Business Law Final

A corporate charter is filed with: a. a state's Secretary of State office. b. a state's Treasury and/or Revenue Division. c. the United States Department of Commerce. d. All the above.

A

A promise by Derkin Restaurants to buy all of the produce it needs this next year at an established price from Elfredo's Produce would be an: a. enforceable requirements contract. b. enforceable output contract. c. unenforceable, illusory contract. d. unenforceable promise based on past consideration.

A

All of the following are characteristics of a closely held corporation EXCEPT: a. the shares are publicly traded. b. the corporation can typically operate without a board of directors. c. the shareholders usually restrict share transfer. d. minority shareholders are provided more protection than in regular corporations.

A

Amy Hudson has been trying to purchase Glen Cappel's antique desk for some time, but Glen has been reluctant to sell. One evening Glen said to Amy, "Okay, I'll sell the desk for $550." Amy replied, "Thank you, Glen. I accept." The agreement was not reduced to writing, but Glen and Amy did shake hands. Two days later, Amy sent Glen a letter outlining the terms of the agreement, and stating that she would deliver $550 cash according to the agreement within ten days. The letter was signed, "Best regards, Amy." Later, Amy had second thoughts, and refused to go through with the purchase. Nothing had been exchanged at this point. Glen: a. can enforce the contract against Amy because the statute of frauds is satisfied under this situation. b. cannot enforce the contract against Amy because her signature was inadequate without her last name under the statute of frauds. c. cannot enforce the contract against Amy because he did not sign the letter. d. can enforce the contract because they shook hands on the agreement.

A

An S Corporation cannot have more than ____ shareholders. a. 100 b. 75 c. 50 d. 25

A

An agency relationship can be created: a. by the conduct of the parties. b. by an oral agreement in all circumstances. c. only by a written agreement. d. only by the meeting of all the standards of contract law.

A

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. b. insurance contracts are underwritten by reputable companies. c. insurance activities are regulated by the state department of insurance. d. All of the above.

A

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. b. Barb wins. The agreement is denying her the right to do the only thing she knows how to do. c. Barb wins. The agreement is not enforceable because it is not ancillary to a legitimate bargain. d. Barb wins. The agreement is not reasonable as to time.

A

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. b. The undisputed amount is also known as an unliquidated amount. c. If the parties agree to settle for less than the full amount, their agreement is governed by the ruling in Henches v. Taylor. d. If Wilde's agrees to accept less than the full amount, the agreement is only binding if it is in writing and signed by Bernie.

A

Cameron, editor of the local newspaper, assigned to Jim the writing of a story about pollution of a nearby stream. Although Jim used reasonable care in gathering and checking his information, unknown to Jim, the story contained a defamatory statement about Maureen. Maureen reads the story and sues Jim for libel. Cameron, who read and published the story: a. must indemnify Jim for Maureen's claim. b. need not indemnify Jim for Maureen's claim because Jim should have checked his facts more carefully. c. need not indemnify Jim for Maureen's claim because Jim breached his duty to obey instructions. d. can recover damages from Jim for any injury to the newspaper resulting from Jim's story.

A

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. b. If Carl rejects Mary's counteroffer, she can still accept Carl's offer of $1,500. c. Neither offer is valid. Who would ever pay $1,000 or $1,500 for a beer can collection? d. Mary's offer is a firm offer. Carl has an exclusive right to consider her offer for a reasonable period of time.

A

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. b. Dana may refuse to accept the painting only if a reasonable person would not like it. c. Dana may refuse to accept the painting if she cannot afford to pay for it. d. Dana may not refuse to accept the painting.

A

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. b. David has the freedom to set any price he wants considering George was foolish enough to enter into a contract without a price established. c. George has the right to establish a price because he is the buyer. David should have taken steps to protect his sales interest. d. None of the above. The contract is not valid because the terms are not definite and certain.

A

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. b. Either Adam or Marty must approve the sale of Debbie's interest. c. Craig has a right to become a full partner once he buys Debbie's interest. d. None of the above is correct.

A

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. b. No, the law requires at least two people to be shareholders of a corporation. c. No, the law does not permit a person to, in effect, incorporate himself. d. Only if he forms an S Corporation.

A

Ending a partnership involves which of the following three steps? a. Dissolution, winding up, and termination. b. Dissociation, winding down, and consummation. c. Failure, dividing up, and paying off. d. Dissociation, agreement, and dissolution

A

Farmer Elvin is holding 200 pounds of potatoes in storage for Chef Noble but Chef Noble has breached the contract by failing to pay for the potatoes. The potatoes are beginning to rot. If Farmer Elvin sells the potatoes to a local diner to make potato soup and salad, then this action would be considered: a. a reasonable mitigation of damages. b. an attempt to maximize damages. c. an attempt to realize an unwarranted profit. d. conversion.

A

Farmer's Fortune Insurance has a contract with Farmer Fran to insure her crops against insect damage. The contract does not specify which insects are covered or how much damage is necessary to make a claim. The contract will probably be enforced in favor of: a. Farmer Fran. b. Farmer's Fortune Insurance. c. Neither side, as it is ridiculous to try to insure against insects. d. Cannot determine... would have to go through litigation to decide.

A

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. b. One. c. Two. d. Five.

A

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. b. close corporation. c. limited liability company. d. business trust

A

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. b. Morales and Rolfes must depend on the UCC's gap-filler provisions to determine a price since the fuel is a "good" covered by Article 2 of the UCC. c. the contract price must remain the same for the entire three-year contractual period. d. their contractual requirements regarding definiteness would be the same under the UCC and the common law.

A

If a court determines a manager's corporate decision amounted to self-dealing: a. the business judgment rule will not apply. b. the transaction being challenged will be automatically voided. c. the manager is automatically personally liable to the corporation. d. All the above

A

In a promissory estoppel case, a court will generally award: a. only reliance damages. b. specific performance. c. both reliance and punitive damages. d. only nominal damages.

A

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. b. de facto corporation. c. corporation by estoppel. d. indemnified corporation

A

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. b. the contract provision requiring arbitration was clear, unambiguous, and fair to both parties. c. the arbitration clause in Klopp's auto insurance contract was valid because it furthered the state policy favoring the use of arbitration to resolve disputes. d. the automobile insurance policy was governed by UCC, Article 3.

A

In the case of scrivener's errors (commonly known as typos), a court will usually: a. reform the contract if it is clear that the mistake is not what the parties intended. b. instruct the parties to rewrite the contract without the errors. c. enforce the contract as written. d. throw out the contract completely.

A

In the late 1960s a shareholder of the company that owned the Chicago baseball team sued the company because the directors refused to install lights in Wrigley Field. The court decided that the directors: a. had a rational purpose for not installing lights and were not liable for doing anything improper. b. were not protected by the business judgment rule. c. had not acted with any rational purpose and were liable to its shareholders for damages caused by their actions. d. None of the above

A

Incorporation protects: a. shareholders against personal liability for the debts of the company. b. anyone involved in management of the business against personal liability for wrongdoing. c. the public from wrongdoing by either the shareholders or the management of the corporation. d. All the above are correct.

A

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. b. Yes, if it is determined that Robert acted negligently in failing to notify Jackie. c. No. Cyndi has an obligation to notify both Robert and Jackie. d. No. Jackie was not notified since Robert never told her Cyndi was moving

A

Jenny is an officer of a corporation. She made a difficult business decision. When challenged about her decision, the court ruled she had acted in good faith and that the business judgment rule applied. As such: a. Jenny will not be held personally liable for a decision that results in money losses to the company. b. Jenny's decision will be reviewed by a court. c. Jenny is immune from a lawsuit. d. Jenny must resign from the board

A

Jim agreed to show Donna's car to a potential buyer. Donna was not able to be home since she had to attend a meeting. After showing the car, Jim left the keys in it and the car was stolen. Which statement is correct? a. Since Jim is a gratuitous agent, he will only be liable for the loss of the car if his conduct constitutes gross negligence. b. Since Jim is a gratuitous agent, he will be liable for the loss of the car if his conduct constitutes ordinary negligence. c. Since Jim is a gratuitous agent, he has no liability for the car. d. Since Jim is a gratuitous agent, he is strictly liable for the loss of the car.

A

John hired Tim to sell his house. Which statement is correct? a. John is Tim's principal. b. Tim, but not John, can terminate the agency. c. This illustrates a power coupled with an interest. d. All the above are correct.

A

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. b. order confiscation of all of her new client files and turn them over to Shawn. c. refuse to become involved, as the noncompete clause was illegal. d. refuse to enforce the noncompete clause, as it is unreasonable regarding time and geographic area.

A

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. b. No. Don was not a partner in the business. c. No. Don was a dissociated partner. d. No. There was no intent to have a partnership

A

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. b. agreement. c. rescission. d. accord and satisfaction.

A

Management's duty to have a rational business purpose, avoid illegal behavior, and make informed decisions refers to its: a. duty of care. b. duty of loyalty. c. duty of openness. d. duty of fairness

A

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. b. that of any limited liability company in Delaware. c. the name of any sole proprietorship in Delaware. d. all of the above.

A

Mrs. O'Leary hired Jenna to sell her house in Michigan. She executed a power of attorney in favor of Jenna authorizing her to do "anything and everything associated with the sale of real estate, acting as a prudent person." On May 30, Jenna finalized a deal with Brandon for the purchase of the house. Brandon and Jenna signed the real estate contract that day. Jenna learned the next day that Mrs. O'Leary had died May 29. a. The contract is void since the agency terminated May 29. b. The contract is valid since the agency's purpose was achieved before Jenna was notified of Mrs. O'Leary's death. c. The contract is voidable at the option of Mrs. O'Leary's estate. d. The contract is voidable at the option of Brandon.

