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1) When a person dies without a valid will, and no heirs exist, the state will assume
ownership of the property.
2) When a franchise agreement contains a notice-and-cure provision, a franchisee's
breach of the duty of honesty and fidelity is not enough to allow the franchisor to
terminate the franchise.
3) Racketeering is a single crime-engaging in financial transactions to conceal the
identity, source, or destination of illegally gained funds.
4) The right to cure is the right of a party who tenders nonconforming performance to
correct his or her performance within the contract period.
5) Compared to business ethics, employee ethics is not an important issue.
6) Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 apply just
to corporate €insiders.€
7) A credit-card company must send monthly bills to cardholders twenty-one days
before the due date.
8) The duration of a franchise is a matter determined by federal or state statutes.
9) A pro rata clause requires that all carriers proportionately share in any loss.
10) Certain federal guidelines significantly constrain and often prohibit mergers that
could result from a purchase of assets.
11) The Consumer Product Safety Commission is the primary agency that issues
regulations on food labeling.
12) There are no defenses to liability under the Comprehensive Environmental
Response, Compensation, and Liability Act.
13) A court will dismiss a derivative suit if a majority of the directors or an independent
panel determines in good faith that the lawsuit is not in the best interests of the
corporation.
14) Gilbert promises to buy Hadley's iPod for $75. Hadley is
a.an offeree.
b.an offeror.
c.a promisee.
d.a promisor.
15) Daniel is a trustee for a federal bankruptcy court. Daniel's duties include
a.collecting the debtor's available estate.
b.establishing priority for the payment of unsecured creditors.
c.operating a debtor's business to obtain maximum profit for creditors.
d.submitting to an examination under oath by the creditors.
16) The U.S. Small Business Administration issues a new regulation that will have a
significant impact on a substantial number of small businesses. Under the Regulatory
Flexibility Act, the agency must do all of the following except
a.measure the cost that the rule will impose on small businesses.
b.consider less burdensome alternatives.
c.conduct a regulatory flexibility analysis.
d.adjust the rule to the satisfaction of the regulated businesses.
17) Pippin signs a lease on behalf of Quixotic Games, Inc., with Riverview Office
Suites. As part of the lease, Pippin signs a document titled "GUARANTY." If Quixotic
Games stops paying the rent, it is most likely that liability or loss for the unpaid amount
will rest with
a.no one.
b.Pippin and Quixotic Games.
c.Riverview Office Suites.
d.the other tenants on the same property.
18) Fact Pattern 20-B1
Ripe Produce, Inc., and Southeast Asian Bistro & Market enter into a contract for the
delivery of locally grown fruits and vegetables. The parties use a standard Ripe Produce
form that contains some of the terms the parties agree on but not others. Some of the
produce spoils before it can be cooked, served, and eaten, or sold. Southeast Asian
refuses to pay for the spoiled goods.
Refer to Fact Pattern 20-B1. Southeast Asian contends that the practice in the trade with
respect to payment for spoiled produce justifies its refusal to pay. Southeast Asian is
arguing that the court should take into account
a.the course of dealing.
b.the course of performance.
c.the usage of trade.
d.a rule of construction.
19) A Maryland state court can exercise jurisdiction over National Insurance
Corporation, an out-of-state company, if the firm has
a.minimum contacts with the state.
b.maximum contacts with the state.
c.medium contacts with the state.
d.no contacts with the state.
20) Diderot€s accountant is Esteban and his attorney is Figaro. All states protect, as
privileged information, Diderot€s communications with
a.Esteban and Figaro.
b.Esteban only.
c.Figaro only.
d.none of the choices.
21) Armando is a witness in a controversy involving the U.S. Bureau of Tobacco and
Firearms. Armando can be compelled to appear before an administrative law judge if he
is served with
a.an order for specific performance.
b.an executive order.
c.a subpoena.
d.a search warrant.
22) Fuel Connector Products, Inc., agrees to sell Go-Flo, Inc., a certain quantity of hose
couplings and fittings, but the contract does not specify a place of delivery. Go-Flo is
expected to pick up the goods. The place of delivery is
a.Fuel Connector's place of business.
b.Go-Flo's place of business.
c.the current location of the hose couplings and fittings.
d.the U.S. Postal Service office nearest to Go-Flo's place of business.
