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Through the insurance agreement, the insured party transfers his or her risk of loss of
property or life to the insurance company.
Corporations are not required to indicate in the name of the corporation that the
business is incorporated.
A tying arrangement occurs when the holder issues a license to use a patented object
only if the licensee agrees to buy some non-patented product from the holder.
Copyrights protect the expression of creative ideas.
The Revised Model Business Corporation Act forbids directors' meetings being held via
telephone.
In order for the statute of frauds to be satisfied, all parties to a contract must sign the
writing.
It is usually more difficult to prove disparate impact, as opposed to disparate treatment,
in regard to violations of Title VII.
If a contract's terms require that modification be in writing, oral modifications are
inadmissible and unenforceable.
Leave provided under the Family and Medical Leave Act must be paid leave.
Congress has the power to enact legislation, but the president can veto a law that
Congress passes.
The law assumes that the principal is only aware of information actually provided to the
principal by the agent.
Today, consolidations are very rare.
A teacher cannot be held liable for copyright infringement under the Fair Use Doctrine
so long as copies are used only for educational purposes.
The defendant responds to a complaint with an answer.
Assets that a debtor gains after filing a voluntary Chapter 7 bankruptcy petition are
generally not part of the bankruptcy estate unless they fall under an exemption.
In a Chapter 7 proceeding, a bankruptcy trustee may at times take over a debtor's
business.
When a partnership is dissolved based upon the withdrawal of a partner, that partner no
longer has actual authority to bind the partnership.
Administrative law consists of procedural, but not substantive, rules.
Under the Equal Credit Opportunity Act, creditors may require that a spouse cosign a
loan application regardless of the credit worthiness of the applicant.
If a landlord retains control of and access to property, the relationship is likely not a
landlord-tenant relationship because the tenant does not have an exclusive right to
possession of the property.
A conditional endorsement destroys negotiability.
Attachment is the same thing as a writ of execution.
A corporation must be dissolved if over 50% of the shareholders die.
List and explain the four different types of privacy torts.
The UCC requires that consideration be provided for the modification of sales and lease
contracts.
Most countries do not grant third-party rights to contracts.
Express warranties may be found in advertisements.
According to the UCC, a check is a special kind of draft.
There are a limited number of circumstances under which silence can be an acceptance.
The Federal Trade Commission has been eliminated.
Which of the following is true regarding whether an employer may be held liable under
Title VII for sexual harassment of an employee by a nonemployee?
A. An employer cannot be held liable in such cases because the employer has no control
over the nonemployee.
B. An employer is liable as a matter of law in such cases because an employer has an
absolute duty to provide a work environment that is free of harassment.
C. An employer may be held liable in such cases if the employer knows that a customer
repeatedly harasses an employee, yet the employer does nothing to remedy the
situation.
D. An employer may only be held liable in such cases if quid pro quo harassment is
involved.
E. An employer may only be held liable in such cases if disparate-impact harassment is
involved.
When the articles of partnership are silent, which of the following property rights do
partners have?
A. The right to participate in the management of the business, the right to possess
partnership property, and the right to an interest in the partnership.
B. The right to participate in the management of the business, but not the right to
possess partnership property or the right to an interest in the partnership.
C. The right to participate in the management of the business and the right to possess
partnership property, but not the right to an interest in the partnership.
D. The right to participate in the management of the business and the right to an interest
in the partnership, but not the right to possess partnership property.
E. The right to possess partnership property and the right to an interest in the
partnership; but not the right to participate in the management of the business because
while the right to participate in management may exist, it is not a property right.
Which of the following is true on appeal regarding the case of Mary W. Scott v.
Mid-Carolina Homes Inc., discussed in the "Case Nugget" in which the plaintiff sued to
recover damages after a salesperson allegedly mistakenly agreed to sell a mobile home
to her for a price that was too low, later told her the mobile home could not be sold
because of a bent frame, and then proceeded to sell it for a higher price to other buyers?
A. The court refused to find that the defendant had the right to rescind the contract
based on the alleged unilateral mistake.
B. The court refused to find that the defendant had the right to rescind the contract
because a mutual mistake was involved.
C. The court found that the defendant had the right to rescind the contract because, even
though the salesperson acted questionably, the plaintiff had not made a down payment.
