Two kids mow your lawn by accident while you are at work. They had been called by a
neighbor, but the mom who took the call wrote down the wrong address. If you refuse
to pay, the kids would succeed in quasi-contract action based on unjust enrichment.
An employer is strictly liable for sexual harassment.
A defect in design can support a strict liability action.
Unless otherwise stated, an offer made “face-to-face” or during a telephone call usually
expires when the conversation ends.
To be successful, the plaintiff in a negligence case must prove that the defendant
breached a duty of due care owed to any person and that the plaintiff was injured.
Off-duty employees may be barred from union solicitation on company premises, and
non-employees (e.g., union management) may be prohibited from soliciting on behalf
of the union anywhere on company property.
A person has no right to renounce an inheritance.
If a promise or an order to pay does not meet one of the requirements of negotiability, it
is subject to the “default” provisions of UCC Article 2.
Companies are covered under the Securities Exchange Act of 1934 only if they are in
the process of making new offerings of securities.
Regarding a certificate of deposit, the depositor is the maker of the instrument.
Under the fault rule, if the prospective bride breaks off the engagement, she must return
the engagement ring to the prospective groom.
Finders of abandoned property must comply with estray statutes in order to acquire title
to the found property.
The parol evidence rule eliminates the possibility of introducing oral evidence about a
written contract regardless of the timing of the oral evidence.
The Insecticide, Fungicide, and Rodenticide Act empowers the federal government to
regulate pesticides and related chemicals, and is administered by the Food and Drug
Administration.
If a person believes that he or she has been discriminated against, he or she cannot
immediately file a lawsuit against the employer.
Restitution consists of returning the goods, property, money, or other consideration
received from the other party.
An express warranty is created when a seller or lessor indicates that goods will conform
to a model or sample of them.
Reversionary interests must be expressly stated.
In most states, a person who wrongfully possesses someone else’s property obtains title
to that property if certain statutory requirements are met. This is called adverse
possession.
The Restatement of the Law of Contracts is the highest priority source of contract law.
The words “agreement” and “contract” are often used interchangeably.
Some states have changed the in pari delicto rule and permit the less-at-fault party to
recover restitution of the consideration they paid under an illegal contact from the
more-at-fault party.
A contract is an agreement that is enforceable by a court of law or equity.
One requirement of an express contract is that it be in writing.
A limited liability company is “manager-managed,” unless the articles of incorporation
provide that it is “member-managed.”
When one party breaches a sales or lease contract, the Uniform Commercial Code
(UCC) provides remedies designed to place the injured party in as good a position as if
the breaching party’s contractual obligations were fully performed.
A contract that makes performance ‘satisfaction guaranteed or your money back” bases
performance on a concurrent condition.
Prior to 1998, tender offers were not federally regulated.
Subject matter jurisdiction is not necessary in a lawsuit where there is in rem
jurisdiction.
One of the uniform laws developed in response to electronic commerce is the Uniform
Computer Information Transactions Act.
The two common situations where a covenant not to compete can be found valid are in
connection with:
A) the sale of a business and contracts involving risky activities.
B) employment contracts and gambling contracts.
C) contracts for the sale of goods and agreements between competitors in highly
competitive industries.
D) the sale of a business and employment contracts.
E) employment contracts and contracts involving risky activities.
What is the significance of a seller being determined to be a lost volume seller?
A) A lost volume seller is entitled to recover lost profits in the event of a breach by the
buyer rather than recovering only the difference in price from selling the goods to an
alternate buyer.
B) With a lost volume seller, the buyer must reject either all of the goods or none of the
goods when some of them are nonconforming.
C) The buyer from a lost volume seller is not able to use the remedy of cover.
D) With a lost volume seller, the seller can recover punitive damages from the buyer.
E) Specific performance is generally available in contracts involving a lost volume
seller.
To be covered by the Family and Medical Leave Act (FMLA), an employee must have
worked for the employer for at least 1 year and have performed more than 1,250 hours
of service during the previous 12-month period.
Billy, a minor, buys a car form Ajax Auto Dealers, signing a $2,000 negotiable
installment note in payment. Ajax needs the cash, so it sells the note to Acme Finance
Company, for its fair market value, indorsing the note in blank. The owner of Acme,
who personally purchased the note, knew that Billy was a minor. Circumstances occur
such that Acme can collect the note only if it is a holder in due course. Is Acme a holder
in due course with respect to this note?
