A reference to laws governing the conduct of states and international organizations and
their relationships with one another is ______.
A. Comparative law
B. International law
C. Joint law
D. Foreign subsidiary law
E. Affiliate law
Which of the following is also known as the Labor-Management Relations Act?
A. The Taft-Hartley Act
B. The National Labor Relations Board
C. The Fair Labor Standards Act
D. The Wagner Act
E. The Landrum-Griffin Act
Which of the following is reported in the Federal Reporter?
A. Statutes
B. Executive orders
C. Common law
D. Administrative laws
E. Local ordinances
If the law’s classification scheme is based on gender, the law will be subject to ___.
A. Rational basis scrutiny
B. Intermediate scrutiny
C. Severe scrutiny
D. Strict scrutiny
E. Legal scrutiny
“Repossession.” Tina sold used vehicles. She sold a used pick-up truck to Joan and a
used convertible to Barry. She properly obtained a security interest in both vehicles.
Both Joan and Barry defaulted on payments owed to Tina for the vehicles. Tina was
under the belief that her only option was to take possession of the collateral. Tina
decided that she would repossess Joan’s pick-up at Joan’s house. Therefore, Tina slipped
into the driveway one evening at midnight and started the engine. Joan immediately ran
out and confronted Tina. Tina shoved Joan away and drove off in the pick-up truck.
Tina was able to repossess Barry’s convertible in a public parking lot with no altercation
with him.
Which of the following is true regarding Tina’s repossession of the pick-up truck?
A. She breached the peace in recovering the collateral.
B. Tina did not breach the peace in recovering the collateral unless Joan can establish
the existence of actual injuries.
C. Tina did not breach the peace because she was entitled to repossess the vehicle and
any injury sustained by Joan was her own fault.
D. Tina breached the peace, but only because she did not provide Joan with prior
notification that she was coming to repossess the collateral.
E. Tina breached the peace, but only because she acted to repossess the collateral after
10:00 p.m. at night.
“Styling Shenanigans.” Candy, who operated a hair and nail salon called “Up Sweep,”
had a crush on Bruce, a stylist there who was one of her employees. He paid her no
attention. Finally, Candy told him that if he wanted to keep his job and get the new
professional blow dryer he requested, he needed to take her on a date and give her a
kiss. Bruce reluctantly did so. After the date, Candy proceeded to make suggestive
comments to Bruce in front of other employees and to request that he rub her shoulders.
When she passed Bruce’s station, she would caress him while he worked. Candy also
decided that Robert, another of her employees, was cute; and she showered him with
the same type of attention. Robert enjoyed the attention, but Bruce was offended and
filed a claim against Candy for sexual harassment. Bruce asked Robert to join in on the
claim. Robert said that Candy’s attention never personally bothered him, but that if
Bruce can collect, then he wants in on the action. Bruce told Robert that he is going to
see a psychologist to substantiate his claim, that such substantiation is necessary, and
that Robert should consider doing likewise. Robert tells him that he has no interest in
seeing a psychologist but that his case is as strong as Bruce’s. He says that while he
found Candy entertaining, he should be able to recover if Bruce recovers.
Which of the following is true regarding Robert’s claim of sexual harassment?
A. He will recover if Bruce is able to recover because their claims will be reviewed as a
group.
B. He will not be able to prevail because Candy did not require that he take any action
toward her in order to receive a work-related benefit or avoid a work-related detriment.
C. A recovery by Bruce does not establish that Robert should recover because Robert
would need to show that he subjectively found Candy’s conduct personally offensive.
D. Candy’s actions would be reviewed only on an objective basis, and what Robert
subjectively thought is irrelevant.
E. Robert will be able to recover only if he can establish that he did not benefit through
favors at work based upon Candy’s actions.
“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 at ABC, she started to make kites at home. She started selling kites to
friends. She also started to make inquiries regarding selling her kites to larger toy stores
in the area, and she began making a few sales to them. Her plan was to start small and
then leave ABC after she had increased sales. She did not work on her side project
while she was on the clock with ABC. Some of the directors learned about her kite sales
and accused her of wrongdoing. Wendy denied any wrongdoing and pointed out that
she did not work on her project while she was on the job with ABC.
What duty, if any, did Wendy violate?
A. She did not commit any violation.
B. She violated the duty of loyalty.
C. She violated the duty of care.
D. She violated the duty of understanding.
E. She violated the duty of profit maximization.
Which of the following allows an agent to conduct all business for the principal?
A. Special power of attorney
B. General power of attorney
C. Acknowledged power of attorney
D. Durable power of attorney
E. Equal power of attorney
As discussed in the case of Double AA Builders Ltd., v. Grand State Construction
L.L.C., which of the following may be used to necessitate that a subcontractor perform
according to the terms of its bid because the contractor has relied on the subcontractor’s
bid?