D. The court ruled that the defendant had the right to rescind the contract because a
unilateral mistake was involved.
E. The court ruled that the defendant had the right to rescind the contract because a
mutual mistake was involved.
Which of the following is required of industries emitting pollutants covered by the 1990
Air Toxics Program?
A. That the industries phase in the use of pollution control equipment for the pollutants
that meets the maximum achievable control technology standard.
B. That the industries phase in the use of pollution control equipment for the pollutants
that meets the maximum affordable control standard.
C. That the industries phase in the use of pollution control equipment for the pollutants
that results in at least a 50% reduction in the pollutants each year.
D. That the industries phase in the use of pollution control equipment for the pollutants
that results in at least a 30% reduction in the pollutants each year.
E. That the industries phase in the use of pollution control equipment for the pollutants
that results in at least a 5% reduction in the pollutants each year.
"Third-Party Woes." Trudy owed Sam $40 for a book she purchased from him. Trudy
mowed Betty's yard for $40 and agreed with Betty that Betty would pay Sam for the
book. Sam is not aware of the assignment. Betty pays no one. Trudy also mowed Bob's
yard for $40. She agreed with Bob that Bob would give the payment to Sally
representing Trudy's birthday present to Sally. Bob later refuses to do so saying that
promises to give gifts are not enforceable. He then moves out of town. Trudy tells both
Sam and Sally that she is broke and that they will have to get any amounts due from
Betty and Bob respectively. Sally is very unhappy because she wanted to buy a new
pair of sandals with the money.
Which of the following would be the likely result if Sally sues Trudy and Bob for the
$40 promised to her for her birthday?
A. Sally will win as to both because they are equally liable to provide the funds.
B. Sally will win as to Bob but win as to Trudy only if she can prove that Bob is
insolvent and unable to pay.
C. Sally will win as to Bob but win as to Trudy only if she can prove that she cannot
find Bob in order to serve process on him.
D. Sally will lose as to both Trudy and Bob because promises to give gifts are
unenforceable in the absence of reliance.
E. Sally will lose as to Trudy because Trudy had no obligation to go through with the
gift, but she will win as to Bob.
When a[n] _______________ privilege exists, one cannot be sued for defamation for
any false statements made, regardless of intent or knowledge of the falsity of the claim.
A. Simple
B. Complex
C. Defamation
D. Absolute
E. Compounded
Which of the following is true regarding remedies available to the seller without court
action if the buyer fails to pay according to the terms of the agreement?
A. Sellers may cancel the contract, withhold delivery of goods, sell undelivered goods
to another buyer, and put a lien on property of the buyer.
B. Sellers may cancel the contract and withhold delivery of goods; but sellers may not
sell undelivered goods to another buyer nor may sellers may put a lien on property of
the buyer.
C. Sellers may cancel the contract; but sellers may not withhold delivery of goods, sell
undelivered goods to another buyer, or put a lien on property of the buyer.
D. Sellers may cancel the contract and put a lien on property of the buyer; but sellers
may not withhold delivery of goods or sell undelivered goods to another buyer.
E. Sellers may cancel the contract, withhold delivery of goods, and sell the goods to
another buyer; but sellers may not put a lien on any property of the buyer.
Which of the following is the study and practice of decisions about what is good, or
right?
A. Morals
B. Ethics
C. Consequences
D. Law
E. Business
"Nails." Mona and her friends Jack and Bobby, all U.S. citizens, want to open a nail
salon. They would all like to avoid personal liability for debts of the business and/or
wrongful acts of each other. They would also like to avoid taxation as much as possible.
Mona is in favor of a corporation and asks if there is any problem with that form of
business. Jack and Bobby say that they are concerned about double taxation with a
corporation and that they are in favor of a partnership, even if personal liability is a
concern. Mona said that she was concerned about the deductibility of losses if the
corporate form was chosen. She did some research and suggested an S corporation to
Jack and Bobby which she claimed would avoid the problem of double taxation.
Which of the following is true regarding the concerns of Jack and Bobby regarding
double taxation and Mona's suggestion regarding an S corporation?
A. Mona's suggestion will not solve the issue of double taxation because with both a
regular corporation and with an S corporation, the corporation is taxed on income and
shareholders are taxed again on dividends they receive.
