Business Law CLEP Diagnostic Test

Which of the following is not true of administrative agencies?

Adjudications before administrative law judges must follow the Federal Rules of Evidence

Which of the following is NOT an essential element of a strict liability claim for product liability?

The defendant must be a seller of goods

In general, a defendant claiming self-defense must show that

The defendant reasonably believed her actions were necessary to protect herself

Which of the following is never a valid defense to a lawsuit alleging negligence?

The defendant's action was unintentional

Which of the following is a distinction that can be drawn between a trial court and an appellate court?

A trial court conducts trials, and an appellate court does not

Which of the following contractual agreements would not be required in writing?

A contract for goods worth $300

On Monday Leslie mailed an acceptance to Peter's offer. On Tuesday Leslie changed her mind and mailed a rejection to Peter's offer. Which of the following will apply if Peter receives the rejection before he receives the acceptance?

A contract will result because acceptance is effective upon dispatch

The ability of a buyer to purchase substitute goods in the event of a seller's breach is known as:

A cover

Which of the following defendants can file for a writ of habeas corpus?

A defendant who is in custody after her judgement is deemed final

Which of the following can count as valid consideration for a contract?

An agreement to do something in the future An agreement to not do something in the future

Virginia entered into a contract with Tammy, that states is cannot be assigned. Assuming there is no other provision related to assignment, which of the following statements if correct?

An assignment by Virginia would entitle Tammy to sue Virginia for breach of contract

Which of the following best defines the frolic and detour doctrine?

An employer can be held liable for all an employee's actions during the course of her employment except those that are substantial deviations from her employment responsibilitiesCas

An agreement to require a buyer to resell products to a particular manufacturer is known as:

An exclusive dealing agreement

Nancy say Cynthia selling cookies on the corner for $1 each. Nancy took $3 out of her pocket and gave it to Cynthia, who gave Nancy three cookies, which Nancy promptly ate. Which of the following best describes this transaction?

An executed exchange

A contract that keeps an offer open for a period of time is called:

An option contract

Which of the following is a distinction that can be drawn between assignment and delegation?

Assignment transfers a right, and delegation transfers a duty

A method of establishing a breach of duty based on a finding that an act does not generally occur without negligence is called

res ipsa loquitor

The plaintiff in a civil case must prove her case:

By a preponderance of the evidence

In general, the Supreme Court grants a writ of certiorari in which of the following cases?

Cases involving conflicts between state courts on important questions of law

All of the following necessarily terminate an offer except:

Changed curcumstances

In an action for an intentional tort, a defendant may raise which of the following defenses?

Consent

Daniel is driving 30 miles above the speed limit and accidentally veers off the road, hitting a tree. The tree falls on Elaine's house, damaging a priceless work of art. If Elaine sues Daniel, a court will likely rule that:

Daniel is liable to Elaine because the damage to the artwork was a sufficiently foreseeable consequence of Daniel's actions

Which of the following decisions could NOT be heard in a state court?

Decisions involving a federal treaty

Which of the following functions could NOT be performed by a judge of a trial court?

Delivering a verdict

Theories that ethics should be based on duties rather than consequences are known as:

Deontological

A court will give heightened scrutiny to all of the following state statutes except a statute that makes distinctions on the basis of:

Economic class

Edward sold Ivan an alarm clock. Under the agreement, the alarm clock was sold "as is". When Ivan took the clock home and tried to set it, the alarm did not work. If Ivan sues Edward, which of the following is true?

Edward can be held liable unless the "as is" language was in writing, conspicuous, and mentions "merchantability"

Ellen is angry with Sheila and grabs a stick to hit her. As she swings, Ellen misses Shelia entirely, but hits Benjamin instead, causing him injury. Which of the following is true?

