Business Law - "209" Chapter 1, Chapter 2, Business Law - Chapter 3, Business Law - Chapter 5, Business Law - Chapter 6, Business Law - Chapter 7, Business Law - Chapter 10, Business Law - Chapter 11, Business Law - Chapter 12, Business Law...

Which of the following represents a unilateral offer?

A. "I will pay you $50 if you mow my lawn"

In 1992, the North Carolina Supreme Court ruled in a case entitled Goodman v. Wenco Foods, Inc., that when a substance in food causes injury to a consumer of the food, it is not a bar to recovery against the seller that the substance was natural to the food. If, in a 2008 case involving a consumer's injury caused by a fish bone in a bowl of fish chowder, the court followed the decision in Goodman v. Wenco Foods, Inc., the court's action in the second case is an example of:

A. 'Stare decisis'

An S Corporation cannot have more than ____ shareholders.

A. 100

In a comparative negligence state, if the plaintiff in a negligence lawsuit is found to be 30 percent negligent, the plaintiff would recover:

A. 70 percent of the damages

Which of the following contracts is most likely to be declared unconscionable?

A. A consumer sales contract which charges 300 times the fair market value of the goods

In the case of Worldwide Insurance v. Klopp, the Supreme Court of Delaware found that:

A. A contract provision requiring arbitration and then permitting appeal by either party was void as unconscionable

Which of the following transactions would be considered by the IRS to be a taxable sale of assets? Changing the form of business from:

A. A corporation to an LLC

Pamela is planning to sell her home decorating store to her daughter. Pamela has:

A. A greater duty to reveal problems in the business because her daughter assumes she will be honest

Which of the following is a rightful dissociation?

A. A partner in a partnership at will serves notice that he intends to withdraw.

Which of the following statements regarding a negligence case is correct?

A. A plaintiff must show that the defendant's act was both the factual cause of her injury as well as a foreseeable injury

A corporate charter is filed with:

A. A state's Secretary of State office.

The Tavern's secret recipe for its pizza sauce would be considered:

A. A trade secret, and an employment noncompete clause would be enforceable to protect it

Debbie is a partner with Adam and Marty. She sells her interest in the partnership to Craig. Which statement below is the most accurate?

A. Adam and Marty must approve the sale for Craig to become a full partner.

The United States has taken a position that legal issues are best resolved by lawsuits involving parties with conflicting interests presenting their strongest possible case to a neutral fact-finder. Because of this, the legal system in the United States is considered:

A. An adversary system

Which of the following exculpatory clauses will most likely be enforceable?

A. An exculpatory clause that relieves a riding stable of negligence

The biggest change in litigation in the last decade is:

A. An explosive rise of electronic discovery

Which of the following elements is not necessary to apply the doctrine of 'res ipsa loquitur'?

A. An ultrahazardous activity is involved

Zena enters into a contract with Steely Company to purchase a washer and dryer. She doesn't understand the financing terms, but signed the agreement anyway because she needs the appliances. The financing terms are very unfavorable to Zena, and she is unable to make all of her payments when they are due. Steely sues. The court would:

A. Be exercising judicial restraint if it requires Zena to pay as she promised, even if they agreement was unfair and unwise

In a civil case, the plaintiff must prove the case:

A. By a preponderance of the evidence

A salesclerk at Sparkle Jewelry Store observed a customer remove a ring from a display case and put it in his pocket. In most states, Sparkle:

A. Can reasonably detain the customer for suspicion of shoplifting

Sea Rovers, Inc. contracted to sell 1,000 pounds of shrimp to the Seafood Shack with delivery on June 1. On May 1 Sea Rovers advised the Seafood Shack that it would not be able to deliver the shrimp. The Seafood Shack:

A. Can sue Sea Rovers immediately for breach of contract

The officers of a corporation are:

A. Chosen by the board of directors

Sam, the seller, enters into a contract agreement to buy Betty Lou's house on the condition that he is able to secure financing at or below 6% per year. This is a:

A. Condition precedent

Dana hires Paris to paint a portrait of her poodle, "Mack." The painting is to be done to Dana's personal satisfaction. Upon completion of the painting, which of the following will be true?

A. Dana may refuse to accept the painting if she really does not like it

The elements in a defamation case are:

A. Defamatory Statement; Falseness; Communication; and Injury

Betty's BBQ orally contracts with Denny's Design House for 10,000 match-books at the price of 10 cents per matchbook. The matchbooks are to be em-bossed with a logo to be designed by Denny's Design promoting Betty's BBQ. Price, payment terms, delivery terms are agreed upon between the parties. Denny's Design creates the logo, gets Betty's BBQ's approval of the design and begins applying the logo on the matchbook covers. Denny's Design has almost finished the order when Betty's BBQ calls to say it has decided to make the eatery a smoke-free restaurant and cancels the order. Denny's Design sues, but Betty's BBQ states that the agreement is unenforceable under the statute of frauds. Who wins?

A. Denny's Design House wins. This situation falls under an exception to the statute of frauds

After the plaintiff has presented her case, the defendant may be granted a:

A. Directed verdict

Ending a partnership involves which of the following three steps?

A. Dissolution, winding up, and termination

Don runs a construction company. He hires people to work on his projects and tells them they are all "independent contractors." Legally, they are not independent contractors since Don tells the workers when to come to work, how long to work, what days to work, what they are to do each day, and so forth. At the end of each week, Don pays his workers in cash rather than with a check. Also, he does not withhold any state, federal or local withholding tax (since he claims the workers are independent contractors). Which statement is correct?

A. Don has committed both unethical and illegal conduct

Fundamental rights include all EXCEPT the right to:

A. Drive

The test of "foreseeability" is generally used to determine the existence of which element of a negligence case?

A. Duty of due care

Under the federal legislation known as OSHA:

A. Employers must keep records of all workplace injuries.

If Edmund and Kaylin have a writing mistakenly showing a sale and pur-chase of goods for $10,000 when the price should have been $1,000, a court will:

A. Enforce the agreement, relying on oral testimony to determine the correct price

"I'll sell you my car if I decide to sell it" is an example of:

A. Enforceable requirements contract

An agreement to pay a lesser amount to settle an unliquidated debt is:

A. Enforceable, as there is consideration

M & E contracted to sell 500 music stands to Coda, Inc. M & E shipped the stands in accordance with the agreement. Coda paid for the stands as promised. The contract between M & E and Coda is discharged by:

A. Full performance

The Federal Trade Commission requires franchisors to:

A. Give prospective franchisees an of-fering circular at least 14 business days prior to the signing of a con-tract or payment of any money.

The Grand Performance Hall is in the process of remodeling and is scheduled to open for business after being closed for 50 years. As part of the remodeling, it is installing a new sound system. The sound system is to be installed by Sound Systems, Inc. on or before April 10. Opening night of the hall is May 1. The contract states that "time is of the essence" because of the opening-night deadline. Sound Systems has some financial difficulties and doesn't deliver the system until April 20. Grand Hall refuses to accept it, and Sound Systems sues. What result?

A. Grand Hal wins; the contract date was strictly enforceable

Judith is a CPA with an excellent reputation and client base. She sells her tax preparation business to Shawn, and the sales contract includes a noncompete clause restricting Judith from opening a similar business for two years within a 10-mile radius of her former office. If she opens a tax preparation office five miles away after one year, a court would probably:

A. Grant an injunction barring her from operating the new office

Bernie owes an undisputed amount to Wilde's Heating & Air Conditioning. Which of the following is true?

A. If Wilde's agrees to accept less than the full amount as full payment, the agreement is not binding

Under most state statutes, a corporation may:

A. Include in its charter a provision indemnifying directors unless they have engaged in intentional misconduct or bad faith.

Orson was fired from his job behind the ticket counter at the airport. He was loudly told to put his personal belongings into a plastic bag and was led out by security guards in front of his co-workers and customers. His supervisor told him not to return. Orson's employer faces potential liability for:

A. Intentional Infliction of Emotional Distress

The federal judicial branch of the U.S. government:

A. Interprets statutes

Jessica was a former employee of Mark. When potential employers called Mark for a reference about Jessica, he stated she was not a very good worker and had been fired for excessive absences. He said he believed Jessica was on drugs, but he did not know for sure. Jessica learned what Mark was saying and sued him. In most states:

A. It was legal for Mark to say what he said if it was true and Mark was not motivated by ill will

John discovered his company's accountant was "skimming" money from the business. The accountant agreed to pay John a one-time payment of $25,000 not to report the skimming to company officials. The accountant promised she would pay the money back when she could. John accepted the money and never reported what he knew. A year later the accountant was fired when the embezzlement was discovered. She was also prosecuted for theft. The payment to John was never discovered. Which statement is correct?

A. John's act was unethical and illegal

Barb has been a children's day care provider for several years in the small town of Sallton. She has decided to give it all up and move to the big city for excitement and adventure. She sells her business to Ken, agreeing not to open a competing business within five miles of Sallton for a period of nine months. After five months of the big city life, Barb is broke and moves back to Sallton. She opens a small day care business. Ken sues on the noncompete clause. What is the most likely result?

A. Ken wins. The agreement is enforceable

Kyle was eating clam chowder soup in a restaurant when a very small piece of bone lodged in his throat. Fortunately, he was able to remove the bone with his fingers. However, he was upset by the incident and sued the restaurant for negligence. The most likely result would be:

A. Kyle will not collect any damages since he did not sustain any damages

Laura intends to file a Title VII lawsuit against her employer. Which of the following is true?

A. Laura is required to first submit her claim to the Equal Employment Opportunity Commission.

Henry David Thoreau felt that war was unjust and therefore refused to pay his taxes when the United States declared war on Mexico. If Henry David Thoreau's neighbor agreed that war was unjust but paid his taxes because the law required him to pay the tax, the neighbor would be applying the jurisprudence theory of:

A. Legal Positivism

In most states dram acts apply to:

A. Liquor stores, bars, and restaurants but not to social hosts

Lois is running for political office. She trails the incumbent and decides to start running a series of "attack ads." The attack ads are very effective and one week before the election it appears that she has drawn even with her opponent. Lois admits that the attack ads were exaggerations and contained some distortions. Which statement is correct?

A. Lois engaged in unethical behavior

Collector Carl displays his beer can collection at the local swap meet. Mary sees the collection and is interested in buying it. Carl says he will sell the collection for $1,500. Mary says she really likes the collection but is only willing to pay $1,000. Which of the following is correct?

A. Mary's counteroffer terminates Carl's offer of $1,500

Noncompetition agreements are:

A. More common today than they were in the past, although policy issues they raised int he 1700s have never gone away

Fashions, Inc. has 12 shareholders. There is no shareholder agreement concerning the board of directors. The company is subject to the Model Act. How many directors is Fashions, Inc. required to have?

A. None

On January 16, Deb offers to sell her waterbed to Colleen for $600. Colleen accepts and agrees to pay Deb $600 on January 27. Which of the following is correct?

A. On January 16, the contract was executory

An insurance contract is not considered to be a legalized form of gambling because:

A. One must have an insurable interest in the person being insured

Harold and Zack have pooled their money together to buy real estate but have filed no formal papers to form a business. Harold, a lawyer, handles all the legal matters and Zack, a real estate broker, finds buyers for the property they have subdivided. Harold and Zack are engaged in a:

A. Partnership

Ron, a minor, goes to the hospital for treatment of the flu. On the new-patient form Ron signs, he agrees to pay for any care or treatment he receives. When billed for the treatment:

A. Ron must pay for the value of the benefit he received, because medical care is a necessary

Sandy, Ramon, and Bonnie were partners. Sandy dissociated from the partnership. Bonnie and Ramon decided to continue the business. When Sandy dissociated, there was a $50,000 debt owed to Great State Bank. Which statement is correct?

A. Sandy remains liable on the $50,000 debt owed to Great State Bank.

Incorporation protects:

A. Shareholders against personal liability for the debts of the company

Under the UCC statute of frauds, the writing for a sale of goods must:

A. State quantity

Mike is planning on incorporating his business in the state of Delaware. The corporate name of Mike's business must be different from:

A. That of any corporation that already exists in Delaware.

Wayne worked in an office. He had no criminal record, had never had a complaint made against him about his work or his conduct, and had been a faithful employee for nearly 20 years. One day, Wayne followed his supervisor to his home and fatally shot him. The estate of the supervisor sued the company, claiming it should have been aware of Wayne's growing frustration with work. The company's best defense will be:

A. That there was no way to foresee that the incident would happen

Tony raped Jane in the parking lot of Joe's Brew Pub. The District Attorney's office prosecuted Tony on rape charges. Subsequently, Jane filed a lawsuit against Tony for money damages. Classify each legal action.

A. The District Attorney's case was a criminal case; Jane's lawsuit was a civil case

The term "S Corporation" comes from:

A. The Internal Revenue Code

Marty, a 16-year-old, contracts with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. Marty agrees to make monthly payments until the purchase price plus interest are paid in full. Which of the following is correct?

A. The contract is voidable by Marty

If Morales and Rolfes Supply negotiate for the purchase and sale of a supply of fuel for a three-year period for Morales' business:

A. The contract may indicate a method for determining the price, without stating a definite price

Tommie, a six-year-old child, was seriously injured when he stuck a fork into an electrical outlet. His parents sued the restaurant when the incident occurred, claiming it should have had child protective guards on the outlets. Whether the restaurant is liable will be dependent upon whether:

A. The incident was reasonably foreseeable

Randy, Joan, and Arnie are partners. Their agreement did not address dissociation nor how long the partnership would last. Randy decided to leave the partnership. When Randy serves notice he intends to withdraw:

A. The partnership can either buy him out and continue in business or wind up the business and terminate the partnership.

Regency Construction placed an order for two hundred 2 x 4s from Lumber Jack. If the place of delivery and time for shipping the goods are not specified, the UCC provides:

A. The place of delivery is Lumber Jack's and the time for delivering the lumber is a reasonable time based on normal trade practice

David and George have a contract wherein George agrees to buy sporting goods and equipment. Since the goods are not to be delivered for several months, they left the price open. Under the UCC, which of the following will be true?

