Under the Securities Exchange Act of 1934, executive officers are not considered
statutory insiders.
Unreasonable zoning may constitute a constructive taking of property by the
government.
Whenever a written agreement under the statute of frauds contains a serious, and
obvious, typographical error, parol evidence is admissible to demonstrate that the error
was indeed an error, as well as to set forth the proper term.
In transit means that the seller or lessor has delivered the goods to a carrier or bailee,
but the carrier or bailee has not yet turned them over to the buyer.
If a buyer and seller execute a contract and the seller subsequently places the goods
with a common carrier for delivery to the buyer, the parties have executed a
common-carrier delivery contract.
A summary jury trial leads to a binding jury verdict.
A shareholder can file a direct suit against a director if the director has caused harm to
the business by violating a fiduciary duty.
In order to proceed in a products liability action, a plaintiff must establish to a certainty
that the product was not damaged after its purchase.
The use of moral pressure is insufficient to establish false imprisonment.
Because of its complicated nature, any complaint should be at least three pages long.
A promise to make a gift is generally enforceable.
Only the offeree to whom an offer is directed can accept the offer.
A person must have a law degree in order to be a mediator.
A general partner has unlimited personal liability for the debts of the limited
partnership.
When directors or officers violate their duty of loyalty, they are self-dealing.
When a court deems a contract integrated, parol evidence is admissible.
Only officers in a limited partnership have a say in the management of the company.
Restitution is the return of any property given up under the contract.
A consumer law is a statute or administrative rule serving to protect consumer interests.
Once a case is in the proper court system, venue determines which trial court in the
system will hear the case.
When negligence per se applies, the plaintiff is required to show that a reasonable
person would exercise a heightened duty of care toward the plaintiff.
An individual who lacks contractual capacity may hire an agent to make contracts on
his or her behalf.
Drinking-water suppliers must provide every household with annual reports detailing
the water contaminants in the household’s drinking water and the health problems the
contaminants may cause.
Some debts that are dischargeable under Chapter 13 are not dischargeable under
Chapter 7
Checks are non-negotiable instruments.
A partner being expelled from the partnership in accordance with the partnership
agreement is not a reason for rightful dissolution of the partnership.
Trade dress is entitled to the same protection as a trademark.
The statute of frauds requires a writing for a bailment that will not be completed within
6 months.
The concept of at-will employment excludes the concept that an employee may quit at
any time.
Contracts for the sale or lease of goods may be formed even though some terms of the
contract or lease are left open.
A franchisee is the owner of a trade name or trademark who is a party to an
arrangement, whereby another party sells goods or services under the trade name or
trademark.
A license is a right to use another’s property that is temporary but not revocable.
Threatening physical harm or extortion to gain consent to a contract is classified as
undue influence.
The government spends large amounts on social insurance.
Which of the following was the first federal legislation passed regulating food and
drugs?
A. The Applied Food, Drug, and Cosmetic Act
B. The Pure Food and Drugs Act
C. The Food and Drug Safety Act
D. The Consumer Safety Act
E. The Congressional Safety Act
“Animal Care.” Susan, a licensed veterinarian, was recently elected to the U.S. Senate.
Susan is very concerned about the lack of care for homeless cats and dogs. She
proposes legislation that citizens of all states be taxed sufficiently to provide for no-kill
animal shelters that citizens in states with higher than average incomes be taxed at a
higher rate than citizens of other states. She also proposed that federal funds for state
highways be denied to any state that fails to provide assistance to low income citizens
in covering pet vaccinations. Bill, another new senator, tells Susan that, apart from the
mandated federal income tax, Congress lacks the authority to tax states because the
U.S. Constitution expressly reserves that right to the states. Sam, another senator, tells
Susan that Congress has no authority to link highway funds or any other funds with
social welfare objectives. Ellen, a clerk in the Senate, tells Susan that Congress is
absolutely prohibited from taxing residents of one state at a higher rate than citizens of
another state.
Which amendment extends most of the provisions of the Bill of Rights to the states?
A. Thirteenth
B. Fourteenth
C. Twenty-first
D. Twenty-second
E. Fortieth
“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 sell Denise a used business law book for $50.
