When negligence per se applies, the plaintiff is required to show that a reasonable
person would exercise a certain duty of care toward the plaintiff.
Aggressors often try to win the favor of a few institutional investors that own large
block of shares.
Partial performance is an exception to the parol evidence rule.
Res ipsa loquitur requires that the plaintiff produce direct evidence of the defendant’s
lack of due care.
Employees are protected in the workplace by federal laws only.
The courts have held that Congress has the authority to pass The Americans with
Disabilities Act according the commerce clause.
Misrepresentation is a false statement by a party about a material fact.
An agent may be required to indemnify the principal if a third party sues the principal.
In a Chapter 7 proceeding, a bankruptcy trustee may temporarily take over a debtor’s
business.
An accord and satisfaction is a court ordered proceeding to determine the amount of
money owed in an unliquidated debt.
If the debtor defaults on a loan, the secured party can take possession of the collateral
without any court order under the UCC.
Privilege is an affirmative defense in a defamation action.
Dividends are profits that a corporation keeps.
A time instrument is a draft that allows the payee to collect payment only at a specific
time in the future.
The age of majority is 18 in all states.
The UCC requires that all written documents must be have relative permanence and
movability to be negotiable.
Specific performance is a court order that requires that a nonbreaching party fulfill the
terms of the contract.
Lack of genuine assent is an element of a valid contract.
Under the UCC, warranties may not extend to third parties of a contract because of the
rule of privity.
The privileges and immunities clause give the federal government the authority to
collect taxes.
A general corporation may only have up to 210 shareholders while an S corporation
cannot have more than 75 shareholders.
Collateral is the property that is subject to a security interest.
The Alternative Dispute Resolution Act of 1998 limits the number of federal district
courts, which have ADR programs.
A private nuisance occurs when a person permanently removes personal property from
the owner’s possession and control.
Courts rely upon the UCC rules to clarify seller and lessor obligations when the
contract or lease is unclear.
Under federal law parents are responsible for the torts of their minor children without
any showing of lack of supervision on the part of the parents.
Good title is title that is acquired from someone who already owns the goods free and
clear.
A negotiable instrument may be oral if the parties agree.
A seller or lessor is allowed to resell or dispose of goods when the original buyer is in
breach and the goods have not yet been delivered but can still collect damages for any
loss.
If additional work is needed for an existing contractual duty due to unforeseen
circumstances, the promise for the additional work may be valid consideration for a
new agreement.
A bank has given value for a negotiable instrument to the extent that the bank has a
security interest in the instrument.
All contracts can be classified as either bilateral or unilateral.
What actions does the UCC provide that a court can take if it discovers that a contract
or lease provision is unconscionable?
A. The court must refer the matter to mediation.
B. The court must refer the matter to arbitration.
C. The court can only refuse to enforce the parts of the contract or lease that are unfair.
D. The court either can refuse to enforce the contract or lease, or can enforce the parts
of the contract or lease that are fair.
E. The court has no power to enforce the lease and must award the innocent party
punitive damages.
Which of the following is a type of intended beneficiary?
A. Creditor
B. Donee
C. Incidental
D. Creditor, donee, and incidental
E. Creditor and donee, but not incidental
In the event of a misspelled name, how may the holder endorse the document?
A. Only with the misspelled name.
B. Only with the holder’s actual name.
C. With the holder’s actual name or with the misspelled name.
D. Endorsement is impossible in such a situation.
E. With the misspelled name and also with a statement indicating to any later holder
what the correct spelling should have been.
Congress created federal administrative agencies Congress through passage of what
type of legislation?
A. Administrative
B. Enabling
C. Statutory
D. Agency
E. Interstate
____________________ sets minimum standards for most voluntarily established
pension and health plans in private industry to provide protection for individuals in
those plans.
A. The Employee Retirement Income Security Act
B. The Benefits Protection Act
C. The Family and Medical Leave Act
D. The Fair Labor Standards Act
E. Workers’ compensation laws
A(n) ______________ is a form of cease-and-desist order issued by the FTC that
applied not only to the product that was the subject of the actions but also to other
products produced by the same firm.
A. corrective advertising
B. ad substantiation
C. multiple-product order
D. consent order
E. puffing
Which of the following are exceptions to the parol evidence rule?