23) Medi-Insurance Company faxes ads to Nancy and other individual consumers
without the recipients’ permission. This is subject to
a.a cease-and-desist order by the Federal Trade Commission.
b.no sanctions.
c.possible fines by the Federal Communications Commission.
d.rescission on the order of the Federal Reserve Board.
24) Rebecca hires Samson to perform at Becca's Bistro, but he breaches the agreement
to accept a higher-paying job at Three Courses Dinner Theater. Rebecca files a suit
against him. The court will most likely
a.award damages to Rebecca.
b.cancel Samson and Three Courses' contract.
c.order Samson to perform the contract with Rebecca.
d.reform Rebecca and Samson's contract.
25) To prepare for a trial between SmartPhones, Inc., and TechApps Company,
TechApps' attorney places SmartPhones' chief executive officer (CEO) under oath. A
court official makes a record of the attorney's questions and the CEO's answers. This is
a.a cross-examination.
b.a deposition.
c.voir dire.
d.an interrogatory.
26) Mirena serves in a representative capacity for Netanya. Orla is injured through
Mirena's negligence. Netanya may be liable to Orla if Mirena's conduct occurred
a.due to a propensity Netanya was not and could not have been aware of.
b.during normal working hours.
c.in the course and scope of Mirena's employment.
d.outside the parties' employment relationship.
27) 12.Eloise is a director for Frozen Yogurt Company. Eloise is also a director for
Gelato Desserts, Inc. When the board of Frozen Yogurt considers entering into a
contract with Gelato Desserts, Eloise must
a.resign from one of the boards.
b.resign from both boards.
c.make a full disclosure of any conflict of interest.
d.use her best business judgment in voting on the proposed deal.
28) Energy Resources, Inc., operates an oil refinery near Forest River, which flows into
Grove Lake. Discharging oil from the refinery into the river can result in
a.penalties and damages.
b.penalties only.
c.damages only.
d.no penalties or damages.
29) After an accident with a vehicle licensed to Guardian Security Company, Heidi
signs a covenant not to sue Guardian Security for damages in a tort action if it pays for
the damage to her car. This covenant is
a.a bar to recovery only if Guardian Security pays.
b.an illusory contract.
c.barred by the preexisting duty rule.
d.barred by the doctrine of promissory estoppel.
30) Closed meetings of the National Security Agency and other federal administrative
agencies are permitted when
a.the subject of the meeting concerns accusing a person of a crime.
b.open meetings would frustrate the implementation of future actions.
c.the subject of the meeting involves matters relating to future litigation or rulemaking.
d.all of the choices.
31) Outdoor Outfitters Store contracts to buy fifty tents from Pitched Camp, Inc. Unless
the contract states otherwise, it is assumed to be
a.none of the choices.
b.a destination contract.
c.a shipment contract.
d.a delivery ex-ship.
32) In advertising circulars, Lo-Price Autos falsely accuses Hi-Value Vehicles, a
competitor, of selling stolen cars. Hi-Value's sales decrease. Lo-Price has most likely
committed
a.slander of quality.
b.slander of title.
c.wrongful interference with a business relationship.
d.none of the choices.
33) Religious rules generally are absolute with respect to the behavior of their
adherents.
34) Browse-wrap terms are often unenforceable.
35) A limited partnership cannot be dissolved by court decree.
36) A contract for a sale of real property or services is a contract for a sale of goods.
37) Contract law does not distinguish between promises that create only moral
obligations and promises that are legally binding.
38) Tech Performance, Inc., completes programming and other tech services for Uno IT
Products Corporation. When Uno's computer system crashes, it loses $500,000 worth of
business and pays $100,000 to have the system reprogrammed. Uno IT announces to
the media that the crash was due to Tech Performance's incompetence and files a
complaint in a federal court against the firm. What are Tech Performance's options in
response?
39) Metal Smelting & Foundry Inc.’s complex spews smoke and odors. The site
features its own rail system, and trucks enter and exit the complex night and day. Neal
and other residents of an adjacent neighborhood can feel the vibrations of the trains and
trucks, and suffer other effects from the operations. Neal and others file a suit against
Metal Smelting. Why might the court rule in favor of the defendant?
40) If a great degree of skill is required, this may indicate that a person is an employee
hired for a specialized job and not an independent contractor.