A. The price will be the reasonable price based on fair market value of the goods at the time of delivery

A United States district court is:

A. The primary federal trial court

All of the following are characteristics of a closely held corporation EXCEPT:

A. The shares are publicly traded

The Utah Court of Appeals in the Dementas v. Estate of Tallas case found:

A. The trial court correctly determined that there was no consideration to support Tallas's promise

Larry goes to his barber who has cut his hair for the past several years. The barber proceeds to cut his hair as they talk about the most recent snow storm to hit the area. This is an example of a:

A. Unilateral, implied contract

Vivian goes to an auction and sees a rare antique lamp that is an identical match to one she already has. At the proper time she bids on the lamp and is the highest bidder. Even though she is the highest bidder, the auctioneer refuses to accept her bid and withdraws the lamp from the auction. Can the auctioneer do that?

A. Unless otherwise stated, the auctioneer had the right to withdraw the item before the fall of the hammer

ABC Siding, Inc. manufactures aluminum siding. ABC enters into a contract to deliver siding to Slippery Siding, Ltd., a retailer of aluminum siding. The written agreement insists that all modifications to the agreement be in writing and signed by both parties. This prohibition against oral modifications is:

A. Valid regardless of whether the clause is signed separately

The Fair Labor Standards Act:

A. Wage provisions do not apply to professional or managerial employees.

The National Relations Labor Act of 1935 is also known as the:

A. Wagner Act

The corporate form of business:

A. Was first known and used by the Greeks and then spread through the Romans to England.

The Johnsons decided to sell their summer cabin on Beech Lake. They sent flyers out to all who previously had expressed an interest in buying the cabin stating that they were planning on selling their cabin. The flyer described the location of the property, the size of the lot, and the price. If one of the recipients responds by sending a letter accepting, an agreement:

A. Will not be formed because the flyer was sent out as an invitation to negotiate

Adam decided to play a practical joke on Linda, a co-worker. As Linda was leaving the office one night, Adam, wearing a mask, stepped out from behind some bushes. He pointed a handgun made out of licorice at her and demanded her purse. He then pushed the candy gun to her head and told her if she told anybody he'd kill her. Linda was very scared during the whole incident. She did not think it was funny when Adam pulled the mask off and took a bite out of the gun as he gave her the purse back. Did Adam commit the tort of intentional infliction of emotional distress?

A. Yes, as his conduct was intentional

David has worked as a CPA for Accountants R Us for about eight months. When his wife had a baby, he requested to take some time off. He believes he is allowed to do so pursuant to the Family and Medical Leave Act. Does the Family and Medical Leave Act apply to professionals like CPAs?

A. Yes, if they work for a company with at least 50 workers.

Sharon had a heart attack while she was under stress at work. Can she collect workers' compensation for the time she had to be away from work as she recovered?

A. Yes, since the heart attack occurred while she was at work.

E. I. James is a writer with a best selling novel. He wishes to create a corporation called "James, Inc." He will be the only shareholder. Can James incorporate his business of writing?

A. Yes, this would be the incorporation of a sole proprietorship

Nancy was a partner of a small business. She could see that the business was beginning to fail and that it was very unlikely it would recover. Not wanting to lose her investment, she asked that the court require the partnership to dissolve since she did not have a legal right to withdraw at that time. Does a court have the authority to order a partnership to dissolve?

A. Yes. A court can dissolve a part-nership when it is convinced that the partnership is unlikely to succeed.

Jackie and Robert own an apartment building as partners. Cyndi, one of their tenants, gives Robert written notice she will be moving out at the end of the following month. Robert did not tell Jackie that Cyndi was moving. Has Cyndi properly given notice to the partnership?

A. Yes. Notice to Robert was notice to the partnership

Judy believed that Ray and Don were partners in an automotive repair business. Ray and Don were not partners. Ray owned the business as a sole proprietor. Ray, however, allowed Don, his unemployed brother-in-law, to be around the business. When Judy was having her car repaired, Ray told her "my partner over there, Don, will give you a ride to work this morning so you can leave your car here. He will give you a ride back here after work and your car will be done." Judy allowed Don to drive her to work. While riding with Don, Don accidentally ran a stop light and caused an accident. Judy was hurt and claims that both Don and Ray are liable to her. Is she right?

A. Yes. This illustrates a partnership by estoppel

In incorporating E-prise, the promoter gave an incorrect ZIP Code for the registered agent. All of the other requirements for incorporation were met. E-prise is a(n):

A. de jure corporation.

Which of the following statements, if made by a seller who knows the statement to be untruthful, would not be misrepresentation of material fact resulting in a cause of action for fraud?

B. "There is no better car in the world."

Lance and Darrell have an equal partnership. This year, after expenses, the partnership had a profit of $100,000. Lance and Darrell will each pay taxes on:

B. $50,000

Arturo drove through an intersection without looking and hit Vincent's car that he had driven into the intersection without obeying a stop sign. Arturo sued Vincent. The jury found that Arturo's fault contributed 20 percent to the collision and determined that his total loss was $100,000. Under comparative negligence, the jury should award Arturo:

B. $80,000

Astrid and Razi formed a partnership in which they agree to share profits 60 percent to Astrid and 40 percent to Razi. Losses will be shared:

B. 60 percent to Astrid and 40 percent to Razi, unless otherwise agreed

A contract between a company in the U.S. and one in China, contained a clause that stated: "If an event happens which is extraordinary and out of the control of the parties such as a strike, act of God, fire, accident, or transportation difficulties, then the affected party shall be relieved of its obligations under the contract." This type of clause is:

B. A 'force majeure' clause

One of the facts leading courts away from a laissez-faire approach to contract law was:

B. A change in relative bargaining power between parties to contracts

Mary contracted to buy 100 table lamps. Under the terms of the agreement, Mary is to pay for the lamps upon delivery. This is an example of:

B. A concurrent condition

An unliquidated debt can be described as:

B. A debt in which the existence or amount is in dispute

Hasbro, Inc., the trademark owner of "Candy Land," sought a court injunction to stop Internet Entertainment Group, LTD from using the domain name, "candyland.com." Internet Entertainment Group had established a sexually explicit site at the domain name. An injunction can only be issued by:

B. A judge exercising equitable power

Harriett raises and sells hippos. In order to keep her hippos happy and healthy, she feeds them Hippo Chow, which she buys from the local pet store. Under the UCC, Harriett is:

B. A merchant of hippos, but not of Hippo Chow

What is NOT required to establish promissory estoppel?

B. A promise made by the plaintiff in response to the defendant's promise

Jennifer has offered to sell her computer for $1750 to Jack. She tells Jack that the computer is only six months old but, in fact, the computer is three years old, and Jennifer wants to unload the lemon. Jack agrees to buy the computer based on Jennifer's representations. This contract is:

B. A voidable contract, one that Jack can void

UCC Section 2-204 provides three important rules that enable parties to make a contract quickly and informally. These include all but which of the following?

B. A writing sufficient under the statute of frauds may be a simple memo, a letter, or informal note, but need not itself be a contract

Congress enacted legislation in 1933 to regulate the securities industry and prohibit various forms of fraud with securities. The Securities Exchange Act of 1934 was passed a year later. This law created the Securities and Exchange Commission (SEC) as an independent regulatory entity whose function is to administer the two laws. The SEC has generated rules and regulations to administer these acts. These rules and regulations are:

B. Administrative Law

A customer in a restaurant would be considered __________ to whom the restaurant owner owes a duty __________.

B. An invitee; of reasonable care

An agreement in which a buyer agrees to buy all the goods produced by a manufacturer is known as:

B. An output contract

Which of the following events would probably excuse performance of a contract based on commercial impracticability?

B. An unforeseeable trade embargo causes prices to triple

Deborah purchased a boat from Sun 'N Surf Marine. She later learned that the salesman had made misrepresentations to induce her to make the purchase. Under UCC Section 2-721, Deborah can rescind the contract:

B. And sue for damages whether the misrepresentation was fraudulent or innocent

The most accurate statement regarding appellate courts is:

B. Appellate courts generally accept the factual findings of the trial court

In bailment cases, exculpatory clauses:

B. Are somewhat more likely to be enforced than in other types of cases

Stanziano Construction needs a backhoe to complete a project. If it pays Hofmann Rentals for temporary use of the equipment, the transaction will be governed by:

B. Article 2A of the UCC

In the case of Sepulveda v. Aviles, the New York Supreme Court, Appellate Division, found evidence of undue influence in:

B. Aviles's use of Seals' funds and credit cards

Laura, a brain surgeon, committed a negligent act when she ran a read light and injured Randy, a pedestrian crossing the street. Randy was a mentally impaired adult.

B. Both Laura's and Randy's conduct will be based on the "reasonable person" standard

Which of the following would probably not be required of employers to reasonably accommodate for religious beliefs?

B. Closing the business on Sunday

The primary source of federal power to regulate business is the:

B. Commerce Clause

Ron operates a garbage pickup business. He contracts to pick up garbage from an apartment complex for the next 52 weeks at a price of $150 per week. Unexpectedly, the landfill center where Ron takes the garbage to dispose of it, files for bankruptcy. As a result, Ron must travel an additional 100 miles to the nearest landfill center, turning Ron's expected profit into a loss of $40 per week. Ron's best argument in support of his petition to be discharged from the contract is:

B. Commercial impracticability

Runyon was ready to sign a two-year agreement with Barnett Corp. to become Barnett's sales representative for a three-state area. LaPrise, who wants to be the representative for that area, threatens Runyon with bodily harm if he takes the position. Runyon decides his physical well being is more important to him than the job, so he does not accept the position. LaPrise:

B. Committed tortious interference with a prospective advantage

The Family and Medical Leave Act applies to:

B. Companies with 100 or more employees

Melody is a recent graduate of State Law School. She lands an impressive employment contract with the firm of Dewey, Cheathem, and Howe, Attorneys at Law, on the stated provision that she pass the upcoming bar exam. This provision in the employment agreement is a(n):

B. Condition subsequent

The Teresa Harris v. Forklift Systems, Inc. case held:

B. Conduct need not affect an employee's psychological well-being to constitute sexual harassment

The courts will find an implied contract when:

B. Conduct of the parties indicates they intended an agreement

Seventy farmers in Morgan County joined together to gain the advantages of purchasing seed and fertilizer in bulk and of obtaining better prices when distributing and selling their crops. These farmers have formed a:

B. Cooperative

What is meant by the term "piercing the corporate veil"?

B. Corporate shareholders may be held personally liable to a person damaged by an act of the corporation.

The form of business ownership that is the most easily transferable is the:

B. Corporation

Wrongful discharge claims are generally based upon all EXCEPT:

B. Criminal Law

The United States Supreme Court has the power to:

B. Declare an act of Congress unconstitutional

Preemptive rights are:

B. Designed to prevent dilution of a shareholder's ownership in the company.

Which of the following relationships will ordinarily not create an insurable interest?

B. Doctor and patient

Marty's home had burned to the ground. When he met with his insurance adjuster, she accused him of burning down the house, and said she would have him criminally prosecuted if he didn't settle the claim for much less than the house was worth. Marty agreed to the settlement. If he changed his mind, he can probably rescind the settlement on the basis of:

B. Duress

At what stage are the partnership debts paid and the proceeds distributed to the partners?

B. During winding up

Dusty dissociated from a partnership. To protect himself from debts of the partnership after he leaves, Dusty should:

B. File a statement of dissociation with the Secretary of State.

MegaCorp is incorporated under Delaware law. It is registered to do business in New York. Legally, in New York MegaCorp is known as what kind of corporation?

B. Foreign

Murray was a partner in a large firm. He died unexpectedly. His son, Frank, wanted to take over for his father in the partnership and was well qualified to do the work his father had done. Which statement best describes Frank's rights in the partnership if he inherits the interest?

B. Frank is entitled to the value in the partnership, but not to become a full partner.

All the business forms listed below have limited liability except the:

B. General partnership

Which of the following statements is correct?

B. Generally speaking, in most states, it is easier for a private employer than the government to test an employee for drugs or alcohol.

The difference between the UCC requirement of good faith and doctrine of unconscionability is that:

B. Good faith focuses on the parties' behavior as they perform the contract

Tri, a full-time college student, sold his car to Don, another student. In the performance of this contract, Tri:

B. Has a duty of good faith which means honesty in fact

Ethics is the study of:

B. How people should act

Don was driving his truck when a board fell out of the truck bed and onto the road. Alice, who was driving behind Don's truck, tried to avoid the board, swerved and struck a telephone pole, causing her severe injuries. Which of the following is correct?

B. In a comparative negligence state, the actions of Don and Alice will be weighed to determine liability

A requirements contract is a contract:

B. In which the seller provides all the goods that the buyer needs

A woman wishes to attend an all-male, publicly supported college. She claims the college is violating the Equal Protection Clause of the Constitution. What level of scrutiny will the court use when deciding this case?

B. Intermediate scrutiny

A condition:

B. Is an event that must occur before a party becomes obligated under a contract

In January 2008, Professor Noe entered into a contract with State University. She agreed to teach full time during the 2008-2009 academic year. Professor Noe died on May 31, 2008. Her estate:

B. Is discharged from any further obligations under the contract

Maxine lost her job as an electrical engineer with a large company which had provided health insurance benefits for Maxine and her family. She now:

B. Is protected under COBRA, which allows her continued health insurance coverage for 18 months as long as she pays the cost.

Jennifer substantially performs her service contract with Gretchen. Due to Jennifer's failure to render complete performance, Gretchen:

B. Is required to pay the full contract price, minus the value of Jennifer's defective performance

An exculpatory clause is generally unenforceable when:

B. It involves public transportation

The importance of a Subchapter S corporation is:

B. Its treatment of shareholders for income taxation purposes.

Common law refers to:

B. Law made when judges decide cases and then follow those decisions in later cases

Dodger bought an insurance contract from Liberty Farm Co. The policy contained a clause stating that all claims for losses had to be reported within 45 days after the date of the loss or the claim would be barred. Time is stated to be of the essence. Dodger sustained a covered farm loss, but did not report it to Liberty Farm until 50 days later. Liberty Farm denied coverage for the claim. If Dodger sues, who wins?

