Kite Sales. Wendy is president of a business that manufactures kites. The kites of her
company, ABC Kites, are sold to large toy stores. After Wendy learned a great deal
about kites, she started to make kites at home and to promote them to large toy stores.
She also started selling kites to friends. Some of the directors learned about her kite
sales and accused her of wrongdoing. Wendy denied any wrongdoing. In which of the
following objectionable activities was Wendy involved, if any, in selling and marketing
the kites?
A. She was not involved in any objectionable activities.
B. She was involved in objectionable self-dealing.
C. She was involved in objectionable personal-profit allocation.
D. She was involved in objectionable private-profit allocation.
E. She was involved in objectionable corporate profit reduction.
Which of the following may be issued to shareholders as proof of ownership in the
corporation?
A. Stock subscriptions
B. Stock acknowledgements
C. Paper documentation
D. Stock certificates
E. Acknowledgement documents
The purpose of the ________________ is to prevent employers from discriminating
against employees and applicants with disabilities.
A. Americans with Disabilities Act
B. Disabled Citizens Act
C. Handicapped Americans Act
D. Disabled Americans Act
E. Disabled Access Act
Which of the following is a measure of recovery when a quasi-contract is involved?
A. The amount set forth in the contract.
B. The fair market value of the matter involved.
C. The wholesale price of any good involved.
D. The amount sought by the plaintiff in the complaint.
E. Damages will be computed the same as they are computed for any other contract.
Shaky Bicycles. Rhonda, an incorporator who filed the articles of incorporation for
ABC Corporation, a corporation set up to sell bicycles, listed the correct town and street
but incorrectly put the wrong street number in the document. Helen, a manufacturer of
bicycle parts, had sold a number of parts to ABC Corporation. Unfortunately, the
corporation was not making any profit, and Helen was not paid in a timely manner.
Rhonda told her that the corporation was not liable because it was not validly formed
due to the address mistake. Bernice, another creditor of ABC Corporation, also claimed
that a shareholder of Shaky Bicycles, Slick, was personally liable to her. Bernice
alleged that Slick committed fraud against her when he told her that ABC Corporation
was making large amounts of money, that if she would only loan $50,000 to the
corporation he would marry her, and that the corporation would make so much money
that she would be wealthy in six months. She loaned the funds, but the corporation has
been unable to repay her. Slick told her that he is sorry, but that her only avenue of
recovery is through the corporation. Assuming ABC’s corporate status is in place, which
of the following is Bernice’s best theory in order to hold Slick personally liable to her?
A. That the corporate veil should be pierced because Slick committed fraud through the
corporation.
B. That in equity Slick should be held personally liable.
C. That Slick should be personally liable because of his status as a shareholder.
D. That the corporate environment should be removed because Slick committed fraud
through the corporation.
E. None of these. There is no theory under which she could hold Slick personally liable
to her.
Used Car Commission. William promised to sell Helen’s car for her, but he wanted a
commission of 10%. Helen signed an instrument promising to pay William a 10%
commission if he sold her car. William assigned the agreement to Phil. Helen’s car was
sold and the buyer paid Helen. A dispute ensued between Helen and William regarding
whether William found the buyer or the buyer found Helen. When Phil asked Helen for
payment on the instrument, Helen refused. William, Helen, and Phil settled their dispute
without going to court, and Helen wrote Phil a check for $3,000. Phil endorsed the
check on the back planning to take it to the bank the next day. Unfortunately, Phil lost
the check that was found by Barry and cashed by the local bank. Barry then left town.
Before Phil endorsed the check it was a(n) ______ instrument; and after he endorsed it,
the check was a(n) _____ instrument.
A. order; order
B. order; transactional
C. order; bearer
D. transactional; bearer
E. transactional, order
Creaky and Toady. 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. Creaky has
hives, and Toady passes gas frequently because of a digestive problem.
Beverly 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 then 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, sustained
other injuries, and has been put on bed rest for two months. Finally, Alice 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 fell in love with Creaky and Toady and
has absconded with them. It was a month before Beverly was able to get a court order
requiring their return. Which of the following would be an order from the court
requiring that Betty return Creaky and Toady to Beverly?
A. An injunction
B. A conciliation
C. A mitigation
D. A directive
E. A specific
Which of the following is treaty that provides a legal structure for international sales?
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
When parties are merchants, the UCC requires ______.
A. reasonableness in dealing with consumers
B. honesty in law when buying or selling goods to consumers
C. honesty in fact and also reasonable commercial standards of fair dealing
D. honesty in law and also reasonable commercial standards of fair dealing
E. honesty in fact and honesty in law when buying or selling goods to consumers
Which of the following occurs when a party threatens to file a frivolous civil lawsuit
unless another party gives consent to the terms of a contract?
A. Duress
B. Undue influence
C. Durable fraud
D. Criminal influence
E. Duress and undue influence, but not durable fraud
________________ are statutes or administrative rules serving to protect consumer
interests.
A. Civil rights laws
B. Consumer laws
C. Labor laws
D. Employment laws
E. Environmental laws
Marcy’s Mom. Marcy’s mother, Sue, did not want her to date until she was older. She
also wanted Marcy to attend law school. Just before Marcy started her freshman year in
college, Sue told Marcy that if Marcy would refrain from dating until she received her
law degree, then Sue would pay off all Marcy’s school loans and throw in an extra
$50,000. Marcy agrees and states, “Thanks, Mom, and by the way, when I graduate I’m
throwing you a big party for all you’ve done for me!” Sue smiles and hugs Marcy.
Marcy finished law school and asked for payment of her loans, the $50,000 in cash, and
for a car. Sue said, “No way – I know you went out on some dates during law school,
and I never agreed on the car.” Marcy said those were just study nights and that her
mother had never objected to Marcy’s frequent statements that she wanted a car upon
graduation. Sue asks about the party. Marcy tells her that she is nuts because there is no
way Marcy can afford a party since Sue has backed out of the deal. After some serious
negotiation Marcy and Sue settled their dispute with Sue agreeing to pay for half of
Marcy’s school loans and for all the expenses of Marcy’s upcoming wedding, and to
forget about Marcy throwing a party for her. Was the agreement between Marcy and
Sue that Sue would pay Marcy’s school loans and throw in an extra $50,000 if Marcy
refrained from dating until she received a law degree sufficiently supported by
consideration?
A. Yes, sufficient consideration existed to support the agreement.
B. No, because the agreement was illusory.
C. No, because refraining from dating and going to school is not of a monetary value
such as to constitute consideration.
D. No, because close relatives are involved.
E. No, because the consideration was inadequate.
What type of law is created by administrative agencies involving applications, licenses,
permits, available information, hearings, appeals, and decision-making?
A. Executive law
B. Congressional law
C. Administrative law
D. Enabling law
E. Rule law
A registrant may lose registration of a domain name for Internet usage by not using it
for more than ___________ days.
A. 30
B. 60
C. 90
D. 120
E. 180
A ______ estate is the most complete estate a person may have.
A. conditional estate
B. life estate
C. leasehold estate
D. future interest
E. fee simple absolute
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 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 Susie. 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
trial, Jane reported Greg’s actions in letting the air out of her tire to the police who said
that they would proceed with a criminal action against Greg. Jane’s action against Greg
for the tire is called a(n) ______.
A. counterclaim
B. cross-claim
C. third party claim
D. discovery claim
E. service claim
Which of the following was the result in Sandra Morris v. Walmart Stores Inc., the case
in the text in which the plaintiff sued the defendant after slipping in water allegedly
from a freezer?
A. That the plaintiff could not recover because she had no evidence that the defendant
had knowledge of the dangerous condition prior to her fall.
B. That the plaintiff could not recover because she could had no evidence disputing the
defendant’s claim that a customer spilled the liquid in which she fell.
C. That the plaintiff could recover on the basis of negligence per se.
D. That the plaintiff could rely on the theory of res ipsa loquitur.
E. That the defendant was entitled to a judgment in its favor because the plaintiff could
not establish that the defendant in general allowed dangerous conditions to exist in its
stores.
Painted House. Billy had a contract to paint Jan’s house for $800 including the duty to
clean up any debris. The contract between Billy and Jan did not contain an
anti-assignment clause. Billy, who was very busy, assigned the contract, including the
right to payment and the duty to paint, to Richard who was interested in making some
extra money and had experience painting. Billy did not tell Jan about the assignment
because he did not want any trouble nor did Richard mention the assignment to her. In
fact, Richard never met Jan because he painted while she was at work. After Richard
did a good job painting the house, Jan sent a check to Billy for $800. Billy needed the
money to pay some bills, so he spent it. He thought he would have money coming in
with which to pay Richard, but that did not happen. Richard asked Jan for $800 when it
was not forthcoming from Billy. Jan refused. Richard said that he was going to sue her
and Billy. Jan called Billy and told him that he had no right to assign the contract.
Another problem involved disposal of debris. Although Richard was a good, competent
painter, he forgot and left some old paint cans at Jan’s house. Jan demanded that Billy
come and properly dispose of the paint cans because they could not simply be put in the
trash. Billy refused and told her that she would have to get Richard to dispose of the
paint cans because that was his responsibility. Which of the following is true regarding
Jan’s statement to Richard that he had no right to delegate duties under the contract?
A. Jan is correct because a personal type of service was involved.
B. Jan is correct because the contract did not specifically give Richard the right to
assign the contract.
C. Jan is correct both because a personal type of service was involved and because the
contract did not specifically give Richard the right to assign the contract.
D. Jan is incorrect because the contract was not a personal service, and there was no
requirement that the contract specifically reference the right to assign rights and duties.
E. Jan is incorrect only because the contract and assignment were for an amount under
$1,000. Otherwise, Richard had no right to assign the contract.
In which of the following is a category into which intentional torts are divided?
A. Torts against persons, property, and animals.
B. Torts against property, economic interests, and roadways.
C. Torts against persons, economic interests, and strict liability.
D. Torts against persons, property, and economic interests.
E. None of these.
Which of the following is false under federal law regarding employer monitoring of
employee telephone calls?
A. Employers cannot listen to the private telephone conversations of employees.
B. Employers cannot disclose the content of private telephone conversations of
employees.
C. Employers may ban personal calls during working time.
D. To check for compliance, employers may monitor calls so long as they discontinue
listening to any conversation once they determine it is personal.
E. Employers must give employees access to a telephone and the ability to make
personal phone calls at some point during the workday, and these personal calls may not
be monitored.
Which of the following is the term used to describe the duty an agent has to follow the
lawful instruction and direction of the principal?
A. Duty of action
B. Duty of contract
C. Express duty of action
D. Duty of performance
E. Duty of obedience
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
What usually happens when a partner of a partnership dies?
A. The partnership automatically becomes a sole proprietorship
B. The partnership dissolves
C. The partnership becomes a corporation
D. The partnership stays status quo
E. The partnership turns into a limited liability partnership
Which of the following is false regarding a nonprofit corporation?
A. A nonprofit corporation may not earn profits.
B. Nonprofit corporations do not have shareholders.
C. An objective of a nonprofit corporation is not to earn profit.
D. Nonprofit corporations do not issue stock.
E. Churches and charitable organizations are examples of nonprofit corporations.
Hot Dress. Doreen writes a check for a dress to Hot Dresses, Inc., a small specialty
shop owned primarily by Betty. Betty was getting ready to go on an extended European
vacation and temporarily closed down the shop the day after the dress sale to Doreen.
When Betty returned, she had a number of other things to do and did not take Doreen’s
check and some other checks to the bank for three months. Betty was independently
wealthy and only ran the shop as a hobby, so she had not been in need of funds. When
Betty finally took Doreen’s check to the bank, Betty requested that her bank, ABC
Bank, deposit the check into her account. When ABC Bank, however, requested
payment from Doreen’s bank, XYZ Bank, the check was dishonored because of
insufficient funds in Doreen’s account. Although Betty did not particularly need the
funds, she did not like to feel as if she had been cheated; therefore, she demanded that
Doreen make the check good. Which of the following is the holder of the check?
A. Doreen
B. Hot Dresses, Inc.
C. Doreen’s bank
D. Betty’s bank
E. There is no holder in this instance
Executive agencies tend to focus on _____ regulation whereas independent agencies are
more often focused on _____ regulation.
A. social; economic
B. political; safety
C. social; political
D. safety; social
E. economic; safety
What type of agreement do the parties have when the goods are delivered to a buyer via
a common carrier, such as a trucking line?
A. A simple delivery contract
B. A common-carrier delivery contract
C. A goods-in-bailment contract
D. An average delivery contract
E. A delivery-carrier contract
Which of the following involves the active hiding of the truth about a material fact?
A. Concealment
B. Nondisclosure
C. Negligence
D. Concealment, nondisclosure, and negligence
E. Concealment and nondisclosure, but not negligence
There is only one correct answer for each ethical dilemma.
Under Article 2 of the UCC which of the following is defined as tangible things which
are movable at the time of identification to the contract for sale?
A. Articles
B. Merchandise
C. Goods
D. Attachments
E. Saleable things
Which of the following types of warranties may be automatically, as a matter of law,
injected into a contract?
A. Express
B. Implied
C. Acknowledged
D. Express, implied, and acknowledged
E. Express and implied, but not acknowledged
One way parties can indicate their desire to create an integrated contract is through the
use of a(n) ______ clause.
A. complete
B. merger
C. adhesion
D. bilateral
E. acknowledged
While ordinary decisions made by directors require a ______ vote, more important
decisions sometimes require a(n) _____ vote.
A. majority; two-third
B. majority; three-fourth
C. two-third; three fourth
D. one-third; majority
E. majority; unanimous
If the party that dishonors an instrument is a collecting bank, when must notice of the
dishonor be given to a secondarily liable party by the collecting bank?
A. Before midnight of the next day
B. Within 48 hours
C. Within 7 days
D. Within 10 days
E. Within 30 days
Which of the following represents a valid accord and satisfaction?
A. When a dispute over an unliquidated debt is settled and paid for less than the full
amount.
B. When a dispute over a liquidated debt is settled and paid for less than the full
amount.
C. When a dispute over an unliquidated debt is settled and paid for the full amount.
D. When a dispute over a liquidated debt is settled and paid for the full amount.
E. When a dispute over either an unliquidated or liquidated debt is settled and paid for
less than the full amount.