Under the Federal Trade Commission “franchise rule,” a franchisor may make sales
projections for a potential franchisee based on sales of an existing franchise, but not on
sales of a hypothetical franchise.
A cooperative is a form of co-ownership of a single-dwelling building.
A mortgagor is obligated to pay the amount of the mortgage according to the terms of
the mortgage, even if the document is not recorded.
Although some states permit oral franchise agreements, most have enacted Statutes of
Frauds that require franchise agreements to be in writing.
Drawers sometimes write checks that omit certain information, such as the amount of
the check or the payee’s name, either on purpose or by mistake. These are called
“implied-in-law” checks.
Non-judicial collection efforts, such as ‘self-help” activities like repossessing a car, are
‘stayed” by the filing of a voluntary or involuntary bankruptcy petition.
A person who discloses material nonpublic information to another person is called a
“tippee.”
A debenture is a long-term debt security that is secured by some form of collateral.
If a member disassociates from an “at-will” limited liability company, and the
disassociation was not wrongful, the limited liability company must purchase the
disassociated member’s distributional interest.
Even though an unperformed promise qualifies as consideration, an unperformed
promise does not meet the value requirement for qualifying as a holder in due course.
A serious health condition that makes an employee unable to perform his or her duties
is a situation covered by the Family and Medical Leave Act.
The Sarbanes-Oxley Act of 2002 was enacted by the United States Congress to bring
more transparency to securities markets and to eliminate conflicts of interests that
previously existed in the securities industry.
The Equal Protection Clause generally requires that businesses, both private and public,
treat similarly situated persons similarly.
A non-manager member of a “manager-managed” limited liability company is never
entitled to remuneration for services performed for the limited liability company.
In a declaration of duties, the delegatee is not liable to the obligee for nonperformance
or negligent performance, and the obligee cannot recover damages from the delegatee.
There are two (2.) kinds of powers of attorney: 1.) the express power of attorney; and
2.) the implied power of attorney
A union is permitted to discipline its members for walking off the job in a
non-sanctioned strike.
All members of the United Nations General Assembly are automatically members of
the World Trade Organization.
Title VII of the Civil Rights Act of 1964 applies to all employers, regardless of the
number of employees.
Under the “rule of reason” for violations under the Sherman Act, certain restraints of
trade can be legal in some circumstances, and illegal in others.
Bankruptcy courts are part of the federal court system, and one bankruptcy court is
attached to each of the ninety-four United States district courts in the country.
The Consumer Product Safety Commission (CPSC) can seek injunctions, bring actions
to seize hazardous consumer products, seek civil penalties for knowing violations of the
act or of CPSC rules, and seek criminal penalties for knowing and willful violations of
the act or of CPSC rules.
In a case involving misappropriation of the right to publicity, the plaintiff can recover
the unauthorized profits made by the offending party, but the plaintiff is not entitled to
obtain an injunction preventing further unauthorized use of his or her name or identity.
The Dodd-Frank Wall Street Reform and Consumer Protection Act is the greatest
overhaul of the United States financial system since major banking laws were enacted
during the Great Depression of the 1930s.
A participant in an activity subject to strict liability is liable for damages even if there is
no fault on the part of the participant.
Adoption agencies are always required to provide information regarding an adoption to
either the biological parent or to the adopted child upon formal request.
A private antitrust civil treble-damage action, in which there is no suit by the
government, must be brought within four years from the date that the plaintiff’s injury
occurred.
The tort of misappropriation of the right to publicity is also called the tort of
excoriation.
Government enforcement of federal antitrust laws is divided between the Antitrust
Division of the Department of Justice and the Bureau of Competition of the Federal
Trade Commission (FTC).
A forged check is never “properly payable.”
If a majority of the U.S. Supreme Court justices agree as to the outcome and reasoning
used to decide a case, it is a plurality decision.
The primary purpose of using a living trust is to avoid probate associated with using a
will.
The mailbox rule proves that revocations of offers take effect the moment they are
mailed.
Requirements for recovery for the negligent infliction of emotional distress vary from
state to state.
Assault requires that the defendant touch the plaintiff in some manner.
Generally, shareholders owe a fiduciary duty to other shareholders of the corporation.
Many states have replaced the doctrine of comparative negligence with the doctrine of
contributory negligence.
Rescission and restitution are designed to give the parties the benefit of the bargain.
In a limited liability partnership, there is no tax paid at the partnership level, and all
profits and losses are reported on the individual partner’s income tax return.
A drawee is not liable to pay a draft until the drawee has accepted it.
An agreement between shareholders that addresses how they will vote their shares in an
upcoming election of the board of directors is called a(n):
A) voting trust.
B) proxy.
C) voting agreement.
D) agency agreement.
E) quorum agreement.
Vicki has a checking account with Little Bank. She also has a debit card issued by Little
Bank. Unfortunately, Vicki’s purse and debit card are stolen when she leaves her purse
in the car. Vicki realizes the theft has occurred, but is not too concerned because she
took Business Law at the local community college, and seems to recall that her liability
is limited to $50. As a result, she does nothing until she gets her bank statement 25 days
later and sees that there was an unauthorized use of the card for $400. She calls the
bank 10 days after she gets her bank statement and tells them about the purse-
snatching. They refuse to credit her with the $400. Assume the Electronic Fund Transfer
Act governs. Which of the following is true?
