Which of the following occurs when someone engages in outrageous, intentional
conduct likely to cause extreme emotional distress to the party toward whom the
conduct is directed?
A. Negligent infliction of emotional distress.
B. Intentional infliction of strict-liability distress.
C. Intentional infliction of emotional distress.
D. Reckless invasion of solitude.
E. Psychological infliction of distress.
Which of the following is true regarding corporations?
A. A corporation is not a separate legal entity.
B. A corporation may not be sued.
C. A corporation is created according to federal law.
D. Shareholders may typically be held liable for debts of the corporation.
E. The corporation must pay taxes on profits, and shareholders must pay taxes on
dividends they receive from the corporation.
Which of the following contracts are usually voidable?
A. Contracts entered into as a result of fraud, but not duress or undue influence.
B. Contracts entered into as a result of duress or undue influence, but not fraud.
C. Contracts entered into as a result of undue influence or fraud, but not duress.
D. Contracts entered into as a result of fraud or duress, but not undue influence.
E. Contracts entered into as a result of fraud, duress, or undue influence.
Generally, when an endorsement on a check has been forged, which party is the party
ultimately liable for the loss?
A. The drawer.
B. The first party to accept the forged instrument.
C. The first endorser of the instrument.
D. The bank of the first party to accept the forged instrument.
E. The bank of the drawer even if proper notice was given of the forgery.
Which of the following was the result in the Case Opener involving whether title had
passed to the entity that received shipment although shipment was made to the wrong
party thereby preventing a lawsuit by the assignee of the original owner against the
shipping company?
A. That because the shipper breached its contract by improperly delivering goods, the
lawsuit by the assignee was not barred.
B. That because title and risk of loss had not passed from the seller, who had contracted
with the shipper, to the buyer at the time of transfer, the lawsuit by the assignee was not
barred.
C. That the lawsuit by the assignee was barred because an origin title was involved, and
risk of loss had passed to the buyer by the time of delivery, leaving the seller with no
rights.
D. That the lawsuit by the assignee was barred because a destination title was involved,
and risk of loss had passed to the buyer by the time of delivery, leaving the seller with
no rights.
E. That while the original seller may have had rights to sue, the lawsuit by the assignee
was barred under the Contracts for the International Sale of Goods.
Which of the following is false a trust?
A. Interest may be generated by a trust.
B. Income may be paid to a person identified as an income beneficiary.
C. A person entitled to income must be the person entitled to the trust corpus.
D. A trust may be created to protect a pet.
E. A trust may be created for tax reasons.
“Hair Stylist Woes.” Maryann, a college student, 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 that 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 and she felt
embarrassed and humiliated, 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. All her appointment times were booked and she could do no more
business.
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 loss
of income.
C. Maryann is incorrect because her statements constituted slander per se.
D. Maryann is incorrect because general damages will be presumed.
E. Maryann is incorrect but only because Candy cannot establish liable per se.
Which of the following is not a federal law regulating product labeling?
A. The Wool Products Labeling Act
B. The Fur Products Labeling Act
C. The Flammable Fabrics Act
D. The Nutrition Labeling and Education Act
E. The Imported Canine and Feline Fur Act
A ______ estate is granted for the lifetime of an individual with the right to possess the
property terminating at the individual’s death.
A. Conditional
B. Life
C. Leasehold
D. Future interest
E. Fee simple absolute
Assuming adoption of the UCC, which of the following is true regarding whether the
buyer and seller may negotiate a longer time for the statute of limitations than that
allowed by the UCC?
A. The buyer and seller may not negotiate a longer time for the statute of limitations
than that allowed by the UCC.
B. The buyer and seller may negotiate a longer time for the statute of limitations than
that allowed by the UCC without any limits.
C. The buyer and seller may negotiate a longer time for the statute of limitations than
that allowed by the UCC so long as the time period in which to sue does not extend past
one year from the date of breach.
D. The buyer and seller may negotiate a shorter time for the statute of limitations than
that allowed by the UCC so long as the time period in which to sue does not extend
beyond five years from the date of breach.
E. The buyer and seller may negotiate a shorter time for the statute of limitations than
that allowed by the UCC so long as the time period in which to sue does not extend
beyond six years from the date of breach.