Ellen can be held liable to Benjamin for an intentional tort and negligence

Emma, the owner of a pizza shop, was engaged in discussions with Todd regarding the possibility of his being her delivery driver. However, Sharon convinced Todd to work for her instead. If Emma sues Sharon, the court is most likely to hold that:

Emma can recover if she can prove that Sharon knew of her relationship with Todd

Rene told Daryll that he could purchase her new car if he promised to pay her $50,000. Unbeknownst to Daryll, Rene was playing a practical joke on him and did not intend to sell her car. When Daryll told Rene that he was willing to pay her $50,000 for her car, Rene immediately told Daryll that she was just joking and that the car was not for sale. If Daryll sues Rene to purchase the car, the court will probably find that Daryll is:

Entitled to purchase the car because Rene's words reveal an intent to be bound

Eric and Len are partners in a general partnership that sells ice cream. Eric decided that he also wants to sell sandwiches. For the next three weeks, Eric sells sandwiches in Len's presence. Assuming Len never expressly consented to the selling of sandwiches, which of the following is true?

Erie has actual authority because Len's failure to object means he acquiesced

In interpreting a written contract, a court could look at all of the following except:

Evidence from a witness regarding what the parties intended when drafting the contract

After a plaintiff files a complaint to begin a civil lawsuit in federal district court, which of the following is not an action the defendant may take immediately?

File and appeal

Aidan, who owns a clothing store, sees Evan handling merchandise at the back of the store and then sees him reach into a bag. As a result, Aidan thinks Evan has stolen an item of clothing. As Evan leaves the store, Aidan asks his security guard to detain Evan, take him into a back room of the store and lock the door. The security guard does so. Aidan immediately calls the police. An officer arrives ten minutes later, searches Evan, and finds no clothing. Evan then leaves the store. If Evan subsequently files suit for false imprisonment against Aidan, how is a court likely to rule?

For Aidan, because he was entitled to detain Evan for 10 minutes

Maggie and David reach an oral agreement, under which Maggie will sell some land to David in return for $250. Before she conveys the land to David, Maggie and Julien sign a written contract whereby Maggie agrees to sell the same land to Julien for $3,000. David sues for breach of contract, and at trial Maggie agrees that she and David had an oral agreement but says that she broke that agreement because Julien offered her more money. How is a court likely to rule?

For David, because Maggie breached a valid contract

Silena and Susan form a contract for Silena to fix the air conditioning in Susan's house in return for $500. However, Silena decides that she doesn't feel like working, so she sends Rosa to do it instead. Susan refuses to allow Rosa to do the work, insisting that Silena must do it. Silena sues for breach of contract. How is the court likely to rule?

For Silena, because Rosa is her delegate, and Susan must accept performance from Rosa

Gina and Bobby, both eight years old, get into a fight at school, and Gina hits Bobby in the face, causing injury. If Bobby sues Gina, which of the following is true?

Gina can be held liable for an intentional tort and negligence

Ordinarily a buyer is liable for which of the following?

Goods she fails to reject after a reasonable opportunity to inspect

All of the following federal statutes relate to antitrust law except the

Gramm-Leach-Bliley Act

On receiving a summons, a defendant can do which of the following?

I, II, and III File a demurrer; make a motion to dismiss for lack of subject matter jurisdiction; file a response raising claims against the plaintiff

A material breach allows the nonbreaching party to take which of the following actions?

II only Suspend performance and await cure

Kate and Gino have entered into a contract whereby Kate will play in the orchestra for an opera. If the star of the opera dies and the opera is cancelled, which of the following doctrines is a court most likely to apply in evaluating the validity of the contract?

Impossibility

Which of the following is true of the World Trade Organization?