A

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 partnership when it is convinced that the partnership is unlikely to succeed. b. Yes. Under the UPA, if a partner can show the court the business suffered a loss the year before the case was filed, the court can dissolve the partnership. c. No. A court can only dissolve a partnership at the request of all the partners. d. No. A court does not have authority to dissolve the partnership

A

Sonny, a college student, places a telephone order for a new computer from Computers, Inc. The price of the computer is $1500. The clerk who takes the order sends Sonny a copy of the invoice. The next week, Sonny calls back and tries to cancel his order. a. Sonny cannot cancel the order because Computers, Inc. accepted his order. b. Sonny cannot cancel the order if he has received the invoice. c. Sonny can cancel the order; the invoice is unenforceable against him, as he did not sign the invoice. d. Sonny can now cancel the order but only if he does so in writing within ten days.

C

Statements of facts about the past and present are called: a. provisions and terms. b. promises and covenants. c. representations and warranties. d. damages and remedies.

C

Statutes of limitations: a. define how much money the injured party can sue for under a breach of contract claim. b. define whether there has been substantial performance of a contract or a material breach. c. limit the time in which an injured party may sue. d. only apply to the sale of goods. There is no statute of limitations on a service contract.

C

Suppose that Lenny Lawyer enters into an agreement with Cindy Client that his fee 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? a. The contract will be valid. Cindy would not have been able to afford an attorney otherwise and therefore Lenny was doing a public service. b. The contract will be voidable at Cindy's option. c. The contract will be void as violating a statute. Lenny will not be able to recover anything. d. The contract will be unenforceable if Lenny did not get the agreement in writing.

C

The Model Business Corporation Act states: "All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed by or under the direction of its: a. shareholders." b. officers." c. board of directors." d. executive committee.

C

The business form that is taxed as a partnership and gives all owners limited liability, is: a. a close corporation. b. a limited partnership. c. a limited liability company. d. a general partnership.

C

The concept that an injured party may recover consequential damages only if the breaching party should have foreseen them was established in: a. Bi-Economy Market, Inc. v. Harleysville Ins. Co. of New York. b. Putnam Construction & Realty Co. v. Byrd. c. Hadley v. Baxendale. d. Toscano v. Greene Music.

C

The distinction between a condition precedent and a condition subsequent: a. is important because it determines whether the burden of proof is beyond a reasonable doubt or preponderance of the evidence. b. seldom arises in insurance cases. c. determines who has the burden of proof. d. is important because it determines whether the condition must be express or whether it can be implied.

C

The executives of Jornaginn Corporation have decided they need to sell 50,000 additional shares of stock to finance their plans. The executives: a. cannot sell that many shares unless they were authorized initially in the corporate charter. b. can sell as many shares as the market will bear. 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. d. can sell the shares only if the shares have a par value which is close to the current market price

C

The term "corporate manager" refers to: a. directors. b. corporate officers. c. Both of the above. d. None of the above.

C

Travel Lines offered to sell 10 round-trip tickets to Elaine. Travel Lines stated that the acceptance must be in writing by USPS next-day service. Which of the following acceptances will create a contract between Travel Lines and Elaine? a. Elaine calls Travel Lines and states that she will buy the tickets. b. Elaine sends a fax to Travel Lines stating she will buy the tickets. c. Elaine sends a letter by USPS next-day service to Travel Lines stating that she will buy the tickets. d. All of the above responses will create a contract between Travel Lines and Elaine since they constitute reasonable means of communication.

C

Tuan is president and sole shareholder of Entertainment, Inc. Entertainment, Inc. wishes to borrow money, but to do so, the bank requires Tuan to orally agree to personally pay the debt of the corporation if Entertainment, Inc. cannot. Tuan's guarantee to repay is: a. enforceable under the parol evidence rule. b. unenforceable because there is no insurable interest. c. enforceable because of the leading object rule. d. unenforceable because it is a collateral promise.

C

Under a contract for the sale of land, the statute of frauds: a. does not apply if the purchase price for the land is less than $500. b. requires that the entire agreement be in one single document. c. requires the defendant to sign the agreement. d. does not apply if the total price of the land is to be paid in less than one year..

C

Under the UCC, if a seller of goods breaches the contract, the buyer: a. must "cover." b. may receive only the current market value of the goods. c. may "cover" and then receive the difference between the original contract price and the "cover" price. d. will be awarded the difference between the original contract price and the market value of the goods if the buyer chooses to "cover."

C

Under the Uniform Commercial Code, an agreement modifying a contract: a. always requires consideration. b. requires consideration only when the sale of goods is involved. c. may not require consideration. d. requires consideration only when one of the parties is incompetent.

C

What federal agency requires that the seller of a franchise give the potential buyer an offering circular and audited financial statements? a. The Securities and Exchange Commission (SEC). b. The Interstate Commerce Commission (ICC). c. The Federal Trade Commission (FTC). d. The Franchise Sales Commission (FSC).

C

Which of the following events occurs first with respect to the ending of a partnership? a. Termination. b. Winding up. c. Dissolution. d. Distribution of proceeds

C

Which of the following is NOT a method to acquire control of a company? a. Buy stock from the shareholders through a tender offer. b. Buy the company's assets. c. Make an initial public offering. d. Merge with the company

C

Which of the following is NOT a standard provision frequently found in contracts? a. choice of forum. b. choice of law. c. choice of compensation.. d. arbitration.

C

Which of the following is NOT one of the four focused steps in reading a contract? a. Pre-reading. b. The first read. c. Re-write with a lawyer. d. The second read.

C

Which of the following is the most appropriate term to use when describing management's duty to its shareholders? a. Official duty. b. Light duty. c. Fiduciary duty. d. Statutory duty

C

Which of the following statements is correct with respect to state efforts to offer protection to companies targeted for hostile takeovers? a. Courts offer the only legal protection to companies targeted for hostile takeovers. b. Statutory law offers the only legal protection to companies. c. Both statutory law and the state courts have provided some degree of protection for companies. d. State courts and state statutes have offered no protection for companies targeted for hostile takeovers

C

Which of the following would not be personally liable for the debts of the business? a. A sole proprietor. b. A partner in a general partnership. c. A general partner in a limited liability limited partnership. d. A general partner in a limited partnership.

C

Willis and Leslie orally agree to the sale of a parcel of land for $50,000: one-half payable now as a down payment; one-half payable in 30 days at the time of closing when the title will be transferred. The buyer, Willis, is to have possession immediately. Willis pays Leslie $25,000, takes possession of the land, and starts building a house. At the time of closing, Willis has made a substantial beginning on the house. However, Leslie refuses to transfer the title, claiming the oral contract is not enforceable. This contract is: a. enforceable, because the statute of frauds does not apply to this interest in land. b. unenforceable, because there is no writing signed by Leslie. c. enforceable, because Willis has partially performed the oral contract and made improvements on the land. d. unenforceable, because the parol evidence rule applies.

C

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: a. the de jure doctrine. b. the de facto doctrine. c. the ultra vires doctrine. d. an estoppel theory

C

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: a. Zero will win because there was consideration for the additional $1,500. b. Zero will win because Millie had a pre-existing duty to pay any additional amounts. c. Zero will lose because there was no legal consideration to support the additional $1,500. d. Zero will lose because the UCC does not require consideration to modify an existing contract.

C

Approximately how much merchandise is stolen from United States retail stores every year? A) $10 million B) $50 million C) $10 billion D) $25 billion

C) $10 billion

Which of the following statements about torts is correct? A) A tortious act is always a criminal act B) A criminal act is always a tortious act C) A tortious act may also be a criminal act D) All the above is correct

C) A tortious act may also be a criminal act.

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? A) Adam committed an assault but not a battery B) Adam committed a battery but not an assault C) Adam committed an assault and a battery D) Adam committed neither can assault nor battery since he used a candy gun and was only playing a joke on Linda

C) Adam committed an assault and a battery.

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 its 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? A) Trein is liable for tortious interference with a contract B) Mia is liable for tortious interference with a contract C) E-presto is liable for tortious interference with a contract D) Both Mia and E-pesto are liable for tortious interference with a contract

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

Derek and Abyan were discussing business over lunch when they agreed on the sale of a five-acre parcel of land. Since neither of them had any paper with them, Derek wrote the following on a napkin: "Abyan agrees to purchase from Derek a 5-acre parcel located at the local address of 123 105th Street, St. Joseph, Minnesota, U.S.A. for the price of $4,500 per acre. Transfer of title, payment, and possession to take place on May 1, 2011." Abyan signed the napkin. On May 1, 2011, Derek was ready to close the deal and transfer title but Abyan refused to pay the purchase price. If Derek sues Abyan for the price of the land, the most likely result will be: a. Abyan will win because the writing is not sufficient under the statute of frauds. b. Derek will win because the writing is sufficient under the statute of frauds. c. Abyan will win because Derek did not sign the writing. d. Derek will win because the statute of frauds does not apply to this situation.

B

Dick offers 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? a. Jane can still accept the offer and John must find a 1955 Thunderbird to sell. b. The offer is terminated by law. c. Dick can still revoke his offer so long as he does so before Jane accepts. d. Jane can still accept the offer. She will be entitled to the insurance proceeds.

B

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: a. may keep the payment since he did the work while he was on vacation. b. must turn the money over to the partnership because he earned it doing the kind of work that the partnership does. c. may not accept the money because it would create a conflict of interest. d. may not accept the money because it would mean he was taking a business opportunity away from the partnership

B

Generally, reasonable liquidated damage clauses will be enforced: a. when actual damages are easily determined. b. when actual damages are difficult to determine. c. almost always. d. only in real estate sales contracts.

