Which of the following is typically an appropriate venue in a lawsuit?
A. Only the trial court where the defendant resides.
B. Only the trial court where the plaintiff resides.
C. Only the location where the dispute occurred if the lawsuit focuses on a particular
incident.
D. Both the trial court where the defendant resides and the trial court where the plaintiff
resides.
E. The trial court where the defendant resides and also the location where the dispute
occurred if the lawsuit focuses on a particular incident.
“Mortuary Blues.” Barry and Elaine had a partnership running a mortuary. Elaine died,
and after her death Barry decided to shut down the mortuary. It was too depressing
without Elaine who was a very vivacious person. Elaine also did great makeup on the
deceased clients while Barry struggled with enhancing the appearance of the deceased.
Barry incurred expenses in closing the business affairs of the mortuary. He sought
compensation for that, but the executor of Elaine’s estate objected. The executor also
claimed that Barry had no rights in Elaine’s share of the partnership property and that
he, the executor, had the right to confiscate her share of the property and sell it at
auction. Barry, however, took the position that all interests of Elaine passed to him and
that he owed her estate nothing. The articles of partnership did not address death.
Which of the following is correct regarding the executor’s rights, if any, in Elaine’s
share of the property to sell at auction?
A. The executor was entitled to one-half of the partnership assets including half the
partnership property.
B. The executor was not entitled to partnership property because rights in specific
partnership property passed to Barry according to the right of survivorship.
C. The executor was entitled to one-half the partnership property only if Elaine was the
managing partner pursuant to the articles of partnership.
D. The executor was only entitled to ½ of the partnership property not in use at the
mortuary at the time of her death.
E. The executor was entitled to partnership property only if Elaine’s will stated that the
executor was so entitled.
In a[n] ______ debt, there is no dispute about the fact that money is owed and the
amount of money owed.
A. Actual
B. Acknowledged
C. Certain
D. Liquidated
E. Unliquidated
Under the Revised Model Business Corporation Act, how long do proxies last if they
are not withdrawn?
A. Nine months
B. Eleven months
C. One year
D. Sixteen months
E. Two years
Which of the following is false regarding duties of partners to one another?
A. They have a duty to be loyal to one another.
B. They have a fiduciary duty to one another.
C. They should not take any kind of action that will undermine the partnership.
D. They may engage in a competing business only if the competing business does not
result in significant losses to the partnership.
E. They must disclose any material facts affecting the business to one another.
“Bad Hair Day.” Molly started a new hair salon and leased space for the salon from
Peggy. Unfortunately, Molly’s styling caused some problems for customers. One
customer’s hair turned green from her bleaching process, and she burned another
customer with a curling iron. Not surprisingly, Molly had little business and was unable
to pay her lease payments as they came due. Peggy filed a lawsuit against Molly and
obtained a judgment against Molly for $7,000 in past due rent. Peggy asked for a
court-ordered judgment permitting the sheriff to seize and sell Molly’s equipment
including her hair-dryers, pedicure chair, nail polish, and other items, but the judge
refused her request. Peggy did, however, obtain an order allowing her to seize $3,000
held in Molly’s bank account with which to partially satisfy the debt. Peggy also
discovered that Molly had for her personal use a wide-screen television set worth
approximately $1,000 which was being held by Harold, a television repairer for the
costs of repair. Peggy asked him to turn over the television because her lien had priority,
but Harold refused.
Assuming no exemption applies, which of the following will most likely be the result of
the dispute between Harold and Peggy regarding the television set?
A. Harold will win the dispute because he has rights to a super-priority lien, and he will
be able to recover amounts to which he is due from the sale of the television before
Peggy is entitled to any funds.
B. Peggy will win the dispute because a judicial lien is always enforced before any
other type of lien, and she will be able to sell the television for amounts owed to her by
Molly without sharing any of the funds with Harold.
C. Harold and Peggy will be required to sell the television and split the proceeds 50-50.
D. Harold and Peggy will be required to sell the television and split the proceeds based
upon their percentage of debt.