It is an organization that helps create rules for fair trading practices

Javier seek to hire Doreen to perform repairs on his house. He sends Doreen a contract via e-mail offering to pay Doreen $500 for the work. Later the same day, Doreen sends an e-mail back agreeing to the contract. However, before Javier opens his e-mail from Doreen, he receives a separate e-mail from George offering to do the same work for only $250. Javier accepts George's offer and sends Doreen an e-mail telling her he has made other plans. Doreen seeks to sue Javier for breach of contract. A court is most likely to rule that:

Javier breached a contract with Doreen because Doreen had already accepted his offer when he entered the new agreement with George

Susan speaks with Joan on the phone and offers to create an artwork for Joan in return for $250. Joan responds, "Would the painting be in oil or watercolor?" Susan responds, "Watercolor!" and begins to work on the painting. Five months later, Susan presents Joan with a watercolor painting. If Joan refuses to pay and Susan files suit, a court will likely rule that:

Joan is not liable because there was no meeting of the minds and therefore no contract was formed

Josie and Dwayne enter into a contract whereby Dwayne will give Josie $1000 and Josie will give Dwayne a necklace for Dwayne's wife, Sarah. If Josie fails to provide the necklace, which of the following is true?

Josie is liable to both Dwayne and Sarah

Joy is a model employee with flawless performance evaluations. However, the company where she works fires her anyway. Which of the following is true?

Joy is entitled to compensation under her state's unemployment compensation program

If Emmanuel sues Chondra in a state with which Chondra has no contact, Chondra is likely to raise which of these challenges?

Lack of personal jurisdiction under the 14th Amendment to the U.S. Constitution

Article I of the constitution establishes the:

Legislative branch

In a common-law system, rules governing behavior can be developed by:

Legislatures, administrative agencies, judges

Leon agrees to purchase lumber from Shelly. The lumber arrives a week before the date specified in the contract, but the wood is rotted. Leon tells Shelly that the lumber is unacceptable and that he no longer wants to buy lumber from her. Shelly tells Leon she is sending new lumber anyway, which arrives on the originally agreed-upon delivery date. Which of the following is true?

Leon must pay Shelly the contracted price, as long as the new shipment of wood is in good condition

Which of the following is not a difference between a partnership and a corporation?

Managers' duty of loyalty

Amy owes Mary $500. Amy has contracted with Ian to walk his dogs and in exchange Ian has agreed to pay Mary $500. Which of the following describes Mary's relationship to Ian and Amy?

Mary is a creditor beneficiary

Wanda owns a hair salon. One week, she takes out an advertisement in the local weekly newspaper saying that all haircuts this week will be $5. However, the response is so large that Wanda decides to stop the sale after the 50th customer. Thus, when Joan comes in expecting a $5 haircut, Wanda tells her that the sale is over, and she must pay the $30 non-sale price. Can Joan successfully sue for breach of contract?

No, because Wanda's advertisement does not constitute a contractual offer

Kate gave her sister Emily money for years. After Emily gets a job, Emily promises that within two years she will give Kate back all the money she had received from Kate over the years. If two years pass and Emily fails to repay the money, can Kate sue for breach of contract?

No, because no contract was formed

If a state supreme court rules on an issue of state law, can that decision be overturned by the US Supreme Court?

No, unless the state supreme court decision violates federal law or the US Constitution

Ron entered into an agreement with Noah in which Noah promised to pay Ron $3,000 if Ron built Noah a basketball court. Ron began building the basketball court, but Noah changed his mind. If Ron sues Noah, a court will probably hold that:

Noah must allow Ron to complete performance

The business judgement rule is based on a judgement that:

Officers and directors are well intentioned and act in good faith

Patrick tells Cynthis, who is a compulsive shop-lifter, that he will give her $500 if she refrains from stealing anything from any stores for a full month. Cynthis successfully refrains from shoplifting for a month, but Patrick refuses to pay. If Cynthia sues Patrick, a court is likely to rule that:

Patrick is not liable because of the pre-existing legal duty rule

Florence contracts with Paul to build her a coffee table with 25 in-laid gems built into the surface. When Paul delivers the table, Florence finds that Paul has only put 24 gems into the surface. It would cost twice the amount of the original construction to pull off the lacquer and in-lay the 25th gem. If Florence sues Paul, a court is likely to hold that:

