. That only religions recognized when the First Amendment was passed are entitled to
recognition and protection.
Which of the following is true regarding the Uniform Electronic Transactions Act?
A. It eliminates all effects of the mailbox rule.
B. It provides that offers may not be accepted electronically but otherwise retains
aspects of the mailbox rule.
C. It provides that acceptances may not be made electronically but otherwise retains
aspects of the mailbox rule.
D. It seems to create an electronic version of the mailbox rule.
E. It delays the effect of the mailbox rule by 8 hours.
When a company merges with another company that is not a competitor or a buyer or
seller to the company, that merger is called a ______ merger.
A. Horizontal
B. Vertical
C. Conglomerate
D. Joining
E. Predatory
Kantian ethics is involved with which of the following ethical theories?
A. Deontology
B. Act utilitarianism
C. Rule utilitarianism
D. Absolutism
E. Situational ethics
Which of the following was developed by the United Nations as an alternative for
countries who wanted to participate in some form of multilateral protection of
copyrights, but did not want to agree to the terms of the Berne Convention?
A. The Universal Copyright Convention
B. The Agreement on Trade-Related Aspects of Intellectual Property Rights
C. The Paris Convention
D. The Signatory Agreement
E. The US-Soviet Agreement
Candy wants to start an Internet business doing business domestically as well as
internationally. She is told by the Chinese government that certain items on her site are
objectionable and illegal, and that if she wants to do business in China, she must
remove the objectionable material. Which of the following is true?
A. Candy is within her rights and should stand her ground. She is a U.S. citizen, and so
long as she obeys U.S. laws, she can do business in China.
B. Candy is within her rights only if she petitioned her state senator and obtained his or
her permission to proceed.
C. If Candy wants to do business in China, she must abide by Chinese law.
D. By international law, there is a set fee of $10,000 that Candy can pay if she wants to
obey only U.S. law. If she pays that amount, she can continue in China without any
modification.
E. By international law, there is a set fee of $5,000 that Candy can pay if she wants to
obey only U.S. law. If she pays that amount, she can continue in China without any
modification.
Which of the following occurs when the purchased goods are transferred to the buyer
from the seller at either the time of the sale or some time later by the seller’s delivery?
A. A voidable delivery contract
B. An average delivery contract
C. A simple delivery contract
D. A complex delivery contract
E. An acknowledged sale
Which of the following is false regarding merger control in France?
A. If it is determined that a proposed merger exceeds a reasonable concentration of
power, the minister for the economy can enjoin the companies from completing the
merger.
B. If it is determined that a proposed merger exceeds a reasonable concentration of
power, the minister for the economy can alter the merger’s value.
C. If it is determined that a proposed merger exceeds a reasonable concentration of
power, the minister for the economy can make provisions to ensure higher degrees of
competition in the market.
D. The goal of merger control statutes in France is to discourage mergers.
E. The French government, specifically the minister for the economy, uses the
Commission for Competition as a resource when determining whether a proposed
merger will benefit the French economy or whether the resulting concentration of
power will decrease competition.
Which of the following was the result on appeal in Laborer’s Pension Fund v. A & C
Envtl. Inc., the case in the text in which the defending employer claimed that an
agreement entered into regarding payment of union dues wrongfully required payment
for all defendant’s employees when it should have required payment of dues for only a
few employees who were working out- of-town within the area of the union involved?
A. That the defending employer had to pay no dues at all because a representative of the
plaintiff wrongfully misrepresented the contents of the written document.
B. That the defending employer had to pay only the dues of the employees who were
working out-of-town within the area of the union involved because a representative of
the plaintiff wrongfully misrepresented the contents of the written document.
C. That although a representative of the plaintiff misinformed the defending employer
of the contents of the written document, the defendant’s representative had sufficient
opportunity to read the document; and the defending employer was therefore liable for
dues of all its employees.
D. That the defending employer was liable for all the dues regardless of whether a
representative of the plaintiff misinformed the defending employer of the contents of
the written document and regardless of whether the defendant’s representative had an
opportunity to read it.
E. That while the defending employer would be liable for all dues under common law,
because of applicable federal labor law, the defending employer was liable for dues
only for employees working out-of-town within the area of the union involved.
Which of the following occurs when companies bill consumers for optional services
that the consumers did not order?
A. Slamming
B. Cramming
C. Stuffing
D. Fraudulent adding
E. Fraudulent transfer
Which of the following are types of conditional contracts?