A) yes, Acme is a holder in due course
B) no, because the note was not properly negotiated to Acme
C) no, because the note bore evidence of irregularity
D) no, because Acme took the note with notice that there was a defense to its payment
E) no, Acme is not a holder in due course because of some other reason
The United States Congress created the Consumer Product Safety Commission (CPSC)
in 1972, through its enactment of the Consumer Product Safety Act (CPSA).
Which of the following best describes the effect of typical Good Samaritan laws?
A) Medical professionals are obligated to stop and assist persons in need.
B) Medical professionals have a lower duty of care to strangers than to their regular
patients.
C) Medical professionals cannot be held liable if they cause injury to someone to whom
they provide medical care in an emergency.
D) Someone injured by a medical professional who is providing emergency medical
care at the scene of an accident cannot recover if the injury was due to ordinary
negligence.
E) Medical professionals can only be held liable if they cause permanent injury to
someone to who they provide medical care in an emergency.
Which of the following is true regarding the legal relationship between a limited
liability company and its members?
A) A limited liability company is not a separate legal entity distinct from its members.
B) A limited liability company is a separate legal entity, distinct from its members.
C) A limited liability company is a separate legal entity only from members who own
less than fifty percent of the company’s stock.
D) A limited liability company is the “alter ego” of its members.
E) A limited liability company is a separate legal entity distinct from its members at the
federal level, but not at the state level.
Wayne issues a draft payable to Molly. Molly indorses the draft in blank on the back
and gives it to Jerry. Which of the following statements correctly describes the status of
this instrument?
A) The draft started out as a bearer paper, but Molly converted it to order paper.
B) The draft started out as order paper, but Molly converted it to bearer paper.
C) The draft started out as bearer paper and it is still bearer paper.
D) The draft started out as order paper and it is still order paper.
E) The draft started out as a draft but Molly converted it to a promissory note.
Belinda markets a popular jacket that she sells to retailers for $80 per jacket. She
markets the jackets on a nationwide basis. A competitor introduces to the market in
Virginia and North Carolina a similar jacket that is sold to retailers for $70 per jacket.
Belinda wants to reduce the price of her jacket in Virginia and North Carolina to only
$60 per jacket. She asks your opinion as to whether she can do this, and whether she
would have to reduce the price of the jacket in other states as well. Discuss the legal
principles involved, and whether Belinda can reduce the price of the jackets to $60 in
Virginia and North Carolina.
When a minor voluntarily leaves home and live apart from his/her parents, this is
called:
A) emaciation.
B) restoration.
C) emancipation.
D) affirmation.
E) ratification.
A holder who does not qualify as a holder in due course in his or her own right becomes
a holder in due course if he or she acquires the instrument through a holder in due
course. This is called the ________ principle.
A) shelter
B) habitation
C) domiciliary
D) residence
E) necessity
Which of the following is not a remedy available to a plaintiff in a copyright
infringement case?
A) the profits made by the infringer
B) destruction of the infringing works
C) actual damages
D) statutory damages up to $150,000 for willful infringement
E) an order denying the infringer’s ability to obtain copyright protection for other works
for a fixed statutory period of time into the future
A limited liability company with no specified term is a(n) ________ LLC.
A) unlimited
B) open-ended
C) durable
D) at-will
E) permanent
Which of the following is the best description of an indorsement?
A) a signature that creates no new legal obligations
B) a signature that often creates potential liability for the indorser
C) a transfer that creates no new legal obligations
D) a signature that creases no potential liability for the indorser, unless the indorsement
is a ‘special” indorsement
E) a payment of an instrument that discharges the liability of the maker or drawer
Which of the following allows insurance to remain in effect when an insured’s premium
payment is overdue?
A) a grace period
B) a federal regulation
C) public policy
D) incontestability clauses
E) a “post-pay” period
Great North Corporation has 35 creditors who are owed a total of $400,000. Great
North has assets far in excess of $400,000, but is not paying its debts as they come due.
Johnson Corporation and Jimmy Corporation, each of whom is owed $15,000 by Great
North Corporation, together file an involuntary bankruptcy petition under Chapter 7.
Which of the following is true?
A) The petition is not effective, because Great North has assets exceeding its debts.
B) The petition is not effective, because the $30,000 owed to the two creditors filing the
petition is not large enough to support the petition.