E. Harold and Peggy will be required to sell the television with Harold, the holder of an
artisan’s lien, receiving only 25%, and Peggy receiving the rest.
For which of the following may a director generally be removed?
A. At the will of the president.
B. In the discretion of the shareholders upon majority vote.
C. In the discretion of the shareholders upon a two-thirds vote.
D. In the discretion of other directors upon a majority vote.
E. For cause.
In the U.S. at-will employment applied in all states until ____.
A. 1920
B. 1932
C. 1944
D. 1959
E. 1964
Which of the following is a type of intended beneficiary?
A. Creditor, donee, and incidental
B. Donee and creditor, but not incidental
C. Incidental and creditor, but not donee
D. Creditor but not donee or incidental
E. Donee but not creditor or incidental
“Prudence’s Imprudence.” Unfortunately, Prudence failed to act prudently. She had a
bad day after failing a business law test and breaking up with her boyfriend. While
drinking a mocha and talking on the cell phone with her best friend, she slammed into
the back of George’s car. Shortly thereafter she received notice of a lawsuit setting forth
George’s claims for personal injury and property damage. Prudence was very busy
studying for her next business law test and hanging out with her boyfriend with whom
she had reconciled. Also, she just did not feel like dealing with a pesky lawsuit. Several
months later, Alice, a new agent with the insurer called Prudence and told Prudence that
she had just heard something about a lawsuit from the plaintiff’s lawyer. Alice told
Prudence that although investigation would be difficult after so many months, she
would like to talk with Prudence because the trial was scheduled for the next week.
Prudence told Alice that she had no time to meet at the moment and that just before
court, she would meet with the lawyer the company appointed to represent her. Alice
told Prudence that the insurance company was going to deny coverage. Alice also told
Prudence that vehicle insurance did not typically provide for legal representation and
that, in any event, no lawyer would be provided. Finally, Alice told Prudence that her
insurance was cancelled immediately because she was a real jerk and failed to help, that
insurance would not pay for accidents that were the fault of Prudence anyway, and that
the insurer wanted nothing more to do with her.
On which of the following legal theories would the insurer likely attempt to deny
coverage?
A. Negligence
B. Recklessness
C. Breach of contract
D. Misrepresentation
E. Illegality
What did the U.S. Supreme Court rule in Buckeye Check Cashing Inc., v. Cardegnaet,
the case in the text involving whether the court or the arbitrator should determine
decide the issues of a case when illegality in relation to a contract is claimed?
A. That an arbitrator should address charges of illegality involving either an arbitration
provision or a contract as a whole.
B. That when an arbitration provision in a contract is not specifically challenged, an
arbitrator should address a charge of illegality to a contract as a whole.
C. That when an arbitration provision in a contract is not specifically challenged, a
court should address a charge of illegality to a contract as a whole.
D. That the court should address charges of illegality involving either an arbitration
provision or a contract as a whole.
E. That whether a court or an arbitrator should address charges of illegality involving
either an arbitration provision or a contract as a whole depends upon the first to file
rule.
A ______ is a contract between a creditor and a third party who agrees to pay another
person’s debt and is primarily liable for the debt whereas in a ______, a third party,
must pay a debt only after the debtor has defaulted.
A. Suretyship; guaranty
B. Guaranty; certified agreement
C. Certified agreement; suretyship
D. Certified agreement; guaranty
E. Guaranty; suretyship
While making a delivery, Barry, a delivery driver for XYZ Company, went through the
drive through at a local restaurant to get a cup of coffee and bumped into the car in front
of him doing some damage to the car’s bumper. Which of the following is true
regarding the liability of XYZ Company for the damage to the car?
A. As a matter of law, XYZ Company is not liable because Barry was acting on his own
behalf.
B. As a matter of law, XYZ Company is not liable because only property damage is
involved.
C. As a matter of law, XYZ Company is liable because a company is liable for any torts
committed by an employee during working hours.
D. Whether or not XYZ Company is liable depends on whether Barry’s acts are seen as
substantial departure from his work.
E. Whether or not XYZ Company is liable depends on how long Barry has worked for
the company.
Which of the following is false regarding cooperatives?