B. Jack and Bobby are incorrect, and an S corporation is not needed for any double
taxation issue because with both a general corporation and an S corporation, tax effects
would be the same with the corporation being taxed on earnings and shareholders being
taxed again on dividends.
C. Mona is correct that S corporation shareholders report their income from the
corporation only once, as personal income.
D. Mona is correct in that double taxation may be avoided through the use of an S
corporation, but this can be negated through taxation of dividends at the higher
corporate rate regardless of the tax rate of the shareholder.
E. Mona is correct that double taxation may be avoided through the use of an S
corporation, but this may be negated by the fact that S corporations are taxed at a rate
double that of general corporations.
Which of the following is the applicable standard used in determining the liability of a
common carrier when harm befalls property that is the subject of a bailment placed in
the care of the carrier?
A. The carrier is liable only if ordinary or gross negligence can be proven.
B. The carrier is liable only if gross negligence can be proven.
C. The carrier is liable only if it can be proven that the carrier acted in a reckless
manner.
D. The carrier is generally strictly liable for harm to the bailed property.
E. Because of the doctrine of assumption of risk, the carrier is not liable for harm to the
bailed property.
Which of the following is true regarding the type of intangible item that may constitute
an asset?
A. Goodwill, a company name, and a company logo all constitute types of intangible
items that may constitute assets.
B. Goodwill and a company name are types of intangible items that may constitute
assets, but a company logo is not.
C. Goodwill is a type of intangible item that may constitute an asset, but a company
name and a company logo are not.
D. A company name is a type of intangible item that may constitute an asset, but
goodwill and a company logo are not.
E. A company name and a company logo are types of intangible items that may
constitute assets, but goodwill is not.
Which of the following was the result in PepsiCo Inc., v. The Coca-Cola Co., the case
in the text in which PepsiCo challenged Coca-Cola's loyalty policy by which
independent food distributors (IFDs) agreed to not handle soft drink products of
PepsiCo?
A. That the practice violated antitrust laws because it constituted an attempted
monopolization.
B. That the practice violated antitrust laws because it constituted a monopolization.
C. That PepsiCo failed to provide evidentiary support for the restrictions it urged in
regard to the relevant product market and that it failed to establish an antitrust claim.
D. That while PepsiCo provided sufficient evidentiary support for the restrictions it
urged in regard to the relevant product market, it failed to show that a sufficient number
of customers in that market preferred IFDs over other methods of distribution.
E. That because PepsiCo had itself engaged in anticompetitive conduct, it was estopped
from asserting claims against Coca-Cola.
Which of the following types of securities represent ownership in a corporation?
A. Debt
B. Equity
C. Finance
D. Formal
E. Certified
Under the UCC a delay in delivery or nondelivery, in whole or in part, is not a breach in
circumstances in which performance has been made ______ because a contingency has
occurred that was not contemplated when the parties reached the agreement.
A. Unreasonable
B. Unprofitable
C. Less profitable
D. Impracticable
E. More difficult
Which of the following is true regarding states that have adopted the reasonably
foreseeable users test for accountant liability to third-parties?
A. All states have adopted it.
B. Three-quarters of the states have adopted it.
C. Half the states have adopted it.
D. Very few states have adopted it.
E. All 50 states have rejected it although it is the proposed rule under the Restatement
(Third) of Torts.
"Union Avoidance." Penny owned and operated a large book store with 50 employees.
She was aware of union organization attempts. She prohibited any discussion of the
union and the distribution of literature at any time, including during employee breaks
and lunches in the employee break room. She told employees that she would refuse to
grant a raise to any employee who supported the union. Penny was extremely unhappy
when the union obtained enough support for an election. At that point, she promised
employees that she would give a $1,000 bonus to any employee who voted against the
union. Surprisingly to Penny, employees who voted overwhelmingly supported the
union. On the other hand, employees who voted failed to constitute all employees of the
book store. A number of employees were absent on the day of the election and did not
vote. Penny stated that it was her understanding that the union would not be certified as
the bargaining representative of the employees because fewer than 50% of the total
number of the store employees voted for the union. Penny further stated that, in any
event, she would not deal with the union under any circumstances.
Which of the following is true regarding Penny's statement that if employees would
refuse to elect the union, she would give each employee a $1,000 bonus, but that she
would grant no raises to union supporters?