She asks if she can clean his apartment in return for the book instead of pay cash, and
he agrees. Richard also agrees to sell a communications book for $5 to Jill who
promises to pick it up the next day. Meanwhile, Sam comes to visit and offers Richard
$45 for the business law book. Richard sells it to him because he decides his apartment
is clean enough. 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 $45 for it. Richard decides to forget about Jill and proceeds to
sell the book to Sam for $45. The next day Denise shows up to clean Richard’s
apartment and is very angry because Richard did not save the book for her. Denise
claims that Richard breached their contract because they had a deal. Richard says that
they never had a deal because no consideration was present. He also said that even if
cleaning house would be considered consideration, any housekeeping done would have
been wholly inadequate to support receipt of the book because his house was already
clean. Jill is also angry because Richard sold the communications book and informs
him that he breached the contract he had with her. Richard tells her that he had no
obligation to hold the book for her because they had a unilateral contract. Two days
after they first talked, Dawn tells Richard that she would like the computer. She tells
him that her response bound him and that he should have awaited her action. Richard
tells Sam that he needs to return everything for a full refund. Sam refuses.
Which of the following is true regarding the dispute between Richard and Sam
regarding whether Sam must return anything?
A. Sam must return the computer only.
B. Sam must return the business law book only.
C. Sam must return the communications book only.
D. Sam must return the computer, the business law book, and the communications
book.
E. Sam does not legally have to return anything.
The doctrine of ______ applies in the context of the principal/employer-agent/employee
relationship in relation to liability of the principal/employer for acts of the
agent/employee.
A. Superior respondeat
B. Respondeat superior
C. Stare decisis
D. Res superior
E. Supre superior
In which of the following, if any, may investors share in profits but not in management
responsibilities while avoiding personal liability?
A. Limited partnership
B. General partnership
C. Limited liability partnership
D. Limited liability company
E. There is no such entity
Which of the following is a will that two or more testators execute in which they leave
property to each other as long as the survivor agrees that when he or she dies, the
remaining property will be distributed according to a plan created by all testators?
A. A planned will
B. An estate will
C. A mutual will
D. A co-will
E. A presumptive will
In the event of a misspelled name, how may the holder endorse the document?
A. Only with the misspelled name.
B. Only with the holder’s actual name or the misspelled name.
C. Only with the misspelled name followed by the actual name.
D. With the holder’s actual name, with the misspelled name, or with the misspelled
name followed by the actual name.
E. Endorsement is impossible in such a situation.
Which of the following is true regarding negotiable instruments in the European Union?
A. If a transaction is defined as a negotiable instrument within a certain country, it must
conform to certain general characteristics outlined by the European Economic Council.
B. The European Economic Council adopted the UCC as the law in regard to negotiable
instruments in all member countries of the European Union.
C. The European Economic Council adopted the UCC as the law in regard to negotiable
instruments in all member countries of the European Union unless a member country
has specifically opted out.
D. The European Economic Council suggests the UCC as the law in regard to
negotiable instruments in all member countries of the European Union; but in order for
it to be applicable, a member country must specifically affirm adoption of the UCC.
E. Negotiable instruments are not recognized.
Under which of the following does the court determine the percentage of fault of the
defendant requiring that the defendant be more than 50% at fault before the plaintiff can
recover?
A. Assumption of the risk.
B. Last-clear-chance.
C. Modified comparative negligence.
D. Pure comparative negligence.
E. Both modified comparative negligence and last-clear-chance.
Laws are enforced by which of the following?
A. State legislatures
B. Federal Congress
C. Community consensus
D. Courts
E. The executive branch
Which of the following created the Public Company Accounting Oversight Board to
regulate public accounting firms?
A. The Sarbanes-Oxley Act of 2002
B. The Securities Acts Amendments of 1990
C. The Market Reform Act of 1990
D. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990
E. The National Securities Markets Improvement Act of 1996
“Hawaiian Adventure.” Beverly decides to go on a great trip to Hawaii. She needs
someone, however, to take care of her two dogs, Creaky and Toady, while she is gone.
She hires Frank three months in advance and they reach a contractual arrangement
whereby he will be paid $200 for keeping the dogs for two weeks. Frank comes over
two months before Beverly is set to leave, takes one look at Creaky and Toady, and
declares that they are too creepy to be around. Beverly hires Alice who agrees to care
for Creaky and Toady. Two weeks before Beverly is set to leave, however, Alice calls
and tells her that she just broke both her legs in an automobile accident and has been
put on bed rest for two months. Finally, Beverly hires Betty to care for the dogs and
heads off to Hawaii where she has a great time. Unfortunately, when Beverly returns
home, she finds that Betty has absconded with Creaky and Toady. They were later
found in good health in an exclusive resort visited by Betty. Betty refuses to return
Creaky and Toady to Beverly claiming that they were all enjoying the resort and that
she had become quite attached to them.
What will Beverly seek in order to get Creaky and Toady returned from Betty?
A. An injunction
B. Compensation
C. Punitive damages
D. Nominal performance
E. Adequate performance
Which of the following is true regarding wage garnishment?
A. Wage garnishment is governed only by state law.
B. Wage garnishment is governed only by federal law.
C. Wage garnishment is governed only by local ordinance.
D. Both federal and state laws govern wage garnishment.
E. Garnishment is governed by contractual provisions not by state law, federal law, or
local ordinance.
Under the UCC, items are _____ if they exist physically.
A. Merchandise
B. Real
C. Tangible
D. Movable
E. Saleable
Which of the following is true under the Magnuson-Moss Act if a written warranty is
silent as to whether or not it is a full warranty?
A. It is presumed to be a limited warranty.
B. It is presumed to be an express, limited warranty.
C. It is presumed to be a limited warranty of merchantability.
D. It is presumed to be a limited usage of trade warranty.
E. It is presumed to be a full warranty.
Which of the following is false regarding Internet liability protection policies?
A. They typically cover claims involving copyright and trade infringement.
B. They typically cover claims involving alleged plagiarism committed via the Internet.
C. They typically cover claims involving failure to protect confidential information
gathered online.
D. They typically cover claims involving failure to stop a computer virus.
E. They typically cover claims involving related to patents or trade secrets.
A[n] ______ mistake is a mistake that is shared by both parties to an agreement.
A. Unclear
B. Mutual
C. Unilateral
D. Clear
E. Double
Patricia buys a house from Jake but does not record her ownership interest. Later, Jake
dishonestly sells the same house to Paula who had checked ownership at the courthouse
but saw no mention of Patricia. After she paid Jake, Paula recorded her property interest
at the courthouse. Paula, who thought that Patricia was renting the house from Jake,
then wrote to Patricia asking her to move. Who is entitled to the house? Who do you
believe that ethically should be done assuming Jake cannot be found?
The group that urges states to enact model laws to provide greater uniformity of law is
called the ______.
A. Model Law on Uniform State Laws Organization
B. Federal Uniform Law Commission
C. National Conference of Commissioners on Uniform State Laws
D. Model and Uniform Law Consortium
E. Uniform Statutory Enforcement Commission
“Defective Computer.” Clara went to buy a new computer from XYZ Computer Sales.
The manager there, Harold, told her that the store carried the best computers in the
state, even in the country. Unfortunately, after Clara bought the computer and took it
home, she discovered that it had a number of problems. When she took it back to the
store, Harold told her that he was sorry, that he was simply giving his opinion when he
sold her the computer, and that the store did not warranty products. Harold told her that
is why he never mentioned warranties – because they were not given.
Is the manager correct that the store did not warranty products?
A. Yes, because unless Clara had a written promise specifically providing for a
warranty, the computer was sold without a warranty.
B. Yes, because unless Clara had an oral promise specifically promising a warranty or a
written contract specifically providing for a warranty, the computer was sold without a
warranty.
C. No, because the computer was sold with a warranty of merchantability.
D. No, because the computer was sold with a warranty of merchantability and also with
a warranty of fitness for a particular purpose.
E. No, because the computer was sold with a warranty of merchantability, with a
warranty of fitness for a particular purpose, and also with an express warranty.
“Lake House.” Harry has two houses, a house on the lake and a house in town. Rebecca
wants to buy the house on the lake. Harry and Rebecca orally agree that Rebecca will
buy the house on the lake for $300,000. Harry hurriedly writes out a contract providing
that he would sell “his house” to Rebecca for $300,000. Harry signs the top of the
document. Rebecca does not sign at all. No merger clause is included in the contract.
Harry backs out of the contract, and Rebecca sues him. He tells the judge that the
statute of frauds is left unsatisfied because he did not sign the document at the end and
also because Rebecca did not sign at all. He also tells the judge that, at any rate, the
agreement referred to the house in town, not the house on the lake; and that under the
parol evidence rule, he had the right to identify the correct house.
Which of the following is true regarding Harry’s assertion that the statute of frauds is
not satisfied because Rebecca did not sign the document?
A. Harry is correct.
B. Harry is incorrect because he is the one being sued, and he signed the document.
C. Harry is incorrect because the statute of frauds did not require her signature so long
as the selling price was referenced.
D. Harry is incorrect because the statute of frauds did not require her signature so long
as the type of subject matter involved was referenced.
E. Harry is incorrect because the statute of frauds did not require her signature so long
as the parties were clearly identified.
Which of the following is a contractual party who agrees to receive something from the
other party?
A. Obligor
B. Obligee
C. Assignor
D. Assignee
E. Boundee
Molly goes to the store and buys a toaster that shocks her when she plugs it into the
outlet. She returns it to the store and was told that the seller provided no warranties and
that she would have to return it to the overseas manufacturer even if the postage to
return it to the manufacturer would amount to more than the toaster is worth. Molly
believes that is ridiculous. Who is correct under the UCC and why?
A. Molly is correct because by selling the toaster, the seller made an implied warranty
of merchantability.
B. Molly is correct because by selling the toaster, the seller made an express warranty.
C. Molly is correct because by selling the toaster, the seller made an implied warranty
of fitness for a particular purpose.
D. The seller is correct because only the manufacturer is responsible for warranties on
consumer goods.
E. The seller is correct because while the seller is responsible for warranties for
consumer goods costing in excess of $500, only the manufacturer is responsible for
lower-priced consumer goods.
“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 Molly’s assertion that Richard did not have a
negotiable instrument?
A. Molly is incorrect, and the document by which Tim assigned the right to Richard is a
negotiable instrument in regard to her duty to pay.
B. Molly is correct because her agreement with Tim was not in a writing containing
words of negotiability.
C. Molly is correct because Richard was not a party to the original contract.
D. Molly is incorrect because her admission establishes the existence of a negotiable
instrument between her and Tim that could be assigned to Richard.
E. Molly is correct because the amount at issue is insufficient to create a negotiable
instrument.
Which of the following is found when one party was forced into an agreement by the
wrongful act of another?
A. Duress
B. Negligence
C. Fraud
D. Browbeating
E. Coercion
Which of the following prohibits slavery and grants everyone the right to free choice of
employment, just and favorable conditions of work, reasonable limitations on working
hours, and compensation adequate to provide for the worker’s health and that of his or
her family?
A. The Universal Declaration of Human Rights of 1948
B. Title VII of the Civil Rights Act of 1964
C. The Fair Wage Standard of 2000
D. The Universal Employee Care Act of 1990
E. The International Freedom Act of 2003
Jane is unhappy with her neighbor, Sam, because Sam will not allow her to swim in his
swimming pool. She tells him that unless he lets her swim in the pool, she will bring an
action against him for nuisance because he plays his stereo late at night at times. While
the stereo does not bother Jane because she is up late anyway, she thinks that will
encourage Sam to let her swim in the pool. Sam, however, continues to refuse to allow
Jane to swim in his pool, and Jane proceeds to sue Sam for nuisance. Which of the
following is true?
A. Jane is completely within her rights and has done nothing wrong because Sam really
is playing the stereo late at night.
B. Sam can sue Jane for malicious prosecution and win only if he wins the nuisance
action.
C. Sam can sue Jane for abuse of process and win only if he wins the nuisance action.
D. Sam can sue Jane for malicious prosecution and win regardless of whether or not he
wins the nuisance action.
E. Sam can sue Jane for abuse of process and win regardless of whether or not he wins
the nuisance action.
Which of the following is a term used to refer to agencies that do not clearly fall into
either the classification of an executive agency or the classification of independent
agency?
A. Combined
B. Hybrid
C. Joined
D. Registered
E. Compound
If a[n] _____________ misunderstanding between the parties exists, and as a result of
that misunderstanding the parties do not really come to a meeting of the minds, there is
no contract.
A. Mutual
B. Unilateral
C. Comprehensive
D. Subjective
E. Reasonable
Which of the following is not a basic limit on agency power?
A. Political
B. Statutory
C. Informational
D. Approved
E. Judicial