A. Unincorporated cooperatives are treated like partnerships.
B. In unincorporated cooperatives, members share joint liability for the cooperative’s
actions.
C. Members of incorporated cooperatives enjoy limited liability just as do the
shareholders of a corporation.
D. Cooperatives are usually formed as syndicates.
E. A cooperative is usually formed to market products.
Which of the following was the result on appeal in the Case Opener, the case in which a
majority shareholder voted to award a bonus to her son, the president of the company,
over the objection of minority shareholders?
A. That in awarding the bonus, the majority shareholder violated the duty of loyalty she
owed to the company.
B. That in awarding the bonus, the majority shareholder violated the duty of care she
owed to the company.
C. That in awarding the bonus, the majority shareholder violated the business judgment
rule.
D. That the majority shareholder was guilty of no violation in awarding the bonus.
E. That the majority shareholder’s vote to award the bonus would be upheld only if she
submitted additional proof that the bonus was deserved.
What do the letters “WPH” mean in reference to the “WPH Framework for Business
Ethics” discussed in the text?
A. Who, Purpose, and How
B. When, Plan, and How
C. Why, Procedure, and Hope
D. Where, Plan, and Hope
E. Where, Procedure, and How
Which of the following was the result in Mid-Atlantic Tennis Courts Inc., v. Citizens
Bank and Trust Company of Maryland, the case in the text in which an employee of the
plaintiff fraudulently deposited into his own account at the defending bank checks for
which the plaintiff was payee, and the plaintiff sued the defending bank for checks
endorsed by it “for deposit only” or with no endorsement?
A. The court ruled that because the defending bank was merely the depositary bank, it
held no responsibility to the plaintiff.
B. The court ruled that because employee fraud was involved, the defending bank held
no responsibility to the plaintiff.
C. The court ruled that because a fraud was involved, regardless of whether or not it
was on the part of plaintiff’s employee, the defending bank held no responsibility to the
plaintiff.
D. The court ruled that the defending bank was liable to the plaintiff for checks bearing
the endorsement “for deposit only,” but not for the checks with no endorsement because
as to those checks, the bank was entitled to assume that the depositor was entitled to
deposit the checks.
E. The court ruled that plaintiff was entitled to recover from the bank for all the checks.
Which of the following is provided to a plaintiff if the EEOC decides not to sue on
behalf of the plaintiff?
A. A termination of claim letter
B. A reinstatement letter
C. A referral letter
D. A right-to-sue letter
E. A delineation letter
Which of the following was the result at the U.S. Supreme Court level in Christy
Brzonkala v. Antonio Morrison, the case in the text involving the constitutionality of the
section of the Violence Against Women Act providing for a civil remedy?
A. That Congress lacked authority under the Commerce Clause to pass the section at
issue.
B. That because of its police powers, Congress had authority under the Commerce
Clause to pass the section at issue.
C. That because gender-motivated crimes were at issue, Congress had authority under
the Commerce Clause to pass the section at issue.
D. That because violent crime was involved, Congress had authority under the
Commerce Clause to pass the section at issue.
E. That because the petitioner established a link between the cost of crime against
women and national productivity, Congress had authority under the Commerce Clause
to pass the section at issue.
“Leaky Tub and Flaming Watercraft.” Charles finished college, got a good job, and
decided to sell some used toys and buy newer ones. A used hot tub with a leak in it and
a personal watercraft were at the top of the list. Charles offered to sell to Constance the
hot tub for $500. Constance was interested but not willing to pay $500. She said “I’ll
give you $400.” Charles said that he would think about it. Later, the same day, Charles
offered to sell Donna the hot tub for $500. Donna said “Would you consider $450?”
Charles said he would think on it. A few minutes later, Everett who had heard that
Charles wanted to sell the hot tub accepted Charles’ offer to sell for $500, and they
agreed that the transfer would be made the next day. A few minutes later, Constance
called saying that she accepted Charles’ offer to sell the hot tub for $500. A few minutes
after that, Donna called and told Charles that she accepted his offer to sell the hot tub
for $500. Charles told Constance and Donna that he had already sold it, and they are
angry, threatening to sue. Charles offered to sell the personal watercraft to Joan for
$800. She said that she would think it over and let him know the next day.