A. She could legally promise benefits to employees if they did not elect the union, but
she could not threaten reprisals against employees who supported the union.
B. She could legally threaten reprisals against employees who supported the union, but
she could not legally promise benefits to employees who did not support the union.
C. She could not legally threaten employees who supported the union nor grant benefits
to employees who opposed the union.
D. She could legally threaten employees who supported the union and she could legally
grant benefits to employees who opposed the union.
E. Only so long as the amount at issue was no more than $1,000 per employee could
she legally grant benefits to employees who opposed the union, but she could not
legally retaliate against any employee for support of the union.
Which of the following is defined by the UCC as a change, without consent, that
nullifies the obligation of a party to the instrument?
A. An alteration.
B. A defacement.
C. A material addition.
D. A transformation.
E. A reformation.
For a number of years which of the following has been the primary agency responsible
for the passage and enforcement of federal regulations protecting the environment?
A. The Pollution Control Agency
B. The Environmental Protection Agency
C. The Discharge Avoidance Agency
D. The Reduce Pollutants Agency
E. The Pollution Reduction Agency
A person who believes that they should not cheat on a drug test because if everyone did
so, the drug test would be meaningless is applying a[n] ______.
A. Ethics of care
B. Virtual analysis
C. Cost-benefit analysis
D. Fundamentalist approach
E. Categorical imperative
Which of the following are laws holding that people in peril who receive voluntary aid
from others cannot hold those offering aid liable for negligence?
A. Good Samaritan statutes.
B. Aid to others statutes.
C. Rescue statutes.
D. Freedom statutes.
E. All clear statutes.
An individual would purchase ______ insurance to protect his or her business from tort
liability to third parties.
A. Tort
B. Property
C. Litigation
D. Group
E. Liability
If a partnership does not notify third parties of a dissolution, a partner can still have
______ authority to bind the partnership.
A. Actual
B. Supposed
C. Implied
D. True
E. No
Which of the following is true regarding the adequacy of consideration?
A. Courts generally consider the adequacy of consideration in determining whether to
enforce a contract.
B. Courts consider the adequacy of consideration only if something is sold for less than
90% of its market value.
C. Courts consider the adequacy of consideration only if something is sold for less than
80% of its market value.
D. Courts consider the adequacy of consideration only if something is sold for less than
70% of its market value.
E. Courts seldom consider the adequacy of consideration but will do so if fraud is
involved.
"Puppy Woes." Sam promised to sell Linda a Welsh Corgi puppy for $700 but backed
out of the deal. Linda sued Sam in state court for breach of contract and asked for a jury
to hear the case. During jury selection, one juror, Ann, said that she did not think she
could be fair to Linda because Linda did not appear to be a dog lover. Linda's lawyer
asked that Ann not hear the case on the basis that she could not be fair, and the judge
excused Ann. Linda also decided that another juror, Sandy, looked at her in a grumpy
manner so, without a reason given, Linda's lawyer asked the judge to excuse that juror
from serving. The judge did so. After the jury was chosen, Linda's lawyer made a
statement to the jury as did Sam's lawyer. Linda's lawyer then called to the witness
stand Brenda, a friend of Linda, who heard the discussion held between Linda and Sam
regarding the purchase of the puppy. Brenda testified under questioning by Linda's
lawyer that she heard Linda say that she would pay $700 for the puppy and that she also
heard Sam say that he would sell the dog for that amount. Unfortunately for Linda,
Brenda also testified in response to questioning by Sam's lawyer that Sam distinctly told
Linda that he would only sell the puppy to her if Linda came with cash for the puppy
within seven days. Linda did not show up with the money for ten days and Sam had
already sold the dog to someone else. The judge ruled in favor of Sam.
The statements made to the jury by the lawyers immediately after the jury was chosen
are referred to as ______.
A. Direct statements
B. Closing selection statements
C. Jury statements
D. Influential statements
E. Opening statements
When parties include a[n] ______ clause in their contract, the parties are attempting to
limit their ability to assign their rights under the contract.
A. Antiobligation
B. Antiassignment
C. Anticontract
D. Severability
E. Integration
What is considered a public water supply system under the Safe Drinking Water Act?
