Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Disappointed Applicant. Polly, who had a regular driver's license to operate an
automobile, decided that she really wanted to drive a tractor-trailer truck. She thought
that it would be nice to earn money while seeing the country. Polly had all applicable
training and went to her state's department of motor vehicle office to take the test
required in order to obtain a license to drive a tractor-trailer truck. While taking the test,
in an effort to relieve stress, Polly was stretching her neck and looking around at the
other nervous test takers. The proctor for the exam saw her and accused her of
stretching and straining to look at the exam answers of other test takers. Her application
to drive a tractor-trailer was denied. The local agency department head was also furious
with Polly and proceeded to revoke her regular automobile driver's license as well.
Applicable statutes provide as follows: (1) "the DMV may suspend or revoke the
privilege of any person to operate a motor vehicle upon any of the grounds which
authorize the refusal to issue a license"; (2) "the DMV may refuse to issue a license to
any person who has "committed any fraud in any application." Polly hears that you
have just finished business law and asks for advice. She says that she had decided that
she does not really want to drive a tractor-trailer truck because of her neck problems but
that she really would like to have her license to operate a regular automobile reinstated.
What should Polly do next assuming her state's administrative scheme is the same as
the federal scheme?
A. She should appeal within the agency and later to court if she cannot receive a
favorable agency determination.
B. She should immediately appeal to court bypassing any other agency proceedings.
C. She should appeal within the agency, but no later court proceedings would be
possible.
D. She should file a writ to negate any results in connection with the first test because
by law applicants are entitled to retake a licensure test at least once.
E. At the moment, there is nothing else that Polly can do to obtain reinstatement of her
license; and she can only ask the agency for reconsideration of her position at a later
date.
Which of the following types of securities represent loans to a corporation?
A. Debt
B. Equity
C. Finance
D. Formal
E. Certified
New Furniture. Penny purchased $3,000 worth of furniture from Bob's furniture shop.
Through an arrangement with Bob, Penny financed the purchase through a financing
company called Let Us Help You. Twenty-nine days after the goods were delivered to
her, Penny had a disagreement with Let Us Help You regarding the amount of interest
she would be required to pay. She notified Bob on that day that she was rejecting the
goods. Bob claimed that she did not properly reject the furniture and also that she acted
in bad faith. Penny says that she properly rejected and denies that she acted in bad faith.
She also says that, in any event, she cannot be charged with both wrongful rejection and
also bad faith because of double jeopardy. Which of the following is the correct analysis
of Penny's claim that she cannot be charged with both a wrongful rejection and bad
faith because of the double jeopardy bar?
A. Penny is correct.
B. Penny is correct that she cannot be charged with both a wrongful rejection and bad
faith; but the UCC requires that conclusion, not the double jeopardy bar.
C. Penny is correct that she cannot be charged with both a wrongful rejection and bad
faith; but the common law requires that conclusion, not the double jeopardy bar.
D. Penny is correct that she cannot be charged with both a wrongful rejection and bad
faith; but federal statutory law requires that conclusion, not the double jeopardy bar.
E. Penny is incorrect. She can be charged with both a wrongful rejection and also bad
faith.
When is an arbitrator's decision called an "award"?
A. Always
B. Only if one party completely wins and there is no split decision
C. Never
D. Only if a money award is involved
E. Only if both parties had lawyers. That terminology makes it easier for the lawyers to
be paid
Which of the following is an agreement by which the debtor agrees to pay a debt even
though it could be discharged?
A. A settlement
B. A reaffirmation agreement
C. An acknowledgement agreement
D. An accord and compromise
E. An affirmance
A(n) _________________ takes over administration of the debtor's estate.
A. administrator
B. aligner
C. organizer
D. reformer
E. trustee
Which of the following is a federal executive agency?