Unfortunately, through no fault of anyone, there was a fire at Charles’ home that night
and the personal watercraft burned. Joan called the next day and accepted before
Charles could tell her the watercraft burned. When she found out about the fire, Joan
told Charles that he had better come up with another watercraft, or she was going to
sue.
Which of the following is correct regarding the final status of the negotiations between
Charles and Constance?
A. Charles made an offer which was rejected by Constance when she made a
counteroffer for $400.
B. Charles had made an offer which was still outstanding even though Constance had
made a counteroffer for $400.
C. Charles had made an offer but it was revoked because Constance did not
immediately accept it.
D. Charles had made an offer, and it was still outstanding because he did not revoke it
before ending his initial conversation with Constance in which she offered $400.
E. No binding offer was ever made because an insufficient material term involving who
would move the hot tub was omitted.
“Past Due Rent.” Christen operated a temporary help business. Planning to open a
second office, she rented office space from Dusty. Unfortunately, her business was not
doing very well, and she decided not to open a second office. Christen was able to reach
an agreement with Doug whereby she transferred her entire interest in the leased
property to him. The agreement she had with Dusty prohibited her from transferring her
interest. Dusty, however, accepted rent payments from Doug because it was the easiest
course of action. Doug started a catering business in the space. It did well during the
holiday season, but Doug was unable to maintain bookings and became unable to pay
the rent. Dusty called Christen and asked her to pay the rental payments reminding her
that she breached the lease agreement in the first place when she transferred her
interests in the lease to Doug. Christen told Dusty to forget any payments from her and
hung up. Dusty wants to sue Christen for the lease payments and also for breaching the
lease agreement, and he also wants to sue Doug. Christen talks to Doug and he says that
he has no plans to pay Dusty because Dusty is a jerk. Doug also says that he does not
believe that he has any liability to Christen if she pays Dusty. Doug says that the
premises were acceptable but that Dusty is rude and money hungry, traits he finds
untenable.
Which of the following is true regarding the right of Dusty to collect rent payments
from Christen?
A. Christen owes no duty to pay any rent to Dusty because she validly transferred her
rights and obligations under the lease.
B. Christen only owes a duty to pay Dusty if Doug has been declared bankrupt by the
bankruptcy court.
C. Christen only owes a duty to pay Dusty if she agreed with Doug that she would do so
if he became unable to pay.
D. Christen only owes a duty to pay Dusty only if Doug committed waste on the
property.
E. Christen owes a duty to pay Dusty.
A[n] ______ lease automatically expires at the end of the specified term, and the
landlord is not required to give any notification of termination.
A. Allowable-term
B. Periodic-tenancy
C. Tenancy-at-will
D. Tenancy-at-sufferance
E. Definite-term
“Disgruntled Buyer.” Tom had lived in his home for five years without doing any
upkeep of any type. He was aware that the roof leaked, that he had defective piping, and
that the air conditioning did not work, among other problems. He sold the home to
Kathy. He did not tell her anything about the problems with the house. Shortly after
Kathy moved in, there was a thunderstorm resulting in water streaming down from the
ceiling. Within a few weeks of her moving in, pipes began to burst resulting in
significant water damage. The air conditioner also failed to work when she turned it on
for the first time. Kathy demanded that Tom refund her purchase price and take back the
house. Tom sent her a letter providing as follows:
Dear Kathy,
Caveat emptor. You have marketable title.
Regards, Tom
Kathy is furious and wants to sue.
What does the term “caveat emptor” mean?
A. Let the seller beware.
B. The buyer was negligent.
C. The buyer was unintelligent.
D. Title has passed.
E. Let the buyer beware.
Distribution ______ means distributing an estate by the individual.
A. Per behest
B. Per stirpes
C. Per capita
D. Per clear
E. Per ambulatory
In relation to partnerships between local and multinational companies, what is meant by
the term “keiretsu”?