A) Vicki will have to pay the $400, because she should have notified the bank of the
theft within ten days of the purse snatching.
B) Vicki will have to pay the $400, because she should have notified the bank within
two days of the purse snatching.
C) Vicki would have to pay the $400, regardless of when she notified the bank of the
purse snatching.
D) Vicki does not have to pay the $400, because liability on a debit card is always
limited to $50.
E) Vicki does not have to pay anything, because when a theft is involved, the customer
owes nothing.
Gloria owns a piece of real property. She sells one-half of this property to Sam, but
reserves the right to cross over Sam’s land to get to her remaining land. Gloria has
created a(n):
A) easement in gross.
B) easement appurtenant.
C) easement a prendre.
D) license.
E) license appurtenant.
Assuming that statutory requirements are met, what is protected under merchant
protection statutes?
A) Merchants are protected from the intentional torts of their customers.
B) Merchants are protected from product disparagement claims of their competitors.
C) Merchants are protected from product disparagement claims of their suppliers.
D) Merchants are protected from false imprisonment claims of persons reasonably
detained on suspicion of shoplifting.
E) Customers are protected from the negligent conduct of merchants.
For what period of time may a minor disaffirm a contract after reaching the age of
majority?
A) three (3) months
B) six (6) months
C) one (1) year
D) three (3) years
E) a reasonable period of time
Under the implied warranty of merchantability:
A) fungible goods must be of the highest quality unless otherwise stated.
B) both merchants and nonmerchants can generally be held liable.
C) what is contained on a label is not considered in determining if the warranty has
been breached.
D) a lot (group) of goods meets the warranty requirement so long as, on average, the
goods are of sufficient quality even if there is considerable variation and some of them
are of inferior quality.
E) the warranty requires that the goods be adequately contained and packaged.
What is a letter of credit?
A) A letter of credit provides parties with a way to pay for a sale or lease transaction
under the UCC.
B) A letter of credit is required for any transaction under Revised Articles 2 and 2A.
C) A letter of credit promotes international trade and provides sellers with a guaranteed
payment by a bank if the buyer fails to pay.
D) A letter of credit is an assurance by a bank, that the buyer has the ability to pay for a
sale or lease transaction.
E) A letter of credit documents the buyer’s credit history, so that the seller can determine
whether to sell to the buyer on credit or require cash payment.
In a(n) ________ the seller is the offeror, and the bidders are the offerees.
A) auction with reserve
B) auction without reserve
C) unilateral contract
D) bilateral contract
E) executory contract
The right to cure extends beyond the date that delivery is called for under the contract:
A) only if the contract allows.
B) in all contracts covered by the UCC.
C) in any situation where it is commercially reasonable that it extend.
D) in any situation where cure by the original delivery date would impose a hardship on
the seller.
E) in any situation where the seller reasonably believed that the buyer would accept the
nonconforming goods.
Bob owns a life estate in a ranch in Idaho. This means that:
A) he can live on the ranch as long as he lives, but if he moves off the ranch, he loses it.
B) he can live on the ranch as long as he lives, or he can sell this right to someone else.
C) Bob or his immediate family can live on the ranch, so long as at least one of them is
still living.
D) Bob must live on the ranch for the rest of his life.
E) if Bob sells his life estate to Barbara, she will be able to live on the ranch for the
remainder of her life.
The Federal Currency Reporting Law requires financial institutions to file a Currency
Transaction Report with the Internal Revenue Service, reporting the receipt in a single
transaction or a series of related transactions of cash in an amount greater than:
A) $1,000.
B) $2,000.
C) $3,000.
D) $5,000.
E) $10,000.
Under which of the following must an employee join the union within a certain number
of days after being hired?
A) union shop
B) agency shop
C) closed shop
D) open shop
E) steward shop
Which of the following is not true about promoters of a corporation?
A) A promoter can be relieved of liability on a contract entered into on behalf of a
corporation with a third party if, after the corporation is formed, there is a novation.
B) A promoter can be relieved of liability on a contract entered into on behalf of a
corporation with a third party if, at the time the contract is entered into, the third party
agrees to a novation to occur automatically upon the valid creation of the corporation.
C) The creation of the corporation does not automatically release the promoter from
contracts entered into on behalf of the corporation.
D) If the corporation fails to come into existence, the promoter cannot be held liable on
a contract entered into on behalf of the corporation.
E) If the corporation is formed, it becomes liable on a promoter’s contract only if the
promoter agrees to be bound by the contract.
Internet domain names are assigned by:
A) the United States Patent and Trademark Office.
B) a sub-agency of the Commerce Department.
C) Network Solutions, Inc.
D) Network Solutions, Inc., and other authorized companies.
E) state administrative offices.
Which branch of government has the authority to determine the validity of a law?
A) executive
B) administrative
C) judicial
D) legislative
E) federal
What is the tangible token rule?
