The purchaser’s remedy for violation of Section 12 of the Securities Act of 1933 is
either to rescind the purchase or to sue for damages.
Workers can sue their employers in court to recover damages for employment-related
injuries if the employer does not carry workers’ compensation insurance or does not
self-insure if permitted to do so.
The countries that have voted to use the euro comprise the eurozone.
Private civil actions are permitted under the Fair Labor Standards Act.
UCC Article 2A (Leases) applies to real property leases.
An individual, partnership, or corporation may be a debtor in a Chapter 7 proceeding.
A lease, under UCC Article 2A does not require that the lessee provide consideration
under the agreement.
In applying the objective theory of contracts, the pertinent question to ask is: “Would a
hypothetical reasonable person conclude that the parties intended to create a contract
after considering the words and conduct of the parties and the surrounding
circumstances?”
Under the fault rule, if the prospective groom breaks off the engagement, the
prospective bride gets to keep the engagement ring.
Third-party beneficiaries are either intended or incidental beneficiaries.
A person cannot be held contractually liable on a negotiable instrument unless his or her
signature appears on it.
There are no upper limits on the number of general or limited partners allowed in a
limited partnership.
The existence of a limited liability company begins when the articles or organization
are filed.
One characteristic of independent contractors is that they cannot enter into contracts on
behalf of the principal.
State antitakeover statutes are designed to protect domestic corporations, but not
foreign corporations, doing business in the state.
In order for a surety to be liable, the principal does not have to be in default on the debt,
and the creditor does not have to have exhausted all its remedies against the principal
debtor before seeking payment from the surety.
Ratification must be expressed by written words.
The business or party selling securities to the public is called the “issuee.”
According to the Law and Economics School, promoting market efficiency should be
the central goal of decision making.
A court-appointed guardian is the only person who has the legal authority to enter into
contracts on behalf of a person adjudged insane.
The majority of provisions in contracts are covenants.
Federal antidiscrimination laws prohibit employers from engaging in retaliation against
an employee for filing a charge of discrimination or participating in a discrimination
proceeding concerning race, color, national origin, gender, religion, age, disability,
genetic information, and other forms of discrimination.
A qualified indorsement is created by placing a notation such as “without recourse” or
other similar language that disclaims liability as part of the indorsement.
In order to act as a proxy, one must be an officer or director of the corporation
Many states hold an accomplice liable under the felony murder rule, even if the
accomplice was not directly involved in the death of the victim and did not specifically
intend for the victim to die in the commission of a crime.
All states have usury law prohibiting the charging of illegal interest rates on all loans.
The name for an oral defamatory statement is libel.
To prevent unjust enrichment, courts occasionally enforce oral franchise agreements
that violate the Statute of Frauds.
Specific performance is usually available for the buyer in a contract for the sale of land.
A corporation is automatically bound to its promoters’ contracts as soon as the
corporation is formed.
A court order is required to force a party to provide adequate assurance unless a
repudiation or anticipatory repudiation has occurred.
The two general categories of third-party beneficiaries to a contract are:
A) delegated and assigned.
B) declared and assumed.
C) incidental and intended.
D) original and assumed.
E) precedent and subsequent.
The parties to a sales or lease contract may agree to reduce the statute of limitations
period to ________, but they cannot extend it beyond ________ year(s).
A) one (1.) month; 1 (one)
B) three (3.) months; 1 (one)
C) six (6.) months; 3 (three)
D) one year; 3 (three)
E) one year; four (4.)
Which of the following would the Environmental Protection Agency not designate as a
hazardous waste product?
A) used, contaminated hypodermic needles
B) used batteries that can catch fire or explode
C) used car batteries containing acid that could cause a corrosive leak
D) moldy food that is unfit for human consumption
E) used bandages being disposed of by a hospital
Jimmy and Kathy are married and own some vacant property as tenants by the entirety.
Unfortunately, things are not going well in the marriage. Jimmy wants to sell his
interest in the property for some extra cash. Which of the following is true?
A) Jimmy can sell his interest in the property, and the purchaser will be a tenant by the
entirety with Kathy.
B) Jimmy can sell his interest in the property, and the purchaser will be a joint tenant
with Kathy.
C) Jimmy can sell his interest in the property, and the purchaser will be a tenant in
common with Kathy.
D) Jimmy cannot sell his interest in the property, unless taxes are overdue and the cash
will be used to pay the taxes.
E) Jimmy cannot sell his interest in the property unless Kathy consents to the sale.
In what year did the United States enact its first immigration quota law, setting a limit
on the number of immigrants who could be admitted to the United States from each
foreign country each year?