A. Sale-on-approval contracts, but not sale-or-return or condition-or-sale contracts
B. Sale-or-return contracts and condition-or-sale contracts, but not sale-on-approval
contracts
C. Condition-or-sale contracts and sale-on-approval contracts, but not sale-or-return
contracts
D. Sale-on-approval contracts, sale-or-return contracts, and condition-or-sale contracts
E. Sale-on-approval contracts and sale-or-return contracts, but not condition-or-sale
contracts
A business manager who deceives everyone because the manager believes that
deception maximizes pleasure over pain in a given situation is acting consistently with
which ethical theory?
A. Act deontology
B. Ethical relativism
C. Act utilitarianism
D. Ethical fundamentalism
E. Rule utilitarianism
What is the term for the party to a contract who transfers his or her rights to a contract
to a third party?
A. Transferor
B. Transferee
C. Relator
D. Assignor
E. Assignee
What do the words “deliver to the order of seller” indicate in a goods-in-bailment
contract?
A. A negotiable document
B. A nonnegotiable document
C. A shipment contract
D. An origin contract
E. An execution contract
Which of the following is liability without fault?
A. Negligence.
B. Assumption of the risk.
C. Strict liability.
D. Storekeeper liability.
E. Homeowner liability.
Which of the following is an example of a product developing secondary meaning?
A. Customers identify a certain color as identifying a company’s product.
B. Customers hear of the term through a secondary source such as media advertising.
C. A company has illegally misappropriated a trademark and has used it in second place
to identify a product.
D. A company has agreed to only use a trademark secondarily after the primary user has
abandoned it.
E. A product has secondary meaning in the minds of consumers as to usefulness.
Strict liability is a term used to describe which of the following?
A. Liability without fault.
B. Negligence.
C. Actus reus.
D. Intentional wrongdoing.
E. Recklessness.
In ______ the English Parliament passed the Act for the Prevention of Frauds and
Perjuries.
A. 1555
B. 1677
C. 1770
D. 1776
E. 1865
“Puppy Woes.” Sam promised to sell Linda a Welsh Corgi puppy for $700 but backed
out of the deal. Linda sued Sam in state court for breach of contract and asked for a jury
to hear the case. During jury selection, one juror, Ann, said that she did not think she
could be fair to Linda because Linda did not appear to be a dog lover. Linda’s lawyer
asked that Ann not hear the case on the basis that she could not be fair, and the judge
excused Ann. Linda also decided that another juror, Sandy, looked at her in a grumpy
manner so, without a reason given, Linda’s lawyer asked the judge to excuse that juror
from serving. The judge did so. After the jury was chosen, Linda’s lawyer made a
statement to the jury as did Sam’s lawyer. Linda’s lawyer then called to the witness
stand Brenda, a friend of Linda, who heard the discussion held between Linda and Sam
regarding the purchase of the puppy. Brenda testified under questioning by Linda’s
lawyer that she heard Linda say that she would pay $700 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’s lawyer 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 questioning of Brenda by Linda’s lawyer is called ______, and the questioning of
Brenda by Sam’s lawyer is called ______.
A. Absolute examination; counter-examination
B. True examination; analysis examination
C. True examination; trickster examination
D. Direct examination; interrogating examination
E. Direct examination; cross-examination
Which of the following is property that the true owner has intentionally placed
somewhere but has forgotten its location?
A. Lost
B. Mislaid
C. Discarded
D. Abandoned
E. Terminated
“Used Car Commission.” William promised to sell Helen’s car for her, but he wanted a
commission of 10%. Helen signed an instrument promising to pay William a 10%
commission if he sold her car. William assigned the agreement to Phil. Helen’s car was
sold and the buyer paid Helen. A dispute ensued between Helen and William regarding
whether William found the buyer or the buyer found Helen. When Phil asked Helen for
payment on the instrument, Helen refused. William, Helen, and Phil settled their dispute
without going to court and Helen wrote Phil a check for $3,000. Phil endorsed the
check on the back by signing his name planning to take it to the bank the next day.
Unfortunately, Phil lost the check which was found by Helen and cashed by the local
bank. Helen then left town.
Which of the following is the most likely result if Phil attempts to require that the bank
reimburse him for the value of the check cashed by Helen?
A. The check was an order instrument, and the bank must take the loss because it
should only have provided funds to Phil.
B. Because the check was an order instrument, the bank was within its rights to pay
Helen because she presented the check; and Phil has no rights against the bank.
C. Because the check was a bearer instrument, the bank must take the loss because it
should only have provided the funds to Phil.
D. Because the check was a bearer instrument, the bank was authorized to pay Helen;
and Phil has no rights against the bank.
E. Regardless of what type of instrument the check was, the bank had no right to cash
the check when presented by Helen unless the bank can establish by a preponderance of
the evidence that Helen misrepresented herself as an agent of Phil.