A. Contracts that have been subsequently modified
B. Contracts conditioned on orally agreed-on terms
C. Contracts that are not final as they are part written and part oral
D. Contracts with ambiguous terms
E. All of these
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 would be the result if Marcy attempts to
rescind the contract and recover damages only on the basis of the neighbor’s objection
to a pig farm?
A. Marcy may rescind the contract and recover damages because Lucy made an implied
misrepresentation.
B. Marcy may rescind the contract but may not recover damages because the situation
involved a mutual mistake.
C. Marcy may recover damages but may not rescind the contract because Lucy made an
implied misrepresentation.
D. Marcy may not rescind the contract nor may she recover damages because she,
Marcy, made a unilateral mistake.
E. Marcy may rescind the contract but may not recover damages because she, Marcy,
made a unilateral mistake.
The ______ in a third-party beneficiary contract is the party to the contract who owes
something to the promisor in exchange for the promise made to the third-party
beneficiary.
A. promisee
B. promisor
C. obligor
D. obligee
E. None of these. There are no third-party beneficiary contracts, only second-party
beneficiary contracts.
An agency relationship that arises when an individual misrepresents herself as an agent
for another party and that party accepts the unauthorized act is a(n)
A. agency by ratification.
B. agency by implied authority.
C. agency by estoppel.
D. agency by realization.
E. agency by agreement.
A principal’s obligation to pay an agent for his services is a duty ___________.
A. to provide safe working conditions
B. of reimbursement and indemnification
C. of cooperation
D. to compensate
E. to trust
Which of the following is an Article 3 personal defense to liability on a negotiable
instrument?
A. Nonissuance of an instrument
B. Modification of obligation by separate agreement
C. Nondelivery of the instrument
D. Nonissuance of an instrument, modification of obligation by separates agreement,
and nondelivery of the instrument
E. Nondelivery of the instrument or nonissuance of the instrument, but not modification
of obligation by separate agreement
The United States Constitution and __________ establish the fundamental principles
and rules by which the United States and the several states are governed.
A. the administrative rules
B. the procedural rules
C. the constitution of each state
D. the bylaws of each state
E. both the procedural rules and the bylaws of each state
What did the court rule on appeal in Alfonso Candela v. Port Motors Inc., the case in
the text in which the plaintiff sued the defendant for breach of warranty of title claiming
that he was sold a stolen car?
A. That the defendant passed good title as long as the defendant did not know that the
car was stolen.
B. That the defendant passed voidable title as long as the defendant did not know that
the car was stolen.
C. That a defendant selling stolen goods, regardless of good faith, can never pass a
voidable or good title to the buyer.
D. That a defendant selling stolen goods can pass good title to a buyer so long as the
buyer and seller were innocent and not in collusion.
E. That a defendant selling stolen goods does not pass good title but that the risk of loss
is on the buyer.
Which of the following is false regarding requirements for an instrument to be
negotiable?
A. The instrument must be a written document.
B. The instrument must be signed by the creator of the instrument at the end of the
instrument.
C. The instrument must have an unconditional promise or order to pay.
D. The amount to be paid in the instrument must be a sum certain in money.
E. All of these are false.
For purposes of federal jurisdiction, a limited liability company is considered a citizen
in ______.
A. its place of organization only
B. the location of its principal place of business only
C. the location of either its place of organization or its principal place of business only
D. every state in which its members reside
E. every state in which a member resides, the location of its principal place of business,
or the location of its organization
Which of the following does a seller have in order to indicate ownership of goods when
goods are in some kind of storage so the seller cannot transfer physical possession of
them?
A. A negotiable document of title.
B. A nonnegotiable document of title.
C. A contract or other instrument showing ownership that is not a negotiable or
nonnegotiable document of title.
D. Either a negotiable document of title, a nonnegotiable document of title, or a contract
or other instrument showing ownership that is not a negotiable or nonnegotiable
document of title.
E. A negotiable document or a nonnegotiable document of title only.
Refused Furniture. Selina arranges to sell furniture from her furniture store to Roland
for $3,000. Roland was supposed to give Selina a $500 deposit on February 1 and pay
the remainder in monthly installments. Selina was to deliver the furniture by February
7. Roland did not pay Selina as promised on February 1. He asked her to wait until
March 1, but she refused. She also refused to deliver the furniture. Selina was able to
sell the furniture for only $2,500 because of a downturn in the economy. Roland told
Selina that she had no right to withhold or sell his furniture and that he was suing.