A. Consideration
B. Primary consideration
C. Promissory estoppel
D. Reality estoppel
E. Secondary consideration
Which of the following is true regarding whether a buyer and lessee may make a partial
acceptance?
A. Buyers and lessees may make partial acceptances at any time.
B. The buyer may make a partial acceptance when goods are nonconforming and the
seller has failed to cure the defects, but a lessee may not make a partial acceptance.
C. The lessee may make a partial acceptance when goods are nonconforming and the
lessor has failed to cure the defects, but a buyer may not make a partial acceptance.
D. The buyer or lessee may make a partial acceptance when goods are nonconforming
and the seller or lessor has failed to cure the defects.
E. Neither buyers nor lessees may make partial acceptances because either the whole
must be accepted or rejected.
Which of the following is defamation of a business product or service?
A. Disparagement.
B. Interference with a contract.
C. Conversion.
D. Derogation.
E. Abuse of title.
Which of the following is not expressly prohibited by the Fair Debt Collection Practices
Act?
A. Using obscene language toward a customer.
B. Contacting a debtor who has notified the collection agency that he or she wants no
contact with the agency.
C. Contacting the debtor after 8 p.m.
D. Contacting the debtor before 8 a.m.
E. Misrepresenting the collection agency as a lawyer or a police officer.
“Lake House.” Harry has two houses, a house on the lake and a house in town. Rebecca
wants to buy the house on the lake. Harry and Rebecca orally agree that Rebecca will
buy the house on the lake for $300,000. Harry hurriedly writes out a contract providing
that he would sell “his house” to Rebecca for $300,000. Harry signs the top of the
document. Rebecca does not sign at all. No merger clause is included in the contract.
Harry backs out of the contract, and Rebecca sues him. He tells the judge that the
statute of frauds is left unsatisfied because he did not sign the document at the end and
also because Rebecca did not sign at all. He also tells the judge that, at any rate, the
agreement referred to the house in town, not the house on the lake; and that under the
parol evidence rule, he had the right to identify the correct house.
Which of the following is true regarding Harry’s assertion that the statute of frauds is
left unsatisfied because he did not sign the document at the end?
A. Harry is correct.
B. Harry is incorrect because while the statute of frauds would require his signature on
the document, there is no requirement that the signature be at the end.
C. Harry is incorrect because the statute of frauds did not require his signature so long
as the selling price was referenced.
D. Harry is incorrect because the statute of frauds did not require his signature so long
as the type of subject matter involved was referenced.
E. Harry is incorrect because the statute of frauds did not require his signature so long
as the parties were clearly identified.
Which of the following are permitted to file under Chapter 11 reorganization?
A. Stockbrokers
B. Commodities brokers
C. Banks
D. Savings and loan companies
E. Corporate debtors
“Disputed Ring.” While working in the yard Tina found a beat up ring. Becca, an
eighteen-year-old teenager and neighbor, came over to visit and liked the ring. Tina
said, “You can have this old thing if you would like.” Becca replied, “I really like it –
Maybe it’s a real diamond!” Tina laughingly told her that there was a one in a billion
chance of that and that Tina was more likely to win the lottery. A few months later
Becca ran over to Tina’s house and told Tina that the ring was actually a diamond worth
thousands! Becca gave Tina the ring to examine. Tina put it in her pocket and told
Becca that she would never have given it to her if she had realized its value and that
possession was back where it had always belonged. Tina also told Becca that Becca
failed legally to accept the gift because neither party knew its true value and that
because Tina did not sign any document turning over title, it was impossible for legal
ownership to pass. Becca sues.
Which of the following describes the type of gift, if any, at issue?
A. A gift causa mortis
B. A gift inter vivos
C. A gift inter mortis
D. A gift causa vivos
E. There was no gift because Tina did not realize the ring’s value.
The Age Discrimination in Employment Act applies to private employers having
______ or more employees.
A. 50
B. 40
C. 30
D. 20
E. 15
“Banking Problems.” Constance is a loan officer at ABC Bank. Being somewhat
dishonest, Constance tells Henry, a customer of the bank, who is wealthy and rarely
checks the status of outstanding loans and balances that she is collecting money for a
local animal shelter. She asks him to sign a pledge that he will contribute $50 to the
animal shelter. In fact, through covering pertinent terms of the document, she had him
sign a promissory note made out to her for $5,000, which she later endorsed to Richard.
After leaving the bank, Henry proceeded to one of his businesses, a used car dealership.
