A _____ occurs whenever a party fails to perform his or her obligations under the
contract.
A. Split
B. Break
C. Breach
D. Misdeed
E. Mistake
Which of the following is true regarding Chinese law?
A. China currently has legislation that covers the sale of goods, the provision of
services, and leases.
B. China currently has legislation that covers the sale of goods and the provision of
services, but no legislation that covers leases.
C. China currently has legislation that covers the sale of goods but not the provision of
services or leases.
D. China currently has legislation that covers leases but not the provision of services or
the sale of goods.
E. China has legislation that covers leases and the sale of goods, but not the provision
of services.
Which of the following is true regarding priority in a dispute involving a
purchase-money security interest in business goods other than inventory?
A. The purchase-money security interest has priority over any other secured perfected
interests as long as the purchase-money security interest is perfected within 20 days of
the debtor’s possession of the collateral.
B. The purchase-money security interest has priority over any other secured perfected
interests as long as the purchase-money security interest is perfected within 30 days of
the debtor’s possession of the collateral.
C. The purchase-money security interest has priority over any other secured perfected
interests as long as the purchase-money security interest is perfected within 40 days of
the debtor’s possession of the collateral.
D. The purchase-money security interest has priority over any other secured perfected
interests as long as the purchase-money security interest is perfected within 45 days of
the debtor’s possession of the collateral.
E. The purchase-money security interest has priority over any other secured perfected
interests as long as the purchase-money security interest is perfected within 60 days of
the debtor’s possession of the collateral.
If nothing is stated to the contrary in the terms of an auction, an auction is presumed to
be ______.
A. Without controls
B. With controls
C. Without reserve
D. With reserve
E. Without qualifications
Robby calls Bobby on the telephone and threatened to come over and break his nose.
Which of the following is true?
A. Robby’s conduct constitutes a battery.
B. Robby’s conduct constitutes an assault.
C. Robby’s conduct constitutes both a battery and an assault.
D. Robby’s conduct does not constitute an assault because there is no question of
immediate bodily harm.
E. Robby’s conduct does not constitute an assault because there was no physical
contact.
Which of the following in the corporate formation process provides basic information
about the corporation?
A. The articles of subscription
B. The agreement to promote
C. The agreement to subscribe
D. The agreement to incorporate
E. The articles of incorporation
“Disappointing Boat Purchase.” Sally went to purchase a new boat. She wanted a boat
that she could use in both a nearby lake and also a boat that she could take to the coast
for use in ocean waters. Sally saw a boat that she liked and told the sales representative
at the dealership that she wanted a boat for both lake usage and ocean usage. She told
the sales representative that she particularly liked a boat that they were looking at in the
showroom. The representative told her that the dealership had the best boats in the state,
that the engine was great in the boat she liked, and that she would have no problem with
steering or with the carburetor. He said nothing at all regarding whether or not the boat
was appropriate for ocean waters. Sally purchased the boat. She immediately began to
have significant problems with it. The engine did not perform adequately, and there
were problems with the steering and carburetor among other things. Additionally, after
Sally attempted to take the boat out into ocean waters and had significant difficulty, she
discovered that it was not an ocean-going vessel. It was only appropriate for lake usage.
What type of warranty, if any, did the salesperson make by selling the boat to Sally
knowing that she wanted it to be ocean-going?
A. An implied warranty of merchantability.
B. An implied warranty of fitness for a particular purpose.
C. An express warranty.
D. A strict liability warranty.
E. A federal law warranty.
Which of the following is true regarding simple contracts as compared to negotiable
instruments?
A. Simple contracts are assigned to an assignee, while negotiable instruments are
negotiated to a holder.
B. Simple contracts may be assigned to an assignee or negotiated to a holder while
negotiable instrument may only be negotiated to a holder in due course.
C. Simple contracts may be assigned to an assignee or negotiated to a holder while
negotiable instrument may only be negotiated to a holder.
D. Simple contracts may not be assigned while negotiable instruments may be
negotiated to holder.
E. Simple contracts may be assigned to a holder while negotiable instruments may not
be assigned or negotiated.
Which of the following is true regarding whether employers may discriminate against
smokers?
A. There is a federal law specifically prohibiting employers from firing employees who
smoke, but it does not address the hiring of those who smoke.
B. There is a federal law specifically prohibiting employers from firing or from refusing
to hire employees who smoke.
C. There is a federal law specifically prohibiting employers from firing employees who
smoke and from refusing to hire employees who smoke, and it also requires that
employers have a designated smoking area.
D. There is no federal law prohibiting employers from firing employees who smoke
although some states have laws protecting rights of smokers.
E. Neither federal nor state laws prohibit employers from firing employees who smoke.
“Miracle Pill.” Katie advertised that she had developed a pill for women that would
result in weight loss, wrinkle loss, and improved vitality; and that for men would result
in all those things plus hair growth. Her television advertisement showed miracle results
allegedly obtained by consumers. Katie cautioned, however, that ingestion of the pill for
six months was required before results would be evident. The pill was wildly popular.
The Federal Trade Commission, however, investigated and determined that Katie had
failed to have a reasonable basis for the claims she made in advertisements. Katie
claimed that she was merely involved in the use of generalities and clear exaggerations.
The Commission disagreed and issued a formal administrative complaint against her.
After a hearing, an order was issued requiring that Katie stop advertising and selling the
pills. After losing all appeals, Katie continued selling the pills until she was fined by the
Federal Trade Commission. She has since left the country and cannot be located.
Which of the following is a term for Katie’s defense involving generalities and clear
exaggerations allowable by law?
A. Exaltation
B. Puffing
C. Crowing
D. Swelling
E. Boasting
Which of the following is true regarding what meets the UCC definition of a good?
A. Real estate, corporate stocks, copyrights, and trade fixtures all meet the definition of
a good under the UCC.
B. Corporate stocks, real estate, and copyrights meet the definition of a good under the
UCC, but trade fixtures do not.
C. Trade fixtures meet the definition of a good under the UCC, but real estate, corporate
stocks, and copyrights do not.
D. Copyrights meet the definition of a good under the UCC, but real estate, corporate
stocks, and trade fixtures do not.
E. Real estate, trade fixtures, and corporate stocks meet the definition of a good under
the UCC, but copyrights do not.
Which of the following is a type of liability arising on an instrument when the transfer
of the instrument breaches a warranty associated with the instrument?
A. Warranty liability
B. Payee liability
C. Signature liability
D. Primary liability
E. Secondary liability
Under the Clayton Act, the Department of Justice is most likely to challenge which of
the following types of mergers?
A. Horizontal
B. Vertical
C. Conglomerate
D. Joining
E. Predatory
What is the warranty of assignability at common law?
A. That when a party “assigns” a contract to another party, the assignor is impliedly
providing a warranty of merchantability.
B. That when a party “assigns” a contract to another party, the assignor is impliedly
guaranteeing a warranty of fitness for a particular purpose.
C. That when a party “assigns” a contract to another party, the assignor is impliedly
guaranteeing that the rights being assigned are valid.
D. That when a party “assigns” a contract to another party, the assignor is expressly
guaranteeing a warranty of merchantability for fitness.
E. That when a party “assigns” a contract to another party, the person being assigned
contractual rights expressly agrees to provide consideration.
Which of the following may be a “person” under the Uniform Partnership Act?
A. Individuals only
B. Partnerships and individuals
C. Partnerships, individuals, and corporations
D. Partnerships, individuals, corporations, and other associations
E. Corporations only
Which of the following occurs when a person takes ownership of property by treating a
piece of real property as his or her own, without protest or permission from the owner?
A. Adverse title
B. Opposed possession
C. Unopposed possession
D. Adverse possession
E. Obtained title
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
A ______ trust is an equitable trust imposed on one who wrongfully obtains or holds
legal right to property he or she should not possess.
A. Resolute
B. Actual
C. Constructive
D. Defined
E. Absolute
“Exemptions.” Sidney is injured in an automobile accident and cannot work. She cannot
pay her bills and files for bankruptcy relief under Chapter 7. Federal exemptions apply,
and she lists as exempt $25,000 in equity in her residence; interest in a vehicle of
$2,000; interest in jewelry of $400; and retirement funds in her individual retirement
account. Her creditors filed an objection to all claimed exemptions except for the home
equity claim.
Once the petition is filed, which of the following forms Sidney’s bankruptcy estate?
A. All her prepetition assets.
B. The exempt assets only.
C. The nonexempt assets only.
D. The personal goods only.
E. The real estate only.
“Skateboard Growth.” Both Bernie and John were presidents of small corporations
involved with manufacturing and selling skateboards. Bernie’s store was called “ABC
Skateboard” and John’s business was called “Skateboard for Health.” Because a large
sports store was coming into town, they, along with the boards of directors of the two
companies and all shareholders, decided that it would be a good idea to combine the
businesses. They decided to retain the name “Skateboard for Health.” Bernie was
concerned, however, with the change because, on behalf of his company, he was
contemplating filing a lawsuit against Hank who had purchased 10 custom skateboards
and had not paid for them. He was excited, however, about the prospect of not being
liable for a lawsuit he expects to be filed by Greg who fell when a wheel came off on a
skateboard sold by Bernie’s corporation resulting in a serious ankle sprain and medical
bills. After investigation, Bernie is aware that the wheel was negligently attached to the
skateboard. Bernie told John that one reason he wanted to retain John’s name was to
prevent Greg from being able to recover against him.
Which of the following results in a chose in action?
A. The surviving corporation’s right to sue Hank for amounts owed.
B. The right of Greg to sue the surviving corporation for damages.
C. The right of Bernie to a golden parachute if he is terminated after the joining.
D. The right of John to fire Bernie after the merger.
E. The right of shareholders to dissent from the joining of the corporations for 30 days
following.
If a principal agrees to hire no other agent for a period of time or until a particular job is
done, the principal and agent have entered into a[n] ______ agency contract.
A. Encompassing
B. Specific
C. Exact
D. Identified
E. Exclusive
When a party’s obligations under a contract are terminated, the party is said to be ____.
A. Finished
B. Terminated
C. Completed
D. Discharged
E. Recoursed
Bobby has a lawsuit in federal district court and asks Sally, a first year law student,
about court-annexed ADR. What should Sally tell him?
A. Mediation is required by law in federal district court.
B. Arbitration is required by law in federal district court.
C. Mediation is required by law in federal district court, but arbitration is not required.
D. Neither mediation nor arbitration is required by law in federal district court, but all
litigants must present a summary of their positions to a case neutral.
E. Federal district courts vary on the approved ADR methods.
Which of the following countries are signatories to the North American Free Trade
Agreement?
A. United States, Canada, and Japan
B. United States, Canada, and Mexico
C. Canada, Mexico, and Great Britain
D. England, France, and Italy
E. England, France, and Spain
Which of the following is a federal independent agency?
A. The Federal Trade Commission
B. The Federal Aviation Agency
C. The Food and Drug Administration
D. The Federal Deposit Insurance Corporation
E. The National Science Foundation
Which of the following is true regarding treaties at the federal level?
A. A treaty is generally negotiated by the executive branch and must then be approved
by two-thirds of the Senate.
B. A treaty is generally negotiated by the executive branch and must then be approved
by two-thirds of the House of Representatives.
C. A treaty is generally negotiated by the executive branch and must then be approved
by two-thirds of the Senate and also by two-thirds of the House of Representatives.
D. A treaty is generally negotiated by the executive branch and no approval by the
Senate or House of Representatives is needed.
E. A treaty is generally negotiated by the executive branch and must then be approved
by two-thirds of the Senate and also by two-thirds of the state legislatures.
“Feuding Neighbors.” Annette, who is angry because her neighbor, William, allows his
dog to chase her cat, decides to get even. She moves a number of farm animals into her
backyard and begins playing music at all hours of the night. She also steals a nice lawn
chair off of William’s deck. She intends to keep the chair and not give it back. Annette
further took a rake off of William’s deck that she plans to return after she finishes raking
her leaves. William did not give her permission to take the rake or the chair. William is
not happy about the farm animals and the loud music.
What claim would William have against Annette for taking the lawn chair?
A. Trespass to property.
B. Conversion.
C. Private nuisance.
D. Negligence.
E. Harassment.
Which of the following is true regarding similarities between American and European
contract law?
A. U.S. law is provided guidance through statutory enactments known as the
Restatements of the Law, but European law relies entirely on the CISG.
B. U.S. law is provided guidance through the UCC, a federal statutory enactment, but
European law relies entirely on the CISG.
C. U.S. law finds guidance in the Restatements of the Law constituting soft law, not
statutory enactments; and Europe has begun crafting its own version of the U.S.
Restatement of Contracts.
D. U.S. law finds guidance in the Restatements of the Law constituting soft law, not
statutory enactments, but Europe has disavowed any such similar document choosing
instead to rely on the CISG.
E. U.S. law finds guidance in the Restatements of the Law constituting soft law, not
statutory enactments; and Europe has disavowed the CISG choosing to follow a code
similar to the U.S. Restatements of the Law.
“Missed Payments.” Robin, who loved water sports and relaxing in hot tubs, purchased
a hot tub on an installment plan and was to pay the seller monthly. Her last payment
was made on January 2, 2008. After several attempts at collection, the seller brought a
lawsuit against her for sums remaining on the account on January 3, 2013. Robin
defended on the basis that the statute of limitations had run. The seller claimed,
however, that adequate time remained because the UCC applies a flexible statute of
limitations; and, at any rate, sellers have at least five years in which to sue. Robin also
arranged to purchase a personal watercraft. By contract with the seller, Robin was to
pay an initial deposit within 10 days of the sale at which point she could take
possession of the watercraft making monthly payments thereafter. Recognizing that a
personal watercraft would not allow her to invite all her friends on lake trips, a couple
of days after purchasing the personal watercraft, Robin purchased a pontoon boat.
Because the seller of the pontoon boat demanded cash, Robin paid the total sales price
prior to delivery. Unfortunately, when the pontoon boat was delivered, Robin found that
it had a less powerful motor than the seller represented. Robin notified the seller of the
problem, but the seller claimed to have no obligation to remedy the problem. Although
recognizing that she paid too much for it, Robin decided that since lake season was
underway, she would keep the pontoon boat. Because Robin paid full price for the
pontoon boat, she was unable to pay within 10 days the deposit on the personal
watercraft. The seller refused to deliver the watercraft, and sold it to another customer.
Robin informed the seller that the refusal to deliver the watercraft was wrongful and
that she was going to exercise her right to cover.
Which of the following is true regarding the hot tub seller’s right to recover funds from
Robin?
A. The seller will likely be able to proceed because the UCC has a flexible statute of
limitations that takes into account whether the seller attempted to collect or lulled the
plaintiff into believing collection efforts would not be made.
B. The seller will be able to proceed because the UCC statute of limitations in this case
would not expire for five years once a cause of action accrued.
C. The seller will not be able to proceed because the UCC statute of limitations in this
case expired three years after the cause of action accrued.
D. The seller will not be able to proceed because the UCC statute of limitations in this
case expired four years after the cause of action accrued.
E. The seller will not be able to proceed because the UCC statute of limitations in this
case expired two years after the cause of action accrued.
“In Trouble.” Bruno, an issuer of stock, may be in trouble. He sold stock in a new health
club venture before the effective date of registration. He did so because he was in
financial trouble due to other projects. Bruno thought that the health club venture would
be such a success that he would never get caught. Unfortunately, he was wrong. The
health club venture has significant problems, and investors are looking for some way to
hold Bruno responsible. Another problem Bruno has is that he inflated information
regarding the prospects of the health club in the prospectus. Rick, a new lawyer, told
Bruno that as far as he knew, Bruno could be fined for violations under the Securities
Act of 1933, but he could not be sent to jail. Bruno told Rick that was good news and
that no one should feel sorry for the investors because none of them made any effort to
check on information contained in the prospectus or to investigate the future
profitability of the health club venture. Bruno says that he plans to rely on the due
diligence defense. Bruno also asks Rick if he is aware of any other defenses. Bruno says
that once before he was held liable for a violation of the Securities Act of 1933, and he
does not want to be in trouble again.
Which of the following is true regarding Bruno’s plan to rely on the due diligence
defense?
A. He will be able to do so only if he can establish that the purchasers would have had
reasonable grounds to question the registration statement had they reviewed it with due
diligence.
B. He will be able to do so only if he can establish that the purchasers would have had
reasonable grounds to question the prospectus had they reviewed it with due diligence.
C. He will be able to do so if he can establish that the purchasers would have had
reasonable grounds to question either the registration statement or the prospectus had
they reviewed them with due diligence.
D. He will not be able to use that defense unless he can establish that he reviewed the
registration statement and the prospectus, and had reasonable grounds to believe that
the registration statement was accurate with no omission of material facts.
E. He will not be able to rely on that defense because he is an issuer.
As set forth in the text, which of the following is false regarding agency law in relation
to sports agents?
A. Over half of the states have enacted statutes governing the behavior of sports agents.
B. Efforts are underway to develop a uniform act addressing regulation of sports agents
because none exists at the present time.
C. Players associations’ model contracts describe the nature of the services agents can
perform on behalf of their principals and the duties the parties owe to one another.
D. Some states have established criminal penalties for athletes who violate the state law
addressing regulation of sports agents, but most states focus on criminalizing the
activity of sports agents.
E. The Major League Baseball Players Association’s Regulations Governing Player
Agents expressly state that agents act in a fiduciary capacity vis-à-vis their athlete
clients.
When can government agents obtain a search warrant?
A. When they can establish reasonable cause.
B. When they can establish probable cause.
C. When they can establish cause to a substantial certainty.
D. Anytime they have an informant.
E. Anytime the judge is in his office and they show identification as government agents.