B

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: a. protects both parties by ensuring the other side is serious and creates a binding agreement on the issues on which the parties have agreed thus far. 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. c. has no legal effect, but provides a record for the parties as to where the negotiations stand. d. courts will consider to be a valid offer which the other party must accept if offered in good faith.

B

If the subject of the contract includes issues that may be controversial, it is best to: a. keep lawyers out of the negotiation, so relationships are not strained. b. deal with them up front before the relationship is strained. c. deal with them one at a time, as the problems arise. d. state your position up front and stand firm when the other party objects.

B

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: a. is obligated to find another person who will agree to teach during the academic year. b. is discharged from any further obligations under the contract. c. will be discharged from any obligations under the contract only if it can be shown that her death was unexpected. d. will not be discharged. If the University has to pay more in order to hire a comparable substitute professor at the last minute, then the estate will be responsible for the difference in pay.

B

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? a. Y-K's promise to refrain from suing Alex was not supported by legal consideration. b. Y-K's promise to refrain from suing Alex was supported by legal consideration and is enforceable. c. This is an accord and satisfaction, and Y-K cannot sue. d. The courts would apply promissory estoppel in this situation.

B

In bailment cases, exculpatory clauses: a. are very rarely used. b. are somewhat more likely to be enforced than in other types of cases. c. ordinarily involve an attempt to limit liability for damage to persons rather than property. d. None of the above.

B

In breach of the partnership agreement, Trimble, a partner in the partnership of Morris, Newt, and Oppie, Ltd. quits the partnership and goes to work for a competitor. The former partners may ask the court for: a. specific performance requiring Trimble to return to work for Morris, Newt, and Oppie, Ltd. b. an injunction to prevent Trimble from working in competition with the former partners. c. special damages under the rule of Hadley v. Baxendale. d. liquidated damages as compensation for the breach.

B

In order to satisfy the statute of frauds, a writing must: a. be a formal written document drafted by an attorney. b. be signed by the defendant and contain the name of each party, the subject matter of the agreement, and the essential terms and promises. c. be notarized. d. All of the above.

B

In the Unocal Corp. v. Mesa Petroleum Co. case, the court: a. found the issuance of a preliminary injunction against Unocal's offer was proper. b. ruled that a board of directors may not act primarily out of a desire to keep itself in office. c. issued a permanent injunction against a selective exchange offer. d. applied the Williams Act to analyze the target company's actions

B

Jaime offered to buy Kevin's bike. Jamie is the: a. offeree. b. offeror. c. mortgagor. d. trustee.

B

Janet was employed as a sales representative for Esday, Inc. An appreciative customer gave her a diamond bracelet for all her hard work on a complicated contract. Can Janet keep the bracelet? a. Yes. The bracelet was given to Janet personally and intended for her. b. Yes, but only if she discloses the gift to Esday and Esday consents to her keeping the bracelet. c. No. An agent is not allowed under any circumstances to personally profit as a result of the agency relationship. d. No. The bracelet is regarded as an unfair trade practice and violates antitrust law.

B

Jennifer substantially performs her service contract with Gretchen. Due to Jennifer's failure to render complete performance, Gretchen: a. is discharged from any further contractual obligations. b. is required to pay the full contract price, minus the value of Jennifer's defective performance. c. is required to pay the full contract price. d. may declare a material breach and pay only for the value received.

B

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: a. whatever they receive from the partnership. b. $50,000. c. $100,000. d. None of the above. The partnership itself will pay the taxes on the business's profit.

B

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? a. Yes. The UPA states a partner may not collect a "wage" from the partnership business under any circumstances. b. Yes, as there is no agreement between Lori and Dan allowing for either of them to be paid wages for work done at the restaurant. c. No. Dan may collect only minimum wage, as required by federal law. d. No. Dan may collect a fair wage for the work he has performed

B

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: a. a condition precedent. b. a concurrent condition. c. a condition subsequent. d. a service condition.

B

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? a. Domestic. b. Foreign. c. Alien. d. Cumulative.

B

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? a. MegaCorp must register in Michigan because its sales representatives attend a trade show in Michigan. b. MegaCorp is not required to register in Michigan because it does not have an ongoing presence in Michigan. c. MegaCorp must register in Michigan because its actions qualify as doing business. d. Whether MegaCorp has to register in Michigan depends on where its shareholders reside

B

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): a. condition precedent. b. condition subsequent. c. implied condition. d. concurrent condition.

B

Mercury Motors inadvertently mixes up a work order on Peter's car. Peter brought the car in to have the tires rotated. Mercury tuned up the motor by mistake, conferring a benefit on Peter. If Mercury Motors insists that Peter pay for the price of the tune-up, Mercury Motors: a. can recover its reliance interest. b. cannot recover its expectation interest because there was no enforceable agreement. c. will win based on breach of contract. d. will lose because a personal service contract was involved.

B

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: a. NSB wins because the modification was not supported by new consideration. b. NSB wins because the modification has to be in writing. c. Mid-American Oil wins because the UCC governs this case and no new consideration is required. d. Mid-American Oil wins because new consideration was present.

B

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 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 thought he was signing a permission slip allowing the salesman to conduct a free water test to determine the toxins in the water. How would a court most likely describe this contract? a. The contract is fully enforceable as written. b. The contract is unenforceable because it is unconscionable. c. The contract is enforceable, but only up to the value of the water system. d. The contract is unenforceable because it is exculpatory.

B

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? a. Frank has a right to take over for his father in the partnership. b. Frank is entitled to the value in the partnership, but not to become a full partner. c. Frank has no rights to his father's partnership interest. d. None of the above.

B

On the day a tender offer begins: a. greenmail must be sent to the SEC. b. a bidder must file a disclosure statement with the SEC. c. assets of the target corporation must be locked up until an inventory is completed. d. the SEC issues a binding order to the target company to file audited financial statements to the bidder

B

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? a. These price quotes would generally be considered offers. b. These price quotes would generally not be considered offers. c. These price quotes would generally be considered output contracts. d. These price quotes would generally be considered requirements contracts.

B

Preemptive rights are: a. not legal in the majority of states. b. designed to prevent dilution of a shareholder's ownership in the company. c. required to be offered to shareholders by the Model Act. d. designed to indemnify managers who act in good faith

B

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: a. the mail box rule. b. commercial impracticability. c. frustration of purpose. d. true impossibility.

B

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: a. business trust. b. cooperative. c. franchise. d. joint venture.

B

Solomon breaches his contract with Neal to purchase the 500 pairs of socks he had promised to buy. Neal is able to sell the 500 pairs to Renny for a much lower amount. Neal then sues Solomon for damages. Neal will be able to recover: a. the amount in the liquidated damages clause. b. the difference between Solomon's contract price and the amount paid by Renny. c. Solomon's contract price. d. an amount which depends on whether Solomon intentionally breached because he found cheaper socks somewhere else.

B

Standard provisions in a contract that are often listed under the heading "Miscellaneous" are called: a. boilerroom. b. boilerplate. c. boilerpot. d. boilertape.

B

The doctrine of estoppel would most often apply in situations of: a. implied authority. b. apparent authority. c. transaction authority. d. actual authority.

B

The form of business ownership that is the most easily transferable is the: a. general partnership. b. corporation. c. limited liability company. d. limited partnership

B

The importance of a Subchapter S corporation is: a. its organizational structure. b. its treatment of shareholders for income taxation purposes. c. its requirement of restrictive transfer rights of the shares. d. its small cost of formation.

B

The main difference between the UCC requirement for a writing for a contract for the sale of goods and the common law is that the: a. UCC requires only the signature of both parties. b. UCC does not require all the terms of the agreement to be in writing. c. common law requires only an indication that the parties reached an agreement. d. common law requires only the signature of the defendant and the quantity of goods being sold.

B

The remedy of reformation: a. applies only when money damages are inadequate. b. can be used to correct mistakes in the original contract c. is available if fraud is involved. d. is a commonly used remedy.

B

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? A) The owner of the parking lot is liable for conversion. She took John's car without his consent. B) The parking lot owner has a qualified privilege for towing the car since it was a business necessity. C) Even though John left his car in the parking lot under emergency conditions, he still committed a trespass on the owner's property. D) All the above are 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.

Which of the following would be an example of a civil lawsuit? A) George is bing prosecuted for bank fraud B) the government has initiated an action against Jeff for operating a motor vehicle under the influence of alcohol C) Gretta hit Rita in a bar during happy hour. Rita is now suing for injuries D) The DA is bringing Ali to court for violating the city's keg ordinance.

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

Kelley went ice skating on a neighbor's 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 know that she was there. Is the neighbor liable for Kelley's injuries? A) Yes. The neighbor should have posted "thin ice" notices. B) No. Kelley was a trespasser and the neighbor could only be held liable for intentionally injuring her or for gross misconduct. C) It may depend on Kelly's age D) Yes, the neighbor is strictly liable

C) It may depend on Kelley's age

Jeff picks up a piece of metal pipe and swings it around, hitting Gary across the back of the head. What factor would be required for Jeff's employer to be liable to Gary? A) Jeff was at the factory when it happened. B) Jeff voluntarily hit Gary. C) Jeff was moving the pipe as part of his work responsibilities when he hit Gary. D) Gary cannot be an employee of the same company as Jeff.

C) Jeff was moving the pipe as part of his work responsibilities when he hit Gary.

