A written document containing the signature of the creator that makes an unconditional
promise or order to pay a sum certain in money at either a time certain or on demand is
called a _____________.
A. negated instrument
B. promised instrument
C. negotiable instrument
D. promissory agreement
E. negotiable agreement
Which of the following are considered an interest in land within the statute of frauds?
A. Promises to sell crops annually.
B. Agreements between parties for profit sharing from the sale of real property.
C. Boundary disputes that have been settled through the use of land.
D. Promises to sell crops annually, agreements between parties for profit sharing from
the sale of real property, and boundary disputes that have been settled through the use
of land.
E. None of these.
When a contract exists and a principal agrees to certain conditions, but fails to perform,
which of the following may the agent seek in order to force the principal to perform the
contract as stipulated?
A. Specific performance
B. Specific recoupment
C. Adequate performance
D. Reformation
E. None of these
A(n) ___________________ is an FTC order requiring that a company stop its illegal
behavior.
A. industry guide
B. command order
C. consent order
D. stop order
E. cease-and-desist order
Under the Uniform Limited Liability Company Act, an LLC will dissolve after the
passage of ______ consecutive days during which the company has no members.
A. 30
B. 60
C. 90
D. 121
E. 180
Which of the following is false regarding a sole proprietorship?
A. A sole proprietorship requires few legal formalities.
B. A sole proprietor has complete control of the management of the business.
C. The sole proprietor keeps all the profits from the business.
D. Profits are taxed as the personal income of the sole proprietor.
E. A sole proprietor is not personally liable for obligations of the business.
Which of the following results in liability of the principal because the principal
approved of an unauthorized agent’s signature?
A. Ratification
B. Authorization
C. Acknowledgement
D. Pre-approval
E. Post-approval
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 also refused to deliver the furniture. 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 incurred $100 in additional amounts in advertising costs to advertise the
furniture that Roland initially purchased. Selina saved $40 in delivery costs because the
subsequent purchaser picked up her own furniture. Which of the following is true
regarding Roland’s claim that Selina had no right to sell the furniture he initially
purchased?
A. Roland is correct. Selina had no right to sell the furniture, but she retained the right
to sue him for any deficiency.
B. Roland is correct but only because of the special UCC exception for consumer
goods.
C. Roland is incorrect. Selina had a right to resell the furniture.
D. Roland is incorrect but only if Selina can prove that she had no reason to believe that
he was a credit risk prior to signing the contract of sale.
E. Roland is correct because of federal consumer protection laws.
Which of the following was the result in Hill v. Gateway 2000, the case in the text in
which the purchaser of a computer failed to read a contract requiring arbitration that
came packaged with the computer and asked the court to determine that a seller of
computers could not limit buyers’ remedies or require arbitration by bundling hardware
and legal documents?
A. That the contract was binding on the purchaser because the purchaser accepted the
risk of not reading the contract.
B. That the contract was binding on the purchaser because the contract’s requirement of
arbitration was reasonable.
C. That the contract was binding on the purchaser because the contract’s requirement of
arbitration was actually in the purchaser’s favor.
D. That the contract was unconscionable and nonbinding.
E. That the contract was nonbinding because it should have been provided to the
purchaser for review before the computer was shipped.
A relationship in which one party has an unusual degree of _____ in the other can
trigger concern about undue influence in gaining the assent of the more dependent
party.
A. interest
B. investment
C. trust
D. involvement
E. both investment and involvement
Which of the following must occur in order for the exemption involving intrastate
issues to apply?
A. Issuers must do at least 80 percent of their business within the state.
B. Issuers must have at least 80 percent of their assets within the state.
C. Issuers must plan to use at least 80 percent of the profits within the state.
D. Issuers must have their main offices in the state.
E. All of these.
Hot Dress. Doreen writes a check for a dress to Hot Dresses, Inc., a small specialty
shop owned primarily by Betty. Betty was getting ready to go on an extended European
vacation and temporarily closed down the shop the day after the dress sale to Doreen.