Paul is liable to Florence for the difference between the value of the table as built and the value of the table as constructed

Paula was crossing the street without using the crosswalk in violation of state law. Simon, who was driving above the speed limit in violation of state law, hit Paula causing her serious injury. If Paula sues Simon, most courts would hold that:

Paula can recover but only for damages related to Simon's conduct

Construction Corp. contracts with Demolition Inc. for Demolition Inc. to demolish an old building owned by Construction Corp. no later than June 30 so that a new building can be constructed in its place. If June 30 passes and Demolition Inc. has not yet demolished the building, all of the following are remedies that Construction Corp. is entitled by law to pursue, except:

Punitive damages for Demolition Inc.'s wrongful conduct

If a contract falls within the Statute of Frauds, which of the following statements is true?

The contract must be in writing and signed by the party sought to be bound

Which of the following is not an essential element of a cause of action for negligence?

Res Ipsa Loquitur

In a case to be tried before a jury, the judge may perform all of the following duties except:

Resolve disputed factual issues

A court applies the rule of reason to analyze which of the following?

Restrictions on trade

Which of the following applies if the defendant in a product liability action did not know and could not have known that a product had a design defect?

The defendant does not have liability for negligence

A court will presume damages for slander for all of the following EXCEPT

Slander relating to a person's children

15-year-old Stacy entered into a contract to purchase a motorcycle from Roy. A week after purchasing the motorcycle, Stacy turned 16, the age of majority in her state. One day later, Stacy was in an accident and the motorcycle was destroyed, though Stacy survived with minimal injuries. Right after the accident, Stacy contacted Roy to get her money back for the motorcycle. In a suit between Stacy and Roy, a court is most likely to hold that:

Stacy can disaffirm the contract because she disaffirmed within a reasonable time

If the directors of a corporation vote to make the well being of its employees one of the core priorities of the company, the directors are adopting what theory of the firm?

Stakeholder theory

The ability of a party to bring a lawsuit is called

Standing

Ann goes to the bakery and buys cookies labelled "nut-free". However, it turns out the cookies were made with walnuts, and Ann's child, who has a nut allergy, eats the cookies, becomes very sick, and must be hospitalized. If Ann sues the bakery on behalf of her child, under what legal theory might she recover?

Strict Liability for Breach of Implied Warranty of Fitness for a Particular Purpose

Ruby wants to print a newsletter that critiques the local and state governments' efforts regarding the economy. The state wants to review the newsletter to make sure it agrees with the critique. If Ruby sues the state to prevent it from reviewing her newsletter, which of the following standards of review will a court use?

Strict scrutiny, because it involves regulation of content

If the shareholders of a corporation object to the way the corporation is being run, which of the following actions can they legally take?

Sue the corporation Vote to replace the directors of the corporation

If a state enacts a statute that makes it more difficult for people of a particular race to vote, that statute is most likely to be challenged pursuant to

The 14th Amendment to the U.S. Constitution

Congress can regulate cross-country railroad travel because of:

The Commerce Clause of the U.S. Constitution

If a financial institution offers different interest rates on loans based on the race of the borrower, the financial institution is likely in violation of which federal statute?

The Equal Credit Opportunity Act

An employee believes she is being paid less at work than other employees because of her gender. With which of the following federal agencies may she file a claim?

The Equal Employment Opportunity Commission

Which of the following establishes a minimum wage and policies for overtime?

The Fair Labor Standards Act

Lucy needs to take some time off from work to care for her mother who is seriously ill. Which of the following requires her employer to give her time off?

The Family Medical Leave Act

Deceptive advertising is regulated by:

The Federal Trade Commission

The state of California wants to build a bike path that crosses through Holly's backyard. If Holly wants to challenge their actions, which of the following constitutional provisions would most likely impact her challenge?

The Fifth Amendment

If Joan contracts with Danny to paint her house, and the next day, before Danny can do the painting, a hurricane destroys Joan's house, what clause of their contract is implicated?

