Which is a valid defense that allows an employer to discriminate in hiring on the basis
of sex, religion, or national origin if doing so is necessary for the performance of the
job?
A. The Seniority System Defense
B. The Merit Defense
C. The Bona Fide Occupational Qualification Defense
D. The Discrimination Defense
E. There is no valid defense.
Which of the following is an order issued by an agency to appear at a particular time
and place and provide testimony?
A. A subpoena
B. A subpoena duces tecum
C. A summons
D. A summons duces tecum
E. A required documented appearance
In the absence of a time condition in an offer, the offer will expire _____.
A. in forty-eight hours
B. in seven days
C. in thirty days
D. in forty-five days
E. after a reasonable amount of time
Article 2(A) of the UCC governs secured transactions in personal property.
Which rule is an exception as to when a secondary obligation needs to be in writing?
A. The primary-purpose rule
B. The resulting-fact rule
C. The main-purpose rule
D. The delineated rule
E. The personal-obligation standard
The term “reasonable commercial standards of fair dealing” is often called ______.
A. commercial standards
B. commercial reasonableness
C. transactional reasonableness
D. good faith standards
E. good faith reasonableness
Which of the following is a form of self-dealing?
A. Business self-dealing
B. Personal self-dealing
C. Corporate self-dealing
D. Business self-dealing, personal self-dealing, and corporate self-dealing
E. Business self-dealing and personal self-dealing, but not corporate self-dealing
Stolen Purses. Sandra and Mary were having lunch at their favorite restaurant.
Unfortunately, a thief stole their purses containing their ATM cards. Mary notified her
bank the next day of the theft of the ATM card. Unfortunately, the card had already
been used to fraudulently obtain over $1,000. Sandra thought back to her business law
class and did not call her bank, however, because she believed that she would not be
liable for any charges on the ATM card because of the rules involving forgeries.
Nevertheless, a week or so later when Sandra was in the bank, she casually mentioned
to the teller that she needed a new card because hers had been lost. She was shocked
when a bank representative attempted to hold her responsible for hundreds of dollars of
goods bought with the ATM. Sandra told the bank representative that she refused to
cover the amounts, that she was moving her account, and that she wanted all
preauthorized payments and EFTs stopped immediately. Which of the following is true
regarding the bank’s obligation to stop EFT transfers?
A. The bank must immediately end any EFTs on the same day requested so long as the
request is made during regular business hours.
B. The bank must end any EFT payments on the same day requested so long as the
request is made by 2 p.m.
C. The bank must stop any EFT payments so long as the request is made within 48
hours of the EFT authorization.
D. The bank must stop any EFT payments so long as the request is made within five
days of the EFT authorization.
E. The bank could not stop payment because EFT transfers occur instantaneously.
_____________ is the use of generalities and clear exaggerations.
A. Half-truth
B. Puffing
C. Bait-and-switch
D. Deception
E. Fraud
What does “FOB” stand for when used as a shipping term represent?
A. Fee on board
B. Fee on basis
C. Freedom of board
D. Free on board
E. Free of basis
The burden of proof in a criminal case is:
A. preponderance of the evidence.
B. actus Reus.
C. mens Rea.
D. actual malice.
E. beyond a reasonable doubt.
Presidential Profits. Linda was president of a publicly traded tractor company, Tough
Tractors. Linda became aware that stock in her company would likely increase
significantly in value because her company had a contract to purchase the assets of
Rough Tractors. The boards of both companies wanted the information kept
confidential until the purchase was complete and a news release was made. Before the
news was made public, Linda immediately purchased a significant number of shares in
Tough Tractors. Linda also told her friend Frank about the contract to purchase assets.
Frank, who knew that the information was not public, told his brother, George. Frank
and George purchased a number of shares of stock in Tough Tractors prior to any public
announcement of the sale. After the public announce was made and the purchase of
assets went through, Linda, George and Frank, all sold their shares in Tough Tractors
and made a nice profit. For which of the following is George liable?
A. His own profits and also the profits of Frank.
B. His own profits and also the profits of both Frank and Linda.
C. His own profits regardless of whether he knew he was trading in information that
had not been made public.
