A bailment is different from a gift because:
a. a gift requires consideration, but a bailment does not.
b. a gift requires delivery, but a bailment does not.
c. in a bailment, only possession of the property is transferred to the bailee, whereas
with a gift, both possession and ownership must pass to the donee.
d. a gift is always a contract, but a bailment is generally not a contract.
Fashions, Inc. has 12 shareholders. The company is subject to the Model Act. What
officers is Fashions, Inc. required to have?
a. A president, secretary, and treasurer.
b. A president and a secretary, and they can be the same person.
c. A president, at least one vice-president, a secretary, and a chief financial officer.
d. Whatever officers are described in the corporate bylaws.
Kylie filed a Chapter 7 bankruptcy petition in which she exempted her home, valued at
$125,000. Kylie can exempt her entire home from all creditors if:
a. she claims her exemptions under the federal Bankruptcy Code.
b. she lives in a state that allows for an exemption amount of $125,000 or more.
c. she lives in a state that allows an exemption amount of $125,000 or more, she has
lived in that state for at least two years prior to the bankruptcy, and there are no secured
creditors with perfected liens against the home.
d. None of the above.
Sarah, an employee of Amex Corporation, committed a serious criminal act in an
attempt to obtain a large sales order for her employer. A court found her guilty of the
felony and also found the corporation guilty of criminal conduct. The company was
fined $1 million. The court:
a. erred in fining the company since finding both Sarah and the corporation guilty
violates the Double Jeopardy Clause of the Constitution.
b. acted properly if this were a federal proceeding; however, it did not act properly if
this were a state proceeding.
c. acted properly if this were a state proceeding but not if this were a federal case.
d. acted properly in this case.
An exculpatory clause is generally unenforceable when:
a. it attempts to release a party from liability for ordinarily negligent behavior.
b. it involves public transportation.
c. it is written clearly and in bold, large print.
d. the affected activity is a recreational activity.
In a promissory estoppel case, a court will generally award:
a. only reliance damages.
b. specific performance.
c. both reliance and punitive damages.
d. only nominal damages.
The Minnesota legislature passed a law requiring that employers allow each employee
adequate time within each four consecutive hours of work to utilize the nearest
convenient restroom. This law is:
a. an executive order.
b. an ordinance.
c. a statute.
d. a stare decisis.
Chance is a traveling marketing representative for a publishing company. He is an
independent contractor. One afternoon while driving to a meeting, he negligently runs a
stop sign and causes an accident. Judy is injured. Judy can:
a. hold both Chance and his company liable for her injury.
b. hold the company but not Chance liable.
c. hold Chance but not the company liable.
d. not hold Chance or his company liable for her injury.
Roger assaulted Jim in a tavern, causing medical expenses and lost wages. Which of the
following is true?
a. Roger can be prosecuted by the state for a criminal offense and Jim may sue him for
money damages.
b. If Roger is convicted of criminal assault, Jim is not allowed to sue him for money
damages since that would violate the double jeopardy clause of the Constitution.
c. If Jim refuses to press charges against Roger, the state cannot initiate a criminal
proceeding against him.
d. Jim can either elect to sue for money damages or proceed with criminal charges.
Sanco contracted to sell 1,000 cases of oil to AMF. The oil is located in a public
warehouse, which has issued a warehouse receipt for it. Which of the following is
correct?
a. The risk of loss passes to the buyer when the contract is made.
b. The risk of loss passes to the buyer when the goods are tendered to him.
c. The risk of loss passes to the buyer when the warehouse receipt is delivered to the
buyer.
d. The risk of loss passes to the buyer when the buyer gets the oil to its final destination.
Great State Bank claimed that Wiles Accounting committed fraud in the preparation of
an audit. To hold the accounting firm liable, which of the following elements must be
established?
a. Knowledge or reckless disregard of the truth.
b. A fiduciary relationship.
c. Failure to exercise due care.
d. An executed engagement letter.
ADA reasonable accommodations may include:
a. modification of equipment.
b. ramps for accessibility.
c. flexible work schedules.
d. All of the above.
The Chief Executive Officer of Ticor, Inc. must decide about the disposal of toxic waste
materials. Which of the following considerations should help the CEO reach an ethical
business decision?
a. Toxic waste disposal law.
b. The harm the disposal could cause to the environment.
c. The impact on the business if the decision is publicly disclosed through the news
media.
d. All of the above.