A) 1921
B) 1927
C) 1931
D) 1937
E) 1941
In general, who can avoid a contract that involves one adult party and one minor party?
A) the adult
B) the minor
C) neither the adult nor the minor
D) the adult or the minor.
E) A disaffirmance can occur only if both the adult and the minor agree to disaffirm the
contract.
On January 10th, JON, Inc. enters into a contract in which Jon, Inc. is to deliver 1000
special order widgets to the JPK Construction Company for use in a unique project.
Delivery is scheduled for November 23rd. On February 14th, JON, Inc. hears through
the grapevine that JPK has entered into a contract with another company to buy the
widgets at a lower price. JON, Inc. calls JPK on March 15th and is reassured that the
contract will be honored. On August 8th, JPK takes delivery of the widgets from the
other company and begins using them in the unique project they are working on. On
November 23rd, JON, Inc’s truck arrives at JPK’s loading dock with the 1000 widgets
and JPK refuses to take delivery. If JON, Inc. sues JPK, when would the statute of
limitations begin?
A) January 10th
B) February 14th
C) March 15th
D) August 8th
E) November 23rd
Mike, a league official, calls Beth, asking her to referee a soccer game. Beth is not
obligated to serve as a game referee. If she accepts the assignment, Mike will tell her
the exact start time of the game, the fact that she must wear an approved uniform, and
the amount of compensation she will be paid for serving as referee. Once on the field,
Beth is in complete control of fulfilling her responsibilities. Beth is considered an:
A) agent in a undisclosed agency.
B) agent in a partially disclosed agency.
C) agent in a disclosed agency.
D) independent contractor.
E) Incidental contractor.
Which of the following has to do with property in the possession of third parties?
A) attachment
B) execution
C) garnishment
D) composition
E) accommodation
Owners of corporations are called ________.
A) employees
B) associates
C) shareholders
D) directors
E) members
What is true about a partner’s right to participate in the management of the partnership?
A) Partner participation in management is allowed, but only if the partner has been
elected as an officer or management committee member.
B) Partner participation in management is allowed, but only if the partnership
agreement gives the partner such rights.
C) Partner participation in management is allowed automatically, but can be eliminated
in the partnership agreement.
D) Partner participation in management is allowed automatically, and cannot be
eliminated in the partnership agreement.
E) One person must be elected as a managing partner to manage the partnership
business.
What makes a “publicly-held” corporation different from a “public” corporation?
A) A publicly-held corporation has many shareholders, while a public corporation is a
corporation owned by a governmental entity.
B) A publicly-held corporation is entitled to limited liability, but a public corporation is
not.
C) A publicly-held corporation must have a charitable purpose, while a public
corporation need not have a charitable purpose.
D) A public corporation is entitled to limited liability, but a publicly-held corporation is
not.
E) Both terms have the same meaning.
One of the requirements for a factory assembly job at “Slap-it-Together” is that the
worker be at least six feet tall. Susie applies for the job, but is not hired. Which is true?
A) Slap-it-Together is in violation of Title VII, but only if Susie is not at least six feet
tall.
B) Slap-it-Together is in violation of Title VII, but only if fewer than thirty percent of
its employees are women.
C) Slap-it-Together is not in violation of Title VII, even if the requirement results in
fewer women being hired, because the company has the right to hire taller employees if
it so desires.
D) Slap-it-Together is in violation of Title VII if the height requirement has the result of
discriminating against women and the height requirement does not relate to fitness for
the particular job.
E) Slap-it-Together is in violation of Title VII, but only if fewer than fifty percent of its
employees are women.
Patents for inventions are valid for ________ years while design patents are valid for
________ years.
A) 17; 17
B) 17; 20
C) 20; 14
D) 14; 20
E) 17; 14
A party who signs an instrument for the purpose of lending his or her name (and credit)
to another party to the instrument is the ________ party.
A) collaboration
B) secondary
C) conditional
D) accommodation
E) intermediary
The doctrine that shifts the burden of proof from the plaintiff to the defendant is:
A) negligence per se.
B) res ipsa loquitur.
C) apparent negligence.
D) Good Samaritan.
E) negligence res ipsa.
An agent negotiates a contract with a third party for which the agent did not have
express authority. Which of the following is true?
A) The principal can never be held liable on the contract, because the agent exceeded
his authority.
B) The principal can be liable on the contract, but only if the agent had implied
authority to enter into the contract.
C) The principal can be liable on the contract, but only if apparent authority was
present.
D) The principal may not ratify the contract.
