Small business bankruptcies apply to companies with assets of less than $5 million.
Fred and Barney enter into a sales contract for $400. Subsequently, they modify the
contract and the modification adds $400 more to the contract. Neither the original
contract nor the modification need be in writing.
In the case of an involuntary petition, the debtor must file the same schedules filed by
voluntary petition debtors.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 makes it much
more difficult for debtors to escape their debts under federal bankruptcy law.
Earnings and losses from a sole proprietorship are reported on the sole proprietor’s
personal income tax filing.
An agency can be formed by the conduct of the parties.
Both the common law and the UCC provide that a contract is created when the offeror
receives the acceptance, not when the offeree sends the acceptance.
In a Sherman Act Section 2 action, a court must define both the relevant geographic
market and the relevant product or service market.
The two (2.) forms of future interests are conversion and joinder.
Federal law cannot prosecute crimes perpetrated over the Internet because it has no
jurisdiction over World Wide Web matters. Such crimes may only be prosecuted in
international courts.
If a person believes that he or she has been discriminated against, he or she must first
file a complaint with the EEOC.
In evaluating the adequacy of a product’s design, a court may apply a “risk-utility”
analysis.
Informal contracts are always oral.
A promoter is automatically released from liability on a promoter’s contract if the
newly-formed corporation agrees to be bound by the contract.
A writing must be on paper in order to qualify as a negotiable instrument.
A principal-accessory relationship is formed when an employer hires an employee and
gives that employee authority to act and enter into contracts on his or her behalf.
In terms of an accountant’s liability for breach of a contract with a client, courts
generally consider damages to be the expenses the client incurs in securing another
accountant to perform the needed services, as well as any fines or penalties incurred by
the client for missed deadlines and lost opportunities.
The final decision in a case is the judge’s verdict.
There is no accountant-client privilege under federal law.
A promissory note is a two-party instrument.
In a Chapter 7 bankruptcy proceeding, a secured creditor’s only legal recovery option is
foreclosure.
Securities issued in a corporate reorganization in which one security is exchanged for
another security are exempt from registration with the SEC.
The death of either the principal or the agent terminates the agency relationship.
In a sale or return contract, the title remains with the seller until the buyer expressly
accepts the goods.
Any powers not delegated to either the federal government or the states are shared by
the federal and state governments.
A lawsuit for any torts connected with a crime must be brought by the victim in a
lawsuit that is separate from the criminal case.
In a criminal case, the burden of proof that the defendant is guilty is on the government.
Most intangible property is transferred by written conveyance.
Shareholders may vote by moxie; that is, they can appoint another person (the moxie) as
their agent to vote at a shareholders’ meeting.
“Key-person” life insurance covers the lives of owners and other important persons who
work for the business. Upon the death of the insured person, key-person life insurance
is paid to the measuring life’s heirs.
In most states, if a contract is disaffirmed due to intoxication, both parties must be
returned to the status quo.
If a franchisee is the actual or apparent agent of the franchisor, the franchisor is
responsible for the torts and contracts the franchisee committed or entered into within
the scope of the agency.
Section 1 of the FTC Act, as amended, prohibits unfair and deceptive practices.
The document filed in order to obtain a corporate charter is called an affirmation of
incorporation.
In a power of attorney relationship, the agent is called the attorney-in-fact even though
he or she is not a lawyer.
A joint tenancy requires that the property owners be related.
An insider is liable for ‘short-swing” profits, even if he/she has not used inside
information.
Buyers and lessees may only accept delivery of a “commercial unit.”
The concept of flexibility in the law is best illustrated by:
A) the use of precedent to decide similar cases in similar ways.
B) passing statutes that purposely do not address precisely how they would apply in all
situations.
C) the use of appointed judges rather than elected judges.
D) imposing mandatory penalties for criminal violations.
E) setting a fixed amount of damages applicable to all wrongful death cases.
In general, an offeror can revoke an offer:
A) only for a reasonable time after the offer is made.
B) at any time before the offer has been accepted.
C) before the offer has been accepted, and for a reasonable time after its acceptance.
D) at any time before or after the offer’s acceptance.
E) only when the offeree agrees to the offer’s revocation.
What right does a shareholder have to inspect the books and records of a corporation?
A) The shareholder has an absolute right to inspect the articles of incorporation,
shareholder list, bylaws and minutes of shareholders’ meetings within the past three
years, and a limited right to inspect other records.