“International Expansion.” Zach wants to expand his coffee business internationally –
into Zeno, a small remote country. He moves there temporarily in order to oversee
operations. His best friend Zora asks him if he plans to hire legal counsel for the
expansion. Zach replies, “Of course not. The U.S. has the strictest laws regarding
contracts, employment, and business practices in the world. So long as I’m legal in the
U.S., I’m legal anywhere. Besides, I studied up on Zeno law ten years ago, and I know it
all.” Zach proceeds and lands in jail in Zeno for violating recently passed laws
protecting employees and mandating certain benefits. Authorities there claim that he
sexually harassed an employee, failed to pay sufficient wages, and failed to give
employees Zeno’s mandated 12 weeks of paid vacation per year.
The type of law involved in comparing laws between the U.S. and Zeno is ____.
A. Comparative law
B. Contributory law
C. Comprehensive law
D. Complete law
E. Delineated law
Which of the following is false regarding the merger process in South Africa?
A. Shareholders cannot approve a merger unless 50 percent of all shareholders vote to
accept the offer.
B. Minority shareholders have access to South African courts and may employ them
when disputes arise.
C. The Companies Act establishes a panel to inquire about mergers or takeovers.
D. The Companies Act and the rules of the Johannesburg Stock Exchange control
mergers.
E. If a change of corporate control takes place outside the stock exchange, the initiator
of the merger must extend the offer to the shareholders and disclose all pertinent
information to them within a reasonable amount of time.
Which of the following is false regarding the winding-up process?
A. During the winding-up process, the partners must still fulfill their fiduciary duty to
one another in the sense that they must disclose all information about the partnership
assets.
B. During the winding-up process, the partners may not engage in any business that
competes with the partnership business.
C. If a partnership has been rightfully dissolved, any partner can demand that the
winding-up stage begin.
D. If a partner wrongfully dissolves a partnership, that partner has no right to demand a
winding up.
E. During winding-up, once partnership assets are gathered, they are distributed to the
partners or to creditors.
“Grooming Losses.” Wally, Beverly, and Matthew formed a partnership to groom dogs.
Because they were good friends and anticipated making a profit sufficient to
compensate all partners well, the articles of partnership did not allocate profit or losses.
Beverly was appointed managing partner. Unfortunately, the business did not go as well
as expected and the partnership incurred some losses. Matthew claimed that he should
not have to share in losses because he had groomed more dogs than anyone. Matthew
also claimed that although the partnership did not reference compensation for additional
duties, he was entitled to compensation because of his excessive work. Beverly claimed
that she should not have to share in losses because she contributed more capital than did
either of the others. Wally claimed that he should not have to cover the losses because
both Beverly and Matthew had been hiding the books from him. He demanded to
inspect the books and also to review a listing of all partnership assets and profit
statements listing distributions to partners. Beverly and Matthew denied that they had
been hiding the books and claimed complete innocence of any wrongdoing.
Is Wally entitled to inspect the books?
A. Only if he is the managing partner.
B. Only if he can establish fraud on the part of another partner.
C. Only if the articles of partnership specifically gave him that right.
D. Only if the articles of partnership specifically gave him that right or the other
partners agreed.
E. Yes.
“Coffee shops.” Bernice wants to open a chain of coffee shops but needs some
investors. Her friend Robbie tells Bernice that she should be sure that she satisfies
requirements of the SEC. Robbie tells her that she has to provide information to the
SEC involving a description of the securities, an explanation of how proceeds will be
used, information regarding the management of the company and other matters. He tells
her that she also has to provide a document to the SEC that will be provided as an
advertising tool to potential investors who can rely on it to decide whether they should
buy the securities. Bernice says that she does not want to do that. She explains to
Robbie that insofar as the coffee shop venture is concerned, she does not want to
advertise; and she wants to offer securities only to a limited number of wealthy friends.
Particularly, she has in mind Scott who has a net worth of at least $3 million.
Assuming requirements are satisfied, which of the following, if any, may allow Bernice
to avoid registration with the SEC if she proceeds with her plan to offer securities only
to friends without advertisement?
