1) if the parties agree on a reasonable amount of damages that will be paid to the
injured party, this amount is known as _____.
a.liquidated damages
b.unconscionable damages
c.penal damages
d.unenforceable damages
2) _____ theory emphasizes that one should use the categorical imperative and judge an
action by applying it universally.
a.utilitarian
b.teleological
c.justice
d.kantian
3) fred sweet runs dancing classes for middle-aged and elderly people. some of freds
customers lack physical coordination, and injuries from kicks, falls, etc. are common.
fred naturally fears that injured customers will sue him for negligence. thus, he makes
each customer sign a written contract containing a clause relieving fred of all liability
for injuries suffered during his dancing classes. however, fearful that he will lose
business if potential customers become aware of his strategy, fred states the clause in
fine print and doesnt point it out to them. an injured customer sues fred in negligence.
fred wants to defend on the basis of the clause in the contract. which of the following is
the biggest weakness in freds position?
a.that fred tried to use an exculpatory clause at all, because such clauses are invalid on
public policy grounds.
b.that fred tried to use an exculpatory clause to relieve himself of negligence liability.
c.that fred has superior bargaining power, which makes the customers acceptance of the
exculpatory clause involuntary.
d.that fred used a fine-print exculpatory clause, which means that the customer lacked
knowledge of the clauses existence.
4) in response to the telemarketing sales rule (tsr), affected commercial telemarketers
initiated litigation brought on lack-of-statutory authority and:
a.first amendment grounds.
b.fourth amendment grounds.
c.fifth amendment grounds.
d.seventh amendment grounds.
5) amy bought mississippi state lottery tickets. several days later, she learned that
someone had won the lottery but that the winner had not yet come forward. she
searched for her ticket to see if she had selected the winning numbers, but was unable to
find it.
although the lottery ticket was gone, amy still possessed the play slip she had used
when she purchased the ticket. she checked the numbers on the play slip and discovered
that she had the winning numbers for the lottery.
reasoning that the play slip would satisfy the lottery office, amy laid her claim. the
lottery office took the position that amy needed to produce the actual winning ticket as
per the rules, and hence denied her claim. amy sued the lottery office for breach of
contract and unjust enrichment. will she succeed?
a.yes, because the play slip should be proof enough to substantiate her claim on the
prize money.
b.yes, because this is a good faith claim and the lottery office should accept amys play
slip as proof of her winning the lottery.
c.no, because amy had made a mistake in losing the original ticket.
d.no, because the rules of the contract prescribed the ticket must be shown to claim the
money. amy had accepted that rule when she entered into the contract and thus she is
now precluded from claiming the prize money.
6) the primary reason to choose the limited liability limited partnership instead of a
limited partnership as a form of business is to:
a.create a tax shelter for the partners.
b.raise large amounts of capital.
c.limit the liability of all of its general partners.
d.relieve owners from managing the business.
7) thomas wants to create an inter vivos trust for the benefit of his adult children. in
order to create a valid inter vivos trust, he must have a level of mental capacity that is
the same as that required to:
a.make a valid contract.
b.make a valid will.
c.stand trial in a criminal case.
d.testify under oath in a criminal case.
8) jacobs put an old typewriter in the trash. the trash collector, land, took the typewriter,
fixed it up, and sold it to jones for $750. jacobs contends that he is entitled to some or
all of the $750 that land received from jones. based on these facts:
a.land is entitled to the value of the improvements he made, but jacobs is entitled to the
difference between the $750 land received and the value of the improvements land
made.
b.land is entitled to keep the full $750 because jacobs had abandoned the typewriter.
c.jacobs is entitled to the $750 because land paid jacobs no consideration for the
typewriter.
d.jacobs is entitled to recover the typewriter from jones.
9) jones hired smith, a general contractor, to build a garage as an addition to jones
home. smith hired adam to do the roofing work on this garage. all the work was done
satisfactorily, and at the completion of the work, jones paid smith the agreed price.
however, smith never paid adam for his work. three weeks after adam finished his work,
he filed a mechanics lien against the property and demanded that jones pays him for his
work. which of the following is most correct?
a.jones need not pay adam because he has already paid in full for the garage.
b.jones need not pay adam because adams contract is actually with smith in this case.
c.jones should pay adam because adam has the right of redemption.
d.jones should pay adam because adam can enforce his lien claim against the property.