The United States v. Lopez case demonstrates which of the following? A) There are no limitations on the federal government's power pursuant to the Interstate Commerce Clause B) The extensive power of the states to regulate interstate commerce C) Limitations on federal power D) Gun ownership cannot be regulated

C) Limitations on federal power

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? A) Miles actions were negligent B) No tort has been committed C) Miles committed an intentional tort D) Miles is strictly liable

C) Miles committed an intentional tort

Bert had his driver's license suspended by the state department of transportation. He believes his constitutional due process rights were violated by the administrative agency. Can he immediately file a court action to have agency's actions reviewed? A) Yes. A court has the jurisdiction to immediately review an agency's alleged unconstitutional action. B) Yes. Bert must specifically allege his constitutional rights have been violated and file a court action in federal court - not a state court. C) No. Bert must first utilize the administrative agency's procedures to review the suspension before he seeks judicial review by a court. D) No. A court of law does not have jurisdiction to review an administrative agency's actions.

C) No. Bert must first utilize the administrative agency's procedures to review the suspension before he seeks judicial review by a court.

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? A) Res judicata B) Stare decisis C) Res ipsa loquitur D) Mens rea

C) Res ipsa loquitur

The Consumer Product Safety Commission (CPSC) is an independent federal administrative agency. Which statement is correct about the chairperson? A) The chairperson serves at the whim of the President and can be fired at any time B) The chairperson can only be fired by the President for good cause C) The chairperson cannot be fired by the President since the CPSC is an independent agency D) The chairperson has a lifetime appointment and cannot be fired

C) The chairperson cannot be fired by the President since the CPSC is an independent agency

In the title of an appellate court case appears as Jones v. Smith A) Jones is the plaintiff and Smith is the defendant B) Smith won the trial court decision C) You cannot determine which party is the plaintiff, because when a defendant loses a trial and files an appeal, some courts (but not all) reverse the names of the parties D) the trial judge was Jones and the appellate judge is Smith

C) You cannot determine which party is the plaintiff, because when a defendant loses a trial and files an appeal, some courts (but not all) reverse the names of the parties

The Minnesota legislature passed a law requiring that employers allow each employee adequate time within four consecutive hours of work to utilize the nearest convenient restroom. This law is: A) an executive order B) an ordinance C) a statute D) a stare decisis

C) a statute

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: A) a battery, but not an assault B) an assault, but not a battery C) both an assault and a battery D) neither an assault nor a battery

C) an assault, but not a battery

Generally, constitutional protections do NOT apply to: A) are void because they deny a person due process rights B) are void because a state court has no power to prosecute a person for burning the federal flag C) are void because they violate a person's right to freedom of speech D) are valid

C) are void because they violate a person's right to freedom of speech

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: A) are void because they deny a person due process rights. B) are void because a state court has no power to prosecute a person for burning the federal flag. C) are void because they violate a person's right to freedom of speech. D) are valid

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

Negligence concerns harm that A) in unforeseeable B) arises intentionally C) arises by accident D) is always substantial

C) aries by accident

The burden of proof required in a criminal case is A) clear and convincing B) a preponderance C) beyond a reasonable doubt D) highest degree of honesty

C) beyond a reasonable doubt

In Hernandez v. Arizona Board of Regents, the court held that individuals who: A) intentionally provide alcohol to minors can be liable for negligence to injured third parties. B) intentionally provide alcohol to minors cannot be held liable for negligence to injured third parties. C) carelessly provide alcohol to minors can be held liable for damages for resulting injury to third parties. D) none of the above

C) carelessly provide alcohol to minors can be held liable for damages for resulting injury to third parties.

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: A) intrusion B) defamation C) commercial exploitation D) none of the above, since public figures are often imitated by other actors

C) commercial exploitation

A civil case generally proceeds as follows: A) answer, complaint, discovery, trial, verdict. B) complaint, answer, trial, discovery, verdict. C) complaint, answer, discovery, trial, verdict. D) discovery, complaint, answer, trial, verdict.

C) complaint, answer, discovery, trial, verdict.

Theft is to the criminal law as ____ is to the civil law. A) stealing B) appropiating C) conversion D) trespass

C) conversion

Statutory law is to legislative bodies as common law is to A) England B) precedent C) courts D) administrative regulations

C) courts

The 14th Amendment's Equal Protection Clause "strict scrutiny" test will be used when the legislation A) affects an economic interest B) affects a person's right to drive C) differentiates on the basis of race D) affects a person's

C) differentiates on the basis of race

The fraudulent conversion of property which is already in the defendant's possession is: A) money laundering B) exclusion C) embezzlement D) trespassory taking

C) embezzlement

The three branches of government in the United States are: A) executive, legislative, administrative B) administrative, executive, statutory C) executive, legislative, judicial D) administrative, legislative, international

C) executive, legislative, judicial

When an appeal is filed with the U.S. Supreme Court, the Supreme Court: A) must hear the case if the validity of a federal statute is in question. B) must hear the case if two or more U.S. courts of appeals have decided the legal issue differently. C) has discretion as to which cases it hears. D) must hear all cases

C) has discretion as to which cases it hears.

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: A) may not be decided by a federal court since it involves a state facility. B) must be decided by the state court where the inmate established residency before going to prison. C) is a federal question case over which the federal courts have jurisdiction. D) cannot be heard, as prisoners lose the right to sue.

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

West Virginia passed a statute regulating working conditions in its mines. If the statute is challenged in court on substantive due process grounds: A) it would be presumed invalid and would be struck down since it involves a fundamental right to work. B) it would be presumed invalid but would be struck down only if it is not necessary to achieve a compelling government interest. C) it would be presumed valid since it regulates economic or social conditions. D) it carries no presumptions, but must be evaluated based on the procedures involved.

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

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? A) legal positivism B) natural law C) legal realism D) sovereign selection

C) legal realism

The fastest growing method of dispute resolution in the U.S. is A) arbitration B) negotiation C) mediation D) litigation

C) mediation

The Thefot of Honest Services statute A) is violated if an employee draws sick leave pay on a day when she is not sick. B) applies only to government officials. C) prohibits both public and private employees from taking bribes or kickbacks. D) was not passed into law due to a presidential veto.

C) prohibits both public and private employees from taking bribes or kickbacks.

Judicial review can best be described as the power of federal courts to: A) review state court decisions B) review state executive action C) review state and federal legislative and executive action D) none of the above

C) review state and federal legislative and executive action

Smalltown, located in a border state, seemed to favor Caucasians over Latinos in their hiring practices. The courts will review the practice using: A) minimal scrutiny B) intermediate scrutiny C) strict scrutiny D) Supremacy Clause scrutiny

C) strict scrutiny

Which law regulates how federal agencies make rules, conduct investigations, hold meetings and hearings, obtain information, and reach decisions? A) the 1964 civil rights act B) the clean agency act C) the administrative procedure act D) the freedom of information act

C) the administrative procedure act

If a court applies res ipsa loquitur: A) the plaintiff needs to prove the case by a preponderance of the evidence. B) the plaintiff must prove the case by clear and convincing evidence. C) the defendant has the burden of proving he or she is not liable. D) the defendant is strictly liable

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

When Congress passed a criminal statute called the "Gun-Free School Zone Act", the Supreme Court ruled that A) the law was valid as a proper exercise of the power to regulate interstate commerce B) the law was void for vagueness; thus, it was not valid C) the law was not valid since Congress exceeded its power under the Commerce Clause D) although the law was not a proper exercise of the power to regulate interstate commerce, Congress had the power to create such legislation on other grounds. Therefore, the statute was valid

C) the law was not valid since Congress exceeded its power under the Commerce Clause

Assume that in December 2006, the Environmental Protection Agency (EPA) filed an administrative complaint against Marlin Firearms Co. alleging that the company exceeded chromium emissions limits. The EPA proposed a $257,162 fine. Which statement is correct concerning the administrative agency adjudication? A) a jury decides the matter B) the federal rules of criminal procedure govern the admissibility of evidence C) the losing party has a right to appeal D) the parties are not represented by attorneys

C) the losing party has a right to appeal

Punitive damages are awarded: A) for past and future medical expenses B) to repay the victim for losses suffered C) to punish the defendant D) for past and future pain and suffering

C) to punish the defendant

The form of business ownership that is the MOST easily transferable is the

Corporation

"I'll sell you my car if I decide to sell it" is an example of: a. a conditional offer. b. an unliquidated offer. c. a unilateral contract. d. an illusory promise.

D

A group of accounting alumni decided to hold a fund-raiser to establish a scholarship for an accounting student. This enterprise is: a. a limited partnership. b. a partnership. c. a charitable partnership. d. None of the above

D

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: a. unsuccessful because her father's death terminated the contract. b. successful, as there was consideration. c. unsuccessful because her father received no benefit. d. unsuccessful because it was merely fatherly advice not to get married during the first year of law school.

B

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: a. Walter will win, as the promise is enforceable. b. Walter will lose, as he gave no consideration. c. Walter will lose unless the promise was in writing. d. Walter will win, as no consideration is required to modify an employment contract.

B

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? a. Yes, it was up to Wendell to verify the doctor's qualifications prior to having the splinter extracted. 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. c. It depends on whether Wendell's injury healed properly. d. No, but the doctor could probably recover under quasi-contract

B

What is NOT required to establish promissory estoppel? a. A promise made by the defendant. b. A promise made by the plaintiff in response to the defendant's promise. c. Reliance on the defendant's promise. d. Enforcing the promise is the only way to avoid injustice.

B

What is meant by the term "piercing the corporate veil"? a. Corporate directors and/or officers may be held personally liable to a person damaged by an act of the corporation. b. Corporate shareholders may be held personally liable to a person damaged by an act of the corporation. c. Both of the above. d. None of the above

B

When a contract falls within the statute of frauds but is not reduced to a writing, the contract is: a. illegal. b. unenforceable. c. void. d. voidable.

B

When one party to a contract fails to perform as promised, it is called: a. litigation. b. breach. c. liquidated damages. d. bad faith.