When Betty returned, she had a number of other things to do and did not take Doreen’s
check and some other checks to the bank for three months. Betty was independently
wealthy and only ran the shop as a hobby, so she had not been in need of funds. When
Betty finally took Doreen’s check to the bank, Betty requested that her bank, ABC
Bank, deposit the check into her account. When ABC Bank, however, requested
payment from Doreen’s bank, XYZ Bank, the check was dishonored because of
insufficient funds in Doreen’s account. Although Betty did not particularly need the
funds, she did not like to feel as if she had been cheated; therefore, she demanded that
Doreen make the check good. Which of the following is the drawee of the check
Doreen presented to Hot Dresses, Inc.?
A. Doreen
B. Hot Dresses, Inc.
C. Betty, because she owned Hot Dresses, Inc.
D. Doreen’s bank
E. Betty’s bank
UCC Section _____ requires good faith in the performance and enforcement of every
contract.
A. 1-204
B. 2-205
C. 3-301
D. 3-302
E. None of these
Between buyers and sellers in the U.S., which of the following is true regarding
disclaiming the warranty of merchantability?
A. The disclaimer must be in writing.
B. Some states require that the term merchantability be used in the disclaimer.
C. The disclaimer may be made orally or in writing.
D. The disclaimer must be in writing, and some states require that the term
merchantability be used in the disclaimer.
E. The disclaimer may be made orally or in writing, and some states require that the
term merchantability be used in the disclaimer.
Which of the following was the ruling by the U.S. Supreme Court in Rousey v.
Jacoway, the case in the text involving whether funds in an Individual Retirement
Account (IRA) qualify for a federal exemption in bankruptcy proceedings?
A. That funds in an IRA account are exempt from claims of creditors.
B. That funds in an IRA account are not exempt from claims of creditors.
C. That funds in an IRA account are exempt from claims of creditors only up to $5,000.
D. That funds in an IRA account are exempt from claims of creditors only up to
$50,000.
E. That funds in an IRA account are exempt from claims of creditors only up to
$500,000.
A legal entity formed by issuing stock to investors is a _____.
A. cooperative
B. corporation
C. limited partnership
D. limited liability partnership
E. general partnership
Which of the following is relevant in determining whether a particular government
statute violates the Establishment Clause?
A. Whether the statute has a secular legislative purpose.
B. Whether the statute’s principal or primary effect either advances or inhibits religion.
C. Whether the statute fosters an excessive government entanglement with religion.
D. Whether the statute has a secular legislative purpose; whether the statute’s principal
or primary effect either advances or inhibits religion; and also whether the statute
fosters an excessive government entanglement with religion.
E. Whether the statute has a secular legislative purpose and whether the statute’s
principal or primary effect either advances or inhibits religion; but not whether the
statute fosters an excessive government entanglement with religion.
Peanut Allergy. Kitty, who had a love of baking, decided to open her own bakery. She
decided that she did not need and did not want to pay for a lawyer to advise her on
different forms of ownership. Unfortunately, Kitty had not paid attention in business
law class. She proceeded, with little thought, to simply open her business called Kitty’s
Baking. Bobby came in to order some cookies for his girlfriend, Bitsy, who was allergic
to peanuts. Bobby told Kitty that he needed some cookies for Bitsy but that Bitsy had
allergies to peanuts. Kitty told him not to worry because she would make up a special
batch just for him. Kitty had hired some assistants because she was so busy. She told an
assistant, Cathy, to make up several batches of cookies for different customers including
Bobby and to leave out the peanuts in Bobby’s order. Cathy, however, forgot the
instruction and proceeded to make Bobby’s cookies with crushed peanuts. Bobby
picked up the cookies and gave one to Bitsy in the car while they were on the way to
the movie in Bobby’s new car. Bitsy became violently ill, vomited in Bobby’s car, and
had to have her stomach pumped. Bobby and Bitsy sought recovery from Kitty who
told them that Bitsy’s doctor bill and Bobby’s car cleaning bill were business debts, that
the business was new and not making any money at the moment, and that she had no
personal liability. Following the incident involving Bobby and Bitsy, Kitty discussed
with her parents her problems with the bakery. Kitty’s parents would like to invest in
her business and share in any profits, but they do not want to share in the management
responsibilities. Which of the following is true regarding Kitty’s statement that she had
no personal liability?