Robert, a minor, buys a stereo from Jane for $200. State law allows a minor to disaffirm
contracts within a reasonable time after turning 18. Robert disaffirms the contract the
day after turning 18 and returns the stereo.
a. This contract was a valid contract, Robert cannot disaffirm.
b. This contract was a voidable contract, Robert can disaffirm.
c. This contract was a void contract.
d. This contract was unenforceable because it needed to be in writing to be enforceable.
During the development of commercial law centuries ago, businessmen throughout
England and Europe:
a. settled disputes in trade organizations rather than in civil courts.
b. relied on a body of rules which became known as the lex mercatoria.
c. began to treat their own customs as law.
d. All of the above.
President Nixon issued wage-price controls in an effort to stabilize the economy. This
use of executive power was:
a. an illegal usurption of legislative powers which belong to the Congress.
b. a valid use of power, known as an executive order.
c. a valid use of power creating a treaty.
d. an illegal usurption of the regulatory powers of administrative agencies.
The criminal penalties under RICO include all EXCEPT:
a. imprisonment.
b. capital punishment.
c. confiscation of property acquired through the criminal activity.
d. fines.
Which of the following started out as a trademark name?
a. Zipper.
b. Linoleum.
c. Nylon.
d. All the above.
The disposal of nonhazardous solid waste is:
a. generally regulated by state law, but the federal government sets guidelines that must
be followed.
b. the only area of environmental concern that has yet to be regulated by federal action.
c. completely governed by federal administrative law.
d. currently the subject of great debate since the federal government has declared such
activity falls under the Endangered Species Act and, therefore, a small annoying fly
known to frequent landfills must be protected.
Which of the following is NOT a method to acquire control of a company?
a. Buy stock from the shareholders through a tender offer.
b. Buy the company’s assets.
c. Make an initial public offering.
d. Merge with the company.
The element that distinguishes a contract from a gift is:
a. performance of the offeror’s or donor’s promise.
b. the element of consideration which is present in a contract, but not in a gift.
c. whether or not the offeree or donee accepts the offer.
d. whether or not the subject of the gift or contract is illegal.
All the business forms listed below have limited liability except the:
a. limited liability company.
b. general partnership.
c. Subchapter “S” corporation.
d. corporation.
Zero, Inc. agreed to build Millie a storage building for $8,000. After beginning the
project, Zero realized that it could not complete the job and make a profit. Zero
demanded $9,500 to complete the building. Millie agreed to pay the $9,500. When the
project was complete, Millie tendered $8,000 to Zero for the job. If Zero sues Millie for
the remaining $1,500:
a. Zero will win because there was consideration for the additional $1,500.
b. Zero will win because Millie had a pre-existing duty to pay any additional amounts.
c. Zero will lose because there was no legal consideration to support the additional
$1,500.
d. Zero will lose because the UCC does not require consideration to modify an existing
contract.
Contemporary laws principle of collective responsibility, such as all partners being
personally responsible for the debts of the partnership, had its roots in:
a. the Anglo-Saxon method of ensuring public order through tithing.
b. the Anglo-Saxon practice of using “oath helpers.
c. the English use of ‘shire reeves.
d. the English system of feudalism.
Noncompetition agreements are:
a. more common today than they were in the past, although policy issues they raised in
the 1700s have never gone away.
b. now illegal, as they violate antitrust laws.
c. infrequently litigated.
d. relatively recent developments, first used following the Great Depression in the
United States.
When a business is concerned about selling to minors because of their right to disaffirm
contracts, the business might protect itself by:
a. getting the minor to sign an agreement not to disaffirm.
b. requiring an adult co-signer.
c. requiring a court-appointed guardian to be named.
d. using a layaway system until the minor turns 18.
Judy believed that Ray and Don were partners in an automotive repair business. Ray
and Don were not partners. Ray owned the business as a sole proprietor. Ray, however,
allowed Don, his unemployed brother-in-law, to be around the business. When Judy
was having her car repaired, Ray told her “my partner over there, Don, will give you a
ride to work this morning so you can leave your car here. He will give you a ride back
here after work and your car will be done.” Judy allowed Don to drive her to work.