A. The limited exemption
B. The accredited exemption
C. The unadvertised exemption
D. The private placement exemption
E. There is no such exemption to registration requirements
“Peanut Allergy.” Kitty, who had a love of baking, decided to open her own bakery. She
decided that she did not need and did not want to pay for a lawyer to advise her on
different forms of ownership. Unfortunately, Kitty had not paid attention in business
law class. She proceeded, with little thought, to simply open her business called Kitty’s
Baking. Bobby came in to order some cookies for his girlfriend, Bitsy. Unfortunately,
Bitsy was allergic to peanuts. Bobby told Kitty that he needed some cookies for Bitsy
but that Bitsy had allergies to peanuts. Kitty told him not to worry because she would
make up a special batch just for him. Kitty had hired some assistants because she was
so busy. She told an assistant, Cathy, to make up several batches of cookies for different
customers including Bobby and told her to leave out the peanuts in Bobby’s batch
because of the allergy. Cathy, however, forgot about the peanut allergy and proceeded to
make Bobby’s cookies with peanuts. Bobby picked up the cookies and gave one to Bitsy
in the car while they were on the way to the movie in Bobby’s new car. Bitsy became
violently ill, vomited in Bobby’s car, and had to have her stomach pumped. Bobby and
Bitsy sought recovery from Kitty who told them that Bitsy’s doctor bill and Bobby’s car
cleaning bill were business debts, that the business was new and not making any money
at the moment, and that she had no personal liability. Following the incident involving
Bobby and Bitsy, Kitty discusses her problems with the bakery with her parents. Kitty’s
parents would like to invest in her business and share in any profits, but they do not
want to share in the management responsibilities.
What type of business had Kitty initially set up?
A. A franchise
B. A sole proprietorship
C. An individual proprietorship
D. A general company
E. An S corporation
“Lottery Winnings.” Frank, a hypochondriac who was also very compulsive, was
having minor surgery to repair a bone spur on his foot. He had just purchased a lottery
ticket for a chance at the grand prize of $30,000,000. He always kept lists of the
numbers of his lottery tickets with him in his billfold. Frank’s girlfriend, Bubbles, went
with him to the hospital. While in the waiting room, Frank said to her, “Bubbles, I may
not make it out of this bone spur surgery. Take my lottery ticket. If I don’t make it, I
hope you win and live it up; but please don’t get another boyfriend.” Bubbles replied, “I
could never be happy without you.” A nurse saw and heard the whole exchange. Frank
came out of the surgery just fine but with a sore foot. While he was recuperating that
evening, Bubbles watched the lottery drawing and discovered that Frank’s ticket was
indeed the winning ticket. She immediately moved out and collected the winnings.
Frank saw her on television with her new boyfriend, George. She appeared to be very
happy. He checked the numbers and discovered that she won off of his ticket. Frank
says that the lottery money is his.
Which of the following describes the statement Frank made to Bubbles prior to surgery
regarding the lottery ticket?
A. A gift causa mortis.
B. A gift inter vivos.
C. A gift inter mortis.
D. A gift causa vivos.
E. It was meaningless because of the condition of death placed on the gift.
Under ERISA, employers are required to provide to plan participants all of the
following except:
A. Plan information (i.e., features and funding).
B. A grievance and appeals process for participants to get benefits from their plans.
C. The right to sue for benefits and breaches of fiduciary duty.
D. A yearly outline of anticipated investments.
E. Assurances that those in charge of managing plan assets have fiduciary
responsibility.
What is the federal minimum wage per hour in the U.S.?
A. $7.25
B. $8.30
C. $5.30
D. $6.50
E. $10.00
Which of the following provides that a revocation is effective only when received by
the offeree?
A. The Acceptance Rule
B. The Contract Rule
C. The Reasonable Rule
D. The Mailbox Rule
E. The Contract Legality Rule
Which of the following is true regarding trials in Japan?
A. The Japanese trial system has juries that function similar to juries in America.
B. The discovery process in the Japanese court system is much simpler than that in
America.
C. Trial involves a series of discrete meetings between the parties and the judge.
D. Known evidence must be automatically exchanged without request or order of the
court.
E. Only civil penalties may be imposed in civil cases for parties violating judicial
orders.
Which of the following under the UCC is a good used or bought for use primarily for
personal, family, or household purposes?