D. Only his own profits and those of Linda.
E. Only his own profits and then only if it can be shown that he knew or should have
known that the material information was not public.
The __________ is the supreme law of the land.
A. U.S. Constitution
B. Declaration of Independence
C. United States Code
D. model law
E. Uniform Code
Wedding Photos. Bobby took a number of wedding photos at Jill’s wedding. He was
paid as the photographer. On all of the photographs, he appropriately noted in the
bottom right-hand corner the necessary information showing that he was claiming
copyright protection. Jill came to see Bobby three years after the initial photographs
were taken and requested that he grant her permission to run off as many copies as she
wanted at the local photo shop from the pictures that she initially purchased. The photo
shop had refused to reproduce the photographs without his permission. When he
refused to give her permission to do so, Jill started a heated argument. She told Bobby
that photographs are not entitled to copyright protection. She also told him that even if
he was correct that there was some copyright protection, she was engaged in fair use;
and that, in any event, damages for copyright infringement are unavailable. Which of
the following is true regarding Jill’s claim that she was engaged in fair use?
A. It is likely that she would win on the claim because she does not seek to use the
photographs in a business pursuit.
B. It is likely that she would win on the claim because she only seeks to copy what she
has already purchased.
C. This issue would not come up because Bobby is not entitled to copyright protection
on the photographs.
D. She would lose because the fair-use doctrine is only available to educators.
E. She would likely lose under the weighing test mandated by the Copyright Act.
Tutoring Concerns. Wally and Sally want to go into business together and plan on
offering a tutoring service to high school and college students. Wally proposes that they
share control of the business and split profits equally and not bother with a written
agreement. Sally, however, is concerned about being able to pay their debts since they
will have to rent tutoring space and purchase computers and supplies. She is also
concerned about parents and students who may sue if the students’ test scores do not
improve. She tells Wally that she just bought a new boat and car, and that she does not
want her assets to be in jeopardy. She tells Wally that they should form a corporation to
shield their personal assets. Wally, however, says their personal assets are not in danger
with his proposal because they are a business and that, furthermore, forming a
corporation would likely result in double taxation. What type of arrangement did Wally
propose with his suggestion that they share control of the business and split profits
equally?
A. A joint sole proprietorship
B. A partnership
C. A corporation
D. An S corporation
E. A limited partnership
If corporations act beyond their express and implied powers, the act is called a(n) _____
act.
A. respondeat superior
B. ultra vires
C. res ipsa loquitur
D. stare decisis
E. res propertie
__________ is a requirement by the Federal Trade Commission that a company run
advertisements in which the company explicitly states that formerly advertised claims
were untrue.
A. Corrective advertising
B. Repeal advertising
C. Notice publication
D. Notice advertising
E. Action publication
Which of the following is true regarding federal taxation?
A. The U.S. Constitution explicitly grants Congress the power to tax.
B. The taxes laid by Congress must be uniform across the states.
C. Congress can legitimately use taxes to encourage the development of certain
industries and discourage the development of others.
D. The U.S. Constitution explicitly grants Congress the power to tax; the taxes laid by
Congress must be uniform across the states; and Congress can legitimately use taxes to
encourage the development of certain industries and discourage the development of
others.
E. None of these.
Belinda purchases a couch from Good Furniture Store. She pays for the couch, and the
store agrees to deliver it. Unfortunately, on the way to her house, the vehicle overheats
and burns, destroying the truck and the couch inside. Belinda asks for a refund or
another couch. The storeowner refuses on the basis that risk of loss had passed to
Belinda. Who will win the dispute and why? What would have happened if Belinda had
purchased the couch at a yard sale, and the loss occurred while the seller was delivering
it?
In a merger situation, which of the following is a term for the remaining corporation?
A. The resulting corporation
B. The winning corporation
C. The approved corporation
D. The surviving corporation
E. The remaining corporation
Which of these types of contracts does not fall within the statute of frauds?