While riding with Don, Don accidentally ran a stop light and caused an accident. Judy
was hurt and claims that both Don and Ray are liable to her. Is she right?
a. Yes. This illustrates a partnership by estoppel.
b. No. Don was not a partner in the business.
c. No. Don was a dissociated partner.
d. No. There was no intent to have a partnership.
The National Relations Labor Act of 1935 is also known as the:
a. Wagner Act.
b. Taft-Hartley Act.
c. Robinson-Patman Act.
d. Freedom to Work Act.
Mark signs a periodic year-to-year lease at the River’s Edge Warehouse. After the year
expires, Mark stays in the warehouse and the landlord acquiesces. Mark:
a. has a month-to-month periodic lease, which can be terminated by either party’s giving
a 30-day notice.
b. has a tenancy at sufferance which is not a true tenancy at all.
c. has another one-year lease. Periodic tenancies automatically renew unless either party
gives proper notice to the other that the tenancy will terminate upon the expiration of
the time period.
d. None of the above.
Ending a partnership involves which of the following three steps?
a. Dissolution, winding up, and termination.
b. Dissociation, winding down, and consummation.
c. Failure, dividing up, and paying off.
d. Dissociation, agreement, and dissolution.
Suppose that Lenny Lawyer enters into an agreement with Cindy Client that his fee will
be a percentage of the recovery Lenny obtains for Cindy in her pending divorce. State
law makes such a contingency fee arrangement illegal in divorce actions. What will be
the probable outcome if Lenny attempts to enforce the agreement?
a. The contract will be valid. Cindy would not have been able to afford an attorney
otherwise and therefore Lenny was doing a public service.
b. The contract will be voidable at Cindy’s option.
c. The contract will be void as violating a statute. Lenny will not be able to recover
anything.
d. The contract will be unenforceable if Lenny did not get the agreement in writing.
Assume that three automobile manufacturers all merged into one car company. Such a
merger would be a:
a. vertical merger.
b. vertical cooperative arrangement merger.
c. horizontal merger.
d. intracompetitive merger.
Wanderlust gave a security interest in his Conestoga wagon to Iowa Bank who
perfected its security interest by filing a financing statement with the appropriate
officials in Iowa. Five months later, Wanderlust hit the trail again, moving to Montana.
If Iowa Bank wants to continue its perfected interest in the Conestoga wagon, it should:
a. file a continuation statement for another five years in Iowa before Wanderlust moves
on.
b. re-perfect by filing a financing statement in the appropriate place in Montana,
according to Montana law, within four months of Wanderlust’s entering Montana.
c. repossess the Conestoga wagon.
d. file a continuation statement for another four months in Iowa before Wanderlust
moves on.
Generally, a contract may include language that limits or alters the damages recoverable
for a breach of warranty, as long as the restrictions are not unconscionable.
The most common form of business ownership is the corporation.
Contracts must begin with the word, “whereas in order to be legal.
According to the UCC, one or more open terms will not cause a sales contract to fail for
indefiniteness as long as the parties intended to make a contract and there is a
reasonably certain basis for the court to determine the open terms.
Angela uses fraudulent means to induce Walter to enter a sales contract. Angela obtains
a voidable title to the goods.
Adrianna wants to purchase a ten-acre tract of land. Under what circumstances would
the seller be required to divulge information Adrianna does not possess?
Because details can always be added later, its better to not overwhelm a contract with
specifics in the beginning.
To prove an express warranty, some courts require evidence that the buyer relied on the
sellers statement.
A corporation by estoppel is based on fairness rather than strict legal rules.
The UCC looks solely upon “title” to determine ownership in goods.
After a meeting with his advisor to register for a class at State University, Ron forgot
his calculator in the dean’s outer office. Theresa, another student, found the calculator.
The calculator is treasure trove and Theresa may keep it.
Discuss two types of misrepresentation and how they differ. List the three things a party
must show to rescind a contract based on misrepresentation.
Tender means to physically deliver the goods to the buyer.
Expectation interest can best be described as money spent in reliance upon the
agreement.
Most courts hold that a seller of goods is not entitled to consequential damages.
Under modern antitrust law analysis, a company with a market share between 70 and 90
percent has a monopoly.