A. A water supply system that has at least 15 service connections or serves 25 or more
persons.
B. A water supply system that has at least 30 service connections or serves 10 or more
persons.
C. A water supply system that has at least 35 service connections and serves 30 or more
persons.
D. A water supply system that has at least 10 service connections or serves 50 or more
persons.
E. A water supply system that has at least 25 service connections or serves 55 or more
persons.
Carl, without Eddie's knowledge, impersonates Eddie and thereby convinces Connie,
who has never seen Eddie, to write a check to Eddie for upcoming yard work. Carl then
forges Eddie's name and deposits the check into his, Carl's, account. Which of the
following is true regarding whether Connie will be liable for the amount of the check?
A. Under the forgery rule, Connie will be held liable.
B. Under the transferor rule, Connie will be held liable.
C. Under the payee rule, Connie will be held liable.
D. Under the imposter rule, Connie will be held liable.
E. Under the fictitious payee rule, Connie will not be held liable.
Which of the following is false regarding nondischargeable debts under a Chapter 7
bankruptcy filing?
A. Nondischargeable debts include claims of willful or malicious conduct by the debtor
that caused injury to another person or property.
B. Nondischargeable debts include specific student loans, unless payment of the loans
imposes undue hardship on the debtor.
C. Nondischargeable debts include debts not discharged in previous bankruptcies.
D. Nondischargeable debts include judgments against a debtor for claims resulting from
the debtor's drinking and driving.
E. Nondischargeable debts include claims for back taxes or government fines within
four years of filing for bankruptcy.
"Run Around." Millie issues a promissory note to Bob. Bob endorses the note and
transfers it to Anne. Anne endorses the note and transfers it to Henry. Henry presents
the note to Millie for payment. When Henry presents the note to Millie, she asks him
for reasonable identification. He did not have any identification with him and told her
that she had no right to dishonor the instrument. Millie continued to insist, so finally, on
the same day, Bob obtained clear identification and presented it to her. Nevertheless,
even with proper identification, Millie refused to pay the note, claiming that she lacked
the funds with which to do so. After properly providing notification of dishonor to both
Anne and Bob, Henry requested that Anne pay the note, but she told him that he would
have to get his money from Bob. Henry has been trying to call Bob for 35 days, but
Bob did not return his telephone calls. Henry is exasperated; and within 40 days of
when Millie refuses payment, he notifies Millie, Bob, and Anne that the promissory
note has been dishonored by Millie and that he is asserting liability on the note against
all of them. Millie calls him up and says that she never dishonored the note, she simply
lacks the funds with which to immediately pay and thinks that he should seek recovery
elsewhere.
Which of the following is the likely result if Henry sues Anne, Bob, and Millie?
A. The judge is likely to rule that Henry can recover from Anne, Bob, or Millie; but in
the event Anne pays Henry, she can recover from Bob or Millie; and in the event that
Bob pays Henry, he can recover from Millie.
B. The judge is likely to rule that Henry's only option of recovery is against Millie.
C. The judge is likely to rule that Henry's only option of recovery is against Anne
because she provided the note to him, but that Anne can recover from either Bob or
Millie and that if Bob pays Anne, he can recover from Millie.
D. The judge is likely to rule that Henry can recover against Bob and that Bob may
recover against Millie, but Henry cannot recover directly from Anne because she is too
far removed from the maker.
E. The judge is likely to rule that Henry's only option for recovery is against Bob who
may then recover against Millie.
Through which of the following do corporations distribute their income to
shareholders?
A. Allocations
B. Grants
C. Dividends
D. Provisions
E. Allowances
"Puppy Woes." Sam promised to sell Linda a Welsh Corgi puppy for $700 but backed
out of the deal. Linda sued Sam in state court for breach of contract and asked for a jury
to hear the case. During jury selection, one juror, Ann, said that she did not think she
could be fair to Linda because Linda did not appear to be a dog lover. Linda's lawyer
asked that Ann not hear the case on the basis that she could not be fair, and the judge
excused Ann. Linda also decided that another juror, Sandy, looked at her in a grumpy
manner so, without a reason given, Linda's lawyer asked the judge to excuse that juror
from serving. The judge did so. After the jury was chosen, Linda's lawyer made a
statement to the jury as did Sam's lawyer. Linda's lawyer then called to the witness
stand Brenda, a friend of Linda, who heard the discussion held between Linda and Sam
regarding the purchase of the puppy. Brenda testified under questioning by Linda's
lawyer that she heard Linda say that she would pay $700 for the puppy and that she also
heard Sam say that he would sell the dog for that amount. Unfortunately for Linda,
Brenda also testified in response to questioning by Sam's lawyer that Sam distinctly told
Linda that he would only sell the puppy to her if Linda came with cash for the puppy
within seven days. Linda did not show up with the money for ten days and Sam had
already sold the dog to someone else. The judge ruled in favor of Sam.
