Community Fair. Craig and Melinda are searching for a one-time business opportunity
that will enable them to make a sufficient amount of cash to take a really great vacation
to Galapagos. They live in a rather small rural community that has not, to date, had a
community fair. Craig and Melinda decide to sponsor a fair on a weekend in October
and to arrange for exhibits and awards, beauty contests, pie eating contests, food
vendors, and amusement rides. The profit to Craig and Melinda will come from ticket
sales and from charges to food vendors for the privilege of setting up shop. Apart from
some minor skirmishes between Craig and Melinda regarding management rights,
preparations go fairly well. When the weekend of the fair arrives, things initially go
fairly smoothly. Unfortunately, however, one of the beauty contestants slips on the
runway. An argument broke out during the pie eating contests resulting in angry
contestants throwing pies and injuring spectators. Finally, an elderly lady who was
angry because she did not win the prize for the best honey jabbed the volunteer judge
with her cane. All injured parties threaten to sue Craig and Melinda. Craig tells Melinda
that she should bear the larger percentage of any damages because the idea for the fair
was initially hers, and she obtained all necessary permits. Melinda, on the other hand,
tells Craig that he should be wholly responsible for any damages because he was put in
charge of all competitions. They can reach no agreement regarding winding up the
project and splitting the meager profits, and angrily go their separate ways with no
resolution. As she is leaving, Melinda shouts to Craig that as her agent he should have
done a better job with security. Which of the following is true regarding the liability of
Craig and Melinda for the fair?
A. Each party can be held responsible for the liability of the other.
B. Craig is solely responsible because he was charged with handling security.
C. The party who obtained the business license is solely responsible.
D. Under state law, neither party is generally exposed to liability in this type of project.
E. Under state law, it is generally required that the parties agree on the issue of liability
prior to starting the project and file a copy of the liability agreement with the
appropriate state agency.
Which of the following is generally true regarding a liquidated damages provision?
A. A provision for liquidated damages is illegal.
B. A provision for liquidated damages is void because of public policy.
C. A provision for liquidated damages is voidable because of public policy.
D. A provision for liquidated damages is enforceable so long as it is not punitive in
nature.
E. A provision for liquidated damages will be enforced regardless of whether it is
punitive in nature.
How many people sit on a jury for an administrative hearing?
A. 6
B. 8
C. 12
D. 9
E. None
__________________ an employer not required to offer an employee the option to
continue medical benefits under COBRA.
A. When the employee is fired for gross misconduct.
B. When the employer decides to eliminate benefits for all current employees.
C. When the employee quits without notice.
D. When the employee is fired for gross misconduct, when the employer decides to
eliminate benefits for all current employees, and also when the employee quits without
notice.
E. When the employee is fired for gross misconduct and when the employer decides to
eliminate benefits for all current employees, but not when the employee quits without
notice.
Over which of the following does the federal court system have exclusive jurisdiction?
A. Admiralty cases and bankruptcy cases, but not federal criminal prosecutions.
B. Admiralty cases and federal criminal cases, but not bankruptcy cases.
C. Federal criminal prosecutions and bankruptcy cases, but not admiralty cases.
D. Diversity cases only.
E. Admiralty cases, bankruptcy cases, and federal criminal prosecutions.
Which of the following must a buyer do in obtaining cover?
A. Demonstrate good faith in obtaining the substitute goods
B. Pay a reasonable amount for the substitute goods
C. Act without unreasonable delay in purchasing the substitute goods
D. Purchase goods that are reasonable substitutes
E. All of these
Which of the following was the result on appeal in United States v. Carpenter, the case
in the text in which it was claimed that federal securities law was violated by a scheme
by which confidential information gained in the course of obtaining news material for
the Wall Street Journal was sold to stockbrokers?
A. That the defendants were criminally liable for violating federal securities laws by
misappropriating material, nonpublic information for their own profit in the purchase
and sale of securities.
B. That the defendants were not criminally liable for violating federal securities laws by
misappropriating material, nonpublic information for their own profit in the purchase
and sale of securities but that they could be held liable in a civil action to any investors
who suffered harm.
C. That the stockbrokers were criminally liable for violating federal securities laws by
misappropriating material, nonpublic information for their own profit in the purchase
and sale of securities but that there was no basis upon which the newspaper employees
could be held criminally liable.
D. That the newspaper employees could be held criminally liable for violating federal
securities laws by misappropriating material, nonpublic information for their own profit
but that there was no basis upon which the stockbrokers could be held liable.
E. That there was no basis upon which either the newspaper employees or the
stockbrokers could be held criminally liable under federal securities law or under civil
causes of action brought by investors.
International Expansion. Zach wants to expand his coffee business internationally – into
Zeno, a small remote country in Africa. 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. So long as I’m legal here,
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 the remote country of 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 vacation per year.
Which of the following is true regarding Zach’s defense that he thought he knew the law
of Zeno because he had studied it some years before and that the laws under which he
was arrested were new?
A. Rules in international business change frequently, and Zach had a duty to stay
current. It is not a defense that he studied the law at one time and that the laws at issue
were new.
B. Zach is entitled to rely as a defense on the fact that he had studied the law at one
time. Officials in Zeno were charged with publicizing any changes.
C. If Zach can prove that the laws at issue were passed within the last twelve months
before he was arrested, he will get out of jail because under international law, there is a
twelve month grace period for foreigners.
D. If Zach can prove that the laws at issue were passed within the last six months before
he was arrested, he will get out of jail because under international law, there is a six
month grace period for foreigners.
E. Zach cannot be prosecuted so long as he was not aware he was violating the law. He
did not have the requisite intent to perform a criminal act regardless of whether the laws
were new.
When a patent is issued for an object, it gives its holder the exclusive right to produce,
sell, and use the object of the patent for __________ years from the date of application.
A. ten
B. twenty
C. thirty
D. forty
E. fifty
__________________ protects employees against discrimination and harassment based
upon race, color, religion, national origin, and sex.
A. The Civil Rights Act of 1964-Title VII
B. The Pregnancy Discrimination Act of 1987
C. The Age Discrimination in Employment Act of 1967
D. The American with Disabilities Act of 1990
E. The Equal Pay Act of 1963
Which of the following is true regarding privacy rights?
A. The U.S. Supreme Court has said that the U.S. Constitution does not provide any
right to privacy.
B. The U.S. Supreme Court has found that U.S. citizens have a right to privacy based
upon the U.S. Constitution.
C. The U.S. Constitution specifically provides for a right to privacy within the Second
Amendment.
D. The U.S. Constitution specifically provides for a right to privacy within the Sixth
Amendment.
E. Both that the U.S. Supreme Court has found that U.S. citizens have a right to privacy
based upon the U.S. Constitution and that the U.S. Constitution specifically provides
for a right to privacy within the Sixth Amendment.
Agency laws are relevant to _____________________ relationship.
A. principal-agent
B. employer-employee
C. employer-independent contractor
D. principal-agent, employer-employee, and employer-independent contractor
E. principal-agent and employer-employee, but not employer-independent contractor
Which of the following is true in situations in which a principal was undisclosed and
the third party comes to know of the undisclosed principal’s identity, but proceeds to get
a judgment against the agent?
A. The principal is liable to the third party anyway.
B. The principal is liable to the third party only if the agent does not pay.
C. The principal is liable to the third party only if the agent files for bankruptcy.
D. The principal is released from liability to the third party.
E. The principal is released from liability unless a contract for personal service was
involved.
A(n) ______ party is a party who signs an instrument to provide credit for another party
that has also signed the instrument.
A. agreeable
B. accommodation
C. agent
D. principle
E. promisor
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 likely be able to recover
damages based upon a breach of the implied warranty of merchantability?
A. No, because the implied warranty of merchantability was that the car would, for
example, be fit for the ordinary purposes for which such goods are used. Pulling the
boat was not an ordinary purpose for that small car.
B. Yes, because Donnie informed the salesperson about the need for the car to pull the
boat.
C. Yes, because the salesperson told Donnie that the car would pull the boat.
D. No, because of the lack of an implied warranty of fitness for a particular purpose.
E. No, because there was no warranty of merchantability.
______________ time is the period between when a check is written and when it is
presented for final payment.
A. Transfer
B. Electronic
C. Chargeable
D. Float
E. Usable
Which of the following is accurate regarding the speed and cost of ADR?
A. It is usually faster and cheaper.
B. It is usually faster but more expensive.
C. It is usually slower and more expensive.
D. It is usually slower but cheaper.
E. No studies have known, so the answer is unknown.
A hacker tries to obtain the identification numbers of government employees will be
charged with:
A. embezzlement.
B. cyber terrorism.
C. bribery.
D. fraud.
E. false pretenses.
A(n) _____ discharges the nonbreaching party from his obligations under the contract.
A. immaterial breach
B. substantial breach
C. material breach
D. delineated breach
E. crossed breach
To be protected in ____________ use, a trademark must be registered with the U.S.
Patent Office under the Lanham Act of 1947.
A. interstate
B. intrastate
C. interstate and intrastate
D. commercial
E. interstate, intrastate, and commercial
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 best describes Dawn’s statement that
she would think about it and buy the computer if she decided to do so?
A. It is an illusory promise.
B. It is a valid promise.
C. It is a promise sufficient to require Richard to consult with her prior to selling the
computer to someone else.
D. It is a promise sufficient to require Richard to consult with her prior to selling the
computer to someone else, but only for 30 days.
E. It is a real promise.
_____ is an organization formed by individuals to market products.
A. A cooperative
B. A consortium
C. A corporation
D. A universe
E. An enterprise
A bank may determine that ______ or later is the cutoff hour for handling checks.
A. noon
B. 1:00 p.m.
C. 2:00 p.m.
D. 3:00 p.m.
E. 4:00 p.m.
Heather innocently misrepresented the status of a puppy as being a full-blooded
Pomeranian when actually it was a mixed breed. Brad had contracted to purchase the
dog, but the problem was discovered prior to his paying for the dog and picking it up.
Nevertheless, Brad was very angry and felt that Heather should have been more careful.
He said that he planned to rescind the contract and also sue her for damages to punish
her and deter others from behaving similarly. Which of the following is true regarding
the remedies available to Brad?
A. Because Heather violated the contract to provide a full blooded Pomeranian, Brad is
entitled to rescind the contract and also to the damages he seeks.
B. Because Heather violated the contract to provide a full blooded Pomeranian, Brad is
entitled to rescind the contract, but he is not entitled to the damages he seeks.
C. Because Heather is not guilty of any wrongdoing, Brad is entitled to no remedy; and
Heather has an additional 30 days in order to honor the contract.
D. Because Heather is not guilty of any wrongdoing, Brad is entitled to no remedy; and
Heather has an additional 60 days in order to honor the contract.
E. Because Heather is not guilty of any wrongdoing, Brad is entitled to no remedy; and
Heather has an additional 90 days in order to honor the contract.
________________ may be redeemed for a certain number of shares at a specified price
within a given time period.
A. Preemptive shares
B. Share allowances
C. Allocated shares
D. Stock warrants
E. None of these because such a practice is illegal under federal securities laws
A judge reports that a jury was “hung.” What does the judge mean?
A. That the jury wanted to hang the defendant by imposing a heavy sentence.
B. That the jury wanted to hang the prosecutor for unjustly charging the defendant.
C. That the jury could not reach a decision.
D. That the jury had waited an excessive amount of time before reaching a verdict.
E. That the jury had waited an excessive amount of time before retiring for the evening.
In a unilateral contract, the consideration for a promise is ______.
A. an act
B. a return promise
C. an acknowledgement
D. consideration
E. an agreement
The Family and Medical Leave Act covers private employers with ______ or more
employees.
A. 20
B. 25
C. 50
D. 75
E. 100
Which of the following is true regarding the Securities Exchange Act of 1934?
A. It regulates the subsequent trading of securities.
B. It requires that certain issuers file periodic reports with the SEC.
C. It permits the SEC to monitor securities markets for fraud and market manipulation.
D. It regulates the subsequent trading of securities, it requires that certain issuers file
periodic reports with the SEC, and it permits the SEC to monitor securities markets for
fraud and market manipulation.
E. It regulates the subsequent trading of securities and requires that certain issuers file
periodic reports with the SEC, but it does not permit monitoring by the SEC.
Which of the following is true regarding negotiable instruments in England?
A. Promissory notes can be negotiated between parties.
B. Checks can be negotiated between parties.
C. Bills of exchange can be negotiated between parties.
D. Promissory notes can be negotiated between parties, checks can be negotiated
between parties, and bills of exchange can be negotiated between parties.
E. Promissory notes and checks can be negotiated between parties, but bills of exchange
cannot be negotiated between parties.
If the subject matter of an offer becomes illegal, what is the result?
A. The offer immediately terminates.
B. There is no effect as long as the offer was made at least one day before the subject
matter of the offer became illegal.
C. There is no effect as long as the offer was made at least ten days before the subject
matter of the offer became illegal.
D. There is no effect as long as the offer was made at least fifteen days before the
subject matter of the offer became illegal.
E. There is no effect as long as the offer was made at least thirty days before the subject
matter of the offer became illegal.
All states, except Louisiana, follow the _____ common law.
A. English
B. French
C. Italian
D. Spanish
E. Welsh
Which of the following are activities in which agencies may be involved?
A. Conducting research
B. Issuing permits
C. Managing property
D. Conducting research, issuing permits, and managing property
E. Conducting research and issuing permits, but not managing property