B

Which of the following describes the duty of loyalty? a. It requires managers to make decisions they reasonably believe to be in the best interest of the corporation. b. It prohibits making a decision that benefits the decision-maker at the expense of the corporation. c. It requires consideration of the interests of the surrounding community. d. It requires using care that an ordinarily prudent person would take in a similar situation

B

Which of the following events would probably excuse performance of a contract based on commercial impracticability? a. The price of a raw material increases slightly so that the contract will not be as profitable. b. An unforeseeable trade embargo causes prices to triple. c. The promisor of personal services dies. d. The subject matter of the contract is destroyed.

B

Which of the following is NOT one of the three ways to amend a written contract? a. write and sign an amendment document. b. verbally agreeing to the changes and shaking hands on the deal. c. crossing out the mistakes and writing in the corrections. d. writing a totally new contract with the correct provisions.

B

Which of the following is an example of an exculpatory clause? a. Creditor charges 38% interest on a loan. b. Seller is not responsible for property damage regardless of the cause of the injury. c. Buyer agrees to pay any costs of litigation. d. Employee agrees to never work for a competing company.

B

Which of the following is an example of incidental damages you might be awarded if you are wrongfully terminated from your job? a. The costs of psychological counseling. b. The costs of mailing resumes to prospective employers. c. The costs of a new wardrobe for future interviews. d. The costs of cosmetic surgery.

B

Which of the following is generally NOT in the introductory paragraph of a contract? a. The date of contracting. b. The location of contracting. c. The parties to the contract. d. The nature of the contract.

B

Which of the following is not true in applying the Williams Act? a. An individual or group acquiring more than 5 percent of a company's publicly traded stock must file a public disclosure document with the SEC. b. A bidder must keep a tender offer open for at least 30 business days initially. c. If any substantial change is made in the terms of the tender offer, it must be kept open for at least ten business days following the change. d. Any shareholder may withdraw acceptance of the tender offer at any time while the offer is still open

B

Which of the following relationships will ordinarily not create an insurable interest? a. Husband and wife. b. Doctor and patient. c. Debtor and creditor. d. Chief executive officer and corporation.

B

The doctrine of stare decisis A) makes the legal process more expensive B) is an equitable remedy C) makes the law more predictable D) is unimportant to the common law

B ) is an equitable remedy

Annette drove through an intersection without looking and hit Vincent's car that he had driven into the intersection without obeying a stop sign. Annette sued Vincent. The jury found that Annette's fault contributed 20 percent to the collision and determined that her total loss was $100,000. Under comparative negligence, the jury should award Annette: A) $20,000 B) $80,000 C) $100,000 D) Nothing

B) $80,000

A customer in a restaurant would be considered ________ to whom the restaurant owner owes a duty ________. A) a licensee; to warn of known dangers. B) an invitee; of reasonable care. C) a social guest; only to avoid intentionally injuring him. D) none of the above.

B) An invitee; of reasonable care

Laura, a brain surgeon, committed a negligent act when she ran a red light and injured Randy, a pedestrian crossing the street. Randy was a mentally impaired adult. A) The "reasonable person" standard does not apply to Laura since she is an extraordinary person. B) Both Laura's and Randy's conduct will be based on the "reasonable person" standard. C) The "reasonable person" standard does not apply to Randy since he is mentally impaired. D) The "reasonable person" standard does not apply to Laura nor Randy given their respective degrees of extreme intelligence (one high and one low).

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

The primary source of federal power to regulate business is the A) Supremacy Clause B) Commerce Clause C) Contract Clause D) Privilege and Immunities Clause

B) Commerce Clause

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: A) committed tortious interference with a contract. B) committed tortious interference with a prospective advantage. C) committed a battery. D) caused a breach of contract and committed the tort of intrusion.

B) Committed a tortious interference with a prospective advantage

Which of the following is a true statement about tort reform? A) Almost all the states have passed statutes limiting the amount a jury can award in a tort case. B) Congress has proposed and debated bills placing limits on tort awards, but so far has not enacted such legislation. C) Large medical malpractice awards account for about 60 percent of the dramatic increase in health care costs in the United States during the last two decades. D) All of the above.

B) Congress has proposed and debated bills placing limits on tort awards, but so far has not enacted such legislation.

Thompson raised 80 acres of corn, most of which he used to feed his own cattle. He locally sold what he did not use. Based on the Supreme Court's ruling in Wickard v. Filburn: A) Congress has no authority over Thompson's activity based on the negative aspect of the Commerce Clause. B) Congress may regulate Thompson's farming activity because it has a substantial economic effect on interstate commerce. C) only Thompson's local government can regulate his farming activity. D) only Thompson's state and local governments can regulate his farming activity.

B) Congress may regulate Thompson's farming activity because it has a substantial economic effect on interstate commerce

Illegally obtained evidence is not permitted to be used at a criminal trial based upon the: A) Silver plate doctrine B) Exclusionary rule C) Fair play doctrine D) Eighth Amendment

B) Exclusionary Rule

Holt and Collins decide to have their dispute arbitrated by Corrales. Which of the following will NOT be a result of the arbitration? A) Corrales will render a binding decision. B) Holt and Collins retain the right to a class action. C) Holt and Collins give up the right to discovery. D) Corrales need not give reasons for the decision.

B) Holt and Collins retain the right to a class action

Don was driving his truck when a board fell out of the truck bed and onto the road. Alice, who was driving closely 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? A) Don is strictly liable to Alice for her injuries. B) In a comparative negligence state, the actions of Don and Alice will be weighed to determine liability. C) Don was not negligent in allowing the board to fall out of his truck D) Don is engaging in ultrahazardous activity

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

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? A) Minimal scrutiny B) Intermediate scrutiny C) Strict scrutiny D) Compelling interest scrutiny

B) Intermediate Scrutiny

If there is a conflict between a state and federal law, generally the federal law will prevail because of the A) federalism doctrine B) Supremacy Clause C) paramount doctrine D) Interstate Commerce Clause

B) Supremacy Clause

Which of the following played a role in the creation of the U.S. government by solving the problem of federalism?

B) The Iroquois Native Americans

What is the major distinction between executive and independent agencies? A) Executive agencies govern business issues while independent agencies regulate individual matters. B) The President has greater control over executive agencies. C) The Administrative Procedure Act regulates independent agencies but not executive agencies. D) Subpoenas may be issued by independent agencies; executive agencies do not have subpoena power.

B) The President has greater control over executive agencies

Psychologist Holtz is working with a patient, Rebecca, who has expressed the intention to seriously harm two of her acquaintances. If you apply the principle set forth by the Supreme Court of California in the Tarasoff v. Regents of the University of California case, Psychologist Holtz: A) has, because of the bystander rule, no duty to warn the foreseeable victims about Rebecca's expressed intention to harm them. B) has a duty to exercise reasonable care to protect foreseeable victims of Rebecca's violence. C) is in a special relationship with patients, and this relationship creates a privilege of confidentiality between the communicants. D) will be held to a strict duty of care and will be held liable for any victim's injuries if Holtz failed to warn a them of Rebecca's potential violence toward them.

B) has a duty to exercise reasonable care to protect foreseeable victims of Rebecca's violence

The Supreme Court's approach during the period from the 1950s through the 1970s in deciding cases on constitutional grounds is described as: A) judicial restraint B) judicial activism C) judicial review D) the dormant aspect of its judicial power

B) judicial activism

Common law refers to A) law that is the same or similar in all the states B) law made when judges decide cases and then follow those decisions in later cases C) law made by legislature in the form of statutes D) the legal systems of France, Germany, and Italy

B) law made when judges decide cases and then follow those decisions in later cases

Administrative agency rules consist of A) executive and independent rules B) legislative and interpretive rules C) informal and "notice and comment" rules D) promulgated and unpromulgated rules

B) legislative and interpretive rules

Bob, a weak swimmer, ignored warning signs in a recreational swimming area and went into deep water. He soon grew 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 brain damage from being submerged during the ordeal. Bob now sues Kelly for negligence for failing to try to save him. Bob will: A) prevail because society places a duty on people to help each other and Kelly breached this duty, resulting in Bob's injury. B) lose because Kelly had no legal duty to rescue him. C) lose even though Kelly had a legal duty to save him, since Bob will not be able to prove that Kelly's failure to act was the proximate cause of his injuries. D) lose because a reasonable person could not have foreseen that someone in a recreation area could not swim well.

B) lose because Kelly had no legal duty to rescue him.

TECO Coal Corporation is interested in the inspections that the U.S. Bureau of Mines has conducted over the past year. To secure this information, TECO should: A) issue a subpoena duces tecum B) make a Freedom of Information Act rquest C) make a de novo request D) assert the substantial evidence rule

B) make a Freedom of Information Act request

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? A) legal positivism B) natural law C) legal realism D) common law

B) natural law

The notion of civil disobedience is founded on what principle? A) legal positivism B) natural law C) legal realism D) foreseeability

B) natural law

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: A) substantive due process. B) procedural due process. C) the Takings Clause. D) eminent domain.

B) procedural due process

The Supreme Court of California in Wiener v. Southcoast Childcare Centers, Inc.: A) ruled that it did not matter whether the driver of the vehicle acted negligently or with criminal intent, the risk of harm from an unsafe fence was the same and defendants had a duty to make the fence stronger. B) required application of a different standard for third-party criminal acts versus acts of ordinary negligence. C) determined that foreseeability was not at issue in this case. D) placed importance on the fact that the child care facility had been the target of violence in the past.

B) required application of a different standard for third-party criminal acts versus acts of ordinary negligence.