A. The Federal Deposit Insurance Corporation
B. The Equal Employment Opportunity Commission
C. The Nuclear Regulatory Commission
D. The Federal Deposit Insurance Corporation, the Equal Employment Opportunity
Commission, and the Nuclear Regulatory Commission
E. The Federal Deposit Insurance Corporation and the Equal Employment Opportunity
Commission, but not the Nuclear Regulatory Commission
Hair Stylist Woes. Maryann went to see her hair stylist, Candy. Maryann, who had
black, curly hair, requested straight, blond hair. Candy told her that she could make that
change, but there would be significant upkeep involved. Candy made the change, but
Maryann did not do the upkeep required. She also falsely claimed that Candy did not do
what Maryann asked her to do, that Candy lied to her, and that Candy was
professionally incompetent. Maryann made the statements to friends of hers. She also
wrote an editorial in her college newspaper to the effect that Candy's shop should be
avoided at all costs because Candy was incompetent. In fact, Candy was a good hair
stylist and enjoyed a good reputation up until the time that Maryann started her
criticism. Candy threatened to sue Maryann for defamation, but Maryann told Candy
that Candy could not prevail because Candy could not prove loss of income. Candy had
to admit that while her reputation had been damaged somewhat, the damage was
primarily among the college population. Her income kept increasing from other
segments of the community, and she had suffered no net loss. As far as the statements
made to her friends are concerned, which of the following is true in regards to
Maryann's statement that Candy cannot recover because Candy has not suffered a loss
of income?
A. Maryann is correct.
B. Maryann is correct only if she can show that she did not intend to cause Candy to
loss income.
C. Maryann is incorrect because her statements constituted slander per se.
D. Maryann is incorrect because general damages will not be presumed.
E. Maryann is incorrect but only because Candy cannot establish liable per se.
Which of the following occurs when a minor's parents or legal guardians give up their
right to exercise legal control over the minor, typically when the minor moves out of the
parents' house and begins supporting him or herself?
A. Ratification
B. Disaffirmance
C. Emancipation
D. Legal release
E. Reaffirmance
Which of the following is false regarding contracts for necessaries entered into by
minors?
A. A minor cannot disaffirm contracts for necessaries.
B. A minor can disaffirm a contract for necessaries, but the minor will still be held
liable for the reasonable value of the necessary.
C. A contract for a necessary is a contract that supplies the minor with the basic
necessities of life.
D. The purpose of the limitation on the minor's right to disaffirm contracts for
necessaries is to ensure that minors are able to obtain the basic necessities of life when
their parents will not provide them.
E. Whether something is considered a necessary, is related to whether the minor's
parents are willing to provide the item in question for the minor.
Which of the following are written questions that one party sends to another to answer
under oath?
A. Interrogatories
B. Depositions
C. Inquiries
D. Subpoenas
E. Sworn assertions
Which of the following is included in the Central Hudson test for commercial speech?
A. The principle that speech that is misleading is not protected by the First Amendment.
B. The principle that the government must show that a substantial governmental interest
is served by a restriction on commercial speech.
C. The principle that any restriction on commercial speech must not be more extensive
than necessary.
D. The principle that speech that is misleading is not protected by the First Amendment;
the principle that the government must show that a substantial governmental interest is
served by a restriction on commercial speech; and the principle that any restriction on
commercial speech must not be more extensive than necessary.
E. None of these.
_____ are responsible for managing the business of a corporation.
A. Investors
B. Shareholders
C. Officers
D. Administrators
E. Members of the board of directors
Accidental Sale. ABC Motors ordinarily deals in used cars and also does some amount
of repair work. Robby entrusted his automobile to ABC Motors to have the oil changed
and get new brakes. The car was parked in the lot along with other cars, some of which
were for sale. The manager of ABC Motors accidentally sold the car to Connie because
she saw it and took it upon herself to offer a good price. The manager was attempting to
increase the shop's profit margin. Connie had no idea that the car did not belong to ABC
Motors. When Robby went to pick up the car, he was very upset that it was gone. The
manager told Robby that he was very sorry, but that he was not negligent and only
made an honest mistake. According to the manager, Robby accepted the risk of this type
of loss; and his only recourse was against Connie. Which of the following is a proper
identifying term for Connie?