C) The petition is not effective, because more than two creditors must collectively file a
petition in this situation.
D) The petition is not effective, because involuntary petitions are not effective under
Chapter 7 bankruptcies.
E) The petition is effective, because it meets all applicable requirements for filing an
involuntary bankruptcy petition.
Which of the following is not one of the four basic requirements for contract formation
and enforcement?
A) There must be an agreement between the parties.
B) The promise must be supported by a bargained-for consideration that is legally
sufficient.
C) The parties must have contractual capacity.
D) The object of the contract must be lawful.
E) Both parties to the contract must be at least twenty-one (21) years old.
Robert borrows $500 from a pawn shop, leaving his class ring as collateral. Later,
Robert borrows $200 from a bank. Robert signs a security agreement, later filed by the
bank, giving the bank a security interest in this ring. If Robert defaults on both loans,
who has superior rights to the ring?
A) the pawn shop, because it was the first security agreement to be formed
B) the pawn shop, because it was the first to perfect
C) the bank, unless the pawn shop’s security agreement was in writing
D) the bank, because the pawn shop’s interest is not perfected
E) the bank, because banks have priority over other creditors
Which of the following is true regarding the board of directors of a corporation?
A) Corporate directors have an absolute right to inspect corporate books and records,
facilities and premises, as well as any other information affecting the operation of the
corporation.
B) Corporate directors have an absolute right to inspect corporate books and records,
but not corporate facilities and premises.
C) Corporate directors do not have an absolute right to inspect corporate books and
records, or corporate facilities and premises.
D) Corporate directors have an absolute right of inspection to access the corporation’s
books and records, facilities and premises, as well as other information, but only if the
shareholder’s vote by majority vote to allow such access.
E) The articles of incorporation may limit the right of the board of directors to inspect
corporate books and records, and facilities and premises, as well as other information.
Which of the following is not true about tender offers?
A) The offer must remain open at least twenty business days from the commencement
of the offer.
B) The SEC must be notified of the terms of a tender offer at least ten days before it is
made.
C) If the offeror increases the tender price, the higher price must be paid, even to those
who already accepted the offer at the earlier lower price.
D) Any increase in the price offered or the maximum number of shares that the offeror
will accept requires that the effective time of the offer be extended at least ten days.
E) The “pro rata” rule holds that the shares must be purchased on a pro rata basis if too
many shares are tendered.
Which of the following is true regarding “termination-at-will” clauses in franchise
agreements?
A) There is no problem with termination-at-will clauses in franchise agreements.
B) There is no problem with termination-at-will clauses in franchise agreements, so
long as the franchisee was represented by legal counsel during negotiations.
C) There is no problem with termination-at-will clauses in franchise agreements, so
long as the franchisee is allowed to retain any equipment.
D) Termination-at-will clauses in franchise agreements are generally void, except for
franchises specializing in fast food.
E) Termination at will clauses in franchise agreements are generally void.
Article I, Section 8, Clause 3 of the United States Constitution is known as the
________ Clause.
A) Supremacy
B) Foreign Affairs
C) International Trade
D) Interstate Treaty
E) Foreign Commerce
In a criminal trial, the hearing where the defendant is formally notified of the charges
and asked to enter a plea is the:
A) indictment.
B) plea hearing.
C) arraignment.
D) information.
E) booking.
Mike owns a mirror shop. Abby is building a ballet studio and needs 50 mirrors. On
April 1, Abby contracts with Mike to buy 50 mirrors. The mirrors are located at Mike’s
shop and the contract states that Abby is free to pick-up the mirrors at anytime. Abby
pays for the mirrors on April 15 and picks-up the mirrors on May 1. When does the title
pass from Mike to Abby?
A) April 1
B) April 15
C) May 1
D) The title does not pass from Mike to Abby.
E) The title passes when Mike identifies the mirrors for Abby.
A(n) ________ clause permits the maker to pay the amount due prior to the due date of
the instrument.
A) usury
B) pre-payment
C) acceleration
D) due-on-sale
E) extension
Minors are obligated to pay for the ________ for which they contract.
A) necessaries
B) services
C) personal property
D) intellectual property
E) real property
The federal government of the United States can enter into a treaty with the country of
China whereby the two countries agree to reduce trade barriers between the two
countries; however, the state of California cannot enter into a treaty with the country of
China that reduces trade barriers between the state of California and China.
In terms of the Uniform Commercial Code “good faith” requirement, honesty in fact is
a(n) ________ test
A) subjective
B) objective
C) neutral
D) irrelevant
E) secondary
You, your father and your sister are rock climbing when there is a accident. The three of
you are now dangling from a single rope attached by a single cam to the rock face. The
cam is slipping due to the combined weight of the three of you. If nothing is done, all
three of you will die. You are in the middle and your sister is above you. If your father
takes out a knife and cuts the rope, sending himself to his death but saving you and your
sister, what ethical theory has he exhibited?
A) fundamentalism
B) moral minimum
C) social justice
D) duty ethics
E) utilitarianism
To find someone guilty of receiving stolen property, it is sufficient to prove that the
defendant:
A) was in possession of stolen property.
B) intended to keep the property himself.
C) paid for the property and intends to keep it for himself.
D) knowingly received the stolen property and intended to deprive the true owner of the
property.
E) took part in the wrongful taking of the property and intended to deprive the true
owner of the property.
The decision made by an administrative law judge is called a(n):
A) verdict.
B) judgment.
C) order.
D) finding.
E) decree.
A ________ is a short-term debt security with a maturity of five (5.) years or less.
A) debenture
B) bond
C) note
D) promissory note
E) primogeniture
Which of the following is true?
A) Bonds and debentures are two different terms to describe the same instrument.
B) A bond is a debt security, and a debenture is the agreement between the bondholder
and the corporation.
C) A bond is an instrument that has a maturity of more than five years, and a debenture
has a maturity of less than five years.
D) A bond is a secured instrument, and a debenture is an unsecured instrument.
E) A debenture is a secured instrument, and a bond is an unsecured instrument.
When a person deposits money in a bank account in his or her own name and holds it as
trustee for the benefit of his or her child, what kind of trust has been created?
A) a totten trust
B) a charitable trust
C) a spendthrift trust
D) a constructive trust
E) a resulting trust
Discuss the proposed regional “Free Trade Area of the Americas,” and what area it
would cover. Would this agreement be beneficial to the United States and other
countries, or would the costs outweigh the benefits?
If adequate notice is not given of a shareholders’ meeting, the actions at that meeting are
void. Should this be true if the votes of the shareholders not receiving notice would not
have made a difference in the outcome of any elections?
Robin has developed an exclusive line of book bags that are in high demand. Robin
feels that she has been treated unfairly by Book Supply Company in the past, and as a
result, she refuses to sell her popular book bags to them. Has Robin violated Section 1
of the Sherman Act?
Swim Supplies Corporation has made a large per share hostile bid for Bathing Suits to
Go Corporation. The directors of Bathing Suits to Go have already been in negotiations
with Swim Away Corporation. The directors of Bathing Suits to Go adopted a strategy
where they guaranteed Swim Away Corporation that they will not investigate Swim
Supplies’ offer or meet with Swim Supplies. The directors of Bathing Suits to Go
believe that they have free speech rights, and also the right not to talk. Under what
standard will their actions be analyzed, and would a court likely find that they are right?
Bill has organized office social events for the past 13 years, keeping track of birthdays,
sending cards on special occasions and running the various office holiday parties. One
day, Hillary, his boss tells him that he’s been doing such a great job on the office social
matters that she’s going to pay him a $200 bonus this month. However, when bill gets
his check, it’s the same amount that it has always been. Is he entitled to the bonus?
Shortly before President Clinton left office in 2001, he granted a number of
controversial pardons. Heather acquired several domain names, including ones such as
“pardonmetoobill.com” and “outofjailfreewithbill.com.” Heather hopes to use the Web
sites to post jokes and anecdotes about the controversy and the ongoing lives of Bill and
Hillary. Heather hopes that she can attract advertisers to the site. Barring that, she hopes
that maybe Bill Clinton will pay her for the sites. Could Heather face any liability under
the Anticybersquatting Consumer Protection Act?
If the discovery process results in learning about the other side’s case, what is the
purpose of having a trial? Wouldn’t it be redundant to have the trial if both parties
already know what is going to be said?
The United States has a dispute with a foreign country that failed to pay for diplomatic
office space leased to it by the United States government. The United States brings an
action against the foreign country for the past-due rent payments. The foreign country
seeks a dismissal of the complaint, based upon the doctrine of sovereign immunity.
Discuss the doctrine of sovereign immunity, the manner in which it is applied in the
United States, any exceptions to the doctrine of sovereign immunity, and who should
win the dispute.
Under Section 5 of the Federal Trade Commission Act, a party can be found guilty of an
antitrust violation even when none of the antitrust acts is actually being violated. Is this
fair? What is the purpose of this law?
You have interviewed for a job and received a call that they want you to come in again
so they can make an offer to you face to face. In the lobby of the building, a competitor
approaches you and offers you a job with them at a very attractive salary which you
accept on the spot signing a contract. When the company you interviewed with hears
what happened, they are furious. Do they have a cause of action?
Sam is a business executive who flies often in connection with work. After the
September, 2001 terrorists’ destruction in New York and Washington, Sam flew less
frequently. In response to the attacks, new federal regulations made the federal
government responsible for all airport security personnel. In most cases, including at
Sam’s home airport, the government met the obligation by hiring private contractors to
provide the security services. These firms were heavily regulated and controlled by the
government. Also, in the new regulations were profiling guidelines that required
additional security screenings for persons meeting such guidelines. These guidelines
were partly secret, but it was known that members of certain races were much more
likely to fall within them. In addition, on average, six times as many males as females
met the guidelines. Shortly after these regulations were in place, Sam went to his airport
and found extremely long lines at the security checkpoint. He waited in line nearly three
hours. As he was about 10 people away from being screened, an irate passenger,
Marvin, came running through the line screaming that he was about to miss his flight.
Marvin accidentally hit Sam forcefully, breaking Sam’s arm. In addition, Sam had his
pet ferret (a small animal, an exotic pet) in his coat pocket. The impact caused the ferret
to die. Marvin said that the slowness and incompetence of the security personnel had
caused him to “lose it.” When Sam reached the security checkpoint, he was pulled aside
for additional screening. This involved waiting in an additional line for 30 minutes
longer. Sam learned that he had to go through the additional security because he was
returning home on the same day, had no checked baggage, and was male. Sam has sued
both the security screening company and Marvin for his injuries and the loss of his
ferret, and emotional distress related to these. Discuss Sam’s claims, any defenses and
their likely resolution.
Bluegrass, Incorporated does ninety-five percent of its business in the state of
Kentucky, and substantially all of its assets are located in Kentucky. Bluegrass plans to
issue $5,000,000 in new stock, and use the proceeds exclusively in Kentucky. Bluegrass
has ten accredited potential investors, nine of whom live in Kentucky, and one who
lives in Ohio. Can Bluegrass qualify for a “private placement” exemption or an
“intrastate offering” exemption under the Securities Act of 1933?
Sam operates a small business with twelve employees. Sam says to his employees, “I’m
not required to give you a pension plan, but I have decided to do so. The plan is that if
you stay employed with me until you reach the age of sixty-five, I will give you a
pension of $1,000 per year during retirement for each full year you have worked.
Because I believe so strongly in this company, if I invest any money in the fund in
advance, I will put half of it into stock of this company. If you leave before retirement,
you don’t get it. That way, you’ll have more incentive to work hard and stay with the
company.” Comment on the legal aspects of this plan.
Hilda Homeowner said to her neighbor, Paulette Painter, “If you paint my house, I’ll pay
you $1,500. All you must do is finish by the end of the next month. My price assumes
that you will pay for all of the paint and any needed supplies.” Paulette decided to paint
the house. She purchased some supplies as well as enough custom-colored paint to
complete the job. On the morning that Paulette was about to begin painting, Hilda told
her that she had changed her mind and would not pay Paulette to paint the house.
Discuss the rights of the parties in this situation.
What issues may be raised by electronic contracting that are not issues in traditional
contracting? Which UCC provisions should be less applicable to electronic contracting
than to traditional contracting?
Sheila entered into a contract to sell her Honda Civic to Barry at a contract price of
$12,000. On the delivery date, Sheila refused to deliver the car or accept payment. If
Barry covers on the date delivery is supposed to occur, the cost to acquire a similar
Civic (also the fair market value) is $12,900. One week later the fair market value is
$14,000, because a sudden increase in oil prices has made economical used cars more
valuable. Discuss the remedies available to Barry in this situation.
What are the considerations that need to be taken into account when a small business or
an entrepreneur invents something with regard to seeking a patent?