When a judge orders a criminal defendant to reimburse the victim, it is called: A) reimbursement B) restitution C) restraint D) reformation

B) restitution

The Miranda warning insures that the criminal suspects understand their constitutional rights relating to: A) search and seizure B) self incrimination C) double jeopardy D) having a jury trial

B) self incrimination

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: A) she will need to show that the magazine has a history of being "reckless" with facts on a regular basis. B) she will need to show that the magazine either knew the story was false or acted with reckless disregard of the facts. C) she will need to show that the magazine failed to attempt to verify the story by trying to contact her or her agent before the story was printed. D) she will need to show that the magazine could have discovered that the story was false but failed to do so.

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

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

B) state court in Idaho

Under a state law, a dog owner is absolutely liable to any person who is injured by the dog. This is an example of: A) negligence per se B) strict liability C) res ipsa loquitur D) negligence

B) strict liability

Jurisdiction is A) the study of law B) the authority of a court to decide a particular type of case C) a federal court concept D) applicable only to appeals courts

B) the authority of a court to decide a particular type of case

An intentional tort involves conduct in which A) the defendant intended to harm the plaintiff B) the defendant intended a certain physical act which ends up injuring someone. C) injuries are caused to someone because of the defendant's neglect or oversight. D) there is resulting punishment, including prison, for the defendant.

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

The Bill of Rights refers to A) the inalienable rights found at the beginning of the Constitution. B) the first ten amendments to the Constitution. C) a specific listing of individual rights found in the original text of the Constitution. D) a grouping of individual rights set forth by the United States Supreme Court shortly after the Constitution was ratified by the states.

B) the first ten amendments to the Constitution

Congresswoman Sloan introduced a bill in the House of Representatives. If the bill is approved by the House committee specializing in that subject, the bill will go to: A) a Senate committee specializing in the subject matter of the proposed legislation B) the Full House C) a Consecutive Committe made up of representatives of both the House and Senate D) the voters of her state of approval

B) the full House

A misdemeanor is distinguished from a felony based upon A) the rules of evidence B) the length and place of possible imprisonment C) the burden of proof D) the type of intent

B) the length and place of possible imprisonment

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: A) larceny B) trespass C) misrepresentation D) conversion

B) trespass

A contract clause which specifies the amount of damages to be paid in the event of a breach is called: a. a covenant of damages clause. b. a reliance interest of damages clause. c. a liquidated damages clause. d. an incidental damages clause.

C

A contract most likely will be declared unconscionable if: a. it is unbalanced, making it unfair to one party. b. it contains a cancellation clause. c. it is oppressive and the weaker party did not fully understand the consequences of the agreement. d. it is signed by a minor for an item of luxury.

C

A corporate board's refusal to remove a "poison pill" was held reasonable in: a. Lippman v. Shaffer. b. Unocal Corp. v. Mesa Petroleum Co. c. Moore Corp. Ltd. v. Wallace Computer Services, Inc. d. Anderson v. Bellino

C

A letter of intent is not likely to be enforceable unless: a. there is a clearly stated start date for the contract. b. both parties agree on compensation. c. it is clear that both parties intended to be bound by the letter. d. conditions in the letter are met.

C

A manager used her position in the company to develop a new business the company might have pursued. This is a breach of the: a. duty of care. b. duty of non-competition. c. duty of loyalty. d. duty of recognition

C

A partnership is the association of two or more persons to carry on as co-owners a business for profit. The association: a. must be established by filing Articles of Partnership with the Secretary of State. b. must be established by a formal agreement. c. means a voluntary relationship between the persons. d. includes all direct descendants

C

A+ Modeling Agency signs a contract with Sandi to do a photo shoot for the local used car dealer's advertising. The contract was probably written by: a. The owner of A+ Modeling Agency. b. Sandi. c. A+ Modeling Agency's lawyer. d. Sandi's lawyer.

C

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? a. No contract exists. The purported acceptance contains additional terms, so it is a counteroffer, which has not been accepted. b. No contract exists if the additional terms are construed to be material terms. 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. d. A contract exists, but the additional terms are not part of the contract no matter what.

C

All Seasons, Inc. ordered $5,000 worth of Christmas decorations from Santa, Inc. The shipment of decorations was to arrive no later than October 1, but did not arrive until December 1. All Seasons was able to purchase some of the unfulfilled order through other suppliers, but had to pay 15% more than the price under contract with Santa, Inc. As a result of the delay, All Seasons' sales were down 25%. All Seasons can recover: a. punitive damages. b. nominal damages. c. compensatory damages and consequential damages. d. compensatory damages, consequential damages, and punitive damages.

C

An agent may not engage in inappropriate behavior that reflects badly on the principal. This rule applies to conduct: a. during working hours. b. during off-duty time. c. during both working hours and off-duty time. d. only by public officials.

C

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? a. perfect performance; honesty b. strict performance; team work c. good faith; fair dealing d. negotiation; arbitration

C

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: a. the surest way to modify the contract is to liquidate it. b. they may not do so without court supervision. 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. d. courts will generally not enforce a cancellation and modification of a contract unless one party received inadequate consideration under the original contract.

C

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: a. unenforceable due to its vagueness. b. unenforceable due to the difficulty of devising an appropriate remedy for a breach. c. enforceable as long as both parties act in good faith and Bob doesn't suddenly demand more hay than what was reasonably estimated. d. unenforceable unless state real estate law makes an exception.

C

Bob, a house builder, contracts with Ollie to build a house on Ollie's lot. Bob hires Rob to take his place as the builder on this contract. What has Bob done? a. Subcontracted Rob. b. Breached the contract. c. Delegated his duties. d. Assigned his rights.

C

Bob, a house builder, contracts with Ollie to build a house on Ollie's lot. The total price of the construction is $100,000, $20,000 of which will be Bob's profit. After Bob has put $10,000 worth of materials into the house, Ollie wrongfully refuses to let him finish the house. If Bob sues for damages, he will be able to collect: a. $10,000. b. $20,000. c. $30,000. d. $100,000.

C

Chance is a traveling marketing representative for a publishing company. He is an independent contractor. One afternoon while driving to a meeting, he negligently runs a stop sign and causes an accident. Judy is injured. Judy can: a. hold both Chance and his company liable for her injury. b. hold the company but not Chance liable. c. hold Chance but not the company liable. d. not hold Chance or his company liable for her injury.

C

Circus Pizza contracted with Art to run its birthday parties. Art's responsibilities included supervising the children and organizing the games. Circus did not investigate Art's background, which included a history of assaulting children. Art assaulted a 7-year-old girl in the restaurant's kitchen during a birthday party. Circus Pizza: a. cannot be liable for the damages because Art committed an unforeseeable intentional tort. b. cannot be held liable for the damages because Art's conduct was not in the scope of employment. c. may be held liable on the basis of negligent hiring. d. may be held liable only if Circus actually knew of Art's background.

C

Contracts that do not arise from mutual agreement but are created by courts to avoid unjust enrichment are: a. express contracts. b. implied contracts. c. quasi-contracts. d. unilateral contracts.

C

Ethel's Exercise World plans to order three weight machines from Pete's Push, Pedal and Pull, Inc. for a total of $15,000. Pete's demands that Ethel's friend, Moneybags, a wealthy independent businesswoman (not connected with Ethel's business in any way) promise to pay Pete's for the three machines if Ethel's Exercise World does not. Which of the promises in this problem must be in writing to be enforceable? a. The promise made by Ethel's Exercise World to buy the weight machines. b. Moneybag's promise to pay if Ethel's Exercise World doesn't. c. Both Moneybag's promise and Ethel's Exercise World's promise. d. None of the promises in this problem need to be in writing.

C

Floyd offers to sell his 1967 Ford Mustang convertible to Tim. Before they conclude their negotiations, Floyd dies. Which of the following is true? a. Floyd's heirs must sell the car to Tim. b. Floyd's heirs must continue to negotiate the offer and sell the car, if a reasonable price can be determined. c. The offer terminates automatically upon Floyd's death. d. There is a contract if Tim accepts before learning of Floyd's death.

C

For the business judgment rule to apply: a. there must be a conflict of interest. b. the director must exercise extraordinary care. c. the director must act in the best interests of the corporation. d. All of the above

C

HBR Accounting hired Denise, a CPA, to prepare tax returns. Which statement is correct? a. Denise is a gratuitous agent and has a duty not to commit gross negligence. b. Denise is an agent and has a duty not to commit ordinary negligence. c. Denise, as a CPA, is an agent with special skills. She is held to a higher duty than ordinary negligence. d. Denise, as a CPA, is an agent with special skills. She is held to a lower standard than ordinary negligence.

C

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: a. enforceable because Becky is giving up the right to do something she would otherwise be entitled to do. b. enforceable because the agreement accomplishes Ben's goal of keeping Becky from drinking. c. not enforceable because Becky does not have a legal right to drink alcohol. d. not enforceable because Becky is a minor and could disaffirm the contract.

C

If Kay, a partner in an auction business, has a personal creditor who is aggressive about collecting the debt: a. Kay can sell her share in the partnership to repay the debt, regardless of what her partners want her to do. b. the creditor can attach the partnership property to pay off the debt. c. the creditor can attach partnership profits by obtaining a charging order. d. Kay cannot meet her obligation to repay her personal creditor through her partnership assets. Her personal obligations will have to be paid through her personal funds or she will have to dissociate from the partnership and force the partnership to buy her share

C

If Rudy offers Oscar $200 for his laptop valued at $600 and Oscar agrees, a court will probably: a. set aside the agreement as being unfair. b. set aside the agreement because the consideration is inadequate. c. not set aside the agreement based on the adequacy of the consideration. d. not set aside the agreement because of the UCC.

C

If a condition does not occur: a. public policy will require only substantial performance by the party for whom the condition failed. b. the requirement of good faith will be eliminated. c. one party will probably be discharged without performance being required. d. it is considered an anticipatory breach.