A. A type of offshore partnership in which the strengths of outside firms is combined
with those of firms in developing countries.
B. A type of industrial district in which an attempt is made to encourage foreign
investment.
C. A group of businesses in which each individual business has a stake in the others.
D. A partnership with one local and one multinational company in an information and
communication technology project.
E. An agreement between a local and a multinational company to equally share in
profits and losses.
In a destination contract who bears the risk of loss while the goods are in transit?
A. The seller
B. The buyer
C. The loss is proportioned 50% to the buyer and 50% to the seller
D. The loss is proportioned 75% to the buyer and 25% to the seller
E. The loss is proportioned 25% to the buyer and 75% to the seller
A contract that combines a good with a service is a ______ sale.
A. Combined
B. Mixed
C. Service
D. Goods
E. Total
Under Article 2(A) of the UCC, a[n] ______ is a person who transfers the right to
possession and use of goods under a lease.
A. Buyer
B. Seller
C. Lessee
D. Lessor
E. Acquiror
A[n] ______ check is a check for which both the drawer and the drawee are the same
bank.
A. Certified
B. Agreed
C. Acknowledged
D. Cashier’s
E. Promise
Which of the following is true regarding the Revised Uniform Limited Partnership Act
(RULPA)?
A. Most states have adopted the 2001 version of the RULPA.
B. The RULPA was originally adopted in 1958.
C. The RULPA is static for the most part with few changes.
D. The RULPA has been replaced in most states with the Reviewed Uniform Limited
Partnership Act.
E. Louisiana is the only state not to have adopted any version of the RULPA.
Which of the following is true regarding tort litigation?
A. Tort litigation has been declining gradually since 1990.
B. Tort litigation has increased steadily since 1990.
C. Tort litigation has remained constant with no real change in numbers since 1990.
D. Tort litigation increased significantly in the 1990s but has declined in the last two
years.
E. Tort litigation decreased in the 1990’s but has increased steadily since the year 2000.
With which of the following does an organization website address end?
A. .gov
B. .edu
C. .net
D. .org
E. .com
“Teenage Driver.” Sally bought a new car, a yellow convertible. She also had a teenage
son at home, Bobby, but she did not plan to let him drive the car. She was annoyed
because Bobby had run her last car into the lake. Sally decided to change insurers
because she thought her previous insurance agent was annoyed over Bobby’s antics. She
went to ABC Insurance to apply. She got an application from Mark. Sally was a little
nervous because the application asked about other drivers in the home. It also asked if
there were any teenagers in the home. Sally answered “no” on both counts because she
had no plans to let Bobby drive. Sally got full coverage on the car, and the policy was
issued shortly after she completed the application. She renewed the policy without
revising any of the information she provided. Thirteen months later, Sally really needed
some gas in the car for the next day. Under the belief that he had sufficiently matured,
Sally sent Bobby to get some gas at the station just down the street. Unfortunately, a
drunk driver who had no insurance hit the car and totaled it. Sally immediately called
Mark. When Mark reviewed the police report, however, he told Sally that there would
be no coverage on the car because Bobby was driving. Sally said that was completely
unfair and that she would appeal to the jury. Sally told Mark that ABC issued the policy
and that she was relying on the incontestability clause. Mark told Sally that she was
wrong and that based on how disputes were handled under the policy, she would not
even see a jury.
Which of the following, if any, will ABC Insurance most likely be required to prove in
order to deny coverage based on the discrepancy between the application and Bobby’s
driving?
A. Only that Sally’s misrepresentation was material.
B. Only that the company’s knowledge of the misrepresentation would have resulted in
rejection of Sally’s application.
C. Both that Sally’s misrepresentation was material and that knowledge of the
misrepresentation would have resulted in the refusal to provide insurance.
D. That Sally’s misrepresentation was material; that knowledge of the misrepresentation
would have resulted in rejection of her application; and that the insurer’s loss would be
in an amount over $10,000.
E. There is no proof that ABC Insurance can provide to avoid coverage because, as a
matter of law, it is clear that coverage must be provided based on Bobby’s permissive
use of the vehicle.