B. Liberty Farm wins; there was a failure of a condition subsequent

Bob, a weak swimmer, ignored warning signs in a recreational swimming area and went into deep water. He soon tired and realized that he could not make it back to shore. Seeing Kelly, he cried out for help. Kelly, however, ignored the pleas. Bob was finally saved by Dorothy, but suffered partial brain damage by being submerged without oxygen for a number of minutes. Bob now sues Kelly for negligence for failing to save him. Bob will:

B. Lose because Kelly has no legal duty to rescue him

Hensley and Boyer have been negotiating for several months over issues related to the purchase and sale of some real estate. They draft a letter of intent which:

B. May or may not be an offer, depending on the exact language and whether the document indicates that the parties have reached an agreement

A court:

B. May refuse to enforce an express condition intended by the parties if the court determines it is unfair and harmful to the general public

MegaCorp occasionally sells products in Michigan. It does not have an office in that state and does not advertise in Michigan. The company's marketing representatives are based in New York but do travel to Michigan once a year to attend a trade show. Which statement is correct?

B. MegaCorp is not required to register in Michigan because it does not have an ongoing presence in Michigan.

Gary and Herman are partners in a lawn mower repair business in Ohio. While Gary is on vacation, visiting his sister in Georgia, his sister's neighbor has trouble with her mower and Gary fixes it for her. She insists on paying him. Gary:

B. Must turn the money over to the partnership because he earned it doing the kind of work that the partnership does

Mid-American Oil had a contract with NSB Company to supply 1,000 gallons of oil by September 1. The contract contained a provision which required all modifications to be written and signed by the company presidents. In early August, an executive of Mid-American talked with the purchasing agent of NSB who orally agreed to two shipments of oil; one in September and the second one in December. By September 30, when only 500 gallons had been delivered, NSB sued. The likely outcome of this lawsuit is

B. NSB wins because the modification has to be in writing

Henry David Thoreau felt that war was unjust and therefore refused to pay his taxes when the United States declared war on Mexico. Thoreau felt that there was a higher law than the law of the land. Which theory of jurisprudence was he applying?

B. Natural Law

The notion of civil disobedience is founded on what principle?

B. Natural law

Wendell, new to the area, selects a doctor from the telephone book and visits that doctor to have a splinter extracted. Unbeknownst to Wendell, the doctor has never passed the state licensing exams. Later, when Wendell discovers the truth, he refuses to pay his bill. If the doctor sues for recovery of the fee, will the court support the doctor's claim?

B. No, the court is likely to take the position that it is not in the public's best interests to enforce contracts with unlicensed doctors

Mentally infirm Sasha contracts to purchase a piano for $2,500 in 60 monthly installment payments. Six months later she tries to void the contract on grounds of mental impairment. A court will:

B. Normally void the contract but will require Sasha to return the piano

Jaime offered to buy Kevin's bike. Jamie is the:

B. Offeror

Charles and Becky are partners. If they have a disagreement, the Uniform Partnership Act will govern their respective rights with each other:

B. Only if they do not have a written partnership agreement that addresses the issue of dispute.

The basic distinction between a bilateral contract and a unilateral contract is that:

B. Only one promise is involved in a unilateral contract

The President of the United States:

B. Oversees administrative agencies

Charles and Ellen, an unmarried couple, run an ice cream store. The business is not incorporated and they have filed no formation papers with the state. Their business is a:

B. Partnership

Paul decided he did not want the new jeans he had purchased from a large discount department store. He had worn them three times and decided he just did not like them. The jeans fit him fine and there is nothing wrong with them. He takes the jeans back to the store and, as is its policy, the store gave him a full refund of his money. Which statement is correct?

B. Paul's conduct was unethical

Ikerd was entering the United States from a trip abroad when the Customs Service confiscated some goods she had purchased and brought back with her. The determination of whether the government is attempting to take property and what type of hearing the Customs Service must offer Ikerd, is an analysis of:

B. Procedural due process

As English judges were developing the common law of contracts in the twelfth and thirteenth centuries:

B. Promises were found not binding unless written and sealed

When the Food and Drug Administration prohibits a certain drug from being marketed in the United States, this is:

B. Public law

Al contracted to sell his house to Bev. Subsequently, they both changed their minds and agreed to cancel the contract. The contract between Al and Bev is discharged by:

B. Recission

When a business is concerned about selling to minors because of their right to disaffirm contracts, the business might protect itself by:

B. Requiring an adult co-signer

Which of the following is an example of an exculpatory clause?

B. Seller is not responsible for property damage regardless of the cause of the injury

Seth told the salesperson at Outdoor Times that he wanted a sleeping bag that would keep him comfortable if the temperature drops to 10 degrees Farenheit at night. The salesperson told Seth there were two styles that would meet his needs and Seth chose one. If the salesperson did not give Seth a written warranty with the sleeping bag:

B. Seth will still receive a warranty of merchantability and a warranty of fitness for a particular purpose

A national magazine published an article about a famous television star. The television personality is upset because the information contained in the story is not correct. If the actress sues the magazine:

B. She will need to show that the magazine either knew the story was false or acted with reckless disregard for the facts

Randi, a resident of Oregon, was involved in an auto accident while in Idaho. The other party lives in Wyoming. Randi wishes to recover the $28,000 cost to repair his car. The most appropriate court for her to file her lawsuit is in a:

B. State court in Idaho

Under a state law, a dog owner is absolutely liable to any person who is injured by a dog. This is an example of:

B. Strict liability

Upon graduating from college, Kathy announced her plans to enter law school the following fall and to marry Rick in December. Kathy's father was afraid that marriage during her first year in law school might cause her to fall behind in her studies or cause her to drop out of school. He called Kathy and promised her $10,000 if she postponed her wedding until after completion of her first year of law school. Kathy agreed and postponed the wedding for a year. Kathy successfully completed her first year of law school, but soon thereafter, Kathy's father died. The administrator of her father's estate claimed she was not entitled to the $10,000 because there was no consideration for her father's promise. If Kathy sues the estate, she will probably be:

B. Successful, as there was consideration

If there is a conflict between a state and federal law, generally the federal law will prevail because of the:

B. Supremacy Clause

Abbott provided evidence of fraudulent financial reporting about his employer, a publicly traded company, to federal securities investigators. Abbott receives whistleblower protection under:

B. The Sarbanes-Oxley Act

Jurisdiction is:

B. The authority of a court to decide a particular type of case

John enters into a contract to paint Chad's house. When Chad decides a color, John will buy the paint and paint the house for the price of $2,500. This contract is governed by:

B. The common law of contracts governs because the predominant factor of the contract is for the sales of services and not goods

Roxanne was fired from her job when her employer instituted a new policy that prohibited employees from smoking cigarettes. This requirement applied to off-duty time as well as job-related time. Roxanne claimed that she could not quit smoking and that she was wrongfully fired since she did not smoke in the workplace -- only when she was outside the building and during off-duty time.

B. The company would be liable to Roxanne only if there is a state statute prohibiting employers from passing such job-related requirements

Mike owns a house in a poor area of a large city. Mike is on disability and his total monthly income is $700. A sales representative visits his home, selling a water purification system. Mike buys and signs a contract that calls for monthly payments of $500 for the next 10 years. The water system is worth no more than $1000. Mike did not understand what he was signing and thought it was a permission slip allowing the salesman to conduct a free water test to determine the number of toxins in the water. How would a court most likely describe this contract?

B. The contract is unenforceable because it is unconscionable

An intentional tort involves conduct in which:

B. The defendant intended a certain physical act which ends up injuring someone

The Bill of Rights refers to:

B. The first ten amendments to the Constitution

Dick offes to sell Jane his 1955 Thunderbird convertible. Before Jane can accept the offer, lightning strikes the car and it is totally destroyed. Which of the following is true?

B. The offer is terminated by law

Howson won a lawsuit against Hardwick for intentionally inflicting emotional distress. The jury awarded Howson $500,000 in compensatory damages. It also awarded Howson $4 million in punitive damages because Hardwick was quite wealthy and the jury thought a large amount was necessary for Hardwick to feel the punishing effect of the judgement. How does the jury's award fit into the guidelines offered by the U.S. Supreme Court?

B. The punitive award is excessive because the Supreme Court has stated that the trial court may not use the defendant's wealth as an excuse to award an unreasonably high award

A seller's form clearly states no warranty is included. The buyer's form states that the seller warrants the goods for one year. In this case:

B. The warranty term is a "different term," and the majority of states hold that a contract can be formed but the contradictory terms cancel each other out

Oxtron, Inc. sent the following price list to its customers. Dispensers SBC-500J $670.00 True TDD-1 $875.00 True TDD-2 $1,465.00 True TDD-3 $1,515.00 CO2 Tank and Regulator $150.00 Which statement is correct?

B. These price quotes would generally not be considered offers

Robert, a minor, buys a stereo from Jane for $200. State law allows a minor to disaffirm contracts within a reasonable time after turning 18. Robert disaffirms the contract day after turning 18 and returns the stereo.

B. This contract was a voidable contract, Robert can disaffirm

Rodney was employed by Deluxe Discount Store. Rodney's manager directed him to check the prices of dog food at Huge Savings Store. The manager of Huge Savings Store saw Rodney writing down prices and asked him to leave. Rodney, fearful that he would be fired by Deluxe, refused to leave. Rodney committed the tort of:

B. Trespass

Why do many major corporations actively encourage ethical behavior?

B. Unethical behavior can quickly destroy a business

Walter worked nights as a clerk in a fast-food store. On his last work shift, Walter's boss told him, "I'm really grateful for the year that you have worked here. I am going to give you a bonus of $1,000 in your last paycheck." When Walter got his last paycheck, there was no bonus. If Walter sues, the likely result will be:

B. Walter will lose, as he gave no consideration

When may an employer require an employee to submit to a lie detector test?

B. When the test is part of an on-going investigation into crimes that have occurred

In January, Alex promised to pay Y-K Inc. $5,000 if it would refrain from filing suit against him on a breach of contract action. Y-K agreed and accepted a $5,000 check from Alex. Which of the following statements is correct?

B. Y-K's promise to refrain from suing Alex was supported by legal consideration and is enforceable

Lori and Dan own a small restaurant as partners. Dan works several hours a day cooking, waiting on tables, doing the books, and so forth. Dan believes he is entitled to be paid at least a standard wage for all his work since, at the present time, the part-time kitchen helpers earn more than he does! Lori claims Dan is not entitled to anything other than one-half the net profits. Is Lori right?

B. Yes, as there is no agreement be-tween Lori and Dan allowing for either of them to be paid wages for work done at the restaurant.

Corporate stock can be divided into categories called ________, which can be further divided into ________.

B. classes, series.

A plaintiff sues in negligence but has no direct proof that the defendant behaved unreasonably. Which of the following is most likely to help the plaintiff?

C. 'Res ipsa loquitur'

John, his parents, and three brothers own all the stock of their family farm corporation. This corporation, which is taxed as a corporation, is probably:

C. A closely held corporation

Which of the following types of property would be classified as "goods" under Article 2 of the UCC?

C. A computer

Acme Co. offers to buy 1000 widgets from Widget World Co. The written offer provides for 1000 at $10 per widget, to be delivered May 1. The offer has no other provisions. Widget World sends a written acceptance. However, the acceptance also states that if any claim arises under this contract, Widget World must be notified within 10 days. Acme does not object to this provision. Both parties are merchants. Which of the following best describes this situation?

C. A contract exists. If the additional terms are construed to be material, they are not part of the contract. If the additional terms are not material, they are part of the contract

An example of the type of relationship required to find undue influence would be:

C. A doctor-patient relationship

Which of the following would not be personally liable for the debts of the business?

C. A general partner in a limited liability limited partnership

The business form that is taxed as a partnership and gives all owners limited liability, is:

C. A limited liability company

The Minnesota legislature passed a law requiring that employers allow each employee adequate time within each four consecutive hours of work to utilize the nearest convenient restroom. This law is:

C. A statute

Which of the following statements about torts is correct?

C. A tortious act may also be a criminal act

Which of the following contracts requires a writing under the UCC, Article 2?

C. A toy manufacturer contracted to sell dolls valued at $10,000 to a department store

Adam decided to play a practical joke on Linda, a co-worker. As Linda was leaving the office one night, Adam, wearing a mask, stepped out from behind some bushes. He pointed a handgun made out of licorice at her and demanded her purse. He then pushed the candy gun to her head and told her if she told anybody he'd kill her. Linda was very scared during the whole incident. She did not think it was funny when Adam pulled the mask off and took a bite out of the gun as he gave her the purse back. Which statement is correct?

C. Adam committed an assault and a battery

Does ethical behavior maximize profitability?

C. Although there is no guarantee that ethical behavior pays in the short or long run, there is evidence that the ethical company is more likely to win financially

Bailey Co. and Spryt Bros. enter into a contract for the manufacture and sale of 400 lawn chairs. If both parties agree that a modification is necessary

C. An agreement to rescind the contract will terminate the contractual rights of Bailey Co. and Spryt Bros. if neither of them had completed their obligations

Marco agrees to sell Clowns R Us some balloons. The contract states that Clowns may buy as many balloons as it wishes. This agreement is:

C. An illusory contract

The executives of Jornaginn Corporation have decided they need to sell 50,000 additional shares of stock to finance their plans. The executives:

C. Are limited by the number of shares authorized in the corporate charter, but this number can be increased by amending the charter and paying a fee.

Lori and her friends burn an American flag as an act of political protest. Lori is arrested for violating a state law that prohibits flag burning. The Supreme Court has ruled that laws making it illegal to burn an American flag:

C. Are void because they violate a person's right to freedom of speech

Negligence concerns harm that:

C. Arises by accident

Mark was refused employment at a Christian Bookstore because he was not a "born-again Christian." If Mark brings a Title VII action against the bookstore, its best defense would be:

C. Being a "born-again Christian" is a bona fide occupational qualification

Don was standing in a cafeteria line holding a plate. Tim was upset with Don. Tim turned Don around and grabbed the plate out of Don's hand. Tim then held the plate up and threatened to break it over Don's head. Tim has committed:

C. Both an assault and a battery

Once a provision is in the corporate charter, it can only be changed by:

C. Both of the above are necessary to change a corporate charter.

A company that makes a commercial with a person who does an excellent, realistic job of pretending to be a famous movie star could be sued by the real actor for the tort of:

C. Commercial exploitation

A civil case generally proceeds as follows:

C. Complaint, Answer, Discovery, Trial, Verdict

Theft is to the criminal law as ____________ is to the civil law.