C

If a court orders rescission and restitution of a contract under which Nala sold a baseball card to Shirley in exchange for $450: a. Shirley must return the baseball card. b. Nala must return the $450. c. Both a and b. d. Neither a nor b.

C

If each party's promises are listed separately in the contract, the are probably: a. covenantal promises. b. conditional promises. c. reciprocal promises. d. material promises.

C

In Delaware, a person may reserve a corporate name: a. online for a $10 fee. b. for 30 days by writing a letter and paying a $100 fee. c. for 120 days by paying a $75 fee. d. only if the name is simultaneously reserved on a national basis

C

In a contract modification, the phrase, "charged with such amendment" means: a. the party who suggested the change. b. the party who will benefit from the change. c. the party who will be adversely affected by the change. d. the party who did NOT suggest the change.

C

In determining whether parties intended to reduce their agreement to writing, which of the following factors would normally NOT be considered: a. whether the type of agreement is one that is normally put into writing. b. the complexity of the agreement. c. whether or not the terms are complete. d. the amount of money involved in the agreement.

C

In the case of Hooper v. Hooper, the court found: a. when the partnership was dissolved, one partner was entitled to property in kind in an amount by which his services had enhanced the value of the partnership. b. when one partner unexpectedly became unable to contribute services and time to the partnership, there was an implied agreement that the other partner would be paid for the extra services he performed for the partnership. c. the fact that one partner contributes greater skill and takes over management of a partnership business does not give rise to a right to extra compensation. d. although the partners had an express agreement to pay one partner for extra services rendered to the partnership, such an agreement is unenforceable.

C

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? a. Jack has a deal. His offer was intended and contains definite terms. b. Jack has a deal. Joan should have responded saying she is not interested in the car if she didn't want to be bound to the offer. c. Joan is not bound. Generally an offeree must say or do something to accept an offer. d. Joan is not bound. Ten days is not a reasonable amount of time to consider the offer and accept by mail.

C

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? a. Jill has no potential liability to the customer. b. Jill can be held personally liable to the customer since she is a partner. c. Jill can only be liable to the amount of her investment. d. Jill is personally liable, but the woman must first collect from the general partners before collecting from Jill.

C

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: a. an S corporation. b. a C corporation. c. a closely held corporation. d. an LLC

C

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: a. only Marshall. b. only the partnership. c. the partnership and the partners together or in separate lawsuits or in any combination. d. only Marshall and the partnership in a lawsuit together or the creditor loses any right to sue the partnership

C

LLCs have become popular for all except which of the following reasons: a. management flexibility. b. tax status as a partnership. c. uniformity of law. d. limited liability.

C

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? a. The contract is voidable at Larry's option. b. The contract is void for lack of consideration. c. The contract is illegal and void. d. The contract is enforceable.

C

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: a. a requirements contract. b. an output contract. c. an illusory contract. d. an enforceable contract.

C

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. b. the partnership terminates. c. the partnership winds down. d. the partnership estoppes

A

RayCorp offers to buy out MegaCorp by paying $69 per share. LandCo, who also wants to buy MegaCorp, offers to pay $75 per share. When the bidding process is finally over, RayCorp has offered $85 per share and LandCo has offered to pay $90 per share. MegaCorp agrees to sell to RayCorp on grounds that, all things considered, the takeover by RayCorp would be better for the business. LandCo claims that MegaCorp should have sold the company to it since it was the highest bidder. Is LandCo correct? a. Yes. This is a breach of duty. MegaCorp must sell the company to the highest bidder; it cannot give preferential treatment to a lower bidder. b. No. This is covered by the Williams Act. c. No. The directors have broad discretion in deciding to whom to sell the company. d. None of the above

A

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. b. the place of delivery is Regency Construction and the time for shipping is within 30 days. c. the place of delivery is Lumber Jack's and the time for delivering the lumber is within 30 days. d. there is no contract because having more than one open term made the offer too indefinite.

A

Rich and Archie sign an agreement in which Archie agrees to deliver ten cases of champagne in 5 days. The parties negotiated and meant to say in the written agreement, delivery in 50 days. If the evidence is clear that the two parties intended to agree to 50 days, the courts will probably apply the remedy of: a. reformation. b. rescission. c. restitution. d. reliance.

A

Rich and Archie sign an agreement in which Archie agrees to deliver ten cases of champagne in 5 days. The parties negotiated and meant to say in the written agreement, delivery in 50 days. If the two cannot settle this dispute, and Archie still wants to deliver the champagne, then Archie should sue for the remedy of: a. reformation. b. rescission. c. restitution. d. reliance.

A

Ron is the business agent for Kansas Sunshine, a rock band. He is also the agent for another popular Midwestern rock group, City Sand. Ron negotiates a deal with a Kansas City promoter to have City Sand play after a professional football game. The promoter was willing to pay $250,000 for both groups to play after the game; however, Ron talked her into booking just City Sand for $175,000. Given his contract with City Sand, Ron made more money under this arrangement. Has Ron violated his fiduciary duty to Kansas Sunshine? a. Yes. It appears that Ron put his own interests ahead of his principal's interests. b. Yes. Ron cannot, under any circumstances, act as an agent for both groups. c. Both a and b are correct. d. Neither a nor b is correct since it is very common for rock band agents to represent several groups at the same time.

A

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. b. condition subsequent. c. novation condition. d. concurrent condition.

A

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. b. Only Ramon and Bonnie are liable for the $50,000 debt owed to Great State Bank. c. The debt is extinguished as a result of the dissociation. d. Whether Sandy remains liable depends on whether she filed a statement of dissociation

A

Scott is trying to introduce oral evidence in court to alter the terms of a written contract he had with Bonnie. Bonnie has raised the parol evidence rule as an objection to Scott's testimony. In which of the following circumstances will Scott not be able to introduce the oral evidence? a. The contract has an integration clause in it and Scott's point of contention is covered in detail in the contract, although not to his favor. b. There was a mutual mistake of a material fact when the contract was entered into. c. The oral evidence is introduced to clarify the meaning of an ambiguous term used in the written contract. d. Scott claims that he was defrauded into entering into the contract and wants to testify about the intentional misrepresentations of material facts.

A

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. b. must wait until June 1 to see if Sea Rovers will perform before suing for breach of contract. c. cannot sue Sea Rovers because Sea Rovers gave adequate notice. d. must wait until actual damages are determined before it can sue.

A

Specific performance may be available for the breach of a contract to sell: a. an original painting. b. 20 shares of WalMart stock. c. a Nintendo WII video game system. d. a 2007 Mustang in mint condition.

A

The Federal Trade Commission requires franchisors to: a. give prospective franchisees an offering circular at least 14 business days prior to the signing of a contract or payment of any money. b. disclose the exact amount of the initial investment required. c. disclose any litigation the company has ever been involved in d. disclose how many franchisees have gone out of business in the prior five years.

A

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 Hall wins; the contract date was strictly enforceable. b. Sound Systems wins; the contract was substantially performed. c. Grand Hall wins; there was commercial frustration. d. Sound Systems wins; there was a true impossibility.

A

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 make an offer. b. will be formed because the first to respond gets the property. c. will be formed because the price is included. d. will not be formed because of the parol evidence rule.

A

The Lippman v. Shaffer case held that: a. the business judgment rule did not apply to the case. b. the business judgment rule protected the board's decision to make the payments in question. c. there was a contractual duty for the board to make the payments in question. d. the motion for summary judgment was denied

A

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. b. a trade secret, and an employment noncompete clause would NOT be enforceable to protect it. c. just a secret recipe and not something the Tavern could protect in a noncompete clause. d. an exculpatory clause and not enforceable.

A

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. b. Utah applies the "moral obligation" exception to the requirement of consideration, and therefore Tallas's promise was supported by consideration. c. because Utah does not recognize the "moral obligation" exception to the requirement of consideration, Dementas prevails. d. the trial court's finding that the services rendered by Dementas to Tallas were performed gratuitously was erroneous.

A

The Williams Act: a. is designed to regulate the conduct of those attempting to take over a company. b. is designed to regulate the conduct of the target company subject to a takeover. c. prohibits corporate defensive tactics. d. None of the above

A

The corporate form of business: a. was first known and used by the Greeks and then spread through the Romans to England. b. was not known until about 1737 when Sir Francis LaRue developed the concept. c. was first allowed in the State of New York around 1811 and is considered to be an American creation. d. None of the above.

A

The first step a court takes in choosing a remedy is to determine: a. what interest it is trying to protect. b. if the damages can be quantified with reasonable certainty. c. if punitive damages should be awarded. d. whether the injured party mitigated its damages.

A

The officers of a corporation are: a. chosen by the board of directors. b. appointed by the president of the company. c. elected by shareholders. d. appointed by the Secretary of State.

A

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. b. include in its charter a provision indemnifying directors under any circumstances in the conduct of their duties for the corporation. c. not include in its charter a provision indemnifying directors who engage in negligent conduct of their duties. d. not include in its charter any provisions regarding indemnification of directors.

A

Vicki entered into a written contract to buy a car from Valley Motors. During the negotiations, the sales representative said that the car had a two-year full warranty. The written contract included a provision that stated, "This writing is the full and final expression of the parties' agreement; anything said before signing or while signing is irrelevant." The written contract did not include a warranty. Two months after Vicki took delivery of the car, she discovered that the transmission needed to be replaced. Vicki claimed that it was covered by the full warranty. Will Vicki be able to present evidence as to the sales representative's statements concerning the warranty? a. No. The parol evidence rule will most likely exclude any evidence of the discussion of the warranty. b. Yes. The leading object rule will allow evidence as to the discussion of the warranty. c. Yes. The evidence is needed because the contract is ambiguous. d. No, because the contract was fully executed.

