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A[n] ______ is a judicial order authorizing a local law officer to seize and sell any of
the debtor's nonexempt real or personal property within the court's geographic
jurisdiction.
A. Writ of execution
B. Order of attachment
C. Decree of seizure
D. Decree of sale
E. Writ of discharge
A secured interest is a[n] ______ lien.
A. Consensual
B. Statutory
C. Judgment
D. Approved
E. Evaluated
Which of the following is a federal law whose purpose is to protect and improve the
quality of the air through the National Ambient Air Quality Standards, mobile-source
performance standards, and new-source performance standards?
A. The National Air Quality Act
B. The Federal Air Quality Act
C. The Clean Air Act
D. The Ambient Quality Air Act
E. The Uniform Air Quality Standards
Which of the following occurs when a testator relied on false statements when he or she
made a will?
A. Undue influence
B. Fraud
C. Negligence
D. Recklessness
E. Misinformation
A[n] _______________ mark identifies a significant characteristic of the product but is
not the common name of the product.
A. Suggestive
B. Arbitrary or fanciful
C. Generic
D. Descriptive
E. Common
Which of the following is false regarding the rights of an assignee and assignor?
A. Assignees essentially fill in for the assignor as the legal recipient of contractual
duties.
B. Assignees acquire the same contractual duties as the assignor had.
C. Assignees are offered more protection than assignors.
D. The obligor may raise any of the same defenses for nonperformance against the
assignee that he would have been able to raise against the assignor.
E. When an assignor transfers rights to an assignee, the assignor legally gives up all
rights he or she previously had to collect on the contract.
A[n] ______ occurs when a former minor does not specifically state that he affirms a
contract entered into as a minor but takes some action that is consistent with intent to
ratify the contract.
A. Implied ratification
B. Express ratification
C. Express novation
D. Implied novation
E. Continued safety
"Trick or Treat?" Penny has significant credit card debt following her diving trip with
her boyfriend, Sam, to the Grand Cayman islands. Some of the diving trips cost more
than she expected, and these extra expenses were unforeseen. Penny recently took a
business law class and thought that she might be able to find a way out of her troubles.
She owed $2,000 to Credit Card Company A and $3,000 to Credit Card Company B.
She also owed $2,000 to the local dive shop for diving equipment she purchased for the
trip. Penny is in negotiations with the dive shop over that amount because she had a
problem with a mask fogging on the trip and had to replace it while on the trip at a
charge of $100. While the mask issue did not significantly interfere with the trip, Penny
thought that she should get at least some deduction on the overall bill. Penny called
Credit Card Company A and told them that she was a poor student and could not afford
to pay the entire $3,000 she owed. The representative of Credit Card Company A, who
was working her last day, told Penny just to pay $50, and that would be considered
payment in full. The representative sent Penny an e-mail to that effect. Penny was very
pleased and went right out and quit her job at the campus bookstore because she did not
really like dealing with student problems and thought that with the reduction from
Credit Card Company A, she would have no problem in regard to having extra money.
Although her parents supplied her with a large monthly allowance, Penny had the job at
the bookstore so that she would have more money for clothes shopping and fun
activities. In relation to Credit Card Company B, Penny called up and once again pled
her case as a poor student. She talked Credit Card Company B into taking a used car
with a blown-up engine worth around $1,000 in exchange for the debt. Penny did not lie
about the value of the car, but she made it sound as good as possible. Transfer details
regarding the car were worked out through e-mail. Finally, Penny sent the dive shop a
check for $1,000 marked "paid in full." Much to her surprise and pleasure, the dive
shop did indeed cash the check. Penny, however, was distraught to find that within 30
days, Credit Card Company A sent her a bill for $1,950; Credit Card Company B sent
her a bill for $3,000; and from the dive shop she received a check for $1,000 along with
a bill for $2,000. Faced with all these claims, Penny decided to look for work. She
ended up two weeks later with a job selling beauty products that she liked much better
than the bookstore job. It did not require dealing with pesky students. Assume all credit
card company representatives had authority to make the agreements at issue.