Selina incurred $100 in additional amounts in advertising costs to advertise the
furniture that Roland initially purchased. Selina saved $40 in delivery costs because the
subsequent purchaser picked up her own furniture. Which of the following is true
regarding any deduction in damages to which Roland is entitled?
A. Roland is not entitled to any deduction because he was the breaching party.
B. Roland is entitled to a deduction for the delivery expenses only if he can show that
Selina agreed in writing to deduct those in the event of a breach.
C. Roland is entitled to a deduction for the delivery expenses only if he can show that
Selina agreed orally or in writing to deduct those in the event of a breach.
D. Roland is entitled to a deduction for the delivery expenses because that was a
savings to Selina.
E. Roland is entitled to a deduction for the delivery expenses because Selina breached
the contract by not delivering the furniture to him and then pursuing an action for
damages.
Carl, without Eddie’s knowledge, impersonates Eddie and thereby convinces Connie,
who has never seen Eddie, to write a check to Eddie, on which Carl forges Eddie’s name
and deposits into his, Carl’s, account. Which of the following is true regarding whether
Connie will be liable for the amount of the check?
A. Under the forgery rule, Connie will be held liable
B. Under the transferor rule, Connie will be held liable
C. Under the payee rule, Connie will be held liable
D. Under the imposter rule, Connie will be held liable
E. Under the fictitious payee rule, Connie will not be held liable
Boat Tow. Donnie went to a new car dealership and told the salesperson, which was not
the manager, that he needed a new car that would get good gas mileage and would also
pull his big boat. The salesperson encouraged him to buy a smaller car that the
salesperson promised would pull the boat. Donnie bought the car and used it to pull the
boat. Unfortunately, the heavy pull on the car did significant damage to the car’s engine.
Donnie complained to the salesperson that denied any liability. Donnie, who had half a
semester of business law, informed the salesperson that along with the sale of the car he
also received an express warranty and an implied warranty of merchantability, and that
he could recover under either of those theories. Will Donnie be able to recover damages
based upon breach of the implied warranty of fitness for a particular purpose?
A. Yes.
B. No, because there was no express warranty.
C. No, because Donnie’s only right of recovery was for breach of the implied warranty
of merchantability.
D. No, because Donnie’s only right of recovery was for breach of an express warranty.
E. No, because Donnie as a reasonable person should have known that the car would
not pull the boat regardless of what the salesperson said.
A corporation is a(n) _____ corporation in the state in which it is incorporated.
A. domestic
B. home
C. recognized
D. approved
E. certified
______________________ occurs when a target corporation offers to buy its
shareholders’ stock.
A. A self-tender offer
B. A leveraged buyout
C. A cross-tender offer
D. A challenge-tender offer
E. An illegal tender offer
Portraits. Belinda, a famous portrait painter, agreed to paint Harry’s portrait for $5,000.
She also agreed to paint the portraits of Michelle’s two Welsh Corgi dogs, Baby and
Bree. Michelle agreed to pay Belinda $12,000 for the portraits. Belinda charged
Michelle more because dogs annoyed her. Belinda met the spoiled dogs, and they really
got on her nerves. Plus, she was behind on finishing Harry’s portrait. Belinda, therefore,
proceeded to assign the right to receive the money for the dog portraits and the duty to
paint the dog portraits to her assistant, Fred. He eagerly accepted and painted the
portraits. As payment for amounts she owed him for various duties, Belinda also
assigned to Fred the right to receive payment from Harry. Neither the contract Belinda
had with Harry nor the contract she had with Michelle expressly prohibited assignment
or delegation of contractual rights and duties. Belinda finished the portrait of Harry and
called him to come and pick it up. Meanwhile, a disgruntled secretary who disliked
Belinda told both Michelle and Harry about the agreements with Fred. Michelle was
furious and refused to pick up the portrait or pay anyone. Harry likewise refused to pay
for his portrait claiming that the right to payment could not be assigned. What would be
the most likely result if Fred sues Harry for the $12,000 payment?
A. Harry will win because he did not expressly agree to the assignment.
B. Fred will win because the right to receive payment could be validly assigned.
C. Fred will win unless Harry can prove that Fred knew that Harry did not want the
benefits assigned.
D. Fred will lose unless Fred can prove that he was ignorant of the fact that Harry did
not want the benefits assigned.
E. Harry will win because the portrait was personal in nature and could not be assigned.
Which of the following is responsible for registering domain names for Internet use?
A. Internet Solutions Inc.
B. Domain Names Co.
C. Internet Domain Inc.
D. Network Solutions Inc.
E. Findability Inc.
Which of the following types of damages is intended to reimburse a plaintiff for his or
her losses?
A. Compensatory.
B. Punitive.
C. Nominal.
D. Exemplary.
E. Quantum.
Under UCC Sections 2-513(1) and 2A-515(1), the seller or lessor must provide
_____________.
A. the right to cure problems with nonconforming goods
B. the right to be excused from performance if the goods are destroyed
C. an opportunity for inspection before enforcing payment
D. an extension for payment of a destroyed item
E. a course of dealing
Which of the following was the result on appeal in The Twin City Bank v. Kenneth
Isaacs, the case in the text in which the bank appealed a judgment against it for
significant damages after the bank wrongfully held funds of depositors who had been
the victim of check forgery?
A. That the bank could not be held liable for damages because it was recouping its own
losses.
B. That the bank could not be held liable under common law because of its contractual
agreement with the depositors and that the UCC was inapplicable.
C. That the bank could be held liable but only up to $1,000.
D. That the bank could be held liable for actual damages but not for mental anguish.
E. That the bank could be held liable for financial losses and also for mental anguish.
Which clause provides that the Constitution, laws, and treaties of the United States
constitute the supreme law of the land?
A. The First Amendment, clause three
B. The Supremacy Clause
C. The Commerce Clause
D. The Eighth Amendment, clause one
E. The Federalism Clause
________ torts occur when the defendant takes an action that is inherently dangerous
and cannot ever be undertaken safely, no matter what precautions the defendant takes.
A. Criminal
B. Liability
C. Intentional
D. Negligent
E. Strict-liability
Which of the following has the power to dissolve a federal agency?
A. The House of Representatives
B. The Senate
C. Congress
D. The President
E. The Administrative Regulatory Agency
Which of the following are the most common types of rule making done by agencies?
A. Formal and hybrid
B. Informal and hybrid
C. Formal and informal
D. Judicial and informal
E. Legislative and formal
Amber says at trial that Gwen told her that she saw Tom run the traffic light and hit
Christy’s car. On what basis is Amber’s testimony objectionable?
A. It is not objectionable
B. Hearsay
C. Comprehension
D. Preponderation
E. Familiarity
When may an agency claim an exemption from rule making requirements on the basis
that public notice and comment procedures are “impracticable, unnecessary, or contrary
to the public interest” and what steps must be taken?
Why are administrative agencies at times referred to as the “fourth branch of
government,” and is this assertion true?
List the purposes of the law and discuss why these purposes are necessary for an
ordered society.
Describe contrasts between the cost-benefit school of jurisprudence and the natural law
theory of jurisprudence.
Explain in what ways a treaty between a foreign country and the U.S. is similar to a
contract.
Sally, who has a candy shop, agreed to sell Ricky, a teacher, all the chocolate candy
bears in her shop for treats for his class. Unfortunately, through no fault of hers, Sally’s
air conditioner went out and half of the bears partially melted. What are the rights and
duties of the parties in relation to the contract?
Set forth when an implied warranty of fitness for a particular purpose will be found.
Do you believe that the law should be that consideration must be in an amount similar
in value to the item or services being transferred in order for the contract to be
enforceable? Discuss why or why not.
List and discuss the three objectives of tort law.
How can the Federal Trade Commission protect consumers if most companies within
one industry are using the same unfair or deceptive practices?
Lists four situations under which contractual rights cannot be assigned.
Discuss why agency is especially important for modern firms doing business in foreign
countries.
What is the difference between a cashier’s check and a certified check? Can a bank
refuse to certify a check? Assuming the payment is valid, can a bank refuse to issue a
cashier’s check?
Bob offered to sell Teresa his used motorcycle. She took a look at it and asked Bob how
it ran to which Bob replied that it was in good shape. Teresa thought the motorcycle
was two years old when she purchased it. A few days later, she discovered that it was
actually five years old. She asks Bob to take back the motorcycle. He tells her no way,
that he thought she knew the age of that model, and that she should have asked him if
she had any uncertainty. If Teresa sues, who is likely to win and why?
What are the conditions for a drawer or endorser to become liable?
Set forth the steps involved in formal rule making.