A. A good-faith purchaser
B. A valid purchaser
C. A void purchaser
D. A voidable purchaser
E. An interested purchaser for value
Dream Home. Maurice finds a dream home on the lake. He wants to buy it but is unsure
whether he can get a loan. He signs a contract with the seller that he will buy the home
if he can get a loan. Maurice also includes a contractual clause into the contract with the
seller that if the purchase goes through but he loses his job within one year, the seller
will repurchase the house for the same price Maurice paid for it. After getting a loan
and buying the home, Maurice decided that he wanted new windows put into the home.
He entered into a contract with a window contractor. The window contractor visited the
home, but Maurice was always gone. The contractor made several attempts to reach
Maurice, but Maurice would not return phone calls and made no attempt to assist the
contractor with installation. The responsibility of Maurice to make arrangements to give
the window installer access to the home is referred to as which of the following?
A. A condition subsequent
B. A condition precedent
C. An implied condition
D. An express condition
E. Both a condition precedent and an express condition
The UCC requires that sellers and lessors tender ______ goods to the buyer or lessee.
A. adequate
B. transforming
C. conforming
D. reasonable
E. superior
When a principal is classified as a(n) ______ principal, a third party is aware that an
agent is making an agreement on behalf of a principal and the third party also knows
the identity of the principal.
A. acknowledged
B. permitted
C. disclosed
D. revealed
E. uncovered
When may a court rule that parol evidence may be admissible to further the court's
understanding of an agreement?
A. When a court determines that a written agreement represents a complete and final
version of the agreement.
B. When a court determines that a written agreement does not represent a complete and
final version of the agreement.
C. When a court determines that there is disagreement between the parties over
performance of the agreement.
D. When a court determines that the plaintiff failed to do sufficient research to
determine if signing the agreement was advisable.
E. When a court determines that either party failed to obtain counsel to determine if
signing the agreement was advisable.
In which of the following orders of ascending strength may trademarks fall?
A. Generic, suggestive, descriptive, arbitrary, or fanciful
B. Descriptive, generic, suggestive, arbitrary, or fanciful
C. Arbitrary or fanciful, generic, descriptive, suggestive
D. Generic, descriptive, suggestive, arbitrary, or fanciful
E. Suggestive, generic, descriptive, arbitrary, or fanciful
Pet Pig Farm. Marcy wanted to buy Lucy's land and use it to breed small pigs to be kept
as pets. Marcy told Lucy that having water on the property was very important. Lucy
assured her that a spring ran through one corner of the property. Therefore, Marcy
agreed to buy the farm. Although she did not ask Lucy anything about it, Marcy, who
loved pigs, assumed that the neighbors would be pleased with the pigs being in the area.
In a separate contract, Lucy also agreed to sell Marcy a used truck for $5,000. After the
contract for the land sale was entered into, it was discovered that actually the spring did
not run through the corner of Lucy's property. The area in which the spring ran actually
belonged to a neighbor. Additionally, when Lucy brought Marcy the used truck, Marcy
said, "That's not the truck!" It was discovered that Lucy, who had two trucks, thought
that Marcy had bought the older truck when Marcy thought she had purchased the
newer truck. Marcy was also surprised when she received a petition signed by all
surrounding landowners objecting to the presence of the pigs and threatening to sue
Marcy for nuisance. Which of the following is the most likely result in the dispute
between Marcy and Lucy regarding which used truck was sold assuming that both
Marcy and Lucy were each innocently mistaken and did not intend to defraud the other?
A. The contract will be rescinded.
B. Marcy will be allowed to pick the truck she wants to buy because she is the buyer,
and she may also recover damages.
C. Lucy will be allowed to pick the truck she wants to sell because she is the seller.
D. Marcy will be allowed to pick the truck she wants to buy because she also had a
contract on the ancillary farm.
E. Marcy will be allowed to pick the truck she wants to buy because she is the buyer,
but she may not recover damages.
Private persons create ______ corporations for private purposes.