What is Credit Card Company A's best argument in relation to enforcing Penny's
obligations?
A. That the agreement constituted a bad deal for the card company.
B. That only past consideration was involved.
C. That student debt is not dischargeable as a matter of law and that the card company
owed no obligation to Penny regardless of statements made.
D. That its promise was clearly an illusory promise that Penny should have known
could not be enforced once the card company discovered the true circumstances.
E. That no consideration existed for its promise, and that based on Penny's
circumstances and behavior, enforcing the debt would not result in injustice to Penny.
Which amendment protects freedom of religion?
A. First
B. Second
C. Fourth
D. Sixth
E. Eighth
Over which of the following does the federal court system have exclusive jurisdiction?
A. Admiralty cases only
B. Bankruptcy cases only
C. Federal copyright cases only
D. Admiralty, bankruptcy, and federal copyright cases
E. The federal court system has no exclusive jurisdiction
Which of the following prohibits fraud associated with the purchase or sale of all
securities?
A. Section 32(c)
B. Section 15(b)
C. Rule 10(b)-5
D. Rule 5(c)-2
E. Rule 2(c)-5
Which of the following is true regarding the ability of persons suffering from a mental
illness to enter into a binding contract?
A. Persons suffering from a mental illness have no capacity to enter into a binding
contract.
B. Persons suffering from a mental illness have full capacity to enter into a binding
contract so long as they do not present a danger to themselves or others.
C. Persons suffering from a mental illness have full capacity to enter into a binding
contract so long as they inform the other party that they are in treatment.
D. Persons suffering from a mental illness may have full, limited, or no legal capacity to
enter into a binding contract depending on the nature and extent of their mental
deficiency.
E. Persons who suffer from a mental illness always have full capacity to enter into a
binding contract.
Which of the following is also referred to as ethical fundamentalism?
A. Ethical relativism
B. Absolutism
C. Social responsibility
D. Ethical absolutism
E. Absolute theory
Which of the following, if any, is a moratorium for almost all creditor litigation against
a debtor in a Chapter 7 bankruptcy?
A. A stop order
B. An automatic stay
C. A semi-automatic dismissal
D. A semi-discharge
E. There is no such moratorium in a Chapter 7 proceeding
"Missing Earrings." Elaine ordered a pair of diamond stud earrings from BIG Jewelry
Store. She paid in advance because the sales clerk told her that the store would have to
pay the supplier before the earrings could be shipped. Later that day, Elaine found out
from a friend of hers that BIG Jewelry Store was in financial trouble. Elaine was
concerned and immediately called her bank and issued a stop-payment order on the
check she wrote to BIG Jewelry Store. She gave the bank all of the correct information
orally needed to stop-payment on the check. The bank, however, did not stop payment
on the check. The check was paid, BIG Jewelry Store went bankrupt, and Elaine was
unable to get either her money or the earrings from BIG Jewelry Store. Elaine asked the
bank manager of the bank for a refund of the check amount. The bank manager told her
that the stop-payment order was not good because it was oral and that in any event,
under the UCC, banks are not liable for failing to stop payment on a check. The bank
manager further told Elaine that the bank was a holder in due course, and that Elaine is
liable for any damages sustained by BIG Jewelry Store or the bank based upon her
attempt to stop payment on the check.
Which of the following is true regarding the bank manager's statement that the bank
could not incur any liability for damages for the failure to stop payment on a check?
A. The manager is correct.
B. The manager is incorrect, and the bank will incur liability or damages suffered by a
customer due to the failure to stop payment when a stop-payment order was properly
provided.
C. The manager is incorrect, and the bank will incur liability or damages suffered by a
customer due to the failure to stop payment when a stop-payment order was properly
provided, but only up to $500.
D. The manager is incorrect, and the bank will incur liability or damages suffered by a
customer due to the failure to stop payment when a stop-payment order was properly
provided, but only up to $1,000.
E. The manager is incorrect, and the bank will incur liability or damages suffered by a
customer due to the failure to stop payment when a stop-payment order was properly
provided, but only up to $1,500.
Which of the following is true regarding administrative agencies?
A. There are state administrative agencies, but no federal administrative agencies.
B. There are federal administrative agencies, but no state administrative agencies.
C. There are state and federal administrative agencies, but no local administrative
agencies.
D. Administrative agencies exist only at the local county level.
E. Administrative agencies exist at the federal, state, and local level.
Which of the following was the result at the trial court level in the Case Opener
involving Apple's claim that Samsung copied Apple's design of the iPhone and iPad and
Samsung's claim that Apple infringed Samsung's patents?
A. That Apple infringed Samsung's patents but that Samsung did not infringe Apple's
patents.
B. That Samsung infringed Apple's patents but that Apple did not infringe Samsung's
patents.
C. That Samsung did not infringe Apple's patents and that Apple did not infringe
Samsung's patents.
D. That Apple infringed Samsung's patents, that Samsung infringed Apple's patents, and
that damages would be awarded to both parties.
E. That Samsung infringed Apple's patents, that Apple infringed Samsung's patents, but
that no damages would be awarded to either party because they were both guilty of
misconduct.
Sam offers Betty his bicycle for $75. Which of the following is an example of an
illusory promise on the part of Betty?
A. "I'll take it."
B. "I'll take it if I decide to do so."
C. "I won't pay $75, but I will pay $50."
D. "I'll take it if you will let me try it out first and the brakes work well."
E. "I'll take it if you will buy new tires."
Which of the following damages are intended to reimburse a plaintiff for his or her
losses?
A. Compensatory.
B. Punitives.
C. Nominal.
D. Exemplary.
E. Quantum.
"Portraits." Belinda, a famous portrait painter, agreed to paint Harry's portrait for
$4,000. She also agreed to paint the portraits of Michelle's two Corgi dogs, Baby and
Bree. Michelle agreed to pay Belinda $10,000 for the two Corgi 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, assigned the right to receive the money for the dog portraits and
delegated the duty to paint the dog portraits to her assistant, Fred. He eagerly accepted
and painted the portraits. She also assigned to Fred, as payment for amounts she owed
him for various duties, the right to receive payment from Harry. The contract Belinda
had with Michelle did not address assignment in any way. The contract Belinda had
with Harry, however, prohibited the right to assign payment for services received. Harry
fancied himself as an experienced business person and insisted on that provision
because he had read somewhere that such a clause was a good idea. 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 assignments to
Fred. Michelle was furious and refused to pick up the portrait or pay anyone. Harry
likewise refused to pay for his portrait.
What would be the most likely result if Fred sues Michelle for the $10,000 payment?
A. Fred will win only if Fred did a good job on the portraits.
B. Fred will lose because Michelle's only obligation is to pay Belinda.
C. Fred will win unless Michelle can prove that Fred knew that she did not want him to
do the portraits.
D. Fred will lose unless Fred can prove that he was unaware that Michelle did not want
him to do the portraits.
E. Michelle will win because the portrait was personal in nature and could not be
assigned.
Which of the following occurs when a party gives a loan at an interest rate exceeding
the legal maximum?
A. No enforceable legal violation
B. Interest prohibition
C. Principle reduction
D. Usury
E. Plenary
If a trademark is unregistered, which of the following may the holder recover when an
infringer uses the mark to pass off goods as being those of the mark owner?
A. Only damages.
B. Only an injunction prohibiting the infringer from using the mark.
C. An additional amount of damages computed as a multiplier of 5 times the original
damages.
D. Damages, an injunction prohibiting the infringer from using the mark, and additional
damages based on a multiplier of 5 times the original damages.
E. Damages and an injunction prohibiting the infringer from using the mark.
Which of the following was the result on appeal in the Case Opener involving the
alleged breach of an oral contract based on the plaintiff lawyer loaning a corporate
client funds and the client later reneging on a promise, made in gratitude, to give the
lawyer 3 percent of the company's stock?
A. That the promise to transfer the stock flowed from the loan transaction and was
enforceable by the plaintiff.
B. That the promise was unenforceable because lawyers may not loan clients money.
C. That the promise was enforceable only if the total the plaintiff received in funds did
not violate state usury laws involving maximum interest rates.
D. That the promise was not enforceable because it was a gift.
E. That the promise was enforceable as a gift.
Documents used as payments to facilitate commercial transactions were originally
generically called ____.
A. Negotiable instruments
B. Commercial paper
C. Promissory paper
D. Commerce notes
E. Payment notes
Which of the following types of insurance protects a garage owner from liability to
persons who are injured by the operation of the garage?
A. Transportation liability
B. Employee liability
C. Garage liability
D. Vehicle liability
E. Peril
_________ torts occur when the defendant takes an action intending certain
consequences will result or knowing certain consequences are likely to result.
A. Criminal
B. Liability
C. Intentional
D. Negligent
E. Strict-liability
Which of the following was the result on appeal in Spirit Airlines Inc., v. Northwest
Airlines Inc., the case in the text in which Spirit Airlines claimed that Northwest
Airlines lowered its prices on certain flights once Spirit Airlines began to compete?
A. The court ruled that there was sufficient evidence from which a jury could determine
that the defendant was guilty of predatory pricing thereby entitling the plaintiff to
prevail.
B. The court ruled that although there was sufficient evidence from which a jury could
determine that the defendant was guilty of predatory pricing, the defendant was entitled
to a summary judgment ruling in its favor because the plaintiff failed to establish that it
could have succeeded in the market absent the defendant's predatory pricing.
C. That there was insufficient evidence from which to determine that the defendant was
guilty of predatory pricing and that summary judgment was therefore properly granted
to it.
D. That although there was insufficient evidence from which to determine that the
defendant was guilty of predatory pricing, a jury trial was mandated because the
defendant was guilty of attempted monopolization.
E. That although there was insufficient evidence from which to determine that the
defendant was guilty of predatory pricing, a jury trial was mandated because the
defendant was guilty of inequitable conduct.
"Miracle Pill." Katie advertised that she had developed a pill for women that would
result in weight loss, wrinkle loss, and improved vitality; and that 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 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.
If a cease-and-desist order issued by the Federal Trade Commission and upheld by the
courts is violated, which of the following is the fine that the Federal Trade Commission
may impose?
A. $3,000 per violation
B. $5,000 per violation
C. $10,000 per violation
D. $50,000 per violation
E. $100,000 per violation
Which of the following refers to the potential for loss in an insurance agreement?
A. Risk
B. Loss
C. Premium
D. Distribution
E. Outlay
Which of the following is a bank, other than a payor bank, handling the check at any
point from the time the check is deposited to the time it reaches the payor bank?
A. Depositary.
B. Acknowledging.
C. Collecting.
D. Intermediary.
E. Transferring.
When a company prices one product below normal cost until competitors are eliminated
and then sharply increases the price, the company is practicing ______ pricing.
A. Competitive
B. Predatory
C. Secondary
D. Horizontal
E. Primary
Which of the following is true regarding negotiable instruments as compared to
contracts?
A. Similar to contracts, negotiable instruments require consideration.
B. Similar to contracts, negotiable instruments require offer and acceptance; but unlike
contracts, negotiable instruments do not require consideration.
C. A negotiable instrument is a form of a contract and may be referred to as such.
D. Negotiable instruments lack the requirements of contracts involving consideration,
offer, and acceptance.
E. Negotiable instruments require the same elements as contracts in regard to
consideration, offer and acceptance.
Which of the following is property that the true owner has unknowingly or accidentally
dropped or left somewhere?
A. Lost
B. Mislaid
C. Discarded
D. Abandoned
E. Terminated
Which of the following occurs when a party threatens to file a criminal lawsuit unless
consent is given to the terms of a contract?
A. Duress
B. Undue influence
C. Durable fraud
D. Criminal influence
E. Coercion
In a bilateral contract, the consideration for each promise is ____.
A. A completed act
B. The beginning of action in acceptance, even if it is not complete
C. An acknowledgement
D. A return promise
E. An agreement
