Which of the following is true regarding the obligation, if any, of a consumer who
discovers that a company has sent the consumer unsolicited merchandise?
A. The consumer may treat the merchandise as a gift.
B. The consumer may only treat the merchandise as a gift if it has a value of under $25;
otherwise, the consumer must call the seller and ask if the seller would like to cover
return postage.
C. The consumer may only treat the merchandise as a gift if it has a value of under $50;
otherwise, the consumer must call the seller and ask if the seller would like to cover
return postage.
D. The consumer may only treat the merchandise as a gift if it has a value of under
$100; otherwise, the consumer must call the seller and ask if the seller would like to
cover return postage.
E. The consumer must return the merchandise.
Which of the following was the result in John Miller v. Jay Preefer, Richard Preefer,
Comproised Management, Inc., and Palm Beach Ale House and Raw Bar Inc., the case
in the text involving Florida law in which the plaintiff claimed that a covenant not to
compete in regard to the restaurant business entered into in conjunction with a
settlement agreement was unenforceable as a violation of public policy?
A. That Florida law provides for enforceability of covenants not to compete under
specific circumstances including when entered into as part of a settlement agreement.
B. That all covenants not to compete, including the one at issue, were illegal under
Florida law.
C. That Florida law enforces all covenants not to compete.
D. That the covenant not to compete was illegal only because the time constraint was
excessive.
E. That the plaintiff waited too long to sue after the final judgment incorporating the
covenant not to compete and that the covenant not to compete was, therefore,
enforceable.
Miracle Pill. Katie advertised that she had developed a pill for women that would result
in weight loss, wrinkle loss, and improved vitality; and 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 by the Federal Trade Commission 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 the term for the order issued
by the Federal Trade Commission ordering that Katie stop advertising and selling the
pills?
A. A stop gap order
B. An approved order
C. An agency acknowledged order
D. An agency requirements order
E. A cease-and-desist order
Assume a judge writes that she is deciding to enforce a law in question but that her
decision does not mean that she sees the law as the morally correct rule. The judge
would have leanings in the direction of ______.
A. legal positivism
B. natural law
C. legal-realism
D. conscience reaction
E. None of these
Which of the following was the result on appeal in Securities and Exchange
Commission v. Texas Gulf Sulphur Co, the case in the text in which it was alleged that
corporate employees possessed inside information involving the likelihood of a major
mineral find precluding them from trading in their company’s stock?
A. That the defendants could not be held liable because they were not executives of the
company.
B. That the defendants could not be held liable because company policy precluded them
from disclosing the information at issue to the public.
C. That the defendants could not be held liable because a significant mineral discovery
was not sufficiently certain to require disclosure to the public.
D. That the defendants could be held liable because of their status as insiders regardless
of whether the information would be deemed material.
E. That the defendants could be held liable because they failed to reveal material
information to the public.
A condition ______ is a particular event that must occur in order for a party’s duty to
arise.
A. precedent
B. subsequent
C. concurrent
D. at large
E. certain
Which of the following is true regarding oral assignments?
A. Assignments may not be made orally.
B. The UCC requires that assignments be in writing when the amount being assigned is
greater than $5,000.
C. Assignments are not covered by the statute of frauds.
D. The UCC requires that assignments be in writing when the amount being assigned is
greater than $2,000.
E. Both that assignments may be made orally and that the UCC requires that
assignments be in writing when the amount being assigned is greater than $1,000.
The Burial Emporium. Fred operates a funeral home called Fred’s Burial Emporium.
Fred likes to keep things simple. He has one flat price with no itemization and requires
that customers purchase a complete package from him if they want any services
whatsoever. Fred also goes door-to-door selling funeral packages. He tries to visit
neighborhoods in which there has been a recent death because residents in the
neighborhood will have final arrangements on their minds. He believes and informs
customers that once customers sign a contract for burial services, there is no backing
out. Fred also obtains a good deal of business from phone solicitation. He enjoys calling
late at night, between 10 p.m. and 11 p.m., when people are tired, but before they go to
bed. He believes that if people do not feel well, they are more likely to consider funeral
arrangements. After some pesky consumer complaints, the Federal Trade Commission
and other federal agencies investigate Fred. He hires a good lawyer with his profits in
an attempt to stay out of trouble. Which of the following is true regarding Fred’s
practice of doing telephone solicitations late at night after people are tired?
A. Under federal law there is no problem with his practice because any consumer who
does not want to talk to him can simply hang up.
B. According to a rule of the Federal Trade Commission, if a telemarketer calls a
residence after 9 p.m., the telemarketer is engaging in abusive behavior; therefore, Fred
is in violation.
C. According to a rule of the Federal Trade Commission, if a telemarketer calls a
residence after 8 p.m., the telemarketer is engaging in abusive behavior; therefore, Fred
is not in violation.
D. According to a rule of the Federal Trade Commission that is specific to funeral home
directors, direct phone solicitation may not be made; therefore, Fred is in violation.
E. According to a rule of the Federal Trade Commission that is specific to funeral home
directors, direct phone solicitation may not be made after 7 p.m.; therefore, Fred is in
violation.
________________ are also known as unintentional-discrimination cases.
A. Disparate-treatment cases
B. Disparate-impact cases
C. Sexual harassment cases
D. Disparate-treatment cases, disparate-impact cases, and sexual harassment cases
E. Disparate-treatment cases and disparate-impact cases, but not sexual harassment
cases
Portraits. Belinda, a famous portrait painter, agreed to paint Harry’s portrait for $5,000.
She also agreed to paint the portraits of Michelle’s two Welsh Corgi dogs, Baby and
Bree. Michelle agreed to pay Belinda $12,000 for the portraits. Belinda charged
Michelle more because dogs annoyed her. Belinda met the spoiled dogs, and they really
got on her nerves. Plus, she was behind on finishing Harry’s portrait. Belinda, therefore,
proceeded to assign the right to receive the money for the dog portraits and the duty to
paint the dog portraits to her assistant, Fred. He eagerly accepted and painted the
portraits. As payment for amounts she owed him for various duties, Belinda also
assigned to Fred the right to receive payment from Harry. Neither the contract Belinda
had with Harry nor the contract she had with Michelle expressly prohibited assignment
or delegation of contractual rights and duties. Belinda finished the portrait of Harry and
called him to come and pick it up. Meanwhile, a disgruntled secretary who disliked
Belinda told both Michelle and Harry about the agreements with Fred. Michelle was
furious and refused to pick up the portrait or pay anyone. Harry likewise refused to pay
for his portrait claiming that the right to payment could not be assigned. What would be
the most likely result if Belinda sues Michelle for the $12,000 payment?
A. Belinda will win only if Fred did a good job on the portraits.
B. Belinda will win regardless of what type of job Fred did on the portraits so long as
he was a qualified portrait painter.
C. Belinda will win regardless of whether Fred was qualified and regardless of whether
he did a good job because the duties were validly delegated, and Michelle’s only right
of recourse is against Fred.
D. Belinda will win because the contract did not contain an express provision
prohibiting assignment or delegation of contractual rights and duties.
E. Michelle will win because painting the portrait was personal in nature and could not
be delegated.
Corporate ______ are rules and regulations that govern the corporation’s internal
management.
A. bylaws
B. requirements
C. statutes
D. authorizations
E. prohibitions
Surprise Arrival. Gracie was surprised and pleased to find she was pregnant. She
worked as a waitress at Good Food and was aware that Groucho, her employer, had
allowed employees who were ill for reasons that were not work related to take paid time
off. For example, her friend Craig was off with pay for two months after suffering a
mild heart attack, and her friend Bonnie was off of work for three months when she ran
her personal watercraft into a dock and broke her leg. Gracie told her employer
Groucho about her pregnancy. He very angrily told her that pregnancy was completely
voluntary, that he was not paying her a dime when she was off work, and that she would
be lucky if he even allowed her to continue working at all because she would not be as
cute when she gained weight. He also said that he serves families, and he does not want
the kids to ask embarrassing questions of their parents regarding Gracie’s condition.
Gracie was very angry and threatened to sue. Groucho told her, however, that he had
business law back in 1980 and that discrimination based on pregnancy is not even
covered by Title VII. The employee handbook did not address the issue. Which of the
following is true regarding Groucho’s comment that pregnancy-based discrimination is
not covered by Title VII?
A. He is correct, and federal law does not prohibit pregnancy-based discrimination.
B. He is correct in that Title VII does not prohibit pregnancy-based discrimination, but
Title IV prohibits it.
C. He is incorrect because Title VII was amended in 1980 to include pregnancy within
its protection.
D. He is incorrect because Title VII was amended in 1987 to include pregnancy within
its protection.
E. He is incorrect because Title VII was amended in 1997 to include pregnancy within
its protection.
In which of the following does the franchise operate under the franchisor’s business
name and act subject to the franchisor’s standards and methods of business operation?
A. Distributorship
B. Manufacturing arrangement
C. Chain-style business operation
D. Approved business franchise
E. Acknowledged standards operation
In ______ the English Parliament passed the Act for the Prevention of Frauds and
Perjuries.
A. 1555
B. 1677
C. 1770
D. 1776
E. 1865
Cat Chaser. Annette, who is angry because her neighbor, William, allows his dog to
chase her cat, decides that she wants 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. William
is unhappy about the whole situation and wants to sue. What claim would William have
against Annette for taking the lawn chair?
A. Trespass to personal property.
B. Conversion.
C. Private nuisance.
D. Negligence.
E. Harassment.
What does CIF stand for when used as a shipping term represent?
A. Cost, insurance, and freight
B. Collateral, insurance, and freight
C. Commerce, insurance, and freight
D. Cost, indemnity, and freight
E. Cost, insurance, and flight
The principal-employer may be liable for any harm caused by the agent-employee
during the time that the agent-employee is working for the principal under __________.
A. vicarious liability
B. responsible liability
C. comparative liability
D. contributory liability
E. applied liability
Irresponsible Teen. At age 17, in a state in which the age of majority is 18, Sally
purchased a prom dress from Formal Stuff. She wore it to the prom and then attempted
to return it to the store claiming that she was a minor and that she was entitled to a
refund. The dress had clearly been worn and had a purple stain that Sally claimed was
from grape juice. Additionally, a few days before she turned 18, Sally purchased a used
car from Dings and Dents used cars. She had a deal whereby she paid $100 per month
on the car. She drove the car and made payments for fourteen months after she turned
18. Then, she returned the car to Dings and Dents and told them that she wanted all her
money back. Dings and Dents claimed the car was a necessity. Sally and her parents
claimed that the parents were ready and willing to provide a car to Sally and that she
only purchased the car from Dings and Dents because she liked that particular style and
color. When purchases of the dress and car were made, the sellers knew that Sally was
under the age of 18. In the dispute between Sally and the owner of Dings and Dents,
which of the following is true regarding the defense of Sally and her parents that the car
was a necessary?
A. The claim will have no effect because the law does not recognize the concept of
necessaries when minors are involved.
B. Social status is always irrelevant in addressing a claim that an item was a necessary.
C. Whether or not parents would buy the item at issue is irrelevant in addressing a claim
that an item was a necessary.
D. A minor may not disaffirm a contract for a necessary.
E. Even if a minor is allowed to disaffirm a contract for a necessary, the minor will still
be held liable for the reasonable value of the necessary.
Divorce Fallout. Dr. Fred, following a messy divorce, has encountered significant
financial difficulties. Dr. Fred has a friend named Slick Slim who tells Dr. Fred that he
has been making lots of money by selling people a wristband that allegedly places
pressure on a nerve that signals hunger resulting in a lack of appetite. Slick Slim tells
Dr. Fred that, although the device does not really work, people who want to lose weight
and look good in their bathing suits will do anything and that it sells like hotcakes. Slick
Slim tells Dr. Fred that he will pay Dr. Fred five dollars for every band that Dr. Fred can
sell to his patients. Dr. Fred proceeds to mail letters to patients suggesting the use of the
band for weight loss. He also uses UPS to mail samples of the band to some patients
along with letters encouraging purchase of the bands. Dr. Fred then proceeds to bill
Medicare for office consultations he has with patients when they come in to purchase
the bands. The scheme is wildly successful. Dr. Fred is able to entirely satisfy his
alimony obligations within just a few months. Unfortunately, as patients begin to see
that they are not having any weight loss, he has been receiving numerous complaints,
and a friend of his told him that he could even be facing some criminal prosecution. By
mailing correspondence to patients encouraging purchase of the band, which of the
following offenses, if any, did Dr. Fred commit?
A. False pretenses
B. False entry
C. Defalcation
D. Mail fraud
E. He is not guilty of any offense
Executive agencies are referred to as which of the following?
A. Judicial-level agencies
B. Adjudicative agencies
C. Cabinet-level agencies
D. Approval agencies
E. Presidential agencies
When does disaffirmance by a minor have to occur?
A. On the minor’s 19th birthday
B. On the minor’s 21st birthday
C. 6 years from the date of the agreement
D. 2 years from the date of the agreement
E. Within a reasonable time of the minor reaching the age of majority
Which of the following is false regarding Chapter 13 of the bankruptcy code?
A. Chapter 13 permits individuals to pay their debts to creditors in installment plans
under the supervision of the court.
B. Any debtor who files under Chapter 13 could also have filed under Chapter 11.
C. Chapter 13 repayment plans are usually simpler and less expensive than Chapter 11
plans.
D. By statute Chapter 13 plans last between 36 and 60 months.
E. Individuals, partnerships and corporations may file for a Chapter 13 repayment plan.
Which of the following is a type of property that can be touched?
A. Tangible
B. Intangible
C. Substantive
D. Productive
E. All of these
Which of the following is available to a party who was misled by a false statement
contained in an innocent misrepresentation?
A. Rescission of the contract only
B. Compensatory damages along with rescission of the contract
C. Punitive damages in addition to compensatory damages and the right to rescind the
contract
D. Exemplary damages in addition to compensatory damages and the right to rescind
the contract
E. Relevant damages only
The United Nations Convention on Contracts for the International Sale of Goods
governs _____.
A. business to consumer sales contracts
B. business to business sales contracts
C. mixed sale contracts
D. leases
E. all transactions involving the mirror-image rule
A credit card company may not bill a consumer for a damaged item that is unknowingly
purchased with the card if ____________.
A. the consumer purchased the item in the same state as the consumer’s home or within
100 miles of the consumer’s home
B. the consumer purchased the item in the same state as the consumer’s home or within
100 miles of the consumer’s home, and the item cost more than $50
C. the consumer purchased the item in the same state as the consumer’s home or within
100 miles of the consumer’s home; the item cost more than $50; and the consumer made
a good-faith effort to resolve the dispute, such as asking the store for a refund
D. the consumer purchased the item in the same state as the consumer’s home or within
100 miles of the consumer’s home; the item cost more than $50; the consumer made a
good-faith effort to resolve the dispute, such as asking the store for a refund; and the
seller had a history of providing defective merchandise
E. the credit card company may always charge the consumer, and it is up to the
consumer to get a refund from the merchant
Junk Food. Mary Dogood, a member of the school board in ABC County, is appalled at
the amount of junk food in the schools. She convinces the state legislature to pass an
ordinance that no stores may sell any unhealthy, junk food within 500 feet of any school
or day care center. A teacher of political science raises the issue of whether the
regulation is valid and is told that it is a valid exercise of the jurisdiction’s police power
to protect its citizens. Convenience stores balk at the regulation and challenge it in
court. In determining whether the law is constitutional, which of the following will a
court likely ask?
A. Whether the state regulation is needed for a compelling reason.
B. Whether the state regulation is rationally related to a legitimate state end.
C. Whether the state regulation is needed for an important reason.
D. Whether the state regulation will impact tax revenue.
E. Whether the state regulation is needed for a compelling reason and also whether the
state regulation will impact tax revenue.
Which of the following occurs when all aspects of the parties’ duties under the contract
are carried out perfectly?
A. Complete performance
B. Substantial performance
C. Significant performance
D. Absolute performance
E. Approved performance
A breaching party’s right to provide conforming goods when nonconforming goods
were initially delivered is known as ________________.
A. substantial impairment
B. usage of trade
C. cure
D. perfect tender rule
E. course of dealing
When the directors or shareholders of a corporation initiate dissolution procedures it is
a(n) ___________________________.
A. consolidation
B. voluntary dissolution
C. involuntary dissolution
D. hostile takeover
E. leveraged buyout
To the Dogs. Alice loves all animals and is starting a new grooming business for dogs.
She believes that animals are very important and plans to exceed any applicable
regulations regarding cleanliness and health standards. Alice thinks some local
regulations make no sense. For example, there is a local ordinance that all dogs must be
kept on a leash at all times when not in a fenced area. Although Alice lives on a large lot
with plenty of room for dogs to run free, she plans to obey the leash regulation and all
others. She is aware, however, that members of the community have had success in
changing local regulations by petitioning the city council. Alice plans to proceed in that
manner to attempt a change in the leash law. Alice’s plan to obey all laws and
regulations even if she does not agree with them is rooted in which of the following?
A. Legal positivism
B. The historical school
C. Legal realism
D. Natural law
E. Cost-benefit analysis
Angry employee. Martin is in charge of payroll and other expenses for ABC, Inc. He
becomes very angry with his boss Adam because Adam started dating Martin’s
girlfriend Stacy. Martin decided to quit but not before he got some extra money from
ABC, Inc. Martin wrote five checks from the account of ABC, Inc. to pay off the five
credit card companies that Martin owed money. The credit card companies took the
checks without reason to be suspicious as to the source of payment. The checks to the
credit card companies in total amounted to $30,000, and each check was in an amount
under $10,000. Martin also made out ten checks on the account of ABC to twenty
alleged employees who did not really exist. Each of these checks was in the amount of
$5,000. Martin took the checks, endorsed and cashed the checks in the names of the
various fake employees, and kept the cash. Finally, Martin discovers through office
gossip that Adam has been looking for another job with XYZ, Inc. located in a
neighboring state and that Adam is supposed to go there for an in person interview in a
few weeks. Martin sets up an interview with XYZ, Inc. pretends to be Adam, and
induces XYZ, Inc. to give him, posing as Adam, a check for $5,000 as a signing bonus.
Martin immediately endorses the check pretending to be Adam and pockets the cash.
Finally, Martin leaves town heading for the Caribbean. Is ABC, Inc. entitled to a refund
from its bank for the checks the bank paid written to fake employees?
A. Yes, because Martin forged the names of the employees.
B. Yes, because Martin posed as an imposter in regard to the employees.
C. Yes, because the bank has a cause of action against Martin and can likely get a
default judgment.
D. No, because of the imposter rule.
E. No, because of the fictitious-payee rule.
If the plaintiff is seeking legal damages that are designed to punish the defendant and
deter him and others from engaging in similar behavior in the future, the plaintiff is
seeking ______________ damages.
A. consequential
B. punitive
C. liquidated
D. nominal
E. repugnant
An administrative law judge’s decision may be directly appealed to:
A. a state trial court.
B. the full commission or head of an agency.
C. the circuit court of appeals.
D. the Senate.
E. administrative law judge’s decisions are final and may not be appealed.
Which of the following is an example of a material omission or misrepresentation
during a securities transaction under Section 10(b) and Rule 10b-5?
A. A change in the status of litigation against the company.
B. A change in dividends.
C. A new product, process, or discovery.
D. A change in the status of litigation against the company; a change in dividends; and a
new product, process, or discovery.
E. A change in the status of litigation against the company and a change in dividends;
but not a new product, process or discovery.