Taylor comes in to purchase a used car. He and Henry agree that Taylor will purchase a
car for $3,000. Martha also comes in, and she and Henry agree that she will purchase a
used car for $4,000. Both Taylor and Martha make out promissory notes payable to
Henry. At the end of the day, Henry is looking through the notes and decides that
Taylor’s was mistakenly made out for $3,000 when it should have been $3,500. Henry
mistakenly, but honestly, believes that the deal was for $3,500. Therefore, he changes
the note to reflect that Taylor owes $3,500. Henry, on the other hand, simply does not
like Martha. He decides that $4,000 was not enough for the car. Accordingly, he
changes the note to $4,500.
Assuming that Henry admits the modification but it is not considered fraudulent, which
of the following is true regarding Taylor’s liability on the note?
A. Because of the alteration, Taylor is not liable for any amounts under the promissory
note.
B. Taylor’s obligation will be enforced only to the amount of $3,000 if payment is to be
made to Henry; but in the event the note is negotiated to another holder, Taylor is liable
for $3,500.
C. Taylor’s obligation will be enforced only to the amount of $3,000 if payment is to be
made to Henry; but in the event the note is negotiated to a holder in due course, Taylor
is liable for $3,500.
D. Unless Taylor has a written document from Henry to the effect that the agreement
was for $3,000 only, Taylor and Henry will be legally required to split the remainder
with Taylor being held responsible for $3,250.
E. Taylor is liable for $3,000 regardless of whether or not Henry has negotiated the note
to another party.
The U.S. Constitution allocates the power of the federal government among _____
branches of the government.
A. Two
B. Three
C. Four
D. Five
E. Six
Which of the following is false under the Federal Unemployment Tax Act?
A. It was passed in 1935 and created a state system to provide unemployment
compensation to qualified employees who lose their jobs.
B. Employers must pay taxes to the states which deposit the money into the federal
government’s Unemployment Insurance Fund.
C. Each state has an account from which it can access the money in the federal fund.
D. States have different minimum standards for qualifying for unemployment
compensation.
E. Most states do require employee contributions.
For which of the following does the Securities Exchange Act impose liability?
A. Fraudulent statements made to the SEC.
B. Fraudulent statements made to courts.
C. Fraudulent statements made to a client in connection with performing an audit.
D. Negligence in performing an audit or in the construction of a financial statement.
E. Fraud in performing an audit.
“Property Claims.” Bruce sells his home to Sally and her mother, Ruthy. The deed and
documents of ownership held by Sally and Ruthy are written such that Sally and Ruthy
may each sell or devise her interest in the property. Bruce provides Sally and Ruthy
with a general warranty deed. The deed and other documents of sale contain an
easement giving George a right to cut across the property in order to obtain access to an
adjoining lake. George had purchased the easement from Bruce a few years earlier.
After Sally and Ruthy moved in, they saw George cutting through the yard with his
fishing pole. They told him to get out. He told them about the easement, but Sally told
him that she was the new owner and that she was not accepting it. The next week Alice,
the next door neighbor, came over to visit and told Sally and Ruthy that she actually
owned a good bit of the yard that was conveyed to Sally in her deed from Bruce and
that she would like to sell it to Ruthy and Alice. Alice explained that some years prior to
Bruce’s ownership, she had purchased the property from a previous owner. It turns out
that Alice had actually recorded her interest, but it had been inadvertently missed when
the property was sold to Sally and Ruthy. Sally calls Bruce and tells him to straighten
out the problem with Alice. Bruce tells her that he is finished with the property and that
all problems now belong to her and Ruthy.
Who will likely win the dispute regarding whether George holds a valid easement?
A. George will likely win only if he told Sally and Ruthy about the easement before
their purchase.
B. George will likely win regardless of whether he told Sally and Ruthy about the
easement before their purchase.
C. George will likely win only if he can establish that he paid a fair price for the
easement.
D. George will likely win only if he told Sally and Ruthy about the easement before
their purchase, and if he can establish that he paid a fair price for the easement.
E. Ruthy and Sally will likely win because easements are terminated when property is
sold.
“Rough Start.” Debby, who just graduated from college, wanted to buy a new car. She,
however, did not have much of a credit history, and the bank would not give her a loan
unless she had a cosigner who agreed to be liable on the loan along with Debby.
Debby’s father cosigned with Debby on her loan at the bank. Debby also wanted to start
a real estate business. She needed funds with which to do so. Her boyfriend, George,
agreed in a signed writing with the bank that he would pay Debby’s start-up loan for the
real estate business if Debby did not do so. Unfortunately, Debby did not make any
money in the real estate business. She went bankrupt as did George who had been
acting as her receptionist.
What is the effect, if any, of Debby’s bankruptcy on the debt owed by her father?
A. Debby’s father is liable for the debt as he was when he initially signed the loan
agreement.
B. Debby’s father is released in the same manner that Debby is released.
C. Debby’s father is released only if the bank failed to take sufficient steps to sue Debby
and require payment of the loan before she filed for bankruptcy.