A[n] ______ trust is a type of trust created by a court, not a settlor.
A. Implied
B. Untrue
C. Limited
D. Reduced
E. Protection
“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.
Did George act properly in hearing the dispute?
A. He acted properly because it is presumed that arbitrators are unbiased regardless of
their relationship with a party.
B. He acted properly because he only had to reveal the information at issue if Susan had
directly asked about it.
C. He should have revealed that he was married to Bob’s cousin, but none of the other
information had to be revealed.
D. He should have revealed that he had received loans from Bob, but he had no
obligation to reveal other information.
E. He should have revealed all the information and should have refused to arbitrate the
case. His actions would be considered by a federal district judge and the award would
likely be set aside because of showing of bias.
“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.”
In which of the following were the employees engaged when they carried picket signs
informing the public that Warren refused a raise?
A. Informational picketing
B. Signal picketing
C. Boycott picketing
D. Strike picketing
E. Documentary picketing
“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.
Which of the following is correct regarding Wallace’s assertion that Fran cannot recover
the cost of the caps?
A. Wallace is correct. Fran cannot recover because she has nothing in writing.
B. Wallace is incorrect because the cost of the caps is insufficient to come within the
requirement of a writing under the UCC.
C. Wallace is incorrect because Fran has witnesses.
D. Wallace is incorrect because Fran had already made the caps.
E. Wallace is incorrect both because Fran had already made the caps and also because
she had witnesses.
Which of the following does not satisfy the requirement that to be negotiable an
instrument must be payable at a time certain or on demand?
A. The instrument states a specific date for payment.
B. The instrument is dated and then states that “payment will be made 5 days after the
above date.”
C. An instrument that states that payments is due at a fixed time but may be extended at
the election of the holder.
D. An instrument that states that “payment will be made 10 days after delivery of the
goods.”
E. An instrument that permits acceleration of payment and has a fixed date of payment
if the acceleration clause is not affected.
“The Stolen Book.” Susan is told by Betty that Bob stole her business law book out of
her car. The next day Susan confronts Bob and slaps him for stealing her book. Bob had
Susan arrested for slapping him, and the local district attorney is prepared to prosecute
that matter on behalf of the state. Susan sues Bob for damages to the book and for
maliciously having her arrested. Claiming that she lied, Bob sues Betty for defamation.
The prosecution against Susan for slapping Bob involves which of the following?
A. Public law and criminal law
B. Private law and criminal law
C. Private law and civil law
D. Public law and civil law
E. Civil law and criminal law
Which of the following usually requires that the seller or lessor deliver the particular
goods identified in the contract?
A. Absolute order
B. Absolute performance
C. Specific performance
D. Specific order
E. True performance
Which of the following is generally false regarding the surviving entity in a merger
situation?
A. The surviving entity remains a single corporation.
B. The shareholders of the surviving entity must amend its articles of incorporation
according to the specific conditions of the merger.
C. The surviving entity does not become liable for debts of the absorbed corporation.
D. The surviving entity obtains the absorbed corporation’s assets.
E. The surviving entity obtains the absorbed corporation’s rights, powers, and
privileges.
Which of the following is true regarding the right of the federal government to obtain
business books and records?
A. The government has an absolute right to business books and records so long as a
subpoena is issued by a grand jury.
B. The government has no rights to such records without a search warrant, and a grand
jury subpoena is insufficient regardless of whether a sole proprietor or a corporate
shareholder is involved.
C. Obtaining books and records from a sole shareholder of a corporation and also from
a sole proprietor based only upon a subpoena issued by a grand jury violates the right
against self-incrimination.
D. Obtaining books and records from a sole proprietor based only on a subpoena from a
grand jury violates the owner’s rights against self-incrimination, but seizing records
from a sole shareholder of a corporation in that manner does not violate rights against
self-incrimination.
E. Obtaining books and records from a sole shareholder of a corporation based only on
a subpoena from a grand jury violates the shareholder’s rights against
self-incrimination, but seizing records from a sole proprietor in that manner does not
violate rights against self-incrimination.
The ______ holds that the right course of action is the option most consistent with the
building and maintaining of human relationships.