A. She was correct.
B. She was correct only if she can establish that she has paid all her business taxes on
time.
C. She was correct only if she can establish that she has at least 5 employees.
D. She was incorrect.
E. She was incorrect unless she signed an agreement with a financial institution in order
to get a loan for the business and agreed in the document that she would not accept
personal liability for any losses.
DUI Charge. Monique was licensed to train massage therapists. A new federal agency,
the Aesthetic and Massage Commission, took very seriously its role of enforcing the
statute enabling the Commission to do its work and providing that licensed massage
therapists must refrain from “any act or conduct indicating bad faith, incompetence,
dishonesty, or improper dealing.” Monique, while driving home late one night from a
party, was stopped by the police and arrested for driving under the influence of alcohol.
She pled guilty to the offense. When the Aesthetic and Massage Commission
discovered the offense, the officials of the agency met, decided that Monique might
drink on the job, and that she might pose a danger to students. Accordingly, her license
to teach massage therapy was revoked. Monique threatened to sue to retain her license
and was told by the agency head that she had no right to appeal to court because of the
nature of the Aesthetic and Massage Commission and that in any event, action by an
agency is always upheld. Which of the following would have reached the decision at
her hearing before the administrative agency?
A. An adjudicative law judge
B. An administrative law judge
C. A federal court judge
D. A superior court judge
E. A jury
A statement releasing one of the parties to an agreement from all liability, regardless of
who is at fault or what the injury suffered is would be referred to as a(n) _____.
A. substantive agreement
B. adhesion agreement
C. in pari delicto agreement
D. exculpatory
E. res ipsa
_____ torts occur when the defendant acts in a way that subjects other people to an
unreasonable risk of harm.
A. Criminal
B. Liability
C. Intentional
D. Negligent
E. Strict-liability
To which of the following does the Freedom of Information Act not apply?
A. Congress
B. The federal courts
C. The executive staff of the White House
D. It does not apply to Congress, the federal courts, or to the executive staff of the
White House
E. It does not apply to Congress or the federal courts, but it does apply to the executive
staff of the White House
Which of the following occurs when a party threatens to file a criminal lawsuit unless
consent is given to the terms of a contract?
A. Duress
B. Undue influence
C. Durable fraud
D. Criminal influence
E. Duress and undue influence, but not durable fraud
Dream Home. Maurice finds a dream home on the lake. He wants to buy it but is unsure
whether he can get a loan. He signs a contract with the seller that he will buy the home
if he can get a loan. Maurice also includes a contractual clause into the contract with the
seller that if the purchase goes through but he loses his job within one year, the seller
will repurchase the house for the same price Maurice paid for it. After getting a loan
and buying the home, Maurice decided that he wanted new windows put into the home.
He entered into a contract with a window contractor. The window contractor visited the
home, but Maurice was always gone. The contractor made several attempts to reach
Maurice, but Maurice would not return phone calls and made no attempt to assist the
contractor with installation. The provision that the seller will repurchase the home if
Maurice loses his job within one year of the sale is referred to as which of the
following?
A. A condition subsequent
B. A condition precedent
C. An implied condition
D. An express condition
E. Both a condition precedent and an express condition
Which of the following is typically an appropriate venue in a lawsuit?
A. Only the trial court where the defendant resides.
B. Only the trial court where the plaintiff resides.
C. Only the location where the dispute occurred if the lawsuit focuses on a particular
incident.
D. Both the trial court where the defendant resides and the trial court where the plaintiff
resides.
E. The trial court where the defendant resides and also the location where the dispute
occurred if the lawsuit focuses on a particular incident.
Which of the following is not an equitable remedy?