C. Conversion

Public policy means the law that comes from the:

C. Courts that decide what would have a negative impact on society

In analyzing a situation to determine how to act ethically, a business manager should:

C. Determine whether an alternative violates important values

The distinction between a condition precedent and a condition subsequent:

C. Determines who has the burden of proof

Which of the following events occurs first with respect to the ending of a partnership?

C. Dissolution

Trein, Inc. entered into a one-year, $1 million contract with Mia, a sports celebrity, to promote Trein's products. E-presto, Inc., a competitor of Trein, was interested in having Mia promote it products and knew of her contract with Trein. E-presto offered Mia a three-year, $5 million contract. Mia left Trein and signed with E-presto. Which statement is correct?

C. E-presto is liable for tortious interference with a contract

Travel Lust offered to sell 10 round-trip tickets to Elaine. Travel Lust stated that the acceptance must be in writing by USPS next-day service. Which of the following acceptances will create a contract between Travel Lust and Elaine?

C. Elaine sends a letter by USPS next-day service to Travel Lust stating that she will buy the tickets

Bob signed an agreement with Joe under which Bob agreed to purchase all the hay that Joe grew during the coming growing season. This contract will be:

C. Enforceable as long as both parties act in good faith and Bob doesn't suddenly demand more hay than what was reasonably estimated

John was driving home one night in a terrible snow storm when his car stalled. He managed to push the car onto a small shopping center's parking lot. The next day about noon he came to get the car and it had been towed away by the owner of the parking lot. The owner explained she had to remove the car to clean the snow off her lot and told John where the car had been towed. Which statement is correct?

C. Even though John left his car in the parking lot under emergency conditions, he still committed a trespass on the owner's property

In a "mixed contract," one involving a sale of both goods and services, the court will:

C. First determine the dominant purpose of the contract. If the sale of goods dominates the contract, then the court will apply the law of the UCC, Article 2. If the sale of services dominates the contract, the court will apply the common law

In Delaware, a person may reserve a corporate name:

C. For 120 days by paying a $75 fee

As set forth in the Restatement Second of Contracts, which of the following duties are imposed on the parties in the performance and enforcement of a contract?

C. Good faith; fair dealing

Which of the following would be an example of a civil lawsuit?

C. Gretta hit Rita in a bar during happy hour. Rita is now suing for her injuries

An express contract:

C. Has both parties setting forth their intentions

When an appeal is filed with the U.S. Supreme Court, the Supreme Court:

C. Has discretion as to which cases it hears

Max, Jenny, and Craig are partners. They have purchased an elegant Victorian home and converted it into an office for their partnership. Craig decides to use the partnership's office to host some evening parties. Craig has a sideline business of arranging expensive gatherings and charging each person a handsome price to attend these "elite" parties. When Max and Jenny find out what Craig is doing, they demand that he pay them for the use of the property. How much money, if any, is Craig required to pay the partnership?

C. He must turn over any profits he earned from this activity.

In the Strategic Resources Group v. Knight-Ridder, Inc. case, the court found that Knight-Ridder:

C. Intentionally reduced the size of its advertisements, but that the size reduction was not easily discernable

An inmate in a state prison claims his United States constitutional rights prohibiting cruel and unusual punishment are being violated by the state correctional facility. This case:

C. Is a federal question case over which the federal courts have jurisdiction

A contract most likely will be declared unconscionable if:

C. It is oppressive and the weaker party did not fully understand the consequences of the agreement

Kelley climbed a fence and went ice skating on a neighbor's recently dug pond, but she fell through a thin area into icy waters. Kelley did not have permission to be on the property, and the neighbor did not even known that she was there. Is the neighbors liable of Kelley's injuries?

C. It may depend on Kelley's age

West Virginia passed a statute regulating working conditions in its mines. If the statute is challenged in court on substantive due process grounds:

C. It would be presumed valid since it regulates economic or social conditions

Jill was a limited partner in a retail business that was sued by a customer who fell in the store. The customer claimed the business was negligent in caring for its floors. Which statement best describes Jill's potential liability?

C. Jill can only be liable to the amount of her investment.

Jack mails an offer to Joan that states, "I offer to sell you my car for $2000. If I don't hear from you in 10 days, I will assume you are willing to buy the car for the stated price." Jack hears nothing by the deadline and assumes he has a deal. What is the result?

C. Joan is not bound. Generally an offeree must say or do something to accept an offer

Which school of jurisprudence is based on the philosophy that what matters is not what is written as law, but who enforces the law and by what process?

C. Legal realism

Statutes of limitations:

C. Limit the time in which an injured party may sue

Larson entered Forrester's Auto Mart to purchase a used car. Larson found a vehicle with a sales price of $11,000. After Forrester answered all of Larson's questions, Forrester and Larson agreed to a sale. As Larson was leaving to get the money to pay for the car, Forrester told Larson that Robert Redford formerly owned the car. Larson later learned that Robert Redford had never owned the car. If Larson seeks to rescind the deal based on Forrester's statement, Larson will:

C. Lose because he will not be able to prove reliance on the misrepresentation

The doctrine of 'stare decisis':

C. Makes the law more predictable

Marty, a 16-year-old, contracted with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. He agreed to make monthly payments until the purchase price plus interest were paid in full. It is two years later and Marty has not disaffirmed the contract and has made payments on the cycle since turning 18. Which of the following is correct?

C. Marty has ratified the contract and is now bound by its terms

Under the Uniform Commercial Code, an agreement modifying a contract:

C. May not require consideration

A partnership is the association of two or more persons to carry on as co-owners a business for profit. The association:

C. Means a voluntary relationship between the persons

The fastest growing method of dispute resolution in the United States is:

C. Mediation

One morning, Miles placed a thumbtack on the chair of the office manager where he worked. He had no quarrel with the office manager, but thought this would be funny. Two days after sitting on the tack, the office manager was hospitalized with an infection caused by the tack. Which of the following is correct?

C. Miles committed an intentional tort

The observation that "The one and only social responsibility of business is to increase its profits" can be attributed to:

C. Milton Friedman

If Becky promises not to drink alcohol until she becomes a legal adult in exchange for Ben's promise of $1,000, the agreement is

C. Not enforceable because Becky does not have a legal right to drink alcohol

If Rudy offers Oscar $200 for his $600 stereo and Oscar agrees, a court will probably:

C. Not set aside the agreement based on the adequacy of the consideration

If a condition does not occur:

C. One party will probably be discharged without performing

Police Officer Paul apprehends a wanted criminal and then demands the $10,000 reward offered by Crime Stoppers. Which of the following statements is true?

C. Police Officer Paul is not entitled to the reward because he was under a pre-existing duty to make the arrest

Judicial review can best be described as the power of federal courts to:

C. Review state and federal legislative and executive action

Dean Builders agrees to purchase all of its sump pump requirements for the new houses it builds from Satisfactory Sump Pump, Inc. These two business have had similar agreements the last three years and Dean's requirements have averaged 100 sump pumps per year. This year there was an unusually wet spring and Dean's requirements doubled to 200 sump pumps. Because of the high demand of sump pumps, the market price of the pumps tripled. Sat-isfactory Sump Pump, Inc. delivers 100 pumps at $75, the contract price. Satisfactory has exhausted its inventory and cannot deliver any more, so Dean buys the other 100 pumps from other suppliers at $225 each. Dean sues Satisfactory Sump Pump, Inc. for the additional expense. What is the most likely result?

C. Satisfactory Sump Pump, Inc. wins; requirements contracts are governed by a good faith stand-ard, and it was unreasonable for Dean to demand so many addi-tional pumps

Mark works as a bartender at The Little Nipper, a local bar. Under state law, bartenders are required to be licensed. The licensing requires filling out an application and submitting a $50 application fee. The application does not require any special education or experience, just the $50 fee. Craig enters Mark's bar, orders a round of drinks for the house, then notices that Mark's license is not on display behind the bar. Craig learns that Mark is not licensed and refuses to pay for the round of drinks. The Little Nipper sues. What result?

C. Since this is a revenue-raising statute, The Little Nipper wins

Smalltown, located in a border state, seemed to favor Caucasians over Latinos in their hiring practices. The courts will review the practice using:

C. Strict scrutiny

By definition, a sale under Article 2 of the UCC requires:

C. That title to the goods pass be-tween the seller and the buyer and that a price be paid for the goods

What federal agency requires that the seller of a franchise give the potential buyer an offering circular and audited financial statements?

C. The Federal Trade Commission (FTC).

Mary owes $3,800 on her credit card. She sends the credit card company a check for $800 with the notation "payment in full" on the check. If the credit card issuer cashes the check:

C. The check may be subject to a UCC exception to the general rules for accord and satisfaction cases involving checks

Larry has the largest pizza business in the city. He learns that Henry is thinking of opening a competing pizza and pasta delivery business. Larry gives Henry $25,000 to not open his proposed business in the same city. Which statement is correct?

C. The contract is illegal and void

Suppose that Lenny Lawyer enters into an agreement with Cindy Client that his fees will be a percentage of the recovery Lenny obtains for Cindy in her pending divorce. State law makes such a contingency fee arrangement illegal in divorce actions. What will be the probable outcome if Lenny attempts to enforce the agreement?

C. The contract will be void as violating a statute. Lenny will not be able to recover anything

If Kay, a partner in an auction business, has a personal creditor who is aggressive about collecting the debt:

C. The creditor can attach a partnership profits by obtaining a charging order

If a court applies 'res ipsa loquitur':

C. The defendant has the burden of proving he or she is not liable

The three branches of government in the United States are:

C. The executive, legislative, and judicial

In the case of Hooper v. Hooper, the court found:

C. The fact that one partner contributes greater skill and takes over man-agement of a partnership business does not give rise to a right to extra compensation.

Price's Department Store contracted to buy 1,000 drop-waist velour dresses in heather gray from TriColor. Subsequently, TriColor called and asked to ship mink-colored dresses instead of heather gray. Price agreed, in writing, to the change. Which statement is correct?

C. The modification is enforceable

Floyd offers to sell his 1967 Ford Mustang convertible to Tim. Before they conclude their negotiations, Floyd dies. Which of the following is true?

C. The offer terminates automatically upon Floyd's death

Kayla and Marshall formed a partnership. Marshall incurred a debt in the ordinary course of the partnership business. If the debt is not paid, the creditor may sue:

C. The partnership and the partners together or in separate lawsuits or in any combination

Which of the following is true regarding an open price term?

C. The price is the "reasonable" price at the time of delivery

Wizardry Corporation's purpose clause in its charter states, "To operate a home-cleaning service business." After a few years of successful operation, Wizardry is offered the challenge of landscaping a neighboring business. If Wizardry accepts the offer, it would be violating its charter under:

C. The ultra vires doctrine.

Punitive damages are awarded:

C. To punish the defendant

MegaCorp purchased 10,000 shares of its own stock that had previously been owned by private investors. The stock MegaCorp repurchased is called:

C. Treasury stock

LLCs have become popular for all except which of the following reasons:

C. Uniformity of law

Vince has begun forgetting things and is becoming very difficult to get along with. He is 85, has been ill, and is very fond of his housekeeper Annie. He gives a deed to Annie for all of his real property. At Vince's death, his children, who got only his photograph albums according to the will, ask that the deed be set aside and the land be put back in the estate for purposes of division among all the children. The probable result will be:

C. Unless the children can prove that Vince was unable to understand what he was doing, or that Annie used her position to improperly influence Vince, Annie can keep the property

On January 8, Quastrar, Inc. sent Hylavian Company a letter offering to sell $10,000 in restaurant supplies. On January 18, Hylavian mailed a letter to Quastrar accepting the offer. Quastrar received the acceptance letter on January 20. On January 17, Quastrar sent a letter revoking the offer. Hylavian received this letter on January 21. A contract between Quastrar and Hylavian:

C. Was formed on January 18

Maude was denied employment with Trucks R Us as a warehouse worker because she didn't meet the weight requirement of 160 pounds. Trucks argued the weight requirement was reasonable because warehouse workers often have to lift things weighing up to 100 pounds. If she sues Trucks, she will probably:

C. Win, as the weight requirement is discriminatory and doesn't appear necessary for the requirement of lifting 100 pounds

Miles purchased a lawnmower with an attached warning that said, "The manufacturer is not responsible in the case of injury caused by the lawnmower." If Miles is injured because of a defect in the mower and sues the lawnmower manufacturer, he will most likely:

C. Win, as this warning would be unenforceable

In the historic case of Hamer v. Sidway, the nephew:

C. Won, as there WAS consideration

MegaCorp is incorporated in the state of Delaware and is registered only in Delaware. Jolene purchased a MegaCorp product from a company's sales representative following a presentation in Michigan. Jolene was seriously injured by the product in Michigan. Under the Model Act, if Jolene sues in Michigan, can MegaCorp defend the suit there?

C. Yes, MegaCorp can defend against a lawsuit in Michigan regardless of whether MegaCorp is registered to do business in that state.

Zero, Inc. agreed to build Millie a storage building for $8,000. After beginning the project, Zero realized that it could not complete the job and make a profit. Zero demanded $9,500 to complete the building. Millie agreed to pay the $9,500. When the project was complete, Millie tendered $8,000 to Zero for the job. If Zero sues Millie for the remaining $1,500:

C. Zero will lose because there was no legal consideration to support the additional $1,500

In which of the following situations is the seller a merchant under Article 2 of the UCC?