A) a rule that prevents the assignment of contract rights unless there is a tangible token
of proof that the right was assigned
B) a rule that provides that when the same contract right has been assigned to more than
one assignee, the right belongs to the person in possession of the tangible token of the
assignment
C) a rule that requires the assignee of a contract right to give some tangible token of
consideration in exchange for being assigned the contract right
D) a rule that requires the assignor of a contract right to retain some tangible token of
the right assigned
E) a rule that prevents the assignment of contract rights unless a tangible token in the
form of a monetary deposit has been provided
The United States Supreme Court has applied the ________ doctrine and held that most
of the fundamental guarantees contained in the Bill of Rights are applicable to
________ government action.
A) incorporation; federal
B) incorporation; state and local
C) validation; federal
D) validation; state and local
E) validation; foreign
Mike and Jill enter into a written contract for the lease of a car. Jill has leased cars from
Mike on two previous occasions. The lease states “the car may be driven for a
reasonable number of miles each year and there may be a surcharge for excessive
mileage.” At the end of the lease, which last for two years, Jill has put 100,000 miles on
the car. Mike charges Jill a surcharge and Jill refuses to pay because she does not
believe that 100,000 miles in two years is excessive. What will the Court consider first,
in determining what the lease meant by “reasonable number of miles”?
A) Any oral or written statements made by Mike or Jill regarding the meaning of
“reasonable number of miles.”
B) The fact that in the first year, Jill brought the car to Mike for an oil change, the car
had 60,000 miles at the time and Mike did not complain.
C) The fact that in the past Jill has driven the other leased cars for 100,000 miles
without being charged.
D) The fact that in the car leasing business, “reasonable number of miles” usually
means 30,000 miles a year.
E) The fact that Mike charges all of his customers a surcharge when they drive more
than 20,000 miles each year.
For Statute of Frauds purposes, an interest in land includes (but is not limited to):
A) fixtures.
B) mortgages.
C) insurance contracts on interests in land.
D) fixtures and mortgages
E) fixtures, mortgages, and insurance contracts on interests in land.
Multinational corporations are also called ________ -national corporations.
A) supra
B) quasi
C) non
D) trans
E) inter
Merchant protection statutes are also known as the ________.
A) store owner’s discretion
B) employer’s privilege
C) shopkeeper’s privilege
D) shopkeeper’s discretion
E) employee’s privilege
Horizontal price fixing occurs when:
A) one or more companies charge the same prices for goods at all of their stores for an
unreasonable length of time.
B) a manufacturer requires its independent dealers to sell its products at a set price.
C) a company with the entire market on a patented product sells the product at a fixed
price.
D) two or more competing companies agree on the prices to charge for their products.
E) prices are determined with reference to an index, such as the average price of crude
oil, which neither the seller nor the purchaser can control.
The following are required to be proven in a negligence case except:
A) the defendant owed a duty or care to the plaintiff.
B) the defendant was aware of the consequences of his actions when they were done.
C) the defendant breached the duty of care.
D) the defendant’s negligent act was the actual cause of the injury to the plaintiff.
E) the injury was a foreseeable consequence of the defendant’s conduct.
The ________ created the ________ and empowered it to administer federal securities
laws.
A) Securities Act of 1933; Interstate Commerce Commission
B) Securities Act of 1934; Interstate Commerce Commission
C) Securities Exchange Act of 1933; Securities and Exchange Commission
D) Securities Exchange Act of 1934; Securities and Exchange Commission
E) Securities Exchange Act of 1935; Securities and Exchange Commission
Extortion is also commonly called:
A) larceny under rightful color.
B) embezzlement.
C) deceit.
D) bribery.
E) blackmail.
Even if a debtor qualifies under the median or means test, Chapter 7 relief may be
denied by the court because of bad faith, or after examining the:
A) “circumstances of the situation.”
B) “totality of the factors.”
C) “entirety of the circumstances.”
D) “totality of the circumstances.”
E) “entirety of the situation.”
Which of the following is true about copyrights?
A) Copyright protection lasts for 20 years.
B) Copyright protection is effective only if the work has been properly registered.
C) It is not necessary to mark a work as copyrighted in order for it to be protected.
D) In order to obtain a copyright, work must be novel, useful and non-obvious.
E) A work cannot be copyrighted if there is a likelihood of confusion with another
work.
State ________ laws set a(n) ________ limit on the annual interest rate that can be
charged on certain types of loans.
A) pecuniary; upper
B) pecuniary; lower
C) usury; upper
D) usury; lower
E) usury; sliding-scale
In order for an offer to be accepted, which of the following parties must communicate
the offer?
A) the offeror
B) the offeree
C) the offeror’s agent
D) the offeree’s agent
E) the offeror or the offeror’s agent
Article ________ of the Uniform Commercial Code (UCC) establishes warranties that
apply to lease transactions.
A) 1A
B) 1B
C) 2A
D) 2B
E) 3A
Rule 10b-5 of the Securities Exchange Act of 1934 applies to:
A) the issuance of securities covered by a registration statement.
B) the trading of securities, if the trading is performed on a national exchange.
C) only transactions connected with a merger or consolidation.
D) any transfer of securities.
E) only transfers made in violation of a transfer restriction.