B) The shareholder has an absolute right to inspect all books and records of the
corporation.
C) The shareholder has a limited right to inspect all books and records of the
corporation.
D) The shareholder has a general right to inspect all books and records, but only under
the strict supervision of the board of directors.
E) The shareholder has no right to inspect such documents, unless the corporate bylaws
specifically grant such a right.
The release of one contractual party and the substitution of another party for the
released party is called a(n):
A) substitution by law.
B) removal and replacement.
C) novation.
D) adjudication.
E) accord and satisfaction.
Which of the following is not true about the United Nations?
A) It was founded in 1918 at the end of World War I.
B) Most nations of the world are members.
C) There are only five permanent members of the Security Council.
D) It contains a number of autonomous agencies that deal with specialized problems.
E) Its headquarters are in New York City.
Under what conditions must an employer allow non-employee union solicitation on
company property?
A) if there is currently no union representing the company’s employees
B) if the employees live in a company town such that it would be difficult to solicit the
employees off of company property
C) if the purpose is to solicit employees to change union representation, rather than to
solicit non-union workers to join a union
D) if the purpose of the union is to address issues other than wages
E) if the non-employee is a former employee, and the solicitation is related to the
dismissal
Barry has contracted to paint the exterior of Al’s house for $3,000. Al hired Barry
because he heard that Barry did an excellent job. Because Al really wanted Barry to
paint the house, the contract contained an anti-delegation clause. Barry, however,
delegates his duty to paint the house to his younger brother, Doug. Barry and Doug
agree that Barry will pay Doug $1,900 to paint the house. Doug is unaware of how
much Al is paying Barry. Al is unaware of the fact that Doug will actually be painting
the house. Which of the following is true about this situation?
A) This is an example of a simultaneous assignment and delegation.
B) Barry has committed fraud by not telling Doug how much he is being paid by Al.
C) The anti-delegation clause would not be enforced, and Barry has not breached the
contract.
D) Barry is obligated to pay Doug $3,000 if Doug properly does the complete job of
painting Al’s house.
E) Barry has breached the contract if Doug paints the house.
Which of the following correctly ranks the types of crimes from most serious to least
serious?
A) violations, misdemeanors, felonies
B) violations, felonies, misdemeanors
C) misdemeanors, felonies, violations
D) felonies, violations, misdemeanors
E) felonies, misdemeanors, violations
What was the result in Amex Life Assurance Company v. Slome Capital Corp.,
involving whether an insurer was bound to pay on a policy, even though the insured had
someone else take his physical examination for him in order to conceal that he was
HIV-positive?
A) The insurer did not have to pay the life insurance proceeds, because fraud was
involved.
B) The insurer could avoid payment of the life insurance proceeds, but only if it could
present clear and convincing proof that fraud was involved.
C) The insurer could avoid payment of the life insurance proceeds, regardless of
whether fraud was involved.
D) The insurer had to pay the life insurance proceeds, because the insured had medical
privacy rights, and therefore no duty to reveal he was HIV-positive.
E) The insurer had to pay the life insurance proceeds, because the incontestability
clause in the policy prevented the insurer from denying coverage.
A written contract contains an express warranty that the goods will be “made of
stainless steel.” The seller wishes to disclaim this express warranty. How may the seller
accomplish this?
A) This express warranty may not be disclaimed.
B) by language stating that no warranties, express or implied are contained in this
contract
C) by general language, such as “as is” or “with all faults”
D) by specifically mentioning “merchantability”
E) by specifically mentioning “fitness for a particular purpose”
What is the tort liability of an agent if the tort was committed within the “course and
scope” of the agency?
A) The agent is released from liability.
B) The agent and the principal will be held equally liable.
C) The agent is liable for his or her own tortuous conduct.
D) The agent will be liable, but only if the principal is unable to pay the victim’s
damages.
E) The principal can assert the contributory negligence defense.
When can a minor disaffirm a contract?
A) until reaching a final agreement
B) until a reasonable time after forming the contract
C) until a reasonable time after beginning performance of the contract
D) until reaching the age of majority
E) until the expiration of a reasonable period of time after reaching the age of majority
Under a lease contract, if the tender of delivery of goods does not conform to the lease
contract, when does the risk of loss pass to the lessee?
A) The risk of loss will pass to the lessee when the goods are shipped.
B) The risk of loss will pass to the lessee at the time the lease contract is signed.
C) The risk of loss will not pass until the tender of delivery is corrected to conform to
the lease contract.