E) The principal may ratify the contract, or the principal may be held responsible if the
existence of either implied or apparent authority can be established.
In Hickman v. Bates, involving the sale of land by the plaintiff to the defendant, the
court found:
A) that Bates had forced Hickman to sign under duress and awarded Hickman the value
of the property that she signed away as compensatory damages.
B) that Bates had made an intentional misstatement of the facts constituting fraud and
awarded Hickman the value of the property that she signed away as compensatory
damages.
C) that Bates committed fraud by not disclosing information to the young and mentally
limited Hickman and awarded Hickman the value of the property that she signed away
as compensatory damages.
D) that Bates committed fraud by not disclosing information to the young and mentally
limited Hickman and rescinded the contract.
E) that a contract was formed with the consent of the parties, that Hickman’s mistake
was unilateral, and that since Hickman could have sought advice but did not, she had no
remedies.
What is dishonor in connection with a negotiable instrument?
A) an instrument being created in connection with a fraudulent transaction
B) any potential transferee refusing to accept the instrument
C) the refusal of the maker or drawer to pay the instrument when it is presented for
payment
D) the transfer of an order instrument without the proper indorsement
E) an instrument being created without evidence of value
Pat went to Eighth National Bank in Oregon and obtained a loan to purchase a
computer from a friend. Pat signed a security agreement granting the bank a security
interest in the computer. Pat planned to use this computer in his home-based publishing
business. The bank gave Pat $2,500 to use in purchasing the computer. However, Pat
immediately went to Las Vegas without purchasing the computer, and has not been seen
since. The bank has filed a financing statement covering the computer. The bank wants
the computer. Can the bank get the computer?
A) yes, because the computer is equipment
B) yes, so long as no one else had an earlier perfected security interest in the computer
C) no, because Pat is no longer in the state of Oregon
D) no, because a security interest has not attached
E) no, because the bank must first try to collect from Pat
Which of the following is one of the primary types of contractual conditions?
A) antecedent
B) collateral
C) subsequent
D) conjectural
E) determinative
Each state has a highest court in its court system. Most states call this highest court the
state ________ court.
A) superior
B) supreme
C) appellate
D) trial
E) civil
The doctrine that would allow a party to rescind a contract because the other party
abused a fiduciary relationship in forming the contract is:
A) duress.
B) fraud in the inducement.
C) undue influence.
D) the parol evidence rule.
E) fraud in the inception.
Which of the following is a category of innovation that can be patented?
A) living material invented by a person
B) living material not invented by a person
C) terms
D) signs
E) symbols
If a contract is not enforced on the basis of the Statute of Frauds, the court has based its
decision on the presence of which type of fraud?
A) fraud in the inducement
B) fraud in the inception
C) fraud by concealment
D) The court’s decision could have been based on the presence of fraud in the
inducement, fraud in the inception, or fraud by concealment.
E) The court’s decision could not have been based on the presence of any of these types
of fraud.
In an agency relationship, which of the following is not one of the common ways in
which the duty of loyalty can be breached?
A) self-dealing
B) dual agency
C) usurping an opportunity.
D) using general knowledge
E) misusing confidential information
Mike’s Dress Mart calls a manufacturer and offers to purchase 100 dresses specifying a
particular style number and asking for assorted sized in blue and red. The manufacturer
can only accept this offer:
A) by returning the phone call and verbally agreeing.
B) by sending a written signed letter agreeing to the terms.
C) by sending a written signed contract agreeing to the terms.
D) by immediately shipping the 100 dresses in assorted sizes in red and blue.
E) All of the above would constitute a valid acceptance.
Under the Statute of Frauds, any contract that transfers an ownership interest in
________ property must be in writing to be enforceable.
A) personal
B) tangible
C) intangible
D) real
E) intellectual
A limited liability company is a(n) ________ LLC in the state in which it is organized.
A) “close”
B) closely-held
C) immune
D) domestic
E) “S”-corporation
To protect minors, the law recognizes the ________ doctrine, which gives minors the
right to ________ most contracts they have entered into with adults.
A) child protection; disaffirm
B) child protection; renunciation
C) infancy; disaffirm
D) infancy; renunction
E) infancy; void
If a company materially misstates certain items on its financial statements, an
accountant conducting an audit of the company should provide which type of opinion?
A) a qualified opinion
B) an unqualified opinion
C) an adverse opinion
D) a disclaimed opinion
E) a sanctioned opinion
The United Nations is headquartered in ________.
A) Geneva, Switzerland
B) Frankfurt, Germany
C) Paris, France
D) New York, New York
E) Yalta, Ukraine (Russia)