A. Ethics of care
B. Principle of virtue ethics
C. Deontology
D. Act utilitarianism
E. Rule utilitarianism
“Lottery Winnings.” Frank, a hypochondriac who was also very compulsive, was
having minor surgery to repair a bone spur on his foot. He had just purchased a lottery
ticket for a chance at the grand prize of $30,000,000. He always kept lists of the
numbers of his lottery tickets with him in his billfold. Frank’s girlfriend, Bubbles, went
with him to the hospital. While in the waiting room, Frank said to her, “Bubbles, I may
not make it out of this bone spur surgery. Take my lottery ticket. If I don’t make it, I
hope you win and live it up; but please don’t get another boyfriend.” Bubbles replied, “I
could never be happy without you.” A nurse saw and heard the whole exchange. Frank
came out of the surgery just fine but with a sore foot. While he was recuperating that
evening, Bubbles watched the lottery drawing and discovered that Frank’s ticket was
indeed the winning ticket. She immediately moved out and collected the winnings.
Frank saw her on television with her new boyfriend, George. She appeared to be very
happy. He checked the numbers and discovered that she won off of his ticket. Frank
says that the lottery money is his.
Which of the following is true regarding Frank’s statement at the hospital regarding
Bubbles taking the ticket?
A. At that point he made a valid gift that could not be revoked.
B. He did not make a valid inter vivos or causa mortis gift because there was no
certainty that he would die.
C. He made an irrevocable gift at that time only if Bubbles never had another
boyfriend; otherwise, she had to give the ticket and any resulting cash to Frank.
D. He made an irrevocable gift at that time if Bubbles refrained from having another
boyfriend until she cashed the ticket; and, after the ticket was converted, the condition
no longer applied.
E. None of these.
Which of the following is the agency responsible for enforcing the Federal Food, Drug,
and Cosmetic Act?
A. The U.S. Food and Drug Administration
B. The Federal Consumer Administration
C. The Federal Consumption Administration
D. The Federal Safety Commission
E. The U.S. Uniform Drug Commission
What rights, if any, does a creditor who does not wish to repossess collateral have in the
event of a default and why might a creditor prefer a remedy other than repossession of
collateral?
Discuss in detail the World Trade Organization including how it was established and its
membership. Also discuss the normal trade relations principle, national treatment,
quantitative restrictions, and dumping.
Set forth the eight exceptions to the parol evidence rule.
Ellen, who runs a successful nail salon, ran across a very interesting pamphlet on
customer relations. The pamphlet was fifty pages long and cost $70.00. Ellen thought
the price was outrageous. Accordingly, she bought one copy and photocopied the pages
that she thought were pertinent and gave them to her employees. She copied forty of the
pages out of the pamphlet for each of twenty employees. A disgruntled employee
informed the publisher of the pamphlet what Ellen had done, and she was charged with
copyright infringement. Ellen defended on the basis of the fair use doctrine. Discuss the
four factors a court would consider in determining whether a violation occurred and
whether you think Ellen would prevail.
When must agency agreements be in writing?
What must be shown in order to establish a violation of Section 1 of the Sherman Act?
Set forth what the UCC requires in the way of good faith and the duty imposed on both
nonmerchants and merchants.
Set forth the seven requirements for an instrument to be negotiable.
Why are administrative agencies at times referred to as the “fourth branch of
government,” and are administrative agencies in fact a fourth branch of government?
What is meant by an antilapse clause, and how do these usually work? Do you believe
that all states and all types of policies should have antilapse clauses, and why or why
not?
As identified by Article 38 of the Statute of the International Court of Justice, what are
four sources that may be used to find international law?
What does a judge consider when conducting a rule-of-reason analysis?
Discuss why a creditor would want to attach property as well as whether attachment is
more often sought by secured or unsecured creditors and why.
Define a bilateral contract and a unilateral contract, and give an example of each.
List the circumstances under which a partnership may be rightfully dissolved.
List the three objectives of tort law and discuss whether you believe that additional tort
reform should occur.
Discuss why agency is especially important for modern firms doing business in foreign
countries.
Bernice purchased a new trampoline from ABC Trampolines. The purchase agreement
signed provided that she released ABC Trampolines from any consequential damages
for personal injury. Unfortunately, the trampoline ripped while she was using it causing
Bernice to fall and break her leg. She asked ABC for damages but the manager refused.
The manager referenced her agreement whereby she signed away her rights to
consequential damages for personal injury. Is the manager right, and why or why not?
Mary is a director of a company that develops expensive residential subdivisions. The
company is considering attempting to purchase a large section of land on which to put a
development. Mary happens to own some of the land. What duty, if any, does she have
regarding disclosure and why or why not; and what steps, if any should be taken by the
board when considering the matter?
Denise, who has several credit cards and lots of unsecured debt, cannot make her
payments but does not want to file for bankruptcy protection. She knows that you are
taking business law and asks you whether she can be forced into Chapter 7 bankruptcy
and, if so, under what circumstances. What would you tell her?