D) The risk of loss will not pass until the lease contract is ratified.
E) The risk of loss never passes to a lessee under a lease contract.
Which of the following is true about the tort of invasion of the right to privacy?
A) The tort is actionable only by public figures.
B) True statements or facts that are disclosed cannot support a claim for invasion of the
right to privacy.
C) Placing someone in a “false light” may constitute an invasion of privacy.
D) The tort requires that the defendant entered the plaintiff’s home or place of business
to acquire the information that was disclosed.
E) The claim may only be filed in federal court.
Which of the following is order paper?
A) a check indorsed “pay to Josh”
B) a check payable to the order of Josh and indorsed in blank
C) a check payable to cash
D) a note payable to bearer
E) a certificate of deposit
Directors and officers of a corporation owe a fiduciary duty to act honestly. This duty,
called the duty of ________, requires directors and officers to subordinate their
personal interests to those of the corporation and its shareholders.
A) care
B) loyalty
C) good faith
D) obedience
E) a fiduciary
Mike checked into a hotel in a state that has a typical innkeeper statute. The hotel clerk
notified Mike that a safe was available for his valuables. Mike decided against using the
safe, because he does not trust hotel employees. Mike hid an expensive watch and cash
in a drawer and went out to dinner. When he came back, the watch and cash were gone.
Which of the following is true?
A) The hotel is not responsible for the loss, unless Mike can prove that a hotel
employee stole the items.
B) The hotel is not responsible for the loss.
C) The hotel is responsible for the loss, unless the hotel can prove Mike failed to make
reasonable efforts to hide the items.
D) The hotel is responsible for the loss, unless the hotel can prove that a hotel employee
did not take the items.
E) The hotel is responsible for the loss, but only to a maximum amount of $500.
Which of the following is not true about the European Union?
A) A common currency has been introduced.
B) The European Union has established the EU Commission and delegated certain
powers to it, including the authority to enact legislation, and to take enforcement
actions to ensure member compliance with the treaty.
C) A majority vote is needed to admit a new member.
D) The gross economic output of European Union nations is greater than that of the
United States.
E) The European Union was created in 1957.
When does the passage of title occur under Article 2 of the UCC?
A) It occurs at the time and place goods are shipped in a shipment contract, and upon
reaching the buyer’s place of business or other specified location in a destination
contract.
B) It always occurs when the goods leave the hands of the seller.
C) It does not occur until the buyer indicates acceptance of the goods.
D) It always passes at the same time that risk of loss passes.
E) It occurs at the time payment is made by the buyer.
Waldo washes windows with World-Wide Window Washers. Waldo has just begun the
second year of a three-year contract that pays him $30,000 per year. Even though Waldo
has performed his job perfectly, he was suddenly told that his contract was being
terminated. Waldo was offered a couple of other jobs shortly after this contract was
terminated. The first was as a custodian in a city 200 miles away paying $24,000 a year.
The second was as a cook in a local fast food restaurant paying $22,000 a year. Waldo
took neither job. In connection with his duty to mitigate, which of the following is true?
A) Waldo would not be obligated to accept the custodian job.
B) Waldo would not be obligated to accept the cook job.
C) Waldo would not be obligated to accept either job.
D) Waldo would be obligated to accept one of the jobs of his choosing.
E) Waldo is not obligated to accept any job of any kind for the duration of the contract
that was breached.
AutoUniverse, a new car dealer, borrowed $500,000 from a bank and signed a security
agreement giving the bank a security interest in “all current inventory, and all inventory
acquired in the future.” The bank forgot to file a financing statement. One year later,
AutoUniverse defaults. At the time of default, AutoUniverse owed $400,000 and had
275 cars in inventory, only 15 of which had been in inventory when the security
agreement was signed. No other creditor had a security interest in the cars. What can
the bank do with respect to the cars in AutoUniverse’s inventory?
A) repossess all the cars, sell them, and keep all of the proceeds
B) repossess all the cars, sell them and keep the proceeds, but not more than $500,000
C) repossess all the cars, sell them and keep the proceeds, but not more than $400,000
D) repossess only the 15 cars that were in inventory when the security agreement was
signed, sell them and keep the proceeds, but not more than $400,000
E) not repossess any of the cars, because the bank has not filed a financing statement
Which of the following is true regarding a shipment contract?
A) It requires the seller to deliver conforming goods to a specific destination.
B) It requires the seller to ship goods conforming to the contract to a buyer via a carrier.
C) Such contracts require the seller to bear the risk of loss to the goods during their
transportation.
D) The risk of loss does not pass until the goods are tendered to the buyer at the
specified destination.
E) It requires the seller to deliver conforming goods to the buyer by use of the seller’s
own trucks.
What is the defining characteristic of a donee third-party beneficiary?
A) The benefit received by the donee beneficiary is a gift.
B) The donee beneficiary has also been delegated a duty.
C) The donee beneficiary was not intended to receive a benefit.
D) The donee beneficiary has preexisting obligations related to the contract.
E) The donee beneficiary status arose out of the assumption of a loan agreement.
Gifts, inheritances, and life insurance proceeds that the debtor is entitled to receive
within ________ days after the petition is filed become part of the bankruptcy estate.
A) 90
B) 120
C) 180
D) 270
E) 365
The main office of the 4th Circuit of the United States Court of Appeals is located in
Richmond, Virginia.
Which of the following pleadings could typically be filed by a defendant in a lawsuit?
A) answer and complaint
B) complaint and cross-complaint
C) motion to intervene and complaint
D) answer and cross-complaint
E) cross-complaint and reply
In 2007, Congress passed a new national minimum wage of $5.85. Which of the
following is true?
A) The state of Delaware must make the state’s minimum wage exactly $5.85.
B) The State of Delaware may enact a minimum wage of $5.75 if it is only applied to
Delaware citizens working within the State of Delaware.
C) The State of Delaware may enact a minimum wage of $6.00 but only after receiving
express permission from Congress.
D) The State of Delaware may enact a minimum wage of $6.00 unilaterally and without
permission.
E) Congress may not enact any laws that interfere with a state’s right to govern its own
citizens so the law will be declared unconstitutional once challenged.
Thelma and Louise decide to kill Thelma’s husband Earl. They decide to poison him
and spend a week planning the murder down to the last detail. On Wednesday, Louise
goes shopping for Earl’s favorite foods and on Thursday Thelma goes to a local
hardware store and buys rat poison. Friday they spend cooking the food and Friday
night before they put the poison in the food, police arrive and arrest them because the
hardware store clerk had called Earl and Earl figured Thelma and Louise were up to
something. Which of the following statements is correct concerning this scenario?
A) No crime was committed because no one was hurt.
B) Thelma and Louise were guilty of attempted manslaughter, because buying the food
constituted an overt act.
C) No crime was committed because conspiracy requires three (3) or more people.
D) Thelma and Louise were guilty of attempted felony murder.
E) Thelma and Louise were guilty of conspiracy, because buying the poison constituted
an overt act.
Two countries who are members of the World Trade Organization have a trade dispute.
One of the countries disagrees with the report of the three-member panel of the World
Trade Organization. What is the next procedural step, assuming the dissatisfied party
wishes to proceed?
A) There is no next procedural step, because the report of the three-member panel is
final.
B) The next procedural step is to the appeals court created by the World Trade
Organization, which is composed of seven professional justices.
C) The next procedural step is to the Supreme International Court.
D) The next procedural step is to the Supreme Court of the prevailing party.
E) The next procedural step is to the dispute settlement body of the World Trade
Organization.
According to Article I, Section 8 of the United States Constitution, which branch
(legislative, executive, or judicial) of government and which level (state or federal) of
government has the “Power…To promote the Progress of Science and useful Arts, by
Securing for limited Times to Authors and Inventors the exclusive Right to their
Respective Writings and Discoveries…”?
A) state legislative
B) state executive
C) federal legislative
D) federal executive
E) federal judicial
Which of the following branch of government is not empowered to establish
administrative agencies?
A) the federal executive branch
B) a state executive branch
C) the United States Congress
D) a state legislative branch
E) a federal or state judicial branch
Probable cause is most directly associated with which step of the criminal process?
A) arrest
B) indictment
C) plea bargaining
D) arraignment
E) jury deliberations
Mike owns an expensive painting when he marries Mandy, and he hangs it in the
marital home. Years later, they divorce. What rights does Mandy have in the painting?
A) Under community property, she is entitled to one-half of the painting’s value.
B) Under equitable division theory, she is entitled to a fair portion of the painting’s
value.
C) a joint tenancy with right of survivorship
D) Mike and Mandy must reach an agreement, or the court will be forced to render its
own decision regarding the couples’ rights in the painting.
E) Mandy has no rights to the painting.