A

Vicki entered into a written contract to buy a car from Valley Motors. The written contract included a provision that stated, "This writing is the full and final expression of the parties' agreement; anything said before signing or while signing is irrelevant." This is: a. an integration clause. b. a statute of frauds clause. c. parol evidence. d. an exculpatory clause.

A

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. b. Generally, the auctioneer must sell to the highest bidder. Vivian will get the lamp. c. Generally, the auctioneer is the offeror and the bidders are the offerees so there is a contract and Vivian will get the lamp. d. Most auctions are without reserve and therefore the auctioneer cannot withdraw the lamp.

A

When a party to a contract intentionally makes the terms of a contract unclear, it is called: a. vagueness. b. duress. c. ambiguity. d. mistake.

A

When a principal is partially disclosed: a. the agent and principal will be jointly and severally liable on the contract. b. the agent and principal will be only jointly liable on the contract. c. only the principal can be liable. d. only the agent is liable.

A

Which of the following exculpatory clauses will most likely be enforceable? a. An exculpatory clause that relieves a riding stable of negligence. b. An exculpatory clause that relieves a riding stable of gross negligence. c. An exculpatory clause that relieves a riding stable from intentional torts. d. A riding stable's exculpatory clause that is hidden in an eight-page document that all riders are required to sign.

A

Which of the following is correct concerning anti-takeover efforts? a. Most states have passed laws to deter hostile takeovers, but these statutes have not totally eliminated hostile takeovers. b. Federal statutes have been more effective than state statutes in eliminating hostile corporate takeovers. c. The most effective federal statute has been the Poison Pill Act. d. Both b and c are correct

A

Which of the following is not required of an agency relationship? a. Consideration. b. Fiduciary relationship. c. Consent of the parties to act as agent or principal. d. Control of principal over agent's conduct.

A

Which of the following statements is incorrect concerning arbitration? a. The losing party in an arbitration can file an appeal in a District Appellate Court. b. Arbitration is almost always cheaper and faster than litigation. c. Arbitrators may be biased toward the "larger" party who may be a repeat client. d. Parties to a contract cannot be forced to arbitrate unless the contract specifies it.

A

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. b. a partnership to an LLC. c. an LLC to a corporation. d. All of the above.

A

Which of the following types of contracts cannot be either contradicted or supplemented by evidence of prior agreements or expressions? a. Totally integrated contracts. b. Incomplete contracts. c. Ambiguous contracts. d. Oral contracts.

A

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% of the damages B) all of the damages C) none of the damages D) 30% of the damages

A) 70% of the damages

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. B) A plaintiff must show that the defendant's act was the factual cause of her injury even if the injury was not foreseeable. C) A plaintiff must show that the defendant's act created a foreseeable danger even if it was not the factual cause of her injury. D) A plaintiff does not have to show that the defendant's act either created a foreseeable danger or that the act was the factual cause of her injury.

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

Which of the following elements is not necessary to apply the doctrine of res ipsa loquitur? A) An ultrahazardous activity is involved. B) The defendant had exclusive control of the thing that caused the harm. C) The harm would normally not have occurred without negligence. D) The plaintiff had no role in causing the harm.

A) An ultrahazardous activity is involved

Which statement is correct concerning judicial review of an administrative agency's action? A) Courts usually accept the facts of the case as determined by the agency and often defer to the agency's interpretation of the law. B) Courts conduct a de novo review of the case. C) Courts ignore the facts of the case. D) Courts substitute their opinion for that of the agency.

A) Courts usually accept the facts of the case as determined by the agency and often defer to the agency's interpretation of the law.

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? a. Since this is an illegal contract, the courts will not enforce it. b. Since Mark violated a regulatory statute, the contract is unenforceable. c. Since this is a revenue-raising statute, The Little Nipper wins. d. Since this is a revenue-raising statute, the licensing law is unconstitutional. Craig wins.

C

Diane, a police officer, stops Tim's car for a traffic offense. While talking to Tim, she shines a flashlight into the passenger compartment of Tim's car and sees evidence of drug paraphernalia. Which statement is correct? A) Diane may search the passenger compartment of the car and any place else in the car, including the trunk, without Tim's consent. B) Diane may search the passenger compartment of the car without Tim's consent; however, she may not search the trunk of the car without his consent or without a search warrant. C) Diane may not search the passenger compartment of the car (nor any place else) without Tim's consent or a search warrant. However, she can require Tim to remain parked until the search warrant is brought to her. D) Under the above circumstances, Diane can write Tim a traffic citation but cannot search the vehicle.

A) Diane may search the passenger compartment of the car and any place else in the car, including the trunk, without Tim's consent.

The test of "foreseeability" is generally used to determine the existence of which element of a negligence case? A) Duty of due care. B) Breach. C) Factual cause. D) Injury.

A) Duty of due care

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. B) Kyle will collect damages as bones in chowder are common. C) Kyle will collect damages if he proves it was possible to prevent tiny fish bones from being present in clam chowder. D) Kyle will collect damages, as res ipsa loquitur applies.

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

In Jones v. Clinton, the court held A) Paula Jones did not demonstrate the essential elements for her claim. B) Paula Jones was entitled to a summary judgment. C) public policy required that the case be dismissed because of the President's governmental position. D) President Clinton failed to comply with a discovery order.

A) Paula Jones did not demonstrate the essential elements for her claim.

Roger assaulted Jim in a tavern, causing medical expenses and lost wages. Which of the following is true? A) Roger can be prosecuted by the state for a criminal offense and Jim may sue him for money damages. B) If Roger is convicted of criminal assault, Jim is not allowed to sue him for money damages since that would violate the double jeopardy clause of the Constitution. C) If Jim refuses to press charges against Roger, the state cannot initiate a criminal proceeding against him. D) Jim can either elect to sue for money damages or proceed with criminal charges.

A) Roger can be prosecuted by the state for a criminal offense and Jim may sue him for money damages.

The issue of the constitutional protections afforded flag burning was addressed A) Texas v. Johnson B) United States v. Lopez C) Marbury v. Madison D) Palmore v. Sidoti

A) Texas v. Johnson

Contemporary law's principle of collective responsibility, such as all partners being personally responsible for the debts of the partnership, had its roots in: A) The Anglo-Saxon method of ensuring public order through tithing B) the Anglo-Saxon practice of using "oath helpers" C) The English use of "shire reeves" D) The English system of feudalism

A) The Anglo-Saxon method of ensuring public order through tithing

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 DA's case was a criminal case; Jane's lawsuit was a civil case. B) The Da's case was a civil case; Jane's lawsuit was a criminal case C) Both cases are criminal D) Both cases are civil

A) The DA's case was a criminal case; Jane's lawsuit was a civil case

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 B) Yes, but only if Adam intended to cause Linda serious emotional distress C) No, since he was only playing a practical joke D) No, since Linda was not physically hurt by Adam

A) Yes, as his conduct was intentional

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 factfinder. Because of this, the legal system in the United States is considered: A) an adversary system B) a conflict system C) an alternative dispute resolution system D) a mediation system

A) an adversary system

Judge Zellar was asked to decide if a plaintiff could see the interrogatories procured by the defendant. The judge viewed the documents alone and decided that they should be made available to the plaintiff. The judge made: A) an in camera inspection. B) a motion to compel answers to interrogatories. C) a request for admission. D) a request for the production of documents.

A) an in camera inspection.

The Administrative Procedure Act A) applies to all federal agencies B) applies to executive branch agencies but not to independent agencies C) applies to independent agencies but not to executive branch agencies D) does not apply to federal agencies

A) applies to all federal agencies

Sid burned his own warehouse in an attempt to collect on a fire insurance policy. Sid has committed: A) arson B) larceny since he committed an act intended to wrongfully obtain money from his insurance company. C) a crime called "burning to defraud insurers" since the crime of arson only applies to property owned by another person. D) an intentional tort, but not a crime since a person has a right to destroy his own property.

A) arson

In a civil case, the plaintiff must prove the case: A) by a preponderance of the evidence. B) by clear and convincing evidence. C) beyond a reasonable doubt. D) None of the above; the burden of proof is on the defendant.

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. B) cannot detain the customer but can alert the police. C) cannot detain the customer but once the customer leaves the store, the salesclerk can make a citizen's arrest. D) cannot detain the customer but can sue for conversion.

A) can reasonably detain the customer for suspicion of shoplifting.

The elements in a defamation case are: A) defamatory statement; falseness; communication; and injury. B) a contract; knowledge of the contract; improper inducement; injury. C) false or misleading fact statements; statements in commercial advertising; likelihood of harm. D) duty; breach of duty; proximate causation; and damages.

A) defamatory statement; falseness; communication; and injury

The U.S. Supreme Court's holding in Ward's Cove Packing v. Atonio A) differed from the holding in Griggs v. Duke Power Co. partly because the Court was more conservative at the time Ward's Cove was decided. B) upheld the ruling in Griggs v. Duke Power Co. C) found that overt racial discrimination existed. D) set forth a "business necessity" requirement for employment hiring practices.

A) differed from the holding in Griggs v. Duke Power Co. partly because the Court was more

After the plaintiff has presented her case, the defendant may be granted a: A) directed verdict B) summary judgment C) judgment n.o.v. D) judgment on the pleadings

A) directed verdict

Fundamental rights include all EXCEPT the right to: A) drive B) vote C) free speech D) travel

A) drive

The federal judicial branch of the U.S. government: A) interprets statutes B) passes statutes C) issues executive orders D) creates administrative agencies

A) interprets statutes

The "dormant" aspect of the Commerce Clause A) is also known as the "negative" aspect. B) means that there are many unused powers still available to the government to regulate trade between the states. C) guarantees that Congress has the power to regulate trade with foreign countries that have not yet developed trade practices with the United States. D) guarantees that the states have the power, even if unