Usually the issue of ripeness arises when one party claims that a case is moot.
Rewriting a contract to reflect what the parties had agreed on is referred to as
rescission.
Both a minor and the adult with whom the minor contracted may disaffirm a contract
based upon the minor’s lack of majority.
Pollution has not always been seen as a problem in the U.S.
An S corporation cannot have more than 75 shareholders.
Under the UCC, a buyer in the ordinary course of business can take goods free of any
security interest created by the seller of the goods unless the security interest is
perfected.
Hostile takeovers are takeovers to which the management of the target corporation
objects.
By federal law, if a tenant vacates prior to the expiration of the lease term, the landlord
has no duty to attempt to lease the property to another party.
The mirror-image rule has been adopted by the UCC.
Money orders are considered checks under the UCC.
Contracts related to an interest in land fall within the statute of frauds.
The European Union is an example of a customs union.
Title insurance protects a buyer from losses resulting from a defect in the title of
property.
A substitute check is a check that is substituted for a lost check.
Retirement funds in an IRA are not exempt in a Chapter 7 bankruptcy proceeding.
When a bank accepts a check, it is primarily liable for the amount of the check.
A suretyship and a guaranty are the same thing.
The Taft-Hartley Act was passed to further strengthen restrictions on employers
regarding unionization.
Under the U.S. Constitution, private property may only be taken by the government if
the government plans to develop the property itself for a public use such as for a school
or a road.
Today, married women have been removed from the category of those lacking
contractual capacity, although in a few states their capacity to enter into certain kinds of
contracts is still limited.
An endorsement to prohibit further endorsement prohibits further transfer.
If an instrument fails to qualify as a negotiable instrument, that means that the
instrument fails to be an enforceable contract.
If an accommodation party pays a note for an accommodated party, the accommodation
party has a right of action against the accommodated party to recover the money paid.
If an owner entrusts the possession of goods to a merchant who deals in goods of that
kind, the merchant has no authority to transfer any rights in the goods to a buyer in the
ordinary course of business.
Farmers are prohibited by antitrust laws from belonging to cooperatives that set prices.
Scienter is present when the party accused of making the fraudulent assertion believed
that the assertion was false or made the claim without any regard for whether it was true
or false.
The issue of whether a hostile work environment exists is only considered by the courts
in the area of harassment based upon gender.
If goods identified to a contract are destroyed through no fault of the parties before the
risk of loss passes to the buyer, the seller must obtain substitute goods.
The SEC may issue bounty payments to insider-trading whistle-blowers.
The average investor does not have to register securities when he or she wants to sell.
Sometimes the depositary is the same bank as the collecting bank.
Closely held corporations generally offer stock for sale to the general public.
The lack of a feasible way to make a safer product as a matter of law prevents liability
based upon an alleged defective product.
No partnership is created based upon an employer sharing profits with an employee as
payment for work.
In China, defamation can be a civil or criminal action.
The Restatement (Second) of the Law of Contracts is not actually the law itself.
A composition agreement is a contract between creditors and a debtor in which the
creditors agree to accept a lesser amount to satisfy the debts and discharge the rest of
the debt.
Once an instrument is negotiable, it remains negotiable.
In an insurance contract, the beneficiary is another name for the insured.
Most states do not recognize the implied covenant of good faith and fair dealing as an
exception to the employment-at-will doctrine.
Trudy signs a contract with ABC Book Club without reading it. The contract provides
that new books will be sent to her eBook reader every month unless she sends
notification rejecting the receipt of new books. Which of the following is true regarding
whether the contract is binding?
A. The contract is not binding because it illegally attempts to enforce acceptance by
silence.
B. The contract is binding but only if the parties have extensive previous dealings
whereby acceptance by silence became an accepted form of business.
C. The contract is not binding unless Trudy pays for at least one month’s supply of
books thereby indicating her intent to be bound.
D. The contract is not binding because transmittal using electronics is involved.
E. The contract is binding.
Which of the following was the result at the U.S. Supreme Court level in Circuit City v.
Saint Clair Adams, the case in the text involving whether arbitration applies in
employment contracts?
A. The Court ruled that the Federal Arbitration Act applies in employment contracts.
B. The Court ruled that neither the Federal Arbitration Act nor the common law of
arbitration applies in employment contracts.
C. The court ruled that the Federal Arbitration Act does not apply in employment
contracts but that state statutes involving arbitration would apply to employment
contracts.
D. The Court ruled that the Federal Arbitration Act does not apply in employment
contracts but that the common law of arbitration applies in employment contracts.
E. The Court ruled that whether the Federal Arbitration Act applies in employment
disputes depends on the type of employment dispute involved, and that if the dispute
involves claims of age discrimination, the Federal Arbitration Act does not apply.
Which of the following is true regarding the ability of individual states to collect sales
tax on Internet transactions?
A. Individual states may without restriction collect sales tax from merchants on items
purchased through the Internet by in-state residents.
B. Only with permission of Congress, granted on a state-by-state basis, may individual
states collect from merchants sales tax on items purchased through the Internet by
in-state residents.
C. States cannot collect sales tax on Internet sales from merchants nor may a state
require that its citizens report Internet purchases so that they may be taxed.
D. A state cannot collect sales tax from merchants unless sales to the state’s citizens
amount to more than 1 million in the aggregate.
E. A state can collect sales tax from a merchant only if the merchant has a store or
distribution center in the state.
“Squirt Gun Mishap.” Zora decided to purchase a large squirt gun for her son, Rambo,
to use while playing in the pool. The squirt gun was of the very elaborate variety and
had a number of different attachments for different sprays of water. The squirt gun came
with instructions for assembly and use, and provided warnings against various types of
misuse. The pamphlet that came with the squirt gun advised that the squirt gun should
be used only under adult supervision, that it must not be used by children under eleven,
and that nothing should be put into the squirt gun except water. Rambo had a party for
his tenth birthday at the pool. A number of children came. One of the children, Sam,
who was ten years old at that time, decided to load pebbles along with water into the
gun. He began shooting with the pebbles and hit Alice in the eye, requiring an
emergency room visit. Alice required some minor surgery, but sustained no permanent
injury. Alice’s parents complained that they looked at the squirt gun when they initially
arrived at the party but did not notice any warnings whatsoever affixed directly to the
product. Alice’s parents want to sue someone for something, but they do not particularly
want to sue Rambo’s mother.
Which of the following is true regarding a lawsuit brought by Alice’s parents against the
manufacturer for strict liability as the theory is applied under Section 402A of the
Restatement?
A. Because neither Alice nor her parents were in privity of contract with the seller, a
lawsuit based on strict liability in tort is barred.
B. Privity of contract is not necessary in order to sue based on strict liability, so the fact
that neither Alice nor her parents were in privity of contract with the seller would not
prevent a strict-liability based action.
C. Although privity of contract is not an issue, Alice’s parents would be unable to
prevail in a strict-liability action because Alice did not sustain permanent physical
injury.
D. Although privity of contract is not an issue, Alice’s parents would be unable to
prevail in an action against the manufacturer for strict liability because they did not read
the instruction booklet.
E. Alice’s parents would be prohibited from suing the manufacturer because of the
federal law prohibiting lawsuits for failure to warn in cases involving children.
Which of the following is the application of ethics to special problems and
opportunities experienced by those in business?
A. Situational ethics
B. Consequentialism
C. Business ethics
D. Sarbanes-Oxley principles
E. Business utilitarianism
Clients who feel that they have suffered damages as a result of a professional’s breach
of his or her duty of care can bring a negligence case against the professional referred to
as a _____________ case.
A. Malfeasance
B. Malpractice
C. Mistake
D. Physician liability
E. Physician guilty
Under which of the following situations does the tort of trespass to realty occur?
A. When a person intentionally enters the land of another without permission; causes an
object to be placed on the land of another without the landowner’s permission; stays on
the land of another when the owner tells him to depart; or refuses to remove something
he placed on the property that the owner of the property asked him remove.
B. When a person intentionally causes an object to be placed on the land of another
without the landowner’s permission; refuses to remove something he placed on the
property that the owner of the property asked him remove; or intentionally enters the
land of another without permission; but not when a person stays on the land of another
when the owner tells him to depart.
C. When a person intentionally enters the land of another without permission; causes an
object to be placed on the land of another without the landowner’s permission; or stays
on the land of another when the owner tells him to depart; but not when a person
refuses to remove something he placed on the property that the owner of the property
asked him remove.
D. When a person intentionally enters the land of another without permission; or stays
on the land of another when the owner tells him to depart; but not when a person causes
an object to be placed on the land of another without the landowner’s permission or
when a person refuses to remove something he placed on the property that the owner of
the property asked him remove.
E. A person does not commit trespass to realty unless it can be established that the
person himself or herself initially entered the land of another without permission.
Which of the following was the result in State of Wisconsin Investment Board v.
William Bartlett, the case in the text in which a shareholder sought an injunction
blocking the merger of the pharmaceutical company in which it owned shares, Medco,
with another pharmaceutical company?
A. That the injunction would be granted because the plaintiff’s allegations demonstrated
that the Medco board failed to inform itself of all material facts concerning the
proposed merger.
B. That because of disputed issues of material fact, the injunction would be temporarily
denied and the case scheduled for a hearing on whether the board adequately informed
themselves of all material information necessary to execute the merger agreement.
C. That the injunction would be granted because the plaintiff’s allegations established
that the board failed to act in good faith and in the honest belief that the merger was in
the best interests of the company.
D. That the injunction would be granted because the plaintiff’s allegations established
that the board willfully left themselves uninformed in order to serve their own
self-interest.
E. That the injunction would be denied because the plaintiff’s allegations of self-interest
did not meet the threshold necessary to rebut the presumption of the business judgment
rule.
“Tutoring Concerns.” Wally and Sally want to go into business together and plan on
offering a tutoring service to high school and college students. Wally proposes that they
share control of the business and split profits equally and not bother with a written
agreement. Sally, however, is concerned about being able to pay their debts since they
will have to rent tutoring space, and purchase computers and supplies. She is also
concerned about parents and students who may sue if their test scores do not improve.
She tells Wally that she just bought a new boat and car, and that she does not want her
assets to be in jeopardy. She tells Wally that they should form a corporation to shield
their personal assets. Wally, however, tells their personal assets are not in danger with
his proposal because they are a business and that, furthermore, forming a corporation
would even result in tax being imposed twice.
In regard to the quest of Wally and Sally to find the best form of business organization,
which of the following is true?
A. An S corporation provides the tax advantages of a partnership but does not avoid
personal liability for shareholders.
B. A limited liability company combines the tax advantages of a partnership with the
limited liability of a corporation.
C. A double sole proprietorship avoids corporate double taxation and also shields assets
of the owners from tort claims of third parties although creditors may reach the personal
assets of the owners.
D. An unincorporated cooperative combines the tax advantages of a partnership with
the limited liability of a corporation.
E. A joint venture is a type of undertaking involving joint stock which is treated as a
corporation in regard to double taxation and limited liability.
In which of the following do all tenants own equal shares of the property with the
property divided equally among surviving joint owners upon the death of one tenant?
A. Joint tenancy
B. True tenancy
C. Tenancy in common
D. Joined tenancy
E. Group tenancy
Which amendment provides the right to a speedy and public trial?
A. The Second Amendment.
B. The Third Amendment.
C. The Fourth Amendment.
D. The Fifth Amendment.
E. The Sixth Amendment.
Assume the Securities and Exchange Commission prosecutes someone for insider
trading. This prosecution is an example of _____ law.
A. Criminal
B. Procedural
C. Civil and natural
D. Natural
E. Positive
Which of the following is the term used when an advertisement is true but incomplete?
A. Inaccurate truth
B. Rule 8(a) violation
C. Rule 3 violation
D. Significant untruth
E. Half-truth
As a general rule, most states will not allow a minor to disaffirm contracts for which of
the following?
A. Life insurance, health insurance, and psychological counseling
B. Health insurance and psychological counseling, but not life insurance
C. Psychological counseling, but not health insurance or life insurance
D. Health insurance, but not life insurance or psychological counseling
E. Education loan contracts and psychological counseling, but not life insurance or
health insurance
Which of the following is not a reason for full dissolution of a partnership in Spain?
A. A partner fails to comply with provisions of the contract.
B. One partner dies.
C. A partner is declared insane and unfit to manage the business.
D. A partner is declared bankrupt.
E. A partner requests that the partnership be terminated.
Which of the following was the result in Ralph T. Leonard v. Jerry D. McMorris, the
case in the text involving whether under the Colorado Wage Claim Act, company
executives of a bankrupt company were liable to employees for unpaid wages and
benefits?
A. That company executives are liable for wages, but not for benefits, and only if the
company is bankrupt.
B. That company executives are liable for benefits, but not for wages, and only if the
company is bankrupt.
C. That only if the company is bankrupt, company executives are liable for wages and
benefits in an amount up to $5,000 per employee.
D. That only if the company is bankrupt, company executives are liable for wages and
benefits in an amount up to $50,000 per executive to be allocated equally among
employees.
E. That company executives are not individually liable for unpaid wages or benefits.
Distribution ______ means distributing an estate by class or representation.
A. Per behest
B. Per stirpes
C. Per capita
D. Per clear
E. Per ambulatory
Which of the following is false under Italian Property Law?
A. There is a difference between physical possession and a mental intention to possess.
B. For immovable property, the potential owner must possess the property for no less
than 20 years before full ownership can occur.
C. For movable property, the potential owner must possess the property for no less than
10 years before full ownership can occur.
D. Immovable property includes anything attached to the ground, such as trees,
buildings, homes, and arenas.
E. Registration is not required for any movable property.
Which of the following are directors who are also officers or employees of the
corporation?
A. Approved directors
B. Outside directors
C. Inside directors
D. Affiliated directors
E. Unaffiliated directors
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
“Presidential Profits.” Linda was president of a publicly traded tractor company, Tough
Tractors. Linda became aware that stock in her company would likely increase
significantly in value because her company had a contract to purchase the assets of
Rough Tractors. The boards of both companies wanted the information kept
confidential until the purchase was complete and a news release was made. Before the
news was made public, Linda immediately purchased a significant number of shares in
Tough Tractors. Linda also told her friend Frank about the contract to purchase assets
although she told him to keep it quiet because it had not been made public yet.
Nevertheless, unable to keep a secret, Frank told his brother, George. Frank and George
purchased a number of shares of stock in Tough Tractors prior to any public
announcement of the sale. After the public announcement was made and the purchase
of assets went through, Linda, George and Frank, all sold their shares in Tough Tractors
and made a nice profit.
In which of the following prohibited practices, if any, was Linda engaged by purchasing
the shares after she found out about the merger?
A. Insider trading
B. Outlaw trading
C. Presidential trading
D. Officer profiting
E. She did not engage in any prohibited practices because as president, she had the legal
right to profit from the upcoming sale.
Which of the following is involved when an agency is referred to as a “captured”
agency?
A. A belief that agency officials are unduly influenced by past ties to the industry
regulated by the agency.
B. A belief that agency officials are unduly influenced by their political party.
C. A belief that agency officials are unduly influenced by politicians in the state in
which the agency is located.
D. A belief that agency officials are unduly influenced by politicians in states most
affected by the regulations issued by the agency.
E. A belief that agency officials are unduly influenced by the desires of Congress.
Because their contracts are ____, minors have the right, until a reasonable time after
reaching the age of majority, to _____ or void their contracts.
A. Void; disaffirm
B. Void; affirm
C. Void; resist
D. Voidable; disaffirm
E. Voidable; affirm
Which of the following is true regarding whether a landlord and tenant may transfer
their interests in the property involved in the lease?
A. Unless prohibited by the lease agreement, both the landlord and the tenant may
transfer their respective interests in the property.
B. Unless prohibited by the lease agreement, the tenant may transfer his or her interest
in the property, but the interest of the landlord may not be transferred.
C. Unless prohibited by the lease agreement, the landlord may transfer his or her
interest in the property, but the interest of the tenant may not be transferred.
D. If the lease is silent on the matter, neither the landlord nor the tenant may transfer his
or her respective interests in the property.
E. Only if the lease is for a period of one year or more may both the landlord and the
tenant transfer their respective interests in the property unless prohibited by the lease
agreement.
Which title of the Civil Rights Act of 1964 deals with discrimination in employment?
A. Title VII
B. Title VI
C. Title V
D. Title IV
E. Title III
Assuming no exception applies, which of the following is true regarding the effect of a
debtor offering to pay less money than is owed as full payment on a debt for which
there is no dispute over the amount or existence of the debt, and the creditor agrees?
A. A liquidated debt is involved, and there is an accord and satisfaction.
B. A liquidated debt is involved, and there is an accord but no satisfaction.
C. A liquidated debt is involved, and there is neither a satisfaction nor an accord.
D. An unliquidated debt is involved, and there is an accord and satisfaction.
E. An unliquidated debt is involved, and there is an accord but not satisfaction.
Generally, a quorum of shareholders exists when shareholders holding more than
______ percent of the outstanding shares are present.
A. 80
B. 70
C. 60
D. 50
E. 25
An agent who distributes, represents, or sells goods on behalf of a foreign seller is
referred to as a[n] ______.
A. Export representative
B. Import representative
C. Foreign sales representative
D. Foreign exportation proponent
E. International sales and importation expert
Which of the following is a transfer or assignment by a debtor of title to property to a
trustee or an assignee who sells the property with the proceeds of the sale going to pay
creditors on a pro rata basis?
A. An assignment for the benefit of creditors
B. A composition agreement
C. A sale and transfer agreement
D. A pro rata agreement
E. A termination agreement
Regardless of the care used in cashing a check by the bank, a customer must report a
forgery within ________ from the date the bank statement showing the forgery is
available to the customer or the customer will lose the right to recover.
A. 90 Days
B. 120 Days
C. 180 Days
D. 9 Months
E. 1 Year
Which of the following is true under the UCC regarding the right of a seller or lessor to
presume acceptance?
A. Sellers and lessors do not have the right to presume acceptance.
B. The seller may presume acceptance if the buyer fails to reject goods within 48 hours,
but the lessor may not presume acceptance.
C. The lessor may presume acceptance if the lessee fails to reject goods within 48
hours, but the seller may not presume acceptance.
D. Both lessors and sellers may presume acceptance if buyers or lessees fail to reject
good within 48 hours.
E. Both lessors and sellers may presume acceptance if buyers or lessees fail to reject
good within a reasonable period of time.
At a[n] ______, attorneys examine a witness under oath with a court reporter present.
A. Deposition
B. Interrogatory
C. Inquiry
D. Pre-trial conference
E. Pre-trial mediation
“Horse Tracks.” Martha, Greg, and Prudence decided to form a corporation called
Horse Tracks to raise horses. They all began the corporate creation process by arranging
for necessary capital and financing. They raised capital from their friends by making
deals whereby their friends would purchase stock in the new corporation. After the
corporation was formed, a problem arose with a contract for feed that Martha, Greg,
and Prudence had entered into while organizing the corporation. Belinda, the seller of
the feed claimed that she had not been fully paid and threatened to sue the corporation.
The contract Martha, Greg, and Prudence had with Belinda did not reference liability
after the new corporation came into legal existence. Martha, Greg, and Prudence asked
for a novation, but were uncertain as to whether that would occur.
Which of the following is a term used to identify Martha, Greg, and Prudence in their
arranging for necessary capital and financing for the corporation?
A. Promoters
B. Subscribers
C. Novators
D. Subscriptioners
E. Acceptors
Set forth the stages of informal rule making.
Discuss what is needed in order to establish damages in defamation actions. Address
whether special proof is needed and, if so, under what circumstances.
Tonya and Maurice form a partnership to sell decorative rock for landscaping purposes.
They are having trouble getting customers as well as loans for inventory. Tonya falsely
tells ABC bank and customers that her parents are partners in the business. Her parents
find out but take no steps to provide correct information. Tonya and Maurice default on
a loan to ABC Bank, and the bank sues Tonya’s parents. Will the bank likely prevail,
and why or why not?
Susan rented office space for her dog grooming business. She put in a wall to divide a
room so that she would have needed storage space. When Wally, the landlord, saw what
she had done, he became very angry and told her that she was liable to him for
damages. Discuss any liability of Susan under the majority rule and also under the
minority rule.
Discuss whether an authorized agent can be held personally liable on a note if the agent
did not sign his or her own name. Further discuss the kind of personal liability an agent
has who simply signs his or her name to an instrument.
Before workers’ compensation laws, what was an injured employee’s only avenue of
recovery against an employer? Discuss whether you believe that ethically workers’
compensation should be retained or repealed.
Describe a franchise that is a distributorship and give an example of a distributorship.
Set forth the four major responsibilities of the SEC as set forth in the text.
Marge ordered for her soccer team T-shirts with the name of the school shown on the
front. The seller requested that Marge come in to inspect the first T-shirt before the
others were made. Marge refused because she was too busy and told the seller to go
ahead and print the shirts. On receipt of the shirts, Marge discovered that the school
name was misspelled. Does Marge have any rights against the seller, and why or why
not?
Discuss in detail the age of majority in Great Britain.
What is the Uniform Computer Information Transactions Act; and what is an important
way, discussed in the text, by which the act protects software vendors?
Discuss the steps that may be taken and the damages a seller and lessor may recover
when a buyer or lessee is in breach, and the goods have not yet been delivered.
Set forth the definition of sexual harassment stated by the EEOC and accepted by the
U.S. Supreme Court.
When is a strict-scrutiny standard used to examine laws, how is this standard applied,
and what presumption do courts apply, if any, in cases involving this standard?
What is an incontestability clause in a policy of insurance, and what is its effect?
Discuss whether you believe that ethically these clauses should be required of insurers.
List and discuss the three tests discussed in the text used for determining the viability of
the insanity defense.
What does the UCC provide regarding protection in movable collateral that is moved
from one state to another?
Why does there need to be a concept of legal assent?
Mary owns a small business of washing cars. Due to severe dry weather, the price of
water increased, she had to increase her prices, and many customers stopped coming.
Mary had several creditors. She told them that she does not want to sell her property
and that she would like to stay in business, but that she is considering bankruptcy unless
her debts can be reduced. By what type of voluntary agreement would creditors receive
only a percentage of the amount owed to them, what are the principles involving such
an agreement, and why would a creditor consider such an agreement?
List the elements necessary to establish bribery of a public official.