10) which of the following is a type of substituted contract in which the obligee agrees
to discharge the original obligor and to substitute a new obligor in his/her place?
a.assignment
b.delegation
c.certification
d.novation
11) the racketeer influenced and corrupt organizations acts (ricos) most controversial
sections allow:
a.federal prosecutors to seek pretrial orders freezing a defendants assets.
b.the government to seek injunctions against future racketeering activities.
c.private individuals to recover treble damages for a statutory violation.
d.government intervention in white-collar crimes.
12) cutco lawn products manufacturing company sells 100 riding lawn mowers to the
smith hardware company, a retailer in the same industry. smith pays for the mowers
with a $50,000 loan from the bass bank. the bank takes a security interest in the mowers
to secure payment of the loan, and perfects it by filing. later, smith sells one of the
mowers to carl, a consumer, who buys in good faith and in the ordinary course of
smiths business. however, carl knows that the bank has a security interest in the
mowers. smith defaults on its loan payments, and the bank moves to repossess all the
mowers. can it repossess the mower sold to carl?
a.since the bank attached its security interest, it may repossess the mower from carl.
b.since the mower is in carls possession now, the bank has no right over this third party.
c.since carl knew about basss security interest, the bank may repossess his mower.
d.since carl bought the mower in good faith, the bank may not repossess his mower.
13) congress enacted the _____ after congressional investigations during the 1950s
uncovered corruption in internal union affairs and revealed that the internal procedures
of many unions were undemocratic.
a.norris-laguardia act
b.landrum-griffin act
c.taft-hartley act
d.wagner act
14) termination of the agency relationship at the option of the agent is known as _____.
a.revocation
b.renunciation
c.falsification
d.liquidation
15) which of the following classes of corporation has members rather than
shareholders?
a.s corporation
b.for-profit corporation
c.publicly held corporation
d.not-for-profit corporation
16) phillips hires addis, who had sixteen prior convictions for the use of hallucinogenic
drugs, as an air traffic controller for his private airport. phillips could easily have
discovered the convictions had he bothered to make a routine criminal record check, but
this was just too much trouble. phillips knew nothing whatsoever about the job of an air
traffic controller, and, when he hired addis, merely told him to get the planes in safely
the best way you know how; the details are up to you. one day, phillips held a private
birthday party for a celebrity and invited 20 of his rich and famous friends, all of whom
were to arrive by a private jet. as it turned out, addis was under the influence of drugs
on this day and, as a result, all 20 of phillipss friends were killed. after this national
tragedy, phillips and addis were sued for negligence by the estates of these people. in
this case:
a.phillips is directly liable for negligent hiring.
b.phillips is liable only under the doctrine of respondeat superior.
c.phillips is not liable because addis is an independent contractor.
d.phillips is not liable because he could never have foreseen addis negligence.
17) _____ indorsements indicate that they are effective only if the payee satisfies a
certain condition.
a.special
b.conditional
c.qualified
d.blank
18) checks that are more than six months old are called:
a.postdated checks.
b.altered checks.
c.stale checks.
d.antedated checks.
19) when an agent suffers losses in conducting the principals business, the principals
obligation is to _____ the agent.
a.indemnify
b.renounce
c.reimburse
d.compensate
20) mark, an attorney, accepts an offer for an attorney position at the firm. prior to
marks first day at work, harold, a managing partner, sends mark an employment policy
manual which contains policies regarding attendance and confidentiality. harold
includes a note advising mark to carefully review the manual as he would be expected
to adhere to its policies. during his first week at the firm, mark is seen leaving the office
at noon with copies of files tucked under his arm. he is also observed giving the copied
files to a man not associated with the firm. at the end of the week, mark is terminated
for violating the terms of the employment policy manual. which of the following is
true?
a.mark may recover his moving expenses under the doctrine of promissory estoppel.
b.the firm breached its express contract with mark by terminating him.
c.the employment policy manual is part of the implied contract between mark and the
firm.
d.the firm may recover marks salary under the doctrine of quasi-contract.