The challenge to the juror who seemed grumpy is referred to as a[n] _______.
A. Peremptory challenge
B. Challenge for cause
C. Stipulated challenge
D. Fairness challenge
E. Approved challenge
Which of the following is a mark identifying the producers as belonging to a larger
group, such as a trade union?
A. Product trademark
B. Collective mark
C. Certification mark
D. Service mark
E. Physical activity mark
Which of the following is needed in order to satisfy the UCC's requirement for a written
document?
A. The contract or memorandum needs only to state the price of the goods.
B. The contract or memorandum needs only to state the quality of the goods.
C. The contract or memorandum needs only to state the quantity to be sold.
D. The contract or memorandum needs to state the price of the goods and the quality of
the goods, but not the quantity to be sold.
E. The contract or memorandum needs to state the price of the goods, the quality of the
goods, and also the quantity to be sold.
Which of the following was the result in Life Partners Inc., v. Miller, the case in the text
involving the validity of a state law in Virginia requiring that viatical insurance
companies pay certain amounts to terminally-ill policyholders who sell their policies?
A. That the law constituted a valid exercise of the state's police powers and was
therefore constitutional.
B. That the law discriminated against interstate commerce and was therefore
unconstitutional.
C. That the law violated the commerce clause and was therefore unconstitutional.
D. That the law violated the equal protection clause and was therefore unconstitutional.
E. That the law violated the due process clause and was therefore unconstitutional.
Which of the following is generally true if no means of communicating an acceptance is
specified in an offer?
A. The acceptance must be in writing.
B. The acceptance must be made verbally either by telephone or in person.
C. No valid contract may be entered into because the offer must specify a means by
which to accept.
D. Acceptance may be made by any reasonable means.
E. Acceptance must be made orally or in writing within twenty-four hours.
Set forth and describe the three property rights held by partners including rights, if any,
upon death.
List the two implied corporate powers set forth in the text.
Set forth the Howey three-part test for determining if a security exists.
Set forth the three circumstances listed in the text under which a corporation acquiring
assets assumes the liabilities of the selling corporation.
Discuss the defenses available to an accountant charged with negligence.
What steps must a target corporation take once an aggressor has presented its offer to
the target corporation's shareholders?
Set forth the reasons by the Federal Arbitration Act under which an arbitrator's award
may be set aside.
Frank is building a home for Debby that is to be completed by December 31st. Frank
tells Debby that he needs to hire additional workers in order to have the home done by
that time and that she needs to pay him an extra $10,000. Debby says that she will pay.
Frank finishes the home and asks for his $10,000. Debby refuses to pay. What is the
likely result if Frank sues? Discuss whether you believe the result is ethical and
equitable.
Set forth the elements of an offer under the common law.
Discuss the options available to a lessee when a landlord fails to make needed repairs
along with any applicable requirements if an option is exercised.
As set forth in the text, what does the Financial Services Modernization Act, also
known as the Gramm-Leach Bliley Act provide regarding financial institutions and
customer privacy?
List and define the two basic types of power of attorney. Also discuss in what way a
durable power of attorney is different from a power of attorney not so designated.
Set forth the order the Uniform Partnership Act establishes for the distribution of
liquidated assets when a partnership is dissolved and has debt.
As set forth in the text, describe a cooperative including typical rules of governance and
the penalty if a member violates the rules.
What are the requirements for a holder to turn to secondarily liable parties?
Describe the two approaches taken by courts in negligent failure-to-warn cases
involving drugs and cosmetics causing adverse reactions in regard to consumers who
would not be considered sophisticated users.
Set forth the three main situations in which the courts find objective impossibility.