A. A retail good.
B. A consumer good.
C. A pledged good.
D. A financed good.
E. An approved good.
“Divorce fallout.” Dr. Fred, following a messy divorce, has encountered significant
financial difficulties. Dr. Fred has a friend named Slick Slim who tells Dr. Fred that he
has been making lots of money by selling people a wristband that allegedly places
pressure on a nerve that signals hunger resulting in a lack of appetite. Slick Slim tells
Dr. Fred that, although the device does not really work, people who want to lose weight
and look good in their bathing suits will do anything. Slick says the wristband sells like
hotcakes. Slick also tells Dr. Fred that he will pay Dr. Fred five dollars for every band
that Dr. Fred can sell to his patients. Dr. Fred proceeds to mail letters to patients
suggesting the use of the band for weight loss. He also uses UPS to mail samples of the
band to some patients along with letters encouraging purchase of the bands. Dr. Fred
then proceeds to bill Medicare for office consultations he has with patients when they
come in to purchase the bands. The scheme is wildly successful. Dr. Fred is able to
entirely satisfy his alimony obligations within just a few months. Unfortunately, as
patients begin to see that they are not having any weight loss, he has been receiving
numerous complaints, and a friend of his told him that he could even be facing some
criminal prosecution.
By which of the following acts, if any, did Dr. Fred commit health care fraud?
A. Dr. Fred did not commit any acts of healthcare fraud.
B. By the submission of false claims to Medicare only.
C. By the receipt of kick-backs from Slick Slim only.
D. By the submission of false claims to Medicare and also by the receipt of kick-backs
from Slick Slim.
E. By submitting false claims to Medicare, by receiving kick-backs from Slick Slim,
and also by merely listening to what Slick Slim had to say.
Whether goods conform to contract terms is a ____.
A. Question of fact
B. Question of law
C. Mixed question of law and fact
D. Question of law unless an installment contract is involved in which case it is a
question of fact
E. Question of fact unless an installment contract is involved in which case it is a
question of law
Which of the following is true regarding who may receive a discharge of debt under
Chapter 7 of the bankruptcy code?
A. Individuals, partnerships, and corporations may all receive a discharge.
B. Partnerships and individuals may receive a discharge, but corporations may not.
C. Corporations and individuals may receive a discharge, but partnerships may not.
D. Individuals may receive a discharge, but partnerships and corporations may not.
E. Corporations may receive a discharge, but individuals and partnerships may not.
Which of the following is true regarding the obligation of a minor on disaffirmance?
A. In all states, a minor must return any consideration in his control but is entitled to a
full refund of any purchase price regardless of the condition of the consideration when
returned.
B. In all states, a minor is entitled to a full refund without returning consideration.
C. In all states, a minor must return any consideration in his control, must make
restitution, and must pay for any loss in value of the collateral.
D. In all states, a minor only receives a return of half the minor’s investment.
E. The obligations of a minor upon disaffirmance vary from state to state.
Which of the following governs the transfer of checks between banks?
A. Article 1 of the UCC.
B. Article 2 of the UCC.
C. Article 3 of the UCC.
D. Article 4 of the UCC.
E. Article 5 of the UCC.
Assume a buyer and seller execute a contract in which the seller is going to deliver a
couch later in the day to the buyer. With a simple delivery contract in which the seller is
not a merchant, which party sustains a loss if, through no fault of either party, the couch
is destroyed through fire prior to delivery?
A. The seller
B. The buyer
C. Loss is proportioned 50% to the buyer and 50% to the seller
D. Loss is proportioned 75% to the buyer and 25% to the seller
E. Loss is proportioned 25% to the buyer and 75% to the seller
A[n] ___________ is a promise or set of promises for the breach of which the law gives
a remedy or the performance of which the law in some way recognizes a duty.
A. Contract
B. Offer
C. Consideration
D. Acceptance
E. Legal object
Which of the following is true regarding S corporations?
A. They are considered partnerships yet taxed like corporations as long as they follow
regulations.
B. They cannot have more than 80 shareholders.
C. Shareholders do not report profit on their personal income tax forms.
D. They may be formed under federal law.
E. Income is taxed only when distributed to the shareholders, who must not report the
income on their personal income tax forms.
Wills are ______, meaning that testators can change them.
A. Changeable
B. Revocable
C. Retrievable
D. Rescuable
E. Ambulatory