A. public
B. private
C. true
D. domestic
E. publicly held
What happens under the UCC, if a buyer of a consumer good subject to
purchase-money security interest later sells the good?
A. The security interest immediately terminates.
B. The security interest passes to the new buyer.
C. Regardless of whether the buyer is aware of the security interest, the security interest
terminates if the sale to the new buyer is made before the original secured party files a
financial statement.
D. As long as the buyer is not aware of the security interest, purchases the good for his
or her personal use, and purchases the good before the secured party files a financial
statement, the new buyer obtains the good free of the security interest.
E. As long as the buyer is not aware of the security interest, purchases the good for
resale, and purchases the good before the secured party files a financial statement, the
buyer obtains the good free of the security interest.
Blow-Up. Jeanie is hauling several containers of gasoline in her vehicle in preparation
for riding her personal watercraft. On the way home, Jeanie stops at the automatic teller
machine at her bank and exits her car. Holly pulls behind her and negligently rear-ends
Jeanie's car. The car explodes and results in the bank building burning to the ground.
The bank sues Holly for negligence claiming that Holly should have to pay for the
entire bank building. The bank claimed that it should be able to recover under the res
ipsa loquitur doctrine. Which of the following is true regarding the bank's claim that it
should be able to recover under the res ipsa loquitur doctrine?
A. The bank is correct because under that doctrine defendants are liable for any harm
caused.
B. The bank is correct only if Holly has sufficient insurance to cover the bank burning.
C. The bank is correct only if it can be established that Holly was a repeat driving
offender.
D. The bank is incorrect because the thing does not speak for itself.
E. The bank is incorrect because res ipsa loquitur is a defense.
What are the main functions of the Sarbanes-Oxley Act of 2002?
A. To issue a cease-and-desist order against violators of any federal securities law and
to seek civil money penalties against any violators.
B. To create rules to require that brokers and dealers provide information concerning
prices ad risks associated with the penny-stock market.
C. To permit the SEC to exempt persons, securities, and transactions from securities
regulations.
D. To increase corporate disclosure requirements and penalize violators more heavily.
E. To create the SEC.
The Family and Medical Leave Act guarantees all eligible employees up to ______
weeks of leave during any ______ month period.
A. 4; 24
B. 12; 24
C. 12; 12
D. 20; 12
E. 20; 24
In the case of multiple forgeries by the same wrongdoer, if a customer examines a bank
statement and does not notify the bank of the first forgery within the time required by
the UCC, what is the effect on subsequent forgeries assuming the bank is not negligent?
A. There is no effect because each forgery stands on its own.
B. The customer is barred from recovering on the subsequent forgeries.
C. The customer may recover on the subsequent forgeries if they are reported to the
bank within 5 days after the statement showing the customer receives the forgery.
D. The customer may recover on the subsequent forgeries if they are reported to the
bank within 10 days after the statement showing the customer receives the forgery.
E. The customer may recover on the subsequent forgeries if they are reported to the
bank within 15 days after the statement showing the customer receives the forgery.
Sally agrees to mow Paul's yard for $300 for the summer. Paul wishes to assign the
contract to his grandmother. Sally objects because Paul's yard is very small while the
grandmother's yard is over an acre. Which of the following is the correct legal outcome
for the dispute between Sally and Paul?
A. Sally will win because Paul's attempted assignment would increase the duties to
which she agreed.
B. Sally will win because all assignments are invalid without the obligor's consent.
C. Sally will win unless Paul paid her the $300 in advance in which case Paul will win.
D. Paul will win because he may validly assign the contract without Sally's consent.
E. Paul will win so long as he tells Sally about the assignment prior to the time she
begins any performance whatsoever.
Pet Pig Farm. Marcy wanted to buy Lucy's land and use it to breed small pigs to be kept
as pets. Marcy told Lucy that having water on the property was very important. Lucy
assured her that a spring ran through one corner of the property. Therefore, Marcy
agreed to buy the farm. Although she did not ask Lucy anything about it, Marcy, who
loved pigs, assumed that the neighbors would be pleased with the pigs being in the area.