The Force Majeure Clause

If a corporation seeking to drill oil abroad pays a local governmental official to speed up the approval process, the corporation would possibly be violating:

The Foreign Corrupt Practices Act

Stuart and Vivian make an oral agreement that Stuart will provide 10 swim lessons to Vivian's children each year for the next three years in return for a payment of $500 per year. Stuart provides the first 10 lessons, but Vivian is dissatisfied with the quality of the lessons and tells Stuart she will not pay. If Stuart sues for breach of contract, the court will likely rule that:

The contract is unenforceable because it cannot be fully performed within a year

Under which of the following circumstances will a corporation likely be liable for its employee's negligence?

The employee's negligence occurs while driving between the corporate office and a remote job site The employee's negligence occurs at the corporations offices, but the employee's actions were directly contrary to company policy The employee's negligence occurs while driving a company car to run personal errands a few blocks from the employer's office while on her lunch break

Under the Uniform Commercial Code (UCC), if an offeree expresses the intent to accept an offer but the acceptance contains terms that are additional to those contained in the original offer, which of the following is true?

The expression will be construed as an acceptance, and the additional terms will be viewed as proposals for inclusion in the contract

Article III of the U.S. Constitution establishes:

The judicial branch

Ideas Inc. has agreed to a merger with Money Corp. Which of the following statements is true?

The merger agreement must be approved under the Hart-Scott_Rodino Act

Two parties enter into a contract whereby one agrees to paint the other's house in return for an established sum of money. After the house is painted, the owner does not pay the agreed-upon amount. Which of the following is NOT a potentially viable defense to a breach of contract lawsuit brought by the painter?

The painter had a friend do the actual job without getting permission from the owner first.

The town of Happy Valley is divided by a railroad track into a north and south side. Happy Valley has two pizza restaurants: one on the north and one on the south side. Each restaurant delivers pizza, but only the side of town where the restaurant is located because the deliveries are conducted via bicycle and crossing the railroad tracks is dangerous. If an antitrust enforcement action is brought against the restaurants, how is a court likely to rule?

The restaurants have not committed an antitrust violation

If an injured worker receives workers compensation, which of the following is not true?

The worker can receive punitive damages if the worker's injury was caused by the employer's gross negligence

Julie's boss told her that she would receive a promotion only if she performed sexual favors for him. If Julie sues her boss, which of the following would form the basis of her claim?

Title VII

Which of the following best defines a quasi contract?

Transaction that allows recovery for unjust enrichment

If one company forms a contract to purchase illegal slot machines from the other, the contract will be:

Unenforceable

Rhea wants Penny to hire her for a job and tells Penny that if she does not hire Rhea then Rhea will protest loudly outside Penny's house every day, embarrassing Penny in front of her neighbors. If Penny enters into a contract to hire Rhea and pay her a salary, the contract would be:

Unenforceable because the contract was entered into under duress

A new drug has been tested, and although it causes serious illness in some patients, it cures many more. If a federal agency approves the drug despite the harm, it is doing so based on what philosophical theory?

Utilitarianism

All of the following can form the basis of personal jurisdiction EXCEPT

Venue

A clothing store owner hires a cashier. The next day, a customer asks the cashier if the price of a particular sweater can be reduced by 10 percent because the sweater is slightly damaged. The cashier agrees and accepts payment. The store owner is outraged at the cashier's act and contacts the buyer, telling her that the cashier was not authorized to provide the discount and telling her that she will replace the sweater with one in better condition but that the buyer must pay full price. Can the buyer refuse?

Yes, because the cashier was acting as the owner's apparent agent in accepting the discount

Francisco, who lives in Georgia, wants to file a negligence suit against Machine, Inc., a company incorporated in Delaware with its corporate headquarters in Kentucky. Can Francisco file this suit in federal court?

Yes, because the parties are from different states