D. Debby’s father is released only if the bank failed to notify him of the bankruptcy in
sufficient time to allow him to make a proper claim against Debby in bankruptcy court.
E. Debby’s father is released only if Debby failed to give him sufficient notice of her
plans to file bankruptcy.
Which of the following is true regarding trade secret protection?
A. A trade secret is protected from unlawful appropriation by competitors as long as it
is kept secret and consists of elements not generally known in the trade.
B. A trade secret is protected from unlawful appropriation by competitors for ten years.
C. A trade secret is protected from unlawful appropriation by competitors for twenty
years.
D. A trade secret is protected from unlawful appropriation by competitors for thirty
years as long as it is kept secret and consists of elements not generally known in the
trade.
E. A trade secret is protected from unlawful appropriation by competitors for seventy
years.
Which of the following is true regarding how an accommodation party may sign an
instrument?
A. An accommodation party may sign an instrument only as a maker.
B. An accommodation party may sign an instrument only as a maker or a drawer.
C. An accommodation party may sign an instrument only as a maker or acceptor.
D. An accommodation party may sign an instrument only as an endorser or acceptor.
E. An accommodation party may sign an instrument as a maker, drawer, acceptor, or
endorser.
A financial statement is considered ____________ if no, or insubstantial, accounting
procedures were used in the compilation of the document.
A. Audited
B. Unaudited
C. Unqualified
D. Qualified
E. Generally accepted
In a merger, what happens to the property of the absorbed corporation?
A. It must be sold and distributed to the absorbed corporation’s shareholders.
B. It must be held in trust for at least one year to satisfy claims of creditors.
C. It must be held in trust for at least six months to satisfy claims of creditors.
D. It must be placed within the jurisdiction of the secretary of state for at least one year
in order to satisfy claims of creditors.
E. None of these.
Which of the following is a card containing microchips for storing data that can be used
to transfer funds?
A. Stored-value cards.
B. Smart cards.
C. Intel cards.
D. Transfer cards.
E. Electronic cards.
What is the system of “guanxi” used in China?
A. It refers to a system of relationship building woven together by social ties.
B. It refers to a system of strict ethical rules.
C. It refers to a prohibition against criticism of government rules and regulations.
D. It refers to a system by which business people attempt to avoid strict Chinese
regulations.
E. It refers to a system of smuggling.
Which of the following was the result in the Case Opener in which the plaintiffs
claimed that a mortgage foreclosure was wrongful because the foreclosure proceedings
did not reveal the true secured party who had purchased the plaintiffs’ loan from the
original lender?
A. That the foreclosure was wrongful because the proper secured party was not
identified.
B. That the foreclosure was wrongful because the loan should never have been
transferred in the first place.
C. That the defendant rightfully foreclosed because the plaintiffs were in default on the
loan and had no right to know the identity of the true secured party.
D. That the defendant rightfully foreclosed because the party who instituted foreclosure
proceedings had the right to service the loan.
E. That while the identity of the secured party should have been disclosed initially in
foreclosure documents, the plaintiffs were not prejudiced by that omission; and the
correct secured party could be substituted in the proceedings.
Which of the following was the result on appeal in McCann v. McCann, the case in the
text involving whether a corporation engaged in a ‘squeeze-out” as to a minority
shareholder?
A. That the business judgment rule does not apply in such situations and that so long as
there is any business reason for a transaction, a corporation cannot be found liable for a
‘squeeze-out” resulting in dismissal of the plaintiff’s claims.
B. That while the business judgment rule applied, the corporation submitted sufficient
evidence to establish legitimate reasons for all questioned transactions and that it,
therefore, could not be held liable to the complaining minority shareholder.
C. That a material question of fact as to whether the directors could be found to have
engaged in a ‘squeeze-out” of the beneficiary, causing him harm beyond every other
shareholder, and that the case would be remanded for further proceedings.
D. That because he owned over 20% of the stock, the failure to grant the complaining
minority shareholder a seat on the board in and of itself was sufficient under the facts
presented to establish that the corporation was guilty of behavior constituting an illegal
‘squeeze-out.”
E. That the failure to declare a dividend when sufficient assets existed with which to do
so in and of itself was sufficient under the facts presented to establish that the
corporation was guilty of behavior constituting an illegal ‘squeeze-out.”
Which of the following are the two primary kinds of performance?
A. Partial and significant
B. Partial and complete
C. Partial and substantial
D. Complete and substantial
E. Complete and significant
Which of the following is a federal executive agency?
A. The Food and Drug Administration
B. The Federal Trade Commission
C. The Securities and Exchange Commission
D. The Federal Communications Commission
E. The Equal Employment Opportunity Commission