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The Mexican limited liability company is derived from the model in which of the
following countries?
A. The United States
B. Canada
C. Italy
D. Spain
E. Germany
Which of the following was the result at the Supreme Court level in Mitsubishi Motors
Corp. v. Soler, the case in the text involving whether an American court may enforce an
agreement to resolve antitrust claims by arbitration when that agreement arises from an
international transaction?
A. The Court recognized that the arbitration agreement should be enforced.
B. The Court refused to enforce the agreement because international parties were
involved.
C. The Court refused to enforce the agreement because antitrust claims were involved.
D. The Court refused to enforce the agreement because there is a lack of federal
substantive law supporting the enforcement of agreements to arbitrate.
E. The Court ruled that the arbitration agreement would be upheld but only if the parties
conducted the arbitration in Japan, the home of Mitsubishi.
Which of the following requires that courts in all states uphold contracts and public acts
of every state thereby protecting wills, divorce decrees, and judgments in civil courts?
A. The full faith and credit clause
B. The privileges and immunities clause
C. The commerce clause
D. The contract clause
E. The Bill of Rights clause
Which of the following offers tax advantages of a partnership and liability advantages
similar to a corporation, but allows for unlimited shareholders?
A. A limited partnership
B. A joint partnership
C. A corporate partnership
D. A limited liability company
E. A cooperative
Which of the following was the result in Meyer v. Christie, the case in the text involving
whether an agreement to enter into a joint venture existed?
A. That the evidence showed only an anticipatory agreement to form a joint venture in
the future, not the actual formation of a joint venture.
B. That no joint venture existed because there was evidence contrary to the intent to
form a joint venture.
C. That any alleged joint venture agreement was unenforceable under the statute of
frauds because it was premised on an unenforceable oral agreement to purchase and
transfer land.
D. That while a joint venture existed, no damages were found.
E. That a joint venture existed with no prohibition against damages.
Which of the following is the right of a buyer and lessee to substitute goods for those
due under a sales or lease agreement?
A. Swap
B. Rearrange
C. Cover
D. Shift
E. Reallocate
Congress first addressed bankruptcy relief in the ____.
A. Bankruptcy Act of 1898
B. Insolvency Act of 1900
C. Protection Act of 1934
D. Bankruptcy Act of 1934
E. Securities Act of 1934
The UCC was created in ____.
A. 1980
B. 1964
C. 1952
D. 1943
E. 1935
Which of the following was offered as a treaty that countries could sign, indicating their
willingness to allow this treaty to govern international business-to-business sales
contracts?
A. The International Convention of Contracts for International Sales
B. The Federation Convention on the Uniform Commercial Code
C. The Worldwide Federation Convention on the Sale of Goods
D. The United Nations Convention on Contracts for the International Sale of Goods
E. The International Agreement on the Sale of Goods
Who is considered an eligible employee under the Family and Medical Leave Act?
A. Those who have worked at least 25 hours a week for each of 12 months prior to the
leave.
B. Those who have worked at least 30 hours a week for each of 12 months prior to the
leave.
C. Those who have worked at least 35 hours a week for each of 12 months prior to the
leave.
D. Those who have worked at least 40 hours a week for each of 12 months prior to the
leave.
E. Those who have worked at least 40 hours a week for each of 24 months prior to the
leave.
Which of the following generally does not offer stock to the public?
A. Alien corporations
B. Foreign corporations
C. Closely held corporations
D. Carefully held corporations
E. Minority shareholder controlled corporations
"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, if any, may be defenses for Bruno?
A. For any alleged violations, Bruno could raise the defense that a plaintiff was aware
of the omission or false statement when the security was purchased; but no defense is
available based on the theory that omitted or false statements were immaterial to the
sale of the security.
B. For any alleged violations Bruno could raise the defenses that a plaintiff was aware
of the omission or false statement when the security was purchased, and that any
omitted or false statement was immaterial to the sale of the security.
C. Except for the violation of selling securities before the effective registration date,
Bruno could raise the defense that a plaintiff was aware of the omission or false
statement when the security was purchased; but no defense is available based on the
theory that omitted or false statements were immaterial to the sale of the security.
D. Except for the violation of selling securities before the effective registration date,
Bruno could raise the defenses that a plaintiff was aware of the omission or false
statement when the security was purchased, and that any omitted or false statement was
immaterial to the sale of the security.
E. No defenses are available to Bruno because he had already been held liable to the
SEC once.
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 verdict.
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.
"Scuba Gear." Shirley is a popular manufacturer of scuba gear. Before she allows a
store to carry her line of scuba gear, she requires that the store owner agree that her line
is the only line of scuba gear the store will carry. She also requires that if a store carries
her line of scuba gear, it must carry her line of wet suits. Sales of other manufacturer's
gear and wet suits have begun a steady decline. She is accused of violating antitrust
laws. Shirley, however, replies that she is simply conducting good business practices.
Trudy, the president of ABC Scuba, calls Shirley and tells her that she is prepared to
bring suit against Shirley for antitrust violations. Shirley tells Trudy that although she is
not in violation, that only the government could take action against her, and that the
government is way too busy to get involved in a dispute over scuba gear.
Which of the following is true regarding the contention of Shirley that her agreements
with sellers to the effect that the sellers will only carry her scuba gear are good business
practices and legal?
A. She is correct.
B. She is wrong because an agreement that a seller will only carry a seller's
merchandise is per se illegal under Section 1 of the Sherman Act.
C. She is wrong because an agreement that a seller will only carry a seller's
merchandise is per se illegal under the Clayton Act.
D. Additional information is needed in order to determine whether she violated either
the Clayton Act or the Sherman Act because her actions will be reviewed under a
rule-of-reason test with the primary inquiry being whether her actions were reasonable
in view of competitive practices in the industry.
E. If the agreement lessens competition or tends to create a monopoly, the agreement is
in violation of Section 3 of the Clayton Act.
Which of the following was decision of the appellate court in Crystal Dixon v.
University of Toledo, the case in the text in which the plaintiff alleged a violation of the
Equal Pay Act?
A. That the defendant was entitled to a judgment in its favor because a claim under the
Equal Pay Act cannot be based on a male successor's pay rate.
B. That the defendant was entitled to a judgment in its favor because Title VII
subsumed the provisions of the Equal Pay Act, and the plaintiff was required to name
Title VII in her complaint.
C. That the defendant was entitled to a judgment in its favor because it established that
the plaintiff was fired for cause.
D. That the plaintiff correctly made out her prima facie case by alleging the wage
differential between her pay at termination and her successor's pay at the onset of his
new position.
E. That the plaintiff correctly made out her prima facie case through establishing that
there was no basis upon which her termination could be legally based and that the male
successor was hired almost immediately following her termination.
Which of the following damages, if any, may a seller receive who sells goods to another
buyer when the original buyer is in breach?
A. The difference between the resale price and the contract price, plus incidental
damages and minus expenses saved.
B. The difference between the resale price and the contract price only.
C. The difference between the resale price and the contract price minus expenses
without any allowance for incidental damages.
D. The difference between the resale price and the contract price, plus incidental
damages, with no deduction for expenses saved.
E. Damages are not available because a seller has no rights to resell goods when the
original buyer is in breach. The remedy is a suit for damages.
Which of the following is true regarding when the UCC allows buyers and lessees to
seek the remedy of specific performance?
A. The UCC only allows buyers and lessees to seek the remedy of specific performance
when goods are unique.
B. The UCC only allows buyers and lessees to seek the remedy of specific performance
when a remedy at law is inadequate.
C. The UCC only allows buyers and lessees to seek the remedy of specific performance
when goods are worth more than $500.
D. The UCC allows buyers and lessees to seek the remedy of specific performance
when goods are unique, when a remedy at law is inadequate, or when goods are worth
more than $500.
E. The UCC allows buyers and lessees to seek the remedy of specific performance
when goods are unique or when a remedy at law is inadequate, but not because the
goods are worth more than $500.
When a creditor, through legal action, seizes a debtor's property to satisfy a debt, the
creditor has a[n] ______ lien.
A. Judicial
B. Mechanic's
C. Artisan's
D. True
E. Contempt
Which of the following is true 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, so long as the
buyer purchases the good for his or her personal use, 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
personal use or resale, and purchases good before the secured party files a financial
statement, the buyer obtains the good free of the security interest.
Which of the following is true regarding any right of inspection in regard to lessees?
A. The UCC provides for no right of inspection for lessees, and the right of inspection
is only available to the lessor if it is provided for by contract.
B. The UCC provides for a right of inspection in regard to perishable items for lessees,
but not otherwise.
C. The UCC provides for a right of inspection in regard to fragile items for lessees, but
not otherwise.
D. The UCC provides for a right of inspection if the lessor and lessee have previously
had disputes in regard to shipments, but not otherwise.
E. The UCC provides for a right of inspection for lessees.
A ______ is a written document executed when the principal is in good mental health
that allows an agent to make medical decisions for the principal at some later date when
the principal can no longer make decisions.
A. Durable power of attorney
B. Medical care proxy
C. Medical decision contract
D. Medical agent proxy
E. Living health proxy
If a policy of insurance protects a person or property from accidental injury, the
insurance is referred to as ______ insurance.
A. Casualty
B. Loss
C. Economic
D. Accidental
E. Injury
A[n] ________ is a distinctive mark, word, design, picture, or arrangement that is used
by a producer in conjunction with a product and tends to cause consumers to identify
the product with the producer.
A. Copyright
B. Patent
C. Trade secret
D. Trademark
E. Intellectual Property
Which of the following types of endorsements is used when the instrument is being
transferred to an agent or trustee for the benefit of either the endorser or a third party?
A. Conditional endorsement.
B. Trust endorsement.
C. Endorsement to prohibit further endorsement.
D. Bearer endorsement.
E. Conditional bearer endorsement.
Which of the following references the type of conglomerate merger that occurs when a
company merges with another company producing a related product in order to add the
related product to the company's production?
A. Horizontal extension
B. Market extension
C. Diversification
D. Vertical extension
E. Product extension
"Tutoring Concerns." Wally and Sally want to go into business together and plan on
offering a tutoring service to high school and college students. Wally proposes that they
share control of the business and split profits equally and not bother with a written
agreement. Sally, however, is concerned about being able to pay their debts since they
will have to rent tutoring space, and purchase computers and supplies. She is also
concerned about parents and students who may sue if their test scores do not improve.
She tells Wally that she just bought a new boat and car, and that she does not want her
assets to be in jeopardy. She tells Wally that they should form a corporation to shield
their personal assets. Wally, however, tells their personal assets are not in danger with
his proposal because they are a business and that, furthermore, forming a corporation
would even result in tax being imposed twice.
Which of the following is true regarding Wally's assertion regarding tax?
A. Wally is correct insofar as the corporation would be required to pay taxes on its
profits, and the shareholders would also be required to pay taxes on dividends.
B. Wally is incorrect because all businesses are taxed in the same manner.
C. Wally is incorrect but only because the law involving taxation of corporations does
not apply until there are at least 10 shareholders.
D. Wally is incorrect but only because the law involving taxation of corporations does
not apply until there are at least 75 shareholders.
E. Wally is correct but only because his proposal does not involve a writing and the
filing of paperwork with the secretary of their state.
Which of the following is an order either forcing a person to do something or
prohibiting a person from doing something?
A. Specification
B. Directive
C. Instructional edict
D. Demand
E. Injunction
Which of the following is true regarding an assignee's acceptance of assigned rights?
A. A creditor beneficiary must accept assignment of rights, but there is no requirement
that a donee beneficiary do so.
B. A donee beneficiary must accept assignment of rights, but there is no requirement
that a creditor beneficiary do so.
C. An assignee must agree to accept assigned rights, and there is a strict protocol for
doing so.
D. An assignee may decline an assignment if he has not agreed to it and declines in a
timely fashion after learning of it.
E. An assignee may only decline an assignment if a delegation of duties is also
involved.
Which of the following is false regarding a sole proprietorship?
A. A sole proprietorship requires few legal formalities.
B. A sole proprietor has complete control of the management of the business.
C. The sole proprietor keeps all the profits from the business.
D. Profits are taxed as the personal income of the sole proprietor.
E. A sole proprietor is not personally liable for obligations of the business.
Which of the following must a plaintiff prove to win a negligence case?
A. Duty, breach of duty, and causation, but not damages.
B. Breach of duty only.
C. Duty and causation only.
D. Causation and damages.
E. Duty, breach of duty, causation, and damages.
"Revenge." Jane, a first year law student, while walking to school in inclement weather,
accidentally slipped on ice knocking down Greg, another first year law student,
breaking his glasses. He was very angry with Jane and let the air out of one of her car
tires. Greg also decided to sue Jane for negligence claiming as damages $300 for his
broken glasses. He decided that he already knew all about the law and did not need a
lawyer. Greg sued Jane in state court. Jane, in the same lawsuit, brought an action
against Greg for letting the air out of her tire. At the trial in state court, Jane told the
judge that a friend, Susie, told her that she saw Greg let the air out of Jane's tire. The
judge disallowed Jane's testimony on that issue. Susie, however, who was in the
courtroom also came and testified to that effect. The state court judge ruled in favor of
Jane. Greg said that he was not giving up and that he would seek double damages on
appeal in federal court. Jane and Greg live in different states when not attending school.
After the trial, Jane reported Greg's action of letting the air out of her tire to the police
who said that they would proceed with a criminal action against Greg. Greg goes to see
Alex, a recent graduate who had just passed the bar, and asked Alex to represent him in
a federal court appeal.
What standard of proof would the judge apply in a criminal action against Greg?
A. A preponderance of the evidence standard
B. A standard of proof beyond a reasonable doubt
C. A standard of proof by a margin
D. A standard of certainty in proof
E. A standard of proof beyond a reasonable question
Bob, who has a large trust fund, is angry at Alice because she stopped dating him. Alice
ran a successful dog grooming shop but Bob decided to open a dog grooming shop next
door solely to run her out of business because he was angry over the break up. Which of
the following is correct?
A. Bob has committed the tort of unfair competition.
B. Bob has committed the tort of interference with contract.
C. Bob has committed the tort of unfair competition and also the tort of interference
with contract.
D. Bob has committed the tort of disparagement.
E. Bob has not committed any tort.
Which of the following is an international agreement?
A. A written agreement made between states governed by international law and relating
to international subject matter.
B. An agreement that is only between two states, not three or more, relating to an
international subject matter.
C. An agreement that is made between at least three states regarding an international
subject matter.
D. A general and consistent practice by states regardless of whether the practice is
accepted as law.
E. A general and consistent practice by states that is accepted as law.
Which type of law delineates the rights and responsibilities involved in relationships
between persons and their government?
A. Criminal
B. Procedural
C. Civil
D. Natural
E. Positive
"Prudence's Imprudence." Unfortunately, Prudence failed to act prudently. She had a
bad day after failing a business law test and breaking up with her boyfriend. While
drinking a mocha and talking on the cell phone with her best friend, she slammed into
the back of George's car. Shortly thereafter she received notice of a lawsuit setting forth
George's claims for personal injury and property damage. Prudence was very busy
studying for her next business law test and hanging out with her boyfriend with whom
she had reconciled. Also, she just did not feel like dealing with a pesky lawsuit. Several
months later, Alice, a new agent with the insurer called Prudence and told Prudence that
she had just heard something about a lawsuit from the plaintiff's lawyer. Alice told
Prudence that although investigation would be difficult after so many months, she
would like to talk with Prudence because the trial was scheduled for the next week.
Prudence told Alice that she had no time to meet at the moment and that just before
court, she would meet with the lawyer the company appointed to represent her. Alice
told Prudence that the insurance company was going to deny coverage. Alice also told
Prudence that vehicle insurance did not typically provide for legal representation and
that, in any event, no lawyer would be provided. Finally, Alice told Prudence that her
insurance was cancelled immediately because she was a real jerk and failed to help, that
insurance would not pay for accidents that were the fault of Prudence anyway, and that
the insurer wanted nothing more to do with her.
Which of the following is true regarding the assertion of Alice that vehicle insurance
policies do not generally provide coverage for legal representation?
A. She is incorrect.
B. She is correct only in situations in which a student with a student policy is involved
in an accident.
C. She is correct only in situations in which an insured has had at least two previous
accidents.
D. She is correct only in situations in which a student is carried on a parent's insurance
policy.
E. She is correct because insureds are expected to shoulder some of the burden of
accidents.