In a separate contract, Lucy also agreed to sell Marcy a used truck for $5,000. After the
contract for the land sale was entered into, it was discovered that actually the spring did
not run through the corner of Lucy's property. The area in which the spring ran actually
belonged to a neighbor. Additionally, when Lucy brought Marcy the used truck, Marcy
said, "That's not the truck!" It was discovered that Lucy, who had two trucks, thought
that Marcy had bought the older truck when Marcy thought she had purchased the
newer truck. Marcy was also surprised when she received a petition signed by all
surrounding landowners objecting to the presence of the pigs and threatening to sue
Marcy for nuisance. Assuming that Lucy innocently made a misrepresentation
regarding the spring running through the corner of the farm with no reason to believe
that was not correct, considering only the lack of a spring issue, which of the following
is true if Marcy does not want to go through with the sale of the farm?
A. Marcy may rescind the contract and recover compensatory damages only.
B. Marcy may rescind the contract, but she may not recover damages.
C. Marcy may sue for damages, but she may not rescind the contract.
D. Because Lucy acted with scienter, Marcy may receive reliance damages in addition
to compensatory damages, but she may not rescind the contract.
E. Because Lucy acted with scienter, Marcy may receive reliance damages in addition
to compensatory damages, and she may rescind the contract.
In a hostile takeover situation, what does the term "going private" reference?
A. A leveraged buyout
B. A management buyout
C. An approved buyout
D. A corporate buyout
E. A closely managed buyout
What are local legislative laws called?
A. Area laws
B. Ordinances
C. Classifications
D. Filings
E. Reports
If a corporation has fewer than _____ shareholders, the Revised Model Business
Corporation Act allows companies to eliminate the board of directors entirely.
A. 100
B. 50
C. 30
D. 25
E. None of these because the Revised Model Business Corporation does not allow
companies to eliminate the board of directors entirely
Garage sale. Richard, who is cleaning out his garage, offers to sell Dawn a used
computer for $200. Dawn replies that "I'll think about it and buy it if I decide to do so."
Richard also calls Denise and offers to give Denise a used business law book. She is
excited to receive the book and tells him that she will pick it up the next day. Richard
also agrees to sell a communications book for $50 to Jill who promises to pick it up the
next day. Meanwhile, Sam comes to visit, offers Richard $20 for the business law book
and Richard sells it to him. Sam also offers Richard $50 for the used computer. Richard
sells it to Sam because he does not expect to hear from Dawn. Sam sees the
communications book and offers Richard $60 for it. Richard decides to forget about Jill
and proceeds to sell the book to Sam for $60. Denise is very angry because Richard did
not save the book for her and claims that he breached a contract because she had
accepted his offer. Jill is also angry because Richard sold the communications book and
informs him that he breached the contract he had with her. Exactly 31 days later, Dawn
tells Richard that she would like the computer. She tells him that her response
constituted consideration in that it bound him to an option contract and that he should
have awaited her final decision. Richard tells Sam that he needs to return everything for
a full refund. Sam refuses. Which of the following is true regarding Jill's claim that by
selling the communications book for a higher price, Richard breached the contract he
had with her?
A. Jill is correct.
B. Jill is correct only if she can establish that she had prior dealings with Richard.
C. Jill is correct only if she can establish that she had provided past consideration in
addition to the amount she agreed to pay for the book.
D. Jill is incorrect because her acceptance was illusory.
E. Jill is incorrect because the amount she agreed to pay was significantly less than the
fair market value of the book and, therefore, did not amount to consideration.
What is something of value given to another party in exchange for something else of
value?
A. Consideration.
B. Acknowledgement.
C. Approval.
D. Discharge.
E. Accession.
Which of the following types of paper require only a delivery of the instrument to the
holder by the payee?
A. A bearer instrument.
B. A delivery instrument.
C. An order instrument.
D. A transfer instrument.
E. An acknowledgement instrument.