A. Rescission
B. Restitution
C. Reformation
D. Injunction
E. Novation
The ______ rule is a common law rule that addresses the admissibility of oral evidence
as it relates to written contracts.
A. oral admissibility
B. oral evidence
C. parol evidence
D. frauds evidence
E. deficient evidence
International Expansion. Zach wants to expand his coffee business internationally – into
Zeno, a small remote country in Africa. His best friend Zora asks him if he plans to hire
legal counsel for the expansion. Zach replies, “Of course not. The U.S. has the strictest
laws regarding contracts, employment, and business practices. So long as I’m legal here,
I’m legal anywhere. Besides, I studied up on Zeno law ten years ago, and I know it all.”
Zach proceeds and lands in jail in the remote country of Zeno for violating recently
passed laws protecting employees and mandating certain benefits. Authorities there
claim that he sexually harassed an employee, failed to pay sufficient wages, and failed
to give employees Zeno’s mandated 12 weeks of vacation per year.
The type of law involved in comparing laws between the U.S. and Zeno is ______.
A. comparative law
B. contributory law
C. comprehensive law
D. complete law
E. delineated law
A person in a position of trust and confidence is known as a(n) ___________.
A. agent
B. principal
C. fiduciary
D. independent contractor
E. employer
Earthquake. Stewart, the owner of ABC Construction, agreed with Joan, the owner of
XYZ Hotel that he would complete renovations on her upper scale hotel on the beach in
Florida by October 1. The amount due to Stewart under the contract was $250,000. The
contract contained a clause by which Stewart would pay Joan $50,000 for each day he
was late on completing the project. Unfortunately, an unexpected strong earthquake
shook the area; and while the earthquake did not damage the hotel itself, Stewart
encountered significant difficulty in getting supplies due to the high demand for
building material following the earthquake. Because he believed that traveling, himself,
to other states to obtain supplies would be prohibitively expensive, he delayed the
project for two weeks while waiting for local stores to have sufficient supplies
available. Stewart finished renovations six days late. Joan told Stewart that she owed
him nothing but that he owed her $50,000. Stewart told Joan that he was suing for the
entire $250,000 because it was not his fault the earthquake delayed matters. Which of
the following is Stewart’s best defense?
A. Impossibility
B. Commercial impracticability
C. Frustration of purpose
D. Profit reduction
E. Material breach
Which of the following is true regarding the mirror-image rule and the UCC?
A. The mirror-image rule applies under the UCC the same as it is applies under
common law.
B. The mirror-image rule that applies under common law does not apply under the
UCC.
C. The mirror-image rule that applies under the common law applies under the UCC
only if a lease is involved.
D. The mirror-image rule that applies under the common law applies under the UCC
only if a sale of goods is involved.
E. The mirror-image rule under the UCC does not apply to common law.
Which of the following can be considered after-acquired property?
A. Inventory.
B. Livestock.
C. Equipment.
D. Inventory, livestock, and equipment.
E. Inventory and equipment, but not livestock.
An event that must occur in order for a party’s duty to arise is called a(n)
________________.
A. integrated contract
B. parol evidence
C. condition precedent
D. incomplete contract
E. delegation
Which of the following was the result on appeal in the case in the text Shelby’s, Inc. v.
Sierra Bravo Inc., involving the issue of whether an agreement to deposit debris and
soil on land came within the statute of frauds?
A. The court ruled that the agreement did not involve an interest in land and did not
come within the statute of frauds.
B. The court ruled that the agreement did involve an interest in land and, that it came
within the statute of frauds, and that no oral agreement was sufficient.
C. The court ruled that the agreement did not involve an interest in land but placed it
within the statute of frauds in order to prevent injustice.
D. The court ruled that the agreement fell within the statute of frauds but that an oral
agreement was sufficient.
E. None of these.
When can government agents obtain a search warrant?
A. When they can establish reasonable cause.
B. When they can establish probable cause.
C. When they can establish cause to a substantial certainty.
D. Anytime they have an informant.
E. Anytime the judge is in his office and they show identification as government agents.