Bob leases an apartment from Brenda and pays rent of two months in advance, plus a
damage deposit. Unfortunately, when he attempts to move in, he finds that Connie is
living in the apartment. Connie tells him that Brenda had no right to ask her to leave
and that she is staying put. Which of the following is true assuming that Connie has no
legal right to occupy the premises?
A. In the majority of states, the landlord is required to remove the previous tenant or
break the agreement with the new tenant.
B. In a majority of states, the landlord is required to simply provide legal possession of
the premises and has no responsibility to see that the previous tenant leaves.
C. In a majority of states Bob and Brenda would have to split any costs involved in
removing Connie from the premises.
D. In a majority of states, Bob would be required to initiate legal action to remove
Connie, but he would be entitled to reimbursement from Bob.
E. In a majority of states, Bob could have Brenda put in jail if she did not have Connie
removed within 30 days.
Which of the following was the result in the Case Opener, the case involving whether a
bank account and cash passed to the sole beneficiary named in a will or through
intestate succession when the will did not contain a residuary clause and did not
specifically reference the land and bank account at issue?
A. That the land passed to the sole beneficiary named in the will because it was
apparent that the deceased meant for him to receive her entire estate.
B. That the estate was partially intestate and that the bank account and land at issue
passed through intestate succession.
C. That the land passed to the state because the disposition of it was unclear.
D. That the land would have passed through intestate succession if the decedent had any
issue, meaning children or grandchildren; but that because she had no children or
grandchildren, the land and bank account passed to the sole beneficiary of the will.
E. That the value of the land and bank account would be split on a 50/50 basis between
the sole beneficiary named in the will and the relatives who would inherit through
intestate succession.
“Green Trees.” Wally, the president of Green Corporation, a company that provides
landscaping services, wanted his corporation to purchase Tree Corporation, another
corporation providing landscaping services. The board of Tree Corporation, however,
did not wish to sell. The board of Green Corporation decided to buy any or all of Tree
Corporation’s stock in order to gain control of Tree Corporation. The management of
Tree Corporation and its board strongly objected to the attempt by Green Corporation to
take over the company. Green Corporation offered to purchase stock held by
shareholders of Tree Corporation at a price substantially above the current market value
of the stock. When that strategy was not wholly successful, Green Corporation offered
to give shareholders of Tree Corporation stock in Green Corporation in return for their
stock in Tree Corporation.
By offering to give shareholders in Tree Corporation stock in Green Corporation in
return for shares of stock in Tree Corporation, Green Corporation made a[n] ____.
A. Exchange offer
B. Stock tender offer
C. Hostile offer
D. Illegal offer
E. Control tender offer
Which of the following is required by the Magnuson-Moss Act when the seller issues a
written warranty for a consumer good?
A. The seller must indicate whether that warranty is a full warranty or a limited
warranty.
B. The seller must provide a full warranty and must indicate as such.
C. The seller must provide a warranty of merchantability, but no other warranties, and
must indicate as such.
D. The seller must provide an implied warranty of trade usage, but no other warranties,
and must indicate as such.
E. The seller must provide an implied warranty of trade usage and an implied warranty
of merchantability, but not other warranties, and must indicate as such.
“Chocolate Chips.” Molly makes great chocolate chip cookies and sells them in her café
called “Molly’s Famous Chocolate Chips.” Some of her friends express interest in
selling her cookies. They want to use her name and identify the cookies as “Molly’s
Famous Chocolate Chips.” Seeing a business opportunity, Molly agrees to bake the
cookies and provide them in a frozen state to her friends who will open other cafés
under her café’s name. Molly strictly controls all packaging and sales. She also
frequently inspects kitchens used by the sellers pursuant to her agreements with them.
Suzette, one of Molly’s friends who entered into an agreement with Molly to open a
café and sell the cookies, was not being sufficiently careful and negligently put a
harmful ingredient into the cookie dough resulting in a customer, Fred, becoming ill.
Fred threatens to sue both Suzette and Molly. Molly is so exasperated that she cancels
all the franchise contracts on the basis of aggravation. Although the franchise
agreements provide that so long as requirements are met, the franchise agreements are
good for a period of two years, Molly takes the position that the cookies involve a
personal service using a trade secret and that she cannot be held liable for
discontinuation.
Which of the following is true regarding Molly’s inspections of kitchens?
A. Franchise law prohibits such inspections because a franchisee is seen as a separate
corporation.
B. Franchise law prohibits such inspections because a franchisee is seen as a separate
partnership.
C. Molly had the right to do so only if she can establish the existence of customer
complaints.
D. Molly had the right to do so only if workers’ compensation claims had been filed
against the franchisees involved.
E. Molly had the right to inspect the kitchens.
If a licensing statute is intended to protect the public’s health, safety, and welfare, an
agreement with an unlicensed professional is typically deemed _____.
A. Executed
B. Enforceable without a fine
C. Illegal and unenforceable
D. Enforceable but with a fine
E. Usury
Which of the following is a document a corporation files with the state explaining its
organization?
A. Certificate of organization
B. Articles of incorporation
C. Proof of incorporation
D. Proof of capitalization
E. Establishment of corporation
Which of the following is the making of an entry into the books of a bank or
corporation that is designed to represent the existence of funds that do not exist?
A. False entry
B. Defalcation
C. False pretenses
D. Ponzi scheme
E. Pretexting
Which of the following was the result on appeal in Federal Election Comm’n v.
Beaumont, the case in the text in which the Supreme Court considered whether certain
of the Federal Election Commission’s regulations including, for example, regulating
corporate political participation through the use of PAC’s, constitute unconstitutional
limits on speech?
A. That the regulations impermissibly regulated speech because nonprofit corporations
were treated differently than corporations operated on a for profit basis.
B. That the regulations impermissibly regulated speech because unreasonable
distinctions were made between exemptions granted to certain nonprofit corporations
but not to others.
C. That the regulations impermissibly regulated speech because, using a strict scrutiny
standard, the regulations were overly broad.
D. That the regulations permissibly regulated speech because nonprofit corporations,
unlike corporations operated on a for profit basis, lack constitutional protection in the
area of free speech.
E. That the regulations permissibly regulated speech because the regulations allowed
some control of campaign activity without jeopardizing the associational rights of
advocacy organizations’ members.
Which of the following is true when upon dissolution of a partnership one partner pays
liabilities of the partnership that are greater than the liquidated assets of the partnership?
A. The partner who paid has a right of contribution against any partner who did not pay.
B. The partner who paid has no right of contribution against any other partner.
C. The partner who paid has a right of contribution against other partners only if the
partner who paid was not the managing partner.
D. The partner who paid has a right of contribution only against other partners who
participated in the management of the partnership.
E. The partner who paid has a right of contribution only against other partners who did
not participate in the management of the partnership.
Which of the following was the result in Patrick v. Allen, the case in the text involving
whether the business judgment rule exempted directors of a corporation from liability
for renting land to a private golf course, of which several directors were members, at a
price sufficient to cover only property taxes?
A. That the directors could not benefit from the rule because the business judgment rule
applies to officers, not directors.
B. That while the business judgment rule applies to directors, it did not apply to provide
protection to the directors because they stood to benefit personally.
C. That the business judgment rule applied to shield the directors from liability because
no fraud was involved in the transaction.
D. That the business judgment rule applied to shield the directors from liability because
the directors received no money directly from the golf course.
E. That the business judgment rule applied to shield the directors from liability because
the transaction was properly recorded on the company’s books and not hidden.
Which of the following was the result in Nancy McCormick v. Robert Moran, the case
in the text in which the plaintiff claimed that she was entitled to a refund of her security
deposit, but the defendant claimed that she was liable for additional costs of cleaning
her apartment that were incurred because of heavy smoking by tenants?
A. The court ruled that the lessee was responsible for additional costs incurred by the
landlord for cleaning the smoke residue even though the lease did not specifically
prohibit smoking on the premises.
B. The court ruled that the lessee was not responsible for additional costs incurred by
the landlord for cleaning the smoke residue because the lease did not prohibit smoking
in the apartment.
C. The court ruled that the lessee was responsible for additional costs incurred by the
landlord for cleaning the smoke residue only because the lease specifically prohibited
smoking in the apartment.
D. The court ruled that the lessee was responsible for one-half the additional cost
incurred by the landlord for cleaning the smoke residue.
E. The court ruled that the lessee was not responsible for additional costs incurred by
the landlord for cleaning the smoke residue unless the landlord could establish by
additional proof that the plaintiff had failed to take appropriate steps to engage in
general cleaning before she vacated the premises.
Which of the following must a plaintiff generally show in order to recover in a product
liability lawsuit?
A. Only that the product is defective.
B. That the defect should have been discovered and fixed prior to sale.
C. That the defendant was negligent.
D. That the product is defective and also that the defect existed when the product left
the defendant’s control.
E. That the product is defective, that the defect existed when the product left the
defendant’s control, and also that the defendant was negligent.
“Book Payment.” Molly and Pat signed a contract providing that “Pat will furnish the
correct used business law book for use in Molly’s business law class; and on August 15,
2013, Molly promises to pay Pat $50 for the book.” Molly took the book and planned to
pay Pat. Meanwhile, Pat properly assigned the contract Molly had signed to Jack. When
Molly went to class, however, she discovered that the book was the incorrect book.
When Jack asked Molly for payment, Molly refused. Molly told Jack that the book was
useless to her and that she was not paying either him or Pat anything for it. Jack told
Molly that he had an enforceable assignment in the form of a negotiable instrument and
that he could collect regardless of whether the book was useless. Molly did not believe
him. Since she was trying to save money on books, she also agreed to buy Tim’s U.S.
history book for $40. She had an oral agreement with Tim that he would give her the
book and that she would pay him in three days. This time Molly got the right book.
Tim, in writing, properly assigned the right to the $40 payment to Richard. Richard
asked Molly for the money. Molly admitted her agreement with Tim but told Richard
that she was not going to pay him because he did not have a negotiable instrument.
Molly also purchased a communications book from Sam promising in writing to give
him, to his order, a DVD she had in return the next day.
Which of the following is true regarding Jack’s claim that he had a negotiable
instrument and could collect from Molly?
A. Jack is correct.
B. The agreement is not negotiable because it does not contain words of negotiability.
C. The agreement is not negotiable because the book was the wrong book.
D. The agreement is not negotiable because Jack was not a party to the original
contract.
E. The agreement is not negotiable both because the amount at issue is insufficient to
create a negotiable instrument.
Which of the following is false regarding marine insurance in Scotland?
A. Scotland has a Marine Insurance Act in its mercantile law that addresses insurance
contracts.
B. Marine insurance policies cover most marine activities including liability to third
parties in the event of difficulties while at sea.
C. Marine insurance policies are among the most simple and easy to understand
insurance policies.
D. Marine insurance policies tend to be exacting.
E. Before an insurer will sign a policy, the value of the item insured must be specified
in the contract.
Which of the following is not a reason that a court would likely pierce the corporate
veil?
A. A corporation did not follow statutory mandates regarding corporate business.
B. Shareholders’ personal interests and corporate interests are commingled such that the
corporation has no separate identity.
C. Shareholders attempt to commit fraud through a corporation.
D. A corporation has only de facto status.
E. A corporation lacks adequate capital when initially formed.
If a person wishes to ensure that an offer will in fact be held open for a set period of
time, the person may do so by entering into a[n] ______________ contract with the
offeror.
A. Clear
B. Explicit
C. Irrevokable
D. Option
E. Adhesion
Which of the following is a group that comes together for the explicit purpose of
financing a specific large project?
A. A business trust
B. A joint venture
C. A syndicate
D. A franchise
E. An enterprise
“Employee Problems.” Harold, who is 97 years old, runs a successful hardware store.
He never had any trouble with dishonest employees in the past. Unfortunately, he hired
an assistant accountant, Renee, who had significant financial problems and began to
steal from Harold. Renee came in early and took the rubber stamp of his signature that
Harold kept in an unlocked drawer along with some checks and used the signature
stamp to create a check payable to her. She then took it to the bank and cashed it.
Harold, who was diligent in examining his bank statements, noticed the unauthorized
check to Renee. He also noticed an unauthorized check cashed by Susie, another
employee. Susie did not know about the stamp in the unlocked drawer and instead
broke into Harold’s personal office, stole checks from a locked cabinet, and skillfully
forged his name. Harold immediately informed his bank about the check involving
Renee. He held off, however, on informing the bank about Susie, who was twenty five,
because he knew she had incurred some significant vet bills for her Corgi dogs, Baby
and Bre. Harold also thought he might ask Susie for a date. Harold, who was honest,
told the bank manager what he suspected had happened involving Renee taking his
stamp and checks from the unlocked drawer. The bank manager told Harold that the
bank was not required to reimburse Harold because Harold was responsible for his own
losses. A few weeks later, Harold asked Susie out on a date. She told him that she
couldn’t go because she had started dating her veterinarian. Harold is very grumpy and
tells the bank manager about the unauthorized check to Susie 35 days after he received
his bank statement and discovered the forgery. Unfortunately, when Harold opened his
next bank statement, it was discovered that after she wrote the first check, there had
been several other forgeries by Susie. The bank was notified of those forgeries within
15 days of when Harold received his bank statement. The bank refused to reimburse
Harold for the checks written by Susie again claiming that he was responsible for his
own losses. Becoming grumpier by the minute, Harold institutes litigation against the
bank.
Which of the following is true regarding whether Harold will have to bear the loss on
the later forgeries, other than the first one, by Susie?
A. Harold will not likely have to bear the loss because there was no delay in bank
notification.
B. Harold will not have to bear the loss because forgeries were involved.
C. Harold will not have to bear the loss because the forgeries were by an employee;
otherwise, he would have had to bear the loss.
D. Harold will have to bear the loss because the checks were cashed before he notified
the bank.
E. Harold will have to bear the loss because he did not notify the bank about the first
forgery by Susie within 30 days.
What did the court rule in the case of Hubbard v. UTZ Quality Foods Inc., in which the
buyer refused on the basis of color to accept potatoes that were the subject of an
installment contract?
A. That the failure to meet the proper color standard was not a substantial impairment.
B. That the failure to meet the proper color standard was a substantial impairment but
that it did not impair the contract.
C. That the failure to meet the proper color standard amounted to a substantial
impairment of the installments substantially impairing the whole contract.
D. That the refusal to accept the potatoes was made in bad faith.
E. That the tendering of the potatoes was made in bad faith.
Which of the following is true regarding “provisional dissolution” of a partnership in
Spain?
A. Provisional dissolution is followed by litigation to determine the legitimacy of the
termination request.
B. Provisional dissolution occurs whenever a partner requests dissolution without the
intervention of the court.
C. Provisional dissolution occurs whenever a party dies.
D. Provisional dissolution is the only method of dissolution of a partnership in Spain.
E. Provisional dissolution is effective for 30 days prior to actual dissolution in order to
allow the parties to wind-up the partnership.
Which of the following terms would be considered material terms?
A. Subject matter but not price, quantity, quality, or parties
B. Price and subject matter, but not quantity, quality or parties
C. Quantity, quality, and subject matter, but not price or parties
D. Subject matter, quality, and price, but not quantity or parties
E. Subject matter, price, parties, quality, and quantity
Which of the following is false regarding antitrust law in Japan?
A. Mergers are regulated.
B. Cartels are illegal if they restrain competition substantially contrary to public
interest.
C. Unfair business practices are banned.
D. Keiretsu as a group have been outlawed.
E. The law prohibits private monopolization.
Alice, a certified public accountant (CPA) made mistakes in auditing the financial
statements of ABC Company, a publicly traded corporation. Although Alice later
became aware of the mistake and knew ABC was soliciting investors, she kept quiet
about it, and ABC proceeded to sell stock without revealing the error. After ABC went
bankrupt, investors sued Alice alleging that she had primary liability under federal
securities law. Which of the following is the most likely result assuming the court
follows the reasoning of David Overton and Jerome I. Kransdorf v. Todman & Co.,
CPAs, P.C. and Trien, Rosenberg, Rosenberg, Weinberg, Ciullo & Fazzari, the case in
the text involving a similar situation?
A. That while Alice had a duty to correct her opinion, she could not be held primarily
liable under federal securities law.
B. That Alice had no duty to correct her opinion in regard to investors because her
contract was only with ABC Company, and the investors had no right to rely upon it.
C. That Alice had a duty to correct her opinion and that she could be held primarily
liable under federal securities law.
D. That Alice had no duty to correct her opinion unless the facts establish that one or
more investors specifically asked her about the results of the audit in which event she
could be held primarily liable under federal securities law if she failed to disclose the
mistake.
E. That Alice had a duty to correct her opinion only if the mistake resulted from gross
negligence on her part in which event she would also have a duty to disclose the
mistake to any potential investors.
The ______ deed carries no warranties, and the grantor simply conveys whatever
interests he or she holds.
A. Quitclaim
B. Special warranty
C. Approved
D. General warranty
E. Specific
Which of the following is the preferred remedy for nonbreaching sellers when buyers
fail to pay and pick up goods?
A. Suit for incidental damages
B. Cover
C. Liquidated damages
D. Resale
E. Suit for consequential damages
What was the result at the U.S. Supreme Court level in the Case Opener involving the
constitutionality of the “individual mandate” contained within the Affordable Care Act
requiring that most Americans obtain minimum essential health insurance contained
within the Affordable Care Act?
A. The Supreme Court upheld the “individual mandate” of the Affordable Care Act on
the basis that it was a valid exercise of congressional power under the taxing clause.
B. The Supreme Court upheld the “individual mandate of the Affordable Care Act on
the basis that it was a valid exercise of congressional power” under the commerce
clause.
C. The Supreme Court upheld the “individual mandate” of the Affordable Care Act on
the basis that it was a valid exercise of congressional power under the taxing clause and
also under the Commerce Clause.
D. The Supreme Court struck the “individual mandate” from the Affordable Care Act as
a violation of the Commerce Clause but allowed the remainder of the law to remain.
E. The Supreme Court struck the “individual mandate” from the Affordable Care Act as
a violation of the taxing clause but allowed the remainder of the law to remain.
“Repossession.” Tina sold used vehicles. She sold a used pick-up truck to Joan and a
used convertible to Barry. She properly obtained a security interest in both vehicles.
Both Joan and Barry defaulted on payments owed to Tina for the vehicles. Tina was
under the belief that her only option was to take possession of the collateral. Tina
decided that she would repossess Joan’s pick-up at Joan’s house. Therefore, Tina slipped
into the driveway one evening at midnight and started the engine. Joan immediately ran
out and confronted Tina. Tina shoved Joan away and drove off in the pick-up truck.
Tina was able to repossess Barry’s convertible in a public parking lot with no altercation
with him.
Which of the following is true regarding Tina’s belief that her only option was to take
possession of the collateral?
A. Tina was correct regardless of whether a vehicle or another type of good was
involved.
B. Tina was correct, but only because a vehicle was involved.
C. Tina was incorrect, because only when a vehicle is involved, a party must disregard
the collateral and proceed to judgment.
D. Tina was incorrect because regardless of whether a vehicle or another type of good
was involved, Tina only had the right to ignore the collateral and proceed to judgment.
E. Tina was incorrect because regardless of whether a vehicle or another type of good
was involved, Tina had the right to either take possession of the collateral or ignore
rights in the collateral and proceed to judgment.
Which of the following is true under the UCC regarding a security interest in collateral
that has been perfected in one state when the collateral is moved to another state?
A. A security interest in collateral that has been perfected in one state will generally
expire immediately when the collateral is moved to another state.
B. A security interest in collateral that has been perfected in one state will generally
transfer to another state for a period of four months from the date that the property is
brought into the other state.
C. A security interest in collateral that has been perfected in one state will generally
transfer to another state for a period of six months from the date that the property is
brought into the other state.
D. A security interest in collateral that has been perfected in one state will generally
transfer to another state for a period of two months from the date that the property is
brought into the other state.
E. A security interest in collateral that has been perfected in one state will generally
transfer to another state for a period of 30 days from the date that the property is
brought into the other state.
Unless the parties agree otherwise, the buyer or lessee typically inspects goods ______
paying.
A. Before
B. Immediately after
C. Within 24 hours after
D. Within 48 hours after
E. Within 7 days after
Which of the following is false regarding the Americans with Disabilities Act?
A. A person is covered under the law if he or she is regarded as having a physical or
mental impairment that substantially limits one or more of the major life activities of
the individual.
B. A person is covered under the law if he or she has a record of having a physical or
mental impairment that substantially limits one or more of the major life activities of
the individual.
C. Claims based on emotional or psychiatric impairments are not allowed.
D. Typical accommodations for those with mental disabilities include providing a
private office, flexible work schedule, restructured job, or time off for treatment.
E. An employer who has repeatedly violated the act may be subject to fines of up to
$100,000.
Which of the following is a written document containing the signature of the creator
that makes an unconditional promise or order to pay a sum certain in money at either a
time certain or on demand?
A. A negated instrument
B. A promised instrument
C. A negotiable instrument
D. A promissory agreement
E. A negotiable agreement
“Styling Shenanigans.” Candy, who operated a hair and nail salon called “Up Sweep,”
had a crush on Bruce, a stylist there who was one of her employees. He paid her no
attention. Finally, Candy told him that if he wanted to keep his job and get the new
professional blow dryer he requested, he needed to take her on a date and give her a
kiss. Bruce reluctantly did so. After the date, Candy proceeded to make suggestive
comments to Bruce in front of other employees and to request that he rub her shoulders.
When she passed Bruce’s station, she would caress him while he worked. Candy also
decided that Robert, another of her employees, was cute; and she showered him with
the same type of attention. Robert enjoyed the attention, but Bruce was offended and
filed a claim against Candy for sexual harassment. Bruce asked Robert to join in on the
claim. Robert said that Candy’s attention never personally bothered him, but that if
Bruce can collect, then he wants in on the action. Bruce told Robert that he is going to
see a psychologist to substantiate his claim, that such substantiation is necessary, and
that Robert should consider doing likewise. Robert tells him that he has no interest in
seeing a psychologist but that his case is as strong as Bruce’s. He says that while he
found Candy entertaining, he should be able to recover if Bruce recovers.
Which of the following is true regarding Bruce’s statement regarding the need for
psychological counseling?
A. A plaintiff is not required to show a tangible psychological injury in order to prevail
on a sexual harassment claim.
B. A plaintiff is required to show a tangible psychological injury in order to prevail on
any sexual discrimination or sexual harassment claim.
C. A plaintiff is required to show a tangible psychological injury in order to prevail on a
sexual harassment claim unless an independent witness can corroborate on an objective
basis that sexual harassment actually occurred.
D. A plaintiff is required to show a tangible psychological injury in order to prevail on a
sexual harassment claim unless the plaintiff can show that the harassment caused the
plaintiff monetary harm in the form of lost wages because of inability to work.
E. A plaintiff is only excused from showing a tangible psychological injury in a claim
involving sexual harassment if the plaintiff can prove beyond a reasonable doubt that
severe and pervasive harassment frequently occurred.
Which of the following is true regarding a party that cannot be a witness to a will?
A. A beneficiary may not be a witness to a will.
B. A spouse may not be a witness to a will.
C. An adult child may not be a witness to a will.
D. An adult child may be a witness to a will, but no other relative may be a witness to a
will.
E. A spouse may be a witness to a will, but no other relative may be a witness to a will.
Which of the following are types of unqualified endorsements?
A. Blank and special.
B. Allonge and special.
C. Allonge and blank.
D. Qualified and blank.
E. Qualified and special.