C. Zompa Inc., a toy manufacturer, contracted to sell dolls to TonTon Department Store.

Contracts that do not arise from mutual agreement but are created by courts to avoid unjust enrichment are:

C. quasi-contracts

Office Plus, an office supply store, ordered 600 blank CDs from Curtis Co., a manufacturer of computer products. Office Plus placed the order using a preprinted purchase order form; Curtis acknowledged the order by sending a preprinted acceptance form back to Office Plus. Unlike Office Plus' form which says nothing about packaging, Curtis's form specifies that the CDs will be packaged in cases of 10 CDs per box, 10 boxes per case. Which statement is correct?

Curtis's packaging term is an ad-ditional term and therefore a part of the contract unless Office Plus promptly objects to the term.

What phrase is critical to the validity of a requirements contract?

D. "In good faith"

Roxanne was injured when she fell in a hole while walking across her landlord's parking lot. She and her lawyer hope they can settle the claim. Which of the following statements about settlements is correct?

D. A case can be settled at any time

Which of the following types of property would be goods under the Uniform Commercial Code?

D. A computer

Which of the following is not an example of a trial court of limited jurisdiction?

D. A general civil division court

AAA and XXX companies are both major international conglomerates. They are negotiating a contract whereby AAA will install a computer system for XXX. One clause in the contract states that AAA will not be liable for damages caused by the negligent installation of the computer system, except that AAA warrants the system and will fix any problem for a period of two years following installation. AAA completes the installation of the computer system. XXX loads extensive amounts of information on the system, but all of it is destroyed because AAA negligently installed the memory chips. AAA fixes the memory, but XXX incurred significant expenses in recreating the lost information. XXX sues for these expenses. AAA defends with the noted clause in the contract.

D. AAA wins; this exculpatory clause is enforceable

Generally, constitutional protections do NOT apply to:

D. Acts of privately owned businesses

The Occupational Safety and Health Administration promulgated a rule requiring guards for hand-fed circular crosscut table saws. The purpose of the guards is to keep employees clear of any danger zones. This rule is:

D. Administrative Law

ADA reasonable accommodations may include:

D. All of the above

Federal jurisdiction based upon a "federal question" includes cases based on:

D. All of the above

Hank owns 100 shares of cumulative preferred stock in Wayside Transport, Inc. Kelsey owns 50 non-cumulative preferred shares, and Oleg owns 120 shares of common stock. Wayside does not pay dividends in 2007. In 2009:

D. All of the above

In awarding punitive damages, a court must consider:

D. All of the above

Martin, Leah, and Pablo are considering forming a business. What factors should they consider in making a choice of organization?

D. All of the above

Nevada passed a law banning all commercial billboards along state highways to rid the state highways of billboards, which are offensive to citizens. If this law were to be challenged, which of the following would a court examine to determine if the law is constitutional?

D. All of the above

Rachel and Cyndi started a retail business called Zebra Toy Company. The business is operated as a partnership. Under partnership law:

D. All of the above

The Chief Executive Officer of Ticor, Inc. must decide about the disposal of toxic waste materials. Which of the following considerations should help the CEO reach an ethical business decision?

D. All of the above

The advantage of a corporation over a partnership is:

D. All of the above

Unethical behavior in an organization can create:

D. All of the above

When an appellate court hears a case, it may:

D. All of the above

Which of the following is a valid defense to a defamation claim?

D. All of the above

Why should ethics be a concern to a business?

D. All of the above

Zeno, Inc. is considering relocating its manufacturing facility from Illinois to Mexico City. The stakeholders in this decision might include:

D. All of the above

To be valid, a noncompete clause must be:

D. All of the above A. Ancillary to a legitimate bargain B. Reasonable in time, geographical area, and scope of activity when ancillary to the sale of a business C. Necessary to protect trade secrets, confidential information, or customer lists developed over an extended time when ancillary to an employment contract

Which of the following offers are considered to be irrevocable for a given period?

D. All of the above A. Firm offers B. Option contracts C. A writing signed by a merchant to hold open an offer the sale of goods for a stated period

The UCC deals with unconscionability in a contract by providing that a court may:

D. All of the above A. Refuse to enforce the contract B. Enforce the remainder of the contract without the unconscionable clause C. Limit the application of any unconscionable clause as to avoid any unconscionable result

The common law governs contracts for:

D. All of the above A. Services B. Real Estate C. Employment

During the development of commercial law centuries ago, businessmen throughout England and Europe:

D. All of the above A. Settled disputes in trade organizations rather than in civil courts B. Relied on a body of rules which became known as the 'lex mercatoria' C. Began to treat their own customs as law

Courts may award damages called "quantum meruit":

D. All of the above A. Which means "as much as he deserved" B. Which is money the court believes the plaintiff morally ought to have C. Even though there as no valid contract entitling the plaintiff to it.

Nortron Corporation wants to create an ethical environment in its company. Which of the following has been found to help foster a sense of ethics within an organization?

D. All of the above alternatives have been used by U.S. companies to create an ethical environment in their organizations.

Which of the following are alternatives with issues of ethics in advertising?

D. All of the above are alternatives in dealing with issues of ethics in advertising

The stated purpose(s) of Article 2 of the UCC is/are:

D. All of the above are correct A. To simplify the law governing sales B. To permit the continued development of business practices through custom and usage C. To make the laws governing sales uniform among the various states

Which of the following would be evidence that two people intend to be partners?

D. All of the above are evidence of a partnership.

E-presto, Inc. has established an EthicsLine. EthicsLine is a toll-free phone number that employees can call any time of the day, any day of the week to discuses ethics and report suspected unethical or improper conduct. Why would E-presto establish the EthicsLine?

D. All of the above are reasons that would justify establishing an EthicsLine

Generally, a seller has no duty to disclose facts. However, there is a duty to disclose information or facts if the disclosure is necessary to:

D. All of the above are true A. Correct a previous assertion B. Correct a basic mistaken assumption on which the other party is relying C. Report a latent defect that the buyer would not be expected to discover

To simplify, clarify, and modernize the law governing commercial transac-tions, the UCC permits the use of "open terms" in sales contracts. In the use of "open terms," which of the following is true?

D. All of the above are true A. The court will use market value and other comparable sales to de-termine what a reasonable price would have been at the time of delivery if the parties have not settled the price in the contract B. If time of payment is not men-tioned in the contract, payment within a commercially reasonable time is presumed C. If the contract permits the buyer or seller to determine the price during contract performance, the UCC requires the party to do so in good faith

Virginia borrowed money from G & L Lending at 35% interest per year. The state maximum interest rate is 20% per year. Virginia defaulted on the loan. What amount can G& L collect from Virginia?

D. All of the above may be correct. The answer depends on the particular state law A. G & L will be able to collect the principal plus 20% interest per year B. G & L will be able to collect the principal but not any interest C. G & L will not be able to collect either the principal or interest

Defining a corporation with such information as the corporate name, the number and type of authorized shares of stock, identification of the purpose and the agent, is done through the:

D. All of the above. All of these terms are used to identify the same document.

Angie, a minor, wants to avoid a contract she made with Cumberland Cycles. She may disaffirm the contract by:

D. All of the answers are correct A. Notifying Cumberland orally that she will not honor the agreement B. Filing a lawsuit to have a court formally cancel the contract C. Just refusing to perform her obligations under the contract

Which of the following acts resulting in injury would be 'negligence per se'?

D. All the above acts are 'negligence per se'

Which of the following statements is correct?

D. All the above are correct

Art and Alma made capital contributions of 60% and 40% respectively to their newly formed partnership, AA & Associates. They did not have a written partnership agreement. At the end of the first year, the partnership made a profit of which Alma now claims half. However, Art maintains he should receive 60%. Who is correct?

D. Alma, as the UPA provides that profits are split equally unless the partners agree otherwise.

If Crosby and Dash are in disagreement as to the exact amount of money that Crosby owes Dash, then they may choose to form a new agreement at a set amount. If they both perform the new agreement, their conduct would be an example of:

D. An accord and satisfaction

When Mohammed was hired by Pomico, Inc., he signed the following agreement, "Upon termination of my employment with Pomico, I agree not to work for a competing company within 30 miles of Pomico's headquarters for one year." This agreement, important to protecting secret information developed in the employer's business, is:

D. An enforceable agreement not to compete

Jeffery offers to shovel the snow from Ben's driveway for $35. Ben replies "OK." This is an example of:

D. An express, bilateral contract

Angela sued Tom for battery. Angela was awarded $30,000 for future medical expenses. Five years after the award, Angela realizes that her medical expenses will far exceed $30,000. Under the single recovery principle:

D. Angela will have no recourse against Tom or the court of the medical expenses as long as the original award was reasonable.

Anne and Mike were winding up their partnership. Mike was approached by a person who wanted the partnership to do some work for him. Mike agreed that the partnership would do the work. Generally speaking, in such a situation:

D. Anne is liable unless she filed a statement of dissolution with the Secretary of State within 90 days of when Mike entered the contract.

Denzil was one of 50,000 people defrauded of $40 in an advertising scam. His best course of action to recover his money is to:

D. Become part of a class action lawsuit, which might include plaintiffs who are unaware of the lawsuit or are even unaware they were harmed

Wayne agrees over the phone to sell L.J. Cartwright 1,000 yards of 1-inch diameter rope. Wayne honestly believes that L.J. Cartwright offered to pay $1.00 per yard whereas L.J.Cartwright actually offered to pay 75 cents per yard. If the parties subsequently take their dispute to court, the fact that L.J.Cartwright admits on the stand that he offered to pay Wayne 75 cents per yard will:

D. Both A and C are correct A. Prevent L.J.Cartwright from us-ing the statute of frauds to nullify the contract C. Make it possible for Wayne to enforce the contract to sell 1,000 yards of rope at a price of 75 cents per yard

Laurie is incorporating her business. The business's home state is Wisconsin. Business will be conducted in California, Michigan, Pennsylvania, and Virginia. Laurie:

D. Can incorporate the business in any state

Roberto sued Monica for injuries received in a traffic accident. If Monica does not respond to the complaint and summons served by Roberto within the prescribed time limits, Roberto may obtain a:

D. Default Judgement

In a negligence case, the plaintiff must establish:

D. Duty of care, Breach, Causation, Foreseeable Harm, and Injury

E-trex, Inc. wanted Prince, a professional basketball player, to endorse its products. Price, however, was not interested. E-trex was not deterred and hired a person who looked and sounded like Prince for its commercials.

D. E-trex's conduct raises the issue of commercial exploitation

Jamie is building a new house on her lot. She invites Earnie of Earnie's Excavation to bid on the excavation job. Earnie observes that the lot next to Jamie's is also under excavation and the soil in that lot is normal and not excessively rocky. Based on the assumption that the soil in Jamie's lot will be similar, he and Jamie agree that the excavation will cost $3,000. When Earnie starts digging, he learns there is solid rock under Jamie's lot. Earnie says it will cost an extra $2,500 for the excavation work. Jamie agrees just to get the job done but later refuses to pay a dime more than $3,000. If Earnie sues, the most likely result would be:

D. Earnie wins, as the modification was due to unforeseen difficulties

Which of the following is least likely to be regarded as a necessary?

D. Educational expenses

Which of the following may be a legitimate, nondiscriminatory criterion for selection of an employee?

D. Educational level

Tony fell and injured himself in a Mega Toy Store. Mega Toy Store is incorporated in Delaware. Tony is a resident of Nevada but was injured in a Mega Toy Store located in Arizona. Mega Toy does not do business in Nevada. Tony's damages exceed $100,000. If Tony decides to sue Mega Toy Store:

D. Either A or B (A. He may file the lawsuit in an Arizona state court.) (B. He may file the lawsuit in a federal district court in Arizona.)

Peter, a minor, purchased a car from ACME Motors. Using a fake ID, he misrepresented his age to be 18. The contract is fully executed. Which of the following is correct?

D. Either b or c may be applicable depending on the law of the jurisdiction in which the contract was formed B. Peter cannot disaffirm the contract because of his misrepresentation. C. Peter can disaffirm the contract, because a minor must be saved from his own poor judgment, including his lie

Mike made the following offer to Mick: "I will pay you $500 if you agree to paint my house." Mick replied that he would. At this point, the contract is an:

D. Executory, bilateral, express contract

Which of the following forms of organization is a compromise between starting one's own business as an entrepreneur and working for someone else as an employee?

D. Franchise

When a party to a contract makes a unilateral mistake, the contract:

D. Generally cannot be rescinded by the mistaken party unless the contract is unconscionable or it is proven that the nonmistaken party knew of the error

Newt, a gun dealer, offers to sell a rare civil war musket to Rush, another dealer, for "$15,000, insurance and shipping paid by buyer." Rush responds, "I accept. Insurance and shipping costs divided equally between seller and buyer." The parties:

D. Have a contract and, in the major-ity of states, the different terms will cancel each other out

In which case is the offer still valid at the time the acceptance is made?

D. In a face-to-face transaction, Pat offers to sell Mike his stereo and Mike accepts

After answering a summons and a complaint, Mike received a set of written questions from the plaintiff's attorney. He was directed to respond to the questions in writing under oath. This discovery technique is called:

D. Interrogatories

If Oregon passed a statute that prohibited liquor stores from engaging in any kind of advertising, that statute would be:

D. Invalid as an unreasonable restriction of free speech

A jury decision in a civil case:

D. Is achieved by informal deliberations

The most accurate statement regarding economic duress is:

D. It may be grounds for rescission

Jim was a mechanic. One day when he attempted to weld a car's gasoline tank, it exploded and he was hurt. He filed to collect workers' compensation. His employer resisted on grounds that Jim had been negligent and had also violated the express regulations of the company when he attempted to weld a gasoline tank. Which statement is correct?

D. Jim can recover even if he was negligent and violated the employer's rules

Jim told his manager, Lana, that a co-worker Diane, had been in prison for theft. Lana checked into the matter and, when she learned that Diane had served time in prison for theft, fired her.

D. Jim is not liable to Diane for defamation

The Kelsoe v. International Wood Products, Inc. case was an example of:

D. Lack of consideration

Shortly after Brian started to work at Trevit, Inc., a co-worker, Lee, began asking him out. Brian said no. Nevertheless, Lee persisted. One day Lee touched Brian's crotch. Which statement is correct?

D. Lee committed the tort of battery

Ryan, a minor, contracted to sell his auto to Ed, a 28-year-old. Ryan later refused to complete the sale. If Ed sues to enforce the contract, Ed will:

D. Lose, because the contract is voidable by Ryan

Walter enters a dentist office and points to a damaged tooth. The dentist, Matt, treats the tooth. If Walter refuses to pay and Matt sued:

D. Matt would win; this is an implied contract

Currently in Americans with Disabilities Act litigation, employers win:

D. More than 90% of the time

When Myrtle comes home from work one evening, she finds that her yard has been mowed and trimmed. Later, a man comes to collect for the yard work done. Myrtle refuses to pay for the work since she has never seen the man before and did not hire him to do her yard work. Which of the following answers is most accurate?

D. Myrtle would not have to pay for the yard work

Theresa and Bobbi bought a racehorse together. They agreed to share all expenses and split net profits equally. There was no agreement as to the duration of the partnership. After about a year, Bobbi decided she was tired of the racehorse business and left the partnership. Bobbi did not violate the partnership agreement. Theresa claims Bobbi's leaving was wrongful. Is Theresa correct?

D. No, in a partnership at will, a partner has the right to leave the partnership at any time

Adam moved into an apartment complex. The rules of the complex prohibit unmarried men and women from living together in the same apartment. When Adam's friend, Diane, moved into the apartment he was served with eviction papers. Adam claims the apartment complex is violating his constitutional rights since it allows married couples to live together. Is Adam right?

D. No. Constitutional protections do not extend to privately owned apartment complexes

Jerry believes his co-worker, Ben, is using illegal drugs. Since both he and Ben are nurses, Jerry is concerned Ben's drug usage could result in injury to a patient. He tells his supervisor, Cyndi. Cyndi talks with Jerry about the alleged drug usage and Ben produces a bottle of prescription medicine he is required to take for high blood pressure. The medication does not affect his ability to do his work. When Ben learns it was Jerry who reported him, Ben claims that Jerry committed an act of defamation when Jerry told Cyndi he used illegal drugs. Is Ben right?

D. No. Jerry is protected by the qualified privilege defense.

Megan was employed by a large company. Her supervisor told her to falsify government reports. She refused and was fired. She sued for wrongful discharge. Her employer claimed that, since Megan was an at-will employee, she had no legal right to claim the company was liable for damages. Is the employer right?

D. No. Though at-will employees do not have extensive rights relative to job security, they may not be legally fired for refusing to perform an illegal act.

The directors of MegaCorp learn that an outsider is planning on buying enough voting stock to get herself elected to the board of directors. MegaCorp, which has cumulative voting, quickly puts together a vote of shareholders to eliminate the company's cumulative voting procedure. The shareholders vote to do away with cumulative voting. The outsider, Dawn, who wanted to get herself elected to MegaCorp's board, claims that the company has committed an illegal act. Is she right?

D. No. Under the Model Act, regard-less of MegaCorp's motives, it had the right to act as it did.

David has worked as a CPA for Accountants R Us for about eight months. When his wife had a baby, he requested to take some time off. He believes he is allowed to do so pursuant to the Family and Medical Leave Act. How many weeks is David allowed to take off under the Family and Medical Leave Act in this situation?

D. None

A group of accounting alumni decided to hold a fund-raiser to establish a scholarship for an accounting student. This enterprise is:

D. None of the above

Which of the following are generally considered to be legal offers?

D. None of the above are generally considered offers A. Placing an item up for auction B. Catalog advertisements C. Price lists

Linda agrees to buy Missy's Greyhound race dog for $2,000. Linda is to deliver the money and take possession of the dog the next morning. That night, running his best race ever, the dog runs away from Missy, never to be seen again.

D. None of the above; the contract duties are discharged

Eintz Corp. hired Jose to bribe a foreign government official. Eintz gave Jose $10,000 in cash to make the bribe payment and $2000 for Jose's efforts. Instead of paying the bribe, Jose pocketed all of the money. If Eintz sues Jose, Eintz will:

D. Not be able to recover the $12,000

John owns a thoroughbred horse named Prince Charming that just ran in the Kentucky Derby. Prince Charming came in last, much to John's frustration and embarrassment. John exclaims in a loud voice, "I'm selling that horse to the first person who hands me $100 bucks!" John has:

D. Not made an offer because under the circumstances a reasonable person would not conclude that John had intent to make an offer

Harry agreed to pay $100 to rent a rooftop spot in downtown Seattle to watch the New Year's Eve festivities. The festivities were unexpectedly cancelled because of concern over a terrorist attack. Harry is:

D. Not obligated to pay under the frustration of purpose doctrine

Patty is a poor college student struggling to work and keep up with her studies. Fred, her uncle, promises to pay Patty support of $200 per month for the next six months. Although Fred didn't ask her to, she quits her current job in order to devote full time to her studies for the next six months. Fred mass one payment and then stops with no explanation. If Patty sues, what is the likely result?

D. Patty may win under the doctrine of promissory estoppel

Research has shown that the least important motivation for managers in behaving ethically is:

D. Profitability

If Jane persuades Linda to buy her horse by telling Linda that the horse runs "like the wind," then Jane's statement is:

D. Puffery

When courts consider economic duress, they consider all the following factors EXCEPT:

D. Relative size of the contract

Which of the following is most likely to constitute fraud?

D. Silence as to a toxic waste problem on real property that the buyer would not reasonably find

The doctrine of preemption is based on the Constitution's:

D. Supremacy Clause

Which of the following limitations does not apply to the government in civil proceedings to take a person's liberty or property?

D. The Equal Protection Clause

The Plaza Hotel contracts with EZ Lawn to have EZ mow the grass on the Plaza grounds for the next 10 years. However, there is a clause in the contract that states if the hotel chooses, the contract may be terminated provided Plaza pays EZ $2,000 on termination. Which of the following is correct?

D. The contract is enforceable because the option to cancel clause is supported by consideration

E-mation entered into a contract with a consumer, Ezra. Ezra was a recent immigrant to the United States, spoke very little English, and had no formal education. The contract provided for Ezra to pay $2500 for a computer system. The system was worth $400. If E-mation sued Ezra under the contract, what is the most likely result?

D. The contract is unenforceable because it is unconscionable

E-mation, Inc hires Marvin to steal trade secrets from one of its competitors for $10,000. Marvin demands half of the money up front. E-mation pays Marvin $5000 but Marvin decides not to pursue theft of the trade secrets. E-mation sues Marvin for the return of the $5000. What will the court do with this contract?

D. The court will not do anything to help E-mation get its money back

Oxtron, Inc. substantially performed its obligations under a service contract. Oxtron is entitled to receive:

D. The full contract price minus the value of the defects

Shelly offers to sell Jane goods both parties know are stolen. Jane accepts the offer, and agrees to pay for the goods. Later, Jane refuses to accept or pay for the goods. If Shelly sues Jane for breach of contract, what is the probable result?

D. The law would not enforce Jane's promise, as it does not have a lawful purpose

If an offer specifies no time limit in which to accept:

D. The offeree has a reasonable period during which to accept

Which of the following is NOT a true statement about fraud?

D. The plaintiff must show that although the defendant acted in good faith, the statement was material because the defendant expected the plaintiff to rely on it and enter into the contract

The intent of the offeror to extend an offer to the offeree is generally determined by reference to:

D. The words and conduct of the offeror

Jackie hires Charles to lay new carpet in her bedroom. Charles does such a bad job, that the only way to fix the carpet is to start over and relay the carpet. Which of the following best describes this situation?

D. This is a material breach. Jackie owes nothing to Charles

Jeff was a subcontractor, bidding on a contract for ACE Corp., the general contractor. When adding up the total of materials and labor, Jeff's secretary mistakenly moved the decimal point one place, ending up with a bid of $3500 rather than $35,000. ACE Corp. accepted Jeff's bid, mostly because all the other bids were over $30,000. When Jeff learned of the mistake, he tells ACE Corp. that he cannot do the job for $3500. If ACE Corp. sues to enforce this contract, what is the most likely result?

D. This is a unilateral mistake, but one where ACE Corp. knew that a mistake had been made. Jeff should be able to rescind the contract

Wholesome Bread, Inc. advertised that its honey wheat bread had 25% fewer calories than a competing brand, Valley Grains. In fact, Wholesome's bread had the same amount of calories as Valley Grains' bread. Wholesome Bread's conduct:

D. Violates the Lanham Act

Wally owns 200 acres of land. Wally offers to sell the land to Robert for $1,500 per acre. Robert replies that he does not need 200 acres of land but would like to buy 40 acres at $1,500 per acre. Wally agrees to sell but does not identify which 40 acres. Later, Wally refuses to sell any land to Robert. What is the result?

D. Wally wins; this agreement is too indefinite since it does not identify which 40 acres are to be sold.

Curtis filed a lawsuit against Ulhoff for failure to repay $1,000 according to the terms of a promissory note. The trial ended before it began, with the trial judge granting a motion for summary judgment in favor of Curtis. Ulhoff has appealed, and the Supreme Court of Iowa has remanded the case. This means:

D. We don't know who wins yet because the case is being returned to the trial court for additional steps

Fashions, Inc. has 12 shareholders. The company is subject to the Model Act. What officers is Fashions, Inc. required to have?

D. Whatever officers are described in the corporate bylaws

Trein, Inc. entered into a one-year, $1 million contract with Mia, a sports celebrity, to promote Trein's products. E-presto, Inc., a competitor of Trein, was interested in having Mia promote it products and knew of her contract with Trein. E-presto offered Mia a three-year, $5 million contract. Mia left Trein and signed with E-presto. If Trein sues E-presto for tortious interference with a contract, E-presto:

D. Will not be able to establish a justification

Carey decided to incorporate her business under the name yStar Inc. Before yStar was incorporated, Carey signed a contract in the name of yStar, Inc. to have some office space remodeled. Which statement is correct?

D. yStar will be liable on the contract only if the corporation adopts the contract.

Ethical companies:

E. Both A and B (A. Tend to earn higher returns than companies that engage in wrong-doing) (B. Tend to have more creative employees than companies that engage in wrong-doing)

A business corporation can be incorporated under either state law or federal law.

False

A defendant who engages in pile driving is liable for harm that results form the activity only if the plaintiff proves the harm was foreseeable.

False

A gambling contract is legal unless it is specifically prohibited by state statute.

False

A governmental classification based on gender would be subject to strict scrutiny.

False

A offers to sell her car to B for $500, and B accepts. A's car has a market value of $1,000 but this fact is unknown to A. The contract is unenforceable.

False

A partner always has the right, though not the power, to leave a partnership.

False

A partnership can only be held liable for the partners' authorized acts.

False

A partnership is a separate, taxable entity.

False

A party to a contract has a duty to investigate the other party's factual statements.

False

A quasi-contract is the same as an oral contract.

False

A valid contract can legally be voided by either party.

False

Abdulla hired Granite Construction to build an addition onto his home. Granite Construction dug the foundation but then abandoned the project. Granite Construction is entitled to receive the full contract price minus the value of the defects.

False

Ahmi was a witness in a lawsuit. When asked why he fired Rana, Ahmi replied, "Rana was fired for willful misconduct." Indeed, Rana had not engaged in any misconduct. Rana will be able to successfully sue Ahmi for defamation based on what Ahmi said in court.

False

Alice signs a contract with Bob to buy Bob's house for $150,000 "if I am able to obtain a mortgage loan for $125,000, at no more than 7% interest, payable over 15 years." Assume that Alice tries but is unable to obtain the described loan, and therefore refuses to proceed with the purchase. Alice is in breach of the contract.

False

April put an advertisement in the newspaper advertising the sale of her computer for $500. Simultaneously, six people responded to the ad by mail with formal written acceptances. April is bound on six contracts to sell her computer for $500.

False

As a general rule, employers have a legal obligation to disclose information about former employees to potential future employers.

False

Assume that Jessie and Lester have formed a contract whereby Jessie agrees to deliver 10,000 dozen "Grade A Large Eggs" to be shipped in recycled paper cartons. A shortage of paper makes paper cartons much more expensive, so Jessie uses styrofoam cartons and ships the eggs. Lester is entitled to cancel the contract based on this deviation of terms in the contract.

False

Barbara, a skilled welder, was hired at Mainco Enterprises for a welding position. Steve, a recent graduate with few job skills, was also hired and was expected to develop general skills on the job. Both were asked to sign noncompete clauses limiting future employment if they left Mainco. A court would be very likely to enforce the noncompete clauses unless the time or geographic restriction is unreasonable.

False

Billy owes a liquidated debt of $3000 to Rayna, his personal weight trainer. Billy sends Rayna a check for $300 on which he has marked, "Payment in Full." If Rayna cashes the check she will not be able to successfully sue Billy for the remainder of the debt.

False

Brock and Heidi agree to jointly run the hospital's fundraiser. Even if they don't have a formal, written agreement, they have formed a partnership.

False

Candy, Inc. signed an agreement with Sweet Plantation. Under the contract, Candy, Inc. agreed to purchase all the sugar cane Sweet Plantation grew during the coming season. This contract will be unenforceable due to its vagueness.

False

Common law is a body of cases decided by legislatures.

False

Concurrent conditions arise when there is both a condition precedent and a condition subsequent.

False

Congress has the sole responsibility for creating statutory law.

False

Congress passed the federal OSHA establishing job safety standards. Illinois passed its own statute, seeking to protect the general public and workers from hazardous wastes. The Illinois statute did not violate the Commerce Clause because it imposed no restriction on interstate commerce. Local workers were obligated to obey both the federal and the state regulations.

False

Contracts generally do not require bargaining that leads to an exchange between the parties.

False

Contracts in which one party agrees to buy all his requirements of certain goods from the other party are generally unenforceable because there is no definite amount.

False

Contributory negligence is followed in most states

False

Corporations have a distinct advantage over other forms of business organization in the area of taxation.

False

Courts normally require adequate consideration.

False

Cynthia and Brian were friends. Brian was a dare devil. Because of his antics, Cynthia thought that Brian wasn't long for this life. Cynthia purchased a life insurance policy on Brian's life. Subsequently, Brian was killed in a car accident. Since Cynthia and Brian were friends, Cynthia had an insurable interest in his life and will be entitled to the insurance proceeds.

False

Denton agreed to build a cedar deck for the Thrashers for $7,000. After he began the work, the Thrashers asked him to add cedar flower boxes at one side. Denton replied he would, but it would cost an additional $600. The Thrashers would not be obligated to pay the additional sum because the original agreement already obligated Denton to complete the deck for $7,000.

False

Disputants Martin and Daulton have hired Thurman to mediate their disagreement. Although Martin and Daulton must accept whatever decision Thurman makes, the mediation has the advantage of keeping Martin and Daulton out of court.

False

Doyle contributed $10,000 to become a partner in the existing partnership of R & Z Heating. If Albert wins a judgment for $25,000 against R & Z on a claim that was incurred before Doyle became a partner, Doyle shares joint and several liability with his new partners for the whole obligation.

False

Dr. Wong, a dentist, and his wife, an attorney, can protect their personal assets with limited liability from their business dealings by creating and operating a professional corporation together.

False

Economists analyzing legal issues by studying externalities have concluded dram shop laws are ineffective.

False

Elion was a partner in a partnership. Elion's death is considered a wrongful dissociation.

False

Elizabeth worked as a salesperson in a carpet store. She was in the process of divorcing her husband and needed some money. Elizabeth sold her wedding ring. Elizabeth is considered a merchant with regard to the sale of the ring.

False

Emails and their attachments are not subject to pretrail discovery.

False

Franchise fees can be costly, but they are usually payable over a number of years, after profits are generated from the business.

False

Fraudulent, but not innocent, misrepresentation permits the injured party to rescind a contract.

False

Gadberry lives in a "common interest development" (CID) and has parked his new pickup truck in his driveway. The Neighborhood Association informs him that, according to their regulations, he may not have a truck in the sight of passersby. The Association has made an unconstitutional restriction of the property rights of residents of the CID.

False

Generally, neither a "time is of the essence" clause nor a "force majeure" clause will be recognized by the courts because these types of clauses are seen as a violation of public policy.

False

Hankrin Corp. is incorporated under Delaware law and has its principal place of business in Annapolis. For diversity purposes, it is considered a resident only of Maryland.

False

Hasbro, Inc., the trademark owner of "Candy Land," sought a court injunction to prevent Internet Entertainment Group, LTD from using the domain name, "candyland.com." A jury will decide whether Hasbro is entitled to this remedy.

False

Heather applied for a promotion, but her manager promoted a co-worker because the manager knew Heather was seven months pregnant. The manager did not want to promote someone who would probably be taking time off of work for childbirth and child care. The manager has acted legally and reasonably to protect her company's interests.

False

If Gloria threw a rock which hit Merle, she is liable for an intentional tort of battery only if she intended to injure or harm Merle.

False

If Lorenzo is seeking an injunction against Brenda to prevent her from selling materials that infringe his copyright, he is entitled to a jury trial if the value of the materials is over $100.

False

If Milan asks a court to order Pamela to stop reprinting his copyrighted material, he is seeking a legal, rather than an equitable, remedy.

False

If a court finds as a matter of law that a clause of Superior Siding's contract was unconscionable at the time the contract was made, the court must refuse to enforce the contract.

False

If a salesperson says, "This is a great car," but the car turns out to be a lemon, the salesperson has committed fraud.

False

If both parties believe they have a binding contract, this belief is controlling if there is later a question about the validity and enforceability of the agreement.

False

If interrogatories are being used as a form of discovery, the opposing party must generally answer all the questions orally under oath.

False

If the law denies all liability for harm done by tortious or criminal activity, no one will have to pay for the harm.

False

In a civil case, the plaintiff must prove the case beyond a reasonable doubt.

False

In a strict liability case, the courts still consider if the defendant acted in a reasonable and prudent manner.

False

In an advertisement, FreshAir, Inc. compared its air freshener to a competing brand. The ad stated that FreshAir lasted for 3 hours while the competitor, Smell Sweet, lasted for only 36 minutes. In fact Smell Sweet freshens the air for more than 2 hours. FreshAir has not violated the Lanham Act because of the First Amendment's guarantee of freedom of speech.

False

In negotiating the purchase of a vehicle, the sales representative told Karla, "I guarantee that you will be personally satisfied with this car." The guarantee was written on the contract when Karla purchased the car. If a controversy arises over Karla's satisfaction, the court will apply a subjective standard, which means Karla's judgment must be reasonable.

False

In order for a federal court to have jurisdiction, there must be a federal question involved and at least $75,000 in dispute.

False

Incorporators are required to sign the charter, deliver it to the proper state officials, and purchase a certain percentage of the initial stock offering.

False

Incorporators of Maizey Co. signed and delivered the corporate charter to the proper office, but due to inefficiencies in the government office, the filing was delayed. During the period between the delivery of the charter and the filing, a promoter of Maizey Co. entered a contract for the delivery of goods using the corporate name. The supplier, if it finds out the filing had not been completed when the contract was entered, may hold the promoter personally liable on the contract.

False

Irving is shopping at the local Computers R Us store and agrees to buy a powerful computer for his home "on the condition of personal satisfaction." If Irving takes the computer back to the store for no reason other than that he doesn't like the computer, then the seller will have no choice but to accept the computer and terminate the contract.

False

It is currently legal for a private employer to use lie detector tests as part of its usual hiring process.

False

It is illegal for shareholders to transfer their stock to a trust and give the trustee the power to vote the shares.

False

Judge Abbott can serve as both a federal judge and a state court judge at the same time.

False

Leasing goods is an insignificant part of business, so its rules are governed by extensions of the UCC Article related to sales rather than having a separate article of the Code to cover leasing.

False

Li was involved in the winding up of her partnership. Li is not entitled to compensation for her work since she is a partner.

False

Lian contracted for financial services from E-wise. This contract is governed by Article 2 of the UCC.

False

Limited liability is a major advantage of a partnership as compared to a corporation.

False

Lorene, an artist, orally agrees to sell Sabrina a painting for $600. While Lorene is busy talking on the phone, Sabrina writes her a note on the back of an envelope she finds in her purse. The signed note states that she will stop by the studio to pick up the painting within the week. Sabrina changes her mind about the painting, and when Lorene sues to enforce the contract, Sa-brina defends on the basis of the statute of frauds. Sabrina will succeed with this defense.

False

Lori works for Big Corporation as an "at will" employee. Richard, owner of a small store, offers to pay Lori much more money if she will leave Big Corp and work for his store. When Lori starts to work for Richard, Big Corp correctly claims Richard is liable for tortious interference with a contract.

False

Lucy and Rick sign a contract in which Lucy agrees to deliver 10 boxes of chocolates in exchange for Rick's promise to pay $5 per box. Lucy delivers the candy. Rick pays for the goods. This contract is fully executory.

False

Megan agrees to sell Neff her quartz watch but they do not specify a price. In such a case, the court would not enforce the agreement because all of the essential terms are not present.

False

Morality plays no part of gambling contract legality.

False

Most contracts are discharged by mutual agreement.

False

Most state legislatures have passed legislation to reimburse crime victims directly through the state government.

False

Nella offers to sell her crop of strawberries, which have just been picked, to Morgan's Market. Since she does not specify a time limit for acceptance, Morgan's can accept the offer the following week, as long as Nella has not revoked it.

False

Obscene speech is protected by the First Amendment.

False

On Monday, Harry puts an offer in the mail to Sally to sell his guitar for $50. Monday night when jamming with his buddies, he decides he will really miss his old guitar and has second thoughts about selling it. Tuesday morning he puts a revocation in the mail informing Sally he has changed his mind and the guitar is no longer for sale. The revocation is effective on Tuesday morning.

False

Paid surrogacy contracts are viewed by the legislative majority in all states as immoral and illegal.

False

Primary methods of alternative dispute resolution include litigation and mediation.

False

Pushy Pat, a persuasive salesman, talked Naive Nancy into purchasing something she didn't really need or want. Naive Nancy may rescind the contract because of undue influence.

False

Ramon purchased 5,000 pounds of coffee from Quick Jump Coffee. The coffee was to be delivered on September 1. Since the contract included a date for performance, time is of the essence and the delivery date is strictly enforceable.

False

Rudolph overhears Macy's plans to go skydiving over spring break. Not really knowing Macy, but figuring it's worth a chance, Rudolph rushes out and buys an insurance policy for $100,000 on Macy's life. Macy does in fact meet her demise jumping out of the airplane. Rudolph can collect the $100,000.

False

Sandra sued her employer, Cape Inc., claiming that she was sexually harassed on the job. This is a criminal lawsuit.

False

Section 2-306 of the UCC expressly disallows output contracts in the sale of goods.

False

Society enforces all promises in the interests of simple morality.

False

Society is hurt when business managers behave ethically.

False

Strawly Corp. wants to sell land which has toxic waste underground. It may shift all the responsibility for environmental cleanup to the buyer by including such a provision in the sales contract.

False

Terminating a corporation is a three-step process: dissolution, winding up, and termination.

False

The "takings clause" prevents the government from taking private property for any reason.

False

The Employee Retirement Income Security Act (ERISA) requires employers to establish pension plans for employees.

False

The Federal Trade Commission will not allow the sale of franchises that are unfair to the franchisee.

False

The Fifth Amendment to the Constitution provides Robert, an employee of Mattax Paper Co., due process protection from being fired without a hearing by a neutral fact finder.

False

The First Amendment guarantee of freedom of speech is an absolute right.

False

The First Amendment to the U.S. Constitution explicitly protects citizens from abridgment of the right of free speech by any level of government.

False

The UCC does not apply to contracts for the sale of goods if the value of the goods is less than $500.

False

The UCC has abolished the common law requirement of consideration in all contracts involving the sale of goods.

False

The UCC is federal legislation enacted by Congress.

False

The UCC requires consideration for agreements modifying contracts for the sale of goods.

False

The age of majority to contract in all states is 21.

False

The behavior of top executives regarding ethical issues has little effect on the behavior of the employees of the organization.

False

The dissolution of a partnership means the same as its termination.

False

The most common form of business ownership is the corporation.

False

The rules set out in the UPA defining the liability of partners to outsiders can be modified by the partnership agreement.

False

The statement, "You will have a job with Snelling & Snelling as long as you complete your degree in business administration this May" does not create a condition because it does not include the phrase "provided that."

False

There is strong evidence that ethical behavior pays off financially for businesses.

False

To be a close corporation, the business must be small, with under 20 owners and under $500,000 in gross annual income.

False

To form an LLC, a charter and an operating agreement must be filed with the Secretary of State in the jurisdiction where the business will operate.

False

To raise revenues, the City of St. Cloud required restaurants to purchase a special permit if they wanted to serve food in an open-air patio. While at Hola Taco, a restaurant in St. Cloud, a customer notices that Hola Taco's permit expired. Because Hola's Taco's permit expired, the customer is not legally required to pay for her food.

False

Tort law is not concerned with how to respond to injury caused by criminals, as this would be addressed by criminal law.

False

Uncle Brandon promises to give his motorcycle to you at the end of the month. This transaction is governed by UCC, Article 2, because a motorcycle is within the definition of "goods."

False

Under corporate law, a corporation that officially states its purpose is "to engage in any lawful activity for which corporations may be organized under the General Corporation Law of Idaho" is too broad. A corporation's purpose must be more narrowly defined.

False

Under the Family and Medical Leave Act, an employee can take up to 12 weeks of paid leave each year for certain personal and family illness situations.

False

Unethical behavior is a bar to financial success.

False

Upon the recommendation of a friend, Hope hires Joey to rewire her kitchen and he completes the work within the time agreed. Then Hope finds out that Joey is not a licensed electrician, and she refuses to pay him for the work. A court will enforce the agreement because otherwise Hope would be unjustly enriched.

False

Valerie promises Teresa that she will pay Teresa $75 if Teresa will clean Valerie's house by noon on Saturday. If Teresa cleans the house by noon on Saturday and Valerie pays the $75, the this is an implied, bilateral, executory contract.

False

Vern Valve Company makes valves for plumbing fixtures. At the beginning of the year, it sends out a price list addressing each one, "To our valued customers." Honest Hank Hardware orders a variety of valves at the prices quoted on the price list. Vern Valve must sell the valves to Honest Hank for the prices quoted on the list.

False

When Olga asks Sven if he wishes to sell his Harley motorcycle, he replies that he would not sell it "for less than $2,000. "Olga replies, "I accept," and hands him $2,000. A contract exists.

False

When Randy accepted a job with Buren Construction, Randy signed the following agreement, "Upon termination of my employment with Buren Construction, I agree never to work for another employer as an electrician." If Randy resigns from Buren Construction, this agreement would be upheld under the theory of freedom of contract.

False

While hunting, Roger enters onto Virgil's property without permission and is injured by a falling, dead tree limb. Under the common law, Virgil is liable for Roger's injuries.

False

Wilfred was driving too fast for the icy road conditions and hit Sally's car. Sally can sue Wilfred in criminal court.

False

Working out some frustration after a bad game, Jessica angrily hits a baseball and then sees it is flying towards the umpire. She yells, "Watch out!" The umpire ducks and the ball misses him. Since there was no physical contact, no assault or battery occurred.

False

Zubair, Inc. leased the 34th floor in an office building in downtown Pitts-burgh. This contract is governed by Article 2A of the UCC.

False

'Res ipsa loquitur' shifts the burden of proof from the plaintiff to the defendant

True

A company that engages in unethical behavior may suffer severe consequences.

True

A corporation by estoppel is based on fairness rather than strict legal rules.

True

A corporation is not allowed to issue dividends to shareholders unless it is solvent.

True

A corporation must always have a registered agent within the state of incorporation, even if the corporation does not maintain an office in that state.

True

A court may, at times, discharge a party who has not performed.

True

A de jure corporation is recognized as a corporation despite a defect in incorporation.

True

A landowner's highest duty is owed to invitees.

True

A letter of intent summarizes progress made during business negotiations, but it does not necessarily create a binding contract.

True

A limited liability company, unlike a Subchapter S corporation, can have members that are corporations, partnerships, or nonresident aliens.

True

A partnership is liable for both the negligent and intentional acts of a partner if the acts were committed within the ordinary course of the partnership's business.

True

A party injured by fraud generally has the choice of suing for damages or rescinding the contract.

True

A prospective juror was exceed from serving after being questioned by the plaintiff's attorney. No reason was given for the rejection. This would be accomplished by the use of peremptory challenge.

True

A salesclerk at Braybon's Department Store observed a customer remove a rin from a display case and put it in her purse. In most states, Braybon's will be able to detain the customer for suspicion of shoplifting.

True

A sports fan, injured by a hockey puck that flew into the stands during an NHL game, would be subject to the defense of assumption of the risk if she files suit to recover for her injuries.

True

A summons is a paper ordering a defendant to answer a complaint within a certain time.

True

A tort is a violation of a duty imposed by the civil law.

True

A wholesaler of coffee notifies a retailer that it cannot fulfill its contractual obligation to deliver 1,000 pounds of coffee at the agreed upon price of $2.00 per pound next month because of recent price increases in coffee. The retailer may treat the wholesaler as having breached the contract and sue for damages even though the wholesaler's performance is not due until next month.

True

According to the UCC, one or more open terms will not cause a sales contract to fail for indefiniteness as long as the parties intended to make a contract and there is a reasonably certain basis for the court to grant an appropriate remedy.

True

After being served with a summons and a copy of the complaint, a defendant usually files a pleading known as an answer, briefly replying to each allegation in the complaint.

True

After her 18th birthday Lora may, by words or action, ratify a contract she made during the previous year.

True

Agreeing not to open a competing business could be consideration.

True

Alex promises to pay $100 to anyone who finds his lost watch. Kate finds and returns the watch to Alex after hearing of the reward money. Alex and Kate have an enforceable unilateral contract.

True

Alicia and Ted have a written agreement wherein they will share the losses of their joint business. This agreement is strong evidence they are partners.

True

All states allow the remedy of rescinding a contract for the sale of goods while still allowing the remedy of suing for damages.

True

An agreement may violate public policy even if the agreement does not require a party to commit a crime, tort, or violate a statute.

True

An appeals court can rule that a trial court's ultimate ruling was correct even if the trial court made some minor errors during the trial.

True

An illusory promise is not consideration.

True

Boris sky dives out of a plane and gets hung up in a tree, hopelessly suspended and swinging precariously in his parachute from the branches of the tree. Natasha sees that he is in trouble and comes to his rescue. Once Boris is safely on the ground, he gratefully promises to give Natasha half of his life savings account. When he changes his mind, Natasha will probably be unsuccessful in enforcing his promise.

True

By creating three independent and equal branches of the federal government, the U.S. Constitution limited the federal government's power.

True

Congress passed a law imposing penalties for displaying "indecent" material online where children could see it. If the U.S. Supreme Court subsequently rules that the statute conflicts with the First Amendment of the U.S. Constitution, the statute is void.

True

Consideration can be a promise or an act.

True

Contract rescission can sometimes be based upon a unilateral mistake.

True

Contracts for the sale of fabric, automobiles, computers, furniture, and paper clips would all be governed by Article 2 of the Uniform Commercial Code.

True

Cooperatives may be either incorporated or unincorporated businesses.

True

Corporations have perpetual existence.

True

Courts recognize a tort of negligently retaining a violent employee.

True

Dewayne sold a space heater to Vivian, telling her it would heat a 200-square-foot area, even though he knew it would effectively heat only about one third of that space. Dewayne is liable for the intentional tort of fraud.

True

Dram shop laws impose liability on those who commercially serve alcohol for injuries caused by their intoxicated patrons.

True

During the hiring interview, Supervisor Staci told Henry that as long as he did his job as requested, he would have a job until he retired. Courts have been willing to enforce such an oral promise, even if the company's top management did not approve the statement.

True

Ethics is the study of how people should act.

True

Filings are required to form and operate a limited liability partnership.

True

Firing an employee for her refusal to violate the law would raise a claim of wrongful discharge.

True

Generally, a joint venture is a partnership created for one limited purpose.

True

Generally, ethical managers have happier, more satisfying lives.

True

Generally, mandatory arbitration provisions in a contract are valid.

True

Hall was arrested for burning the United States' flag in a protest of governmental policy. His action is protected under the First Amendment's guarantee of free speech because the flag burning is considered symbolic speech.

True

Hilda owes Lex $3,000, which is an undisputed amount. If she offers him her car in full settlement of the debt and he accepts, the agreement is binding and he can no longer claim she owes him anything on the original debt.

True

If a contract is made with a person required by law to hold a license, and the purpose of the license is protection of the public, the contract made by an unlicensed person will generally be unenforceable.

True

If a minor can cancel a contract, it can be done at any time during minority or within a reasonable time after reaching majority.

True

If a whistleblower successfully brings suit against a company that defrauds the government, the whistleblower can receive 30 percent of the damages awarded to the government.

True

If an employee is an employee at will, the traditional rule was the employer could fire the employee for a good reason, a bad reason, or no reason at all.

True

If the offer does not specify a type of acceptance, the offeree may accept in any reasonable manner and medium.

True

If the seller has made a substantial beginning in manufacturing cus-tom-ordered goods, then an oral contract may be enforceable regardless of the amount of money involved in the contract.

True

In 1994, the Arizona Supreme Court decided the case of Hernandez v. Arizona Board of Regents and found a duty of care to avoid furnishing alcohol to underage consumers. If in 2008 a Flagstaff, Arizona plaintiff brings a lawsuit against an Arizona university's fraternity for providing alcohol to members under the legal drinking age, the Hernandez v. Arizona Board of Regents case will serve as precedent.

True

In a mixed contract involving goods and services, Article 2 of the UCC will govern if the predominant purpose is the sale of goods.

True

In many states it is illegal to lend money to help someone gamble.

True

In order for a plaintiff to win a case involving intentional infliction of emotional distress, she must prove the defendant acted in an extreme and outrageous manner.

True

In seeking to ascertain whether there is a meeting of the minds, the courts look to how a reasonable person would objectively view the language or actions of the parties.

True

Jeremiah was a partner in a partnership, but quits. Dissociation has occurred.

True

John did not have a license to practice medicine in Florida. Nevertheless, when he retired to Florida, he started providing medical services to the people in his condo. Isaac, John's next-door neighbor, owed John $2000 for medical services. John will not be able to enforce the contract he made with Isaac.

True

Judicial review is the power of the federal courts to declare a statute or governmental action void.

True

Kenneth was exposed to rendition on his job in an environmental cleanup. In a lawsuit against his employer, the court must decide the full extent of both present and future damages rather than allowing Kenneth to return to court years later if medical problems develop at that time.

True

Krista, the Director of Sales at Trein, Inc., had supervised Rex's work for eight years. Rex applied for a job at E-presto, Inc. E-presto called Krista for a recommendation. In giving the recommendation, Krista will be protected from a claim of defamation by a qualified privilege provided she acts in good faith.

True

Kyle, Pedro, and Madeline form a partnership. There is no agreement as to the duration of the partnership. The partnership is a partnership at will.

True

L & M loaned Joan $400 so that she could buy her textbooks for the current semester. L & M's terms for repayment of the loan are, $200 in two months, $200 in four months, and another $100 at the end of the fifth month. The legal rate of interest on this type of loan is six percent per annum. L & M's loan is usurious.

True

Lee owns 1,000 shares of common stock in TriColor, Inc. Common stock is last stock in line for any corporate payouts, including dividends and liquidation payments.

True

Li, a partner, was involved in the winding up of the partnership. A lucrative business opportunity for the partnership arises. Li does not have the right to take on this new business.

True

Mary ges into Honest Harry's Electronics and purchases a TV. Mary agrees to pay for the TV in 30 days on the store's "30 days same as cash" plan. This is an executory contract.

True

Monumental, Inc. contracts with Champion Builders to erect a three-story office building on a parcel of land it has purchased. Before construction begins, the local zoning board changes the zoning of the parcel and those adjoining it to residential use only. Monumental's contract with Champion is discharged.

True

Most states recognize some form of comparative negligence.

True

Nunnsky's Retail sent out newspaper inserts advertising wool suits for $50. In fact, the store had only two, out-of-style suits for sale at this price. Their other wool suits started at $175. If Nunnsky's acted in bad faith in its advertising, consumers may have protection through state statutes.

True

One purpose of contract law is to make business matters more predictable.

True

Opinion is generally a valid defense in a defamation lawsuit because it cannot be proven to be true or false.

True

Owners of preferred stock typically have a preference in liquidation.

True

Pastor Tom was employed by the First Church for 40 years. On Pastor Tom's retirement there was no adequate pension plan. Two months after the retirement, a wealthy parishioner, in consideration for Pastor Tom's 40 years of faithful service and for being such a "sweet" man, promised to pay him $500 per month for the rest of his life. This promise probably is not enforceable.

True

Prior to the Industrial Revolution, the primary law of employment was that, absent an agreement otherwise, a worker was hired for a year at a time.

True

Professor Jones accuses Rachel, a senior at a large state university, of cheating on an exam. The Professor claims that Rachel must prove to him that she did not cheat. If she fails to convince him, she will be expelled from college. Rachel is being denied her due process rights.

True

Public officials and public figures receive less protection from defamation than ordinary people.

True

Punitive damage are intended to punish the defendant for conduct that is extreme and outrageous.

True

Rachel Retailer sends a preprinted purchase order offering to buy goods from Snidley Supplier. Snidley acknowledges Rachel's offer with a preprinted acceptance form. The terms of the two forms do not mirror each other. To analyze whether an enforceable contract exists, one must first determine whether the new language in the acceptance is an additional term or a different term.

True

Raul agrees to paint Mike's house for $1,000. Before finishing, Raul states it is too hot to finish, and Mike offers to pay $1,200 if Raul finishes. Mike's statement that he will pay $1,200 is unenforceable.

True

Revocation is the withdrawal of an offer by the offeror.

True

Robert offers to buy a car from Jane for $400. Jane must accept this offer in order to form an enforceable contract.

True

Roger parked his car at a garage that has a large sign at the entrance saying, "This garage is not liable for items stolen from a car." This type of notice is referred to as an exculpatory clause.

True

Roger, a minor, buys a stereo from Tuneland, Inc. Roger uses the stereo for a few months, returns it to Tuneland, and demands his money back. In a majority of states, Roger may return the stereo and he does not have to pay for the use of the stereo or the damages.

True

Sara decided to incorporate her business under the name Gomo, Inc. Before Gomo was incorporated, Sara signed a contract in the name of Gomo, Inc. to lease a store front. Sara did not tell the other party that Gomo was not yet formed. Sara is personally liable on the lease.

True

Shyff decided to incorporate his business under the name of "Zamm." In addition to "Zamm," the Model Act requires that Shyff include one of the following words: "corporation," "incorporated," "limited," or "company" or an abbreviation thereof.

True

Silas asks his friend Shelby over to go fishing at his pond. If he fails to warn her that the dock has a rotten spot and she falls through and is injured, Silas would be held liable in most states.

True

Since 1900, the number of workplace injuries and deaths has decreased, partly due to the OSHA, even though the size of the workforce has increased fivefold.

True

Software clickwrap and shrinkwrap agreements limiting the manufacturer's maximum responsibility to a refund of the purchase price even if the software destroys your hard drive have generally been found to be binding against consumers.

True

Some courts have held that employee handbooks create binding contract terms.

True

Spencer, an adult of sound mind, has the legal capacity to contract.

True

Summary judgement is appropriate when there are no essential facts in dispute.

True

The Constitution ensures that the states retain all power not given to the national government.

True

The Pines, a small motel in central Georgia, may be subject to federal regulation even though it is not close enough to the state borders to have many guests from other states.

True

The UCC imposes a duty of good faith in the performance of all contracts.

True

The UCC recognizes commercial impracticability as a ground for discharge of a contract.

True

The case of Apcar v. Gaus illustrates that it is essential to comply with all the technicalities of a limited liability partnership statute.

True

The common law of agency applies to relations between partners and it also applies to relations between partners and third parties.

True

The elements of a contract are agreement, consideration, legality, and capacity.

True

The legal right to sue for a breach of contract is subject to a statute of limitations.

True

Timothy and Holly are partners in a printing shop. If Denver obtains a judgment against Timothy for injuring Denver while Timothy was on partnership business, Denver must try to collect from the partnership before going after Timothy's personal assets.

True

To be valid, an agreement not to compete must be ancillary to a legitimate bargain.

True

Travis had too many beers at the baseball game. Ed realized Travis was so intoxicated he wouldn't know what he was doing, so he got Travis to sign a promise to sell his motorcycle to Ed for $50. When Travis gets sober, he may void the contract.

True

TriColor, Inc. is doing business in Minnesota, West Virginia, and Oklahoma. TriColor must register in all three of these states.

True

Under a contract, Danielle is required to make a set of draperies out of fabric chosen by the homeowners, the Flynns. After Danielle makes the draperies according to the contract requirements, her duties under the contract are discharged.

True

Under the Equal Pay Act of 1963 an employee may not be paid at a lesser rate than employees of the opposite sex for tasks requiring equal skill, effort, and responsibility under similar working conditions.

True

Under the UCC, a merchant is frequently held to a higher standard of conduct than a non-merchant.

True

Under the natural law theory of jurisprudence, an unjust law is no law at all.

True

Vernon suffers from a mental impairment due to a brain injury from a motorcycle accident. He contracts with Glena to purchase her dining room furniture. A month later, he tries to void the contract. If he is unable to return the furniture, a court will not rescind the agreement unless Vernon can show that Glena acted in bad faith.

True

Wever, Inc. is considering relocating a facility to Mexico. The interests of the various stakeholders affected by this decision may conflict.

True

When promissory estoppel is used by the courts, it is because there is NOT an enforceable contract present.

True

Whistleblowers are employees who disclose illegal behavior on the part of their employers.

True

Wrongful discharge prohibits an employer from firing a worker for a bad reason.

True

You have placed an antique desk up for auction and the auctioneer has not made any special announcements about the sale. You can withdraw the desk at any time before the auctioneer closes the sale by announcement or by the fall of the hammer.

True