A. Contracts not performed within 6 months
B. Promises made in consideration of marriage
C. Suretyship
D. Agreements related to an interest in land
E. Sale of goods over $500
The term _____ comes from the days when the contract was literally sealed by a piece
of soft wax into which an impression was made.
A. implied-in-fact contracts
B. implied-in-law contracts
C. contracts under wax
D. contracts under seal
E. contracts under pressure
Which principle states that if an item is transferred from one person to another, the
transferee acquires all the rights to transfer or have in the item?
A. The shelter principle
B. The transfer principle
C. The transferee principle
D. The transferor principle
E. The holder principle
In assessing the tort of defamation, the courts must seek a balance between the right to
protect one’s reputation with the rights afforded under:
A. The False Claims Act
B. RICO
C. The First Amendment of the U.S. Constitution
D. The Second Amendment of the U.S. Constitution
E. State statute
Which law requires that an agency business meeting be open to the public if a collegiate
body heads the agency?
A. The Freedom of Information Act
B. The Open Meetings Act
C. The Government in Sunshine Act
D. The U.S. Constitution
E. The Non-privacy Act
Which of the following parties must sign a document coming within the statute of
frauds?
A. The party against whom action is sought
B. The offeror only
C. The offeree only
D. Only a person who has agreed to pay the debt of another
E. Any party to the contract
As a general rule, most states will not allow a minor to disaffirm contracts for which of
the following?
A. Life insurance
B. Health insurance
C. Psychological counseling
D. Life insurance, health insurance, and psychological counseling
E. Life insurance and health insurance, but not psychological counseling
Which of the following is true regarding the adequacy of consideration?
A. Courts generally consider the adequacy of consideration in determining whether to
enforce a contract.
B. Courts consider the adequacy of consideration only if something is sold for less than
90% of its market value.
C. Courts consider the adequacy of consideration only if something is sold for less than
80% of its market value.
D. Courts consider the adequacy of consideration only if something is sold for less than
70% of its market value.
E. Courts seldom consider the adequacy of consideration but will do so if an item was
sold for a low sum in order to avoid claims of creditors.
Which of the following is false regarding the Freedom of Information Act?
A. Information may be obtained under the act regarding how an agency gets and spends
its money.
B. Citizens are entitled to any records that the government has about them.
C. Records involving national security are exempted from the act.
D. Information regarding the agency’s personnel records may be obtained under the act.
E. Records involving an individual’s private life are exempted from the act.
Cosmetic Profits. Sally is the vice president at Big Name Cosmetics Company. Through
important and material nonpublic information, she learns that the company is soon
going to purchase a smaller chain of stores. It is expected that stock in Big Name
Cosmetics will rise dramatically at that point. Sally immediately buys a number of
shares of her company’s stock. She also tells her friend Alice about the expected
purchase of stores. Alice wanted to purchase stock in the company but lacked the funds
with which to do so. Although she did not have the funds in Bank A, Alice decided to
draw a check on Bank A and deposit the check in Bank B and then proceed to write a
check on Bank B to cover the purchase of the stock. She hoped that she would have
sufficient funds to deposit before the check was presented for payment. Of which of the
following, if any, is Sally guilty of by providing information to Alice regarding the
purchase?
A. She is guilty of an insider-trading violation by tipping the information.
B. She is guilty of an insider-trading violation by being tipped.
C. She is guilty of an insider-trading violation by both tipping and being tipped.
D. She is guilty of criminal extortion.
E. She is not guilty of any offense.
What does the UCC provide regarding liquidated damages if the parties do not agree to
them?
A. That the nonbreaching seller may claim against a breaching buyer 20 percent of the
purchase price or $500, whichever is less, as liquidated damages.
B. That the nonbreaching seller may claim against a breaching buyer 20 percent of the
purchase price or $500, whichever is more, as liquidated damages.
C. That the nonbreaching seller may claim against a breaching buyer 30 percent of the
purchase price or $1,000, whichever is less, as liquidated damages.
D. That the nonbreaching seller may claim against a breaching buyer 30 percent of the
purchase price or $1,000, whichever is more, as liquidated damages.
E. Nothing