Utilitarianism has been applauded because it is easy to estimate the “good” that will
result from different actions.
To prove fraud, the following elements must be shown: 1) The wrongdoer made a false
representation of a material fact; 2) The wrongdoer intended to deceive the innocent
party; 3) The innocent party unjustifiably relied on the misrepresentation; and 4) The
innocent party was injured.
Proxies may be in writing or posted online.
A signature can operate as a valid indorsement even if the indorsement is accompanied
by other words.
The term franchise refers to both the agreement between the parties and the franchise
outlet.
Courts have the absolute discretion to award a remedy of specific performance if the
subject matter of the contract is common.
If Section 1 of the Sherman Act were read literally, it would prohibit almost all
contracts.
Because e-mail is usually read privately at one’s desk, employers cannot inspect the
contents of employee e-mail messages as a way to try to prevent sexual harassment in
the workplace.
As a general rule, in order to disaffirm a contract, a minor is obligated only to return the
goods or property he or she has received from the adult in the condition it is in at the
time of disaffirmance.
“Donative intent” means that the donor must accept the goods for a gift to be valid.
A franchise agreement is usually written so that most issues can be negotiated, allowing
the parties to either come to a satisfying agreement from the start, or to renegotiate the
terms and conditions of the contract during the business relationship between the
franchisor and the franchisee .
Consideration that is exchanged after mutual assent to the present contract is called past
consideration.
A homeowner’s policy is a comprehensive insurance policy that includes coverage for
the real and personal risks covered by a fire insurance policy, as well as personal
liability insurance.
In a sale on approval, a buyer accepts goods, if the buyer uses the goods inconsistently
with the purpose of the trial.
The Electronic Communications Privacy Act provides that an injured party may sue for
civil damages for violations of the Act.
The United States Supreme Court has held that public officials cannot recover for
defamation unless they can prove that the defendant acted with “actual malice.”
Common stock, preferred stock, bonds, debentures, and warrants are examples of
statutorily-defined securities.
Under the cumulative method of voting, a stockholder must vote all his or her votes for
one candidate.
An auditor must conduct a sampling of inventory to verify the figures contained in a
client’s financial statements.
Some forms of negotiable instruments extend credit from one party to another.
Professional corporations are prohibited in most states.
Defendants convicted of violations may sometimes be sentenced to jail.
An electronic agent is a telephonic or computer system established by a seller to accept
e-commerce orders.
GATT is a multilateral treaty that establishes trade agreements and limits tariffs and
trade restrictions among its more than 150 member nations.
Generally speaking, an oral contract that the Statute of Frauds requires to be in writing
is unenforceable by either party.
Any contract entered into by a person who has been adjudged insane is void.
In the United States, most contract rights are assignable.
By filing a lawsuit with a court, a plaintiff gives the court in personam jurisdiction over
himself or herself.
Maximizing individual freedom is a function of the law.
A corporation must notify shareholders of the existence of their appraisal rights before a
transaction can be voted on.
If both management and labor approve, managers can belong to the same union as the
employees that they manage.
In terms of the right of redemption, most state laws provide that any party in interest,
such as a second mortgage holder or another lienholder, may redeem the property
during the redemption period.
The Supreme Court leniently construes implied exemptions from antitrust law.
The finder of lost property acquires the same rights as the finder of mislaid property.
The landmark case that initially defined the liability of accountants to third parties was
Supramares Corporation v. Goldman Sachs.
Restraints of trade that are not characterized as per se violations are examined using the
rule of reason.
A tender of delivery occurs when the seller holds the goods available for the buyer to
take delivery and notifies the buyer the goods are available for delivery.
Which of the following is true about the case against McDonald’s for serving very hot
coffee?
A) The plaintiff was not allowed to recover because she assumed the risk of injury.
B) McDonald’s coffee was found to be the same temperature as that served by its
competitors.
C) McDonald’s had turned down a pretrial offer of settlement which was much lower
than the amount awarded by the jury.
D) McDonald’s paid the amount to the plaintiff that the jury awarded.
E) The jury concluded that McDonald’s committed an intentional wrong.
It is payday, and Jane receives her paycheck and heads to the bank to deposit the check.
Before leaving her office she signs the check with a blank indorsement. When she
arrives at the bank she realizes that she has lost the check.
A. If Mike finds the check, what rights does Mike have?
B. How could Jane have indorsed the check to give herself the best protection from
accidental loss or theft?
In the landmark caseGreenman v. Yuba Power Products, Inc., the California Supreme
Court adopted the doctrine of ________ as a basis for product liability actions.
A) negligence
B) comparative negligence
C) contributory negligence
D) strict liability in tort
E) res ipsa loquitur
________ is the threat of immediate harm or offensive contact, or any action that
arouses reasonable apprehension of imminent harm.
A) negligence
B) negligent infliction of emotional distress
C) intentional infliction of emotional distress
D) assault
E) battery
A unilateral contract is:
A) a promise for an act.
B) a promise for a promise.
C) an exchange of money in return for any other property of value.
D) an act for an act.
E) an exchange of money.
Which of the following is not required to be included in a certificate of limited
partnership?
A) the general character of the business
B) the amount of capital contributed by each partner
C) the name and business address of each limited and general partner
D) the portion of profits to be distributed to each limited and general partner
E) the latest date on which the limited partnership is to dissolve
Grinning Pig Restaurant contracts to purchase 100 specially-manufactured tablecloths
with its logo of a smiling pig on them. After the seller completes them, Grinning Pig
wrongfully refuses to accept or pay for the tablecloths. The tablecloths cannot be sold in
the open market. If the seller sues Grinning Pig, what is the proper measure of
damages?
A) the contract price less the resale price
B) fair market value less the contract price
C) the contract price
D) the cover price less the contract price
E) lost profits
Brittany and Lindsay are American citizens on spring break in Mexico. After a hard
night of partying, they are arrested and put in jail. They reside in a state that has
legalized marijuana and considers public nudity a violation subject only to a fine. In
Mexico, the drug charge is a felony, and public nudity is a misdemeanor. They are each
sentenced to five years in a Mexican prison. Their parents petition the United States
government to intervene on behalf of the young women and demand that Mexico
release them. What is the likely outcome?
A) The young women are guilty under the Foreign Corrupt Practices Act because they
broke the law in a foreign country.
B) The “act of state” doctrine will prevail, and the United States will not be permitted to
challenge an act of Mexico in enforcing its own laws.
C) The International Court of Justice will intervene to assure justice.
D) The United Nations may be petitioned to conduct an international arbitration
proceeding to assure justice.
E) The criminal provisions of the North American Free Trade Agreement will be
applied to ensure justice.
Chancery Courts were also known as:
A) law courts.
B) equity courts.
C) criminal courts.
D) merchant courts.
E) legal remedy courts.
If parties to a contract do not specify when payment should be made. Under the UCC,
payment must be made:
A) within 90 days.
B) within 60 days.
C) within 30 days.
D) within a reasonable time.
E) at the time and place of deliver of the goods or title.
What is the essential element of the “conscious parallelism” defense under Section 1 of
the Sherman Act?
A) independent action by the parties, without an agreement between the parties
B) knowledge by independent parties of their conduct
C) other parties undertaking actions similar to those agreed-upon by the defendants
D) a pattern of similar violations
E) an injury that cannot be directly traced to the violation
In general, who can effectively accept an offer for a unilateral contract?
A) any person who performs the action requested in the offer, which can occur either
before or after learning of the offer
B) any person who performs the action requested in the offer, so long as the offer had
been communicated to that person prior to the performance of the act
C) any person who promises to perform the action requested in the offer, which can
occur either before or after learning of the offer
D) any person who promises to perform the action requested in the offer, so long as the
offer had been communicated to that person prior to the making of the return promise
E) any person willing to perform the contractual duties before being paid
The Insider Trading Sanctions Act:
A) permits the Securities and Exchange Commission to obtain a civil penalty of up to
three times the illegal profits, gains, or losses avoided on insider trading.
B) permits a private party to obtain a civil penalty of up to three times the illegal
profits, gains, or losses avoided on insider trading.
C) permits the Securities and Exchange Commission to obtain a civil penalty of up to
two times the illegal profits, gains, or losses avoided on insider trading.
D) permits either the Securities and Exchange Commission or a private party to obtain a
civil penalty of up to two times the illegal profits, gains, or losses avoided on insider
trading.
E) allows insider trading to be prosecuted in state criminal courts.
Molly, a non-merchant, is at a boat store and orally agrees to purchase a sailboat for
$2,000. Molly sends a written confirmation to the boat dealer the next day describing
all relevant terms of their agreement. There is no response from the store. When Molly
goes to the store a week later to pick up the boat, the store refuses to sell the boat for
$2,000. Which is true regarding whether the Statute of Frauds has been satisfied?
A) This Statute of Frauds has not been satisfied.
B) This Statute of Frauds has been satisfied because the boat dealer did not object to the
written confirmation.
C) This Statute of Frauds has been satisfied if $2,000 is a reasonable price for the boat.
D) This Statute of Frauds has been satisfied because the boat dealer is a merchant.
E) The firm offer rule would require the boat to be sold at the offered price of $2,000 in
order for the Statute of Frauds to be satisfied.
Which doctrine was overturned in the case of Brown v. Board of Education?
A) the legality of poll taxes
B) the permissibility of separate but equal facilities
C) allowing only white males to vote
D) the acceptability of paying women less than men for comparable work
E) differential working hours for male and female factory workers
Which of the following statements is true regarding the relationship of law and ethics?
A) The legal requirements will almost always be the same as the ethical requirements,
because the law is based on the ethical standards.
B) In some cases ethics will require a higher standard of conduct than the law, but never
vice versa.
C) In some cases the law will require a higher standard of conduct than ethics, but never
vice versa.
D) Depending on the circumstances, the law can require a higher, lower, or the same
standard of conduct as ethics demands.
E) There is substantial disagreement about legal standards of conduct, but not about
ethical standards of conduct.
Mabel is 84 years old and on most days is mentally incompetent although she has not
been adjudged insane. She has some days when she is fully aware mentally. On one of
her good days, Mabel agreed to buy a five-year subscription to a wrestling magazine.
Can Mabel avoid this contract?
A) no, because it was entered into at a time when Mabel was mentally competent
B) no, because it is for necessary educational purposes
C) yes, but only if she disaffirms when she is not mentally competent
D) yes, because this contract is void and never came into existence
E) yes, because this contract is voidable at Mabel’s election
Which of the following is false regarding innkeepers’ statutes?
A) Most states have enacted innkeepers’ statutes.
B) Innkeepers’ statutes limit the liability of innkeepers.
C) In order to come within the protection of such statutes, innkeepers generally need to
provide a safe in which guests’ valuable property may be kept, and guests need to be
made aware of the safe’s availability.
D) Most states do not allow an innkeeper to limit the dollar amount of its liability by
notifying guests of the limit.
E) Innkeepers’ statutes alter the effect of common law.
Which of the following statements is true regarding a manager-managed LLC?
A) A member of a manager-managed LLC who is not a manager still owes a fiduciary
duty of loyalty to the LLC.
B) A member of a manager-managed LLC who is not a manager still owes a fiduciary
duty of care to the LLC.
C) A member of a manager-managed LLC who is not a manager still owes both a
fiduciary duty of loyalty and a fiduciary duty of care to the LLC.
D) A member of a manager-managed LLC who is not a manager owes a fiduciary duty
of care, but not a fiduciary duty of loyalty, to the LLC.
E) A member of a manager-managed LLC who is not a manager owes no fiduciary duty
of loyalty or care to the LLC.
Whatsamatter U. has just fired Mike, professor who has been very critical of the
administration, even though he has been a very effective and popular professor. He has
also won numerous awards for his research. A school that Mike has applied to has asked
for a reference and the president of Whatsamatter U., intending to hurt Mike’s career,
replies by letter that Mike was a poor teacher, hated by his students and did research of
questionable quality. Mike does not get the job because of the poor reference. If Mike
finds out about the reference, he can likely succeed in suing on the basis of:
A) disparagement.
B) libel
C) slander.
D) disparagement and libel
E) disparagement and slander
Which of the following is created based on a specific agreement?
A) implied agency
B) express agency
C) apparent agency
D) agency by necessity
E) agency by ratification
Which of the following is not typically covered in a franchise agreement?
A) covenant not to compete
B) arbitration clause
C) duration
D) licensing of intellectual property
E) franchisee’s personal and business credit history
Marvin owns several thousand shares of Goodguy Corporation. Bigandbad Corporation
has proposed a merger with Goodguy where Bigandbad will be the surviving
corporation. Bigandbad is proposing to give each current Goodguy shareholder some
Bigandbad stock and some cash for each share of Goodguy. Marvin is opposed to some
of the corporate policies of Bigandbad, and does not want to own any of its stock. What
is Marvin’s best course of action in this situation?
A) Marvin can hope to obtain the support of other shareholders in opposing the merger,
but he must go along with the merger if it is approved.
B) Marvin can hope to convince the board of directors of Goodguy to oppose the
merger, but if he is unsuccessful, he must go along with the merger.
C) Marvin can invoke his appraisal right, and would be entitled to receive cash for his
shares, even though the merger plan includes the receipt of Bigandbad shares.
D) Marvin can invoke his appraisal right, but because part of the price paid for the
Goodguy shares is in the form of stock rather than cash, his appraisal right is limited.
E) Marvin can invoke his appraisal right, but he can only increase the number of shares
he receives, and cannot receive any cash.
Which of the following is true about trusts?
A) They can become effective only after the settlor dies.
B) The trust beneficiary has equitable title to the trust res, but not legal title.
C) The trust documents are a matter of public record.
D) The trust “corpus” refers to the person or persons who receive the trust property.
E) The beneficiary is responsible for collecting money owed to the trust, paying trust
taxes, and maintaining proper trust records.
Which type of indorsement indicates that the proceeds from an instrument must be
deposited into a bank account?
A) blank
B) institutional
C) restrictive
D) qualified
E) controlling
A life estate for the life of another is a life estate:
A) appurtenant.
B) by the entirety.
C) with a license.
D) pour autre vie.
E) a-prendre.
Painter contracts to paint the interior of Owner’s home for $2,000. In each of the
following unrelated examples, indicate what amount of damages Owner is entitled to
recover from Painter.
a. Painter stops work when halfway finished. Owner pays someone else $1,700, a
reasonable amount, to finish the work. Owner has paid Painter $700.
b. Painter stops work when 75% finished with the job. Owner pays someone else
$1,500, a reasonable amount, to finish the work. Owner has paid Painter $700.
c. Painter stops work when 50% finished with the job. Owner pays someone else $1,800
to finish the job, but could have paid yet another person who would have done an
acceptable job $1,500 to finish it. Owner has paid Painter $700.
d. Painter stops work when 50% finished with the job. Painter finds someone who will
finish the work for $1,100. However, the delay caused $200 in water damage and
Owner missed an opportunity to rent an upstairs apartment in the home for $400 per
month. The painter knew that Owner rented the upstairs apartment and that the delay
would affect Owner’s ability to rent. Owner has paid the original painter $1,200 and the
new painter $1,100. Owner ended up losing two months’ rent before he could find
another renter at $400 per month.
Do Revised Article 2 (Sales) and Revised Article 2A (Leases) change any of the risk of
loss rules?
A) No, the Revised Articles do not change the risk of loss rules, but change passage of
title rules.
B) No, the Revised Articles do not change the risk of loss rules, but include rules for
electronic sales and lease contracts.
C) Yes, the Revised Articles change the risk of loss rules back to the common law rules.
D) Yes, the Revised Articles change the risk of loss rules, so that the seller carries the
risk of loss until the buyer receives the goods.
E) Yes, the Revised Articles change the risk of loss rules, so that the common carrier
bears the risk of loss of goods while they are in transit.
Stella has two adult children, Fred and Ethel. Fred was married, but his wife has died.
They had one child. Rita. Ethel was also married, but she has died. Her husband Ed is
alive, as is Ethel and Ed’s child Betty. If Stella dies intestate, how is her estate
distributed?
A) all to Fred
B) to Fred and Ed equally
C) to Fred, Ed and Betty equally
D) to Fred Rita and Betty equally
E) to Fred, Ed, Rita and Betty equally
Zora signs an unconditional written promise to pay a set amount of money to Will at a
certain time. What type of instrument is this?
A) a promissory note
B) a time draft
C) a check
D) a sight draft
E) a money order
A competitor can lawfully discover a trade secret by performing ________ (for
example, taking apart and examining a rival’s product or re-creating a secret recipe).
A) deconstruction
B) dissolution
C) reverse engineering
D) backward construction
E) reverse osmosis
________ is created if the offer is not accepted.
A) A conditional contract
B) A unilateral contract
C) An injunction
D) An abeyance
E) No contract
Which of the following is true regarding contract validity?
A) A void contract is one where a party has the option to avoid his or her contractual
liability.
B) A voidable contract is one in which a party may avoid his or her obligation under the
contract.
C) A voidable contract is one that has no legal effect because one of the essential
elements is missing.
D) An executory contract is unenforceable.
E) A unilateral contract is unenforceable.
Which of the following statements is true?
A) Generally, the franchisor can terminate the franchisee’s agreement at will.
B) Generally, the franchisor can terminate the franchisee’s agreement at will, but only if
the contract so provides.
C) Generally, the franchisor can terminate the franchisee’s agreement, but only for a
legitimate cause.
D) Many states have enacted laws requiring “just cause” before any
franchise agreement can be terminated.
E) Franchises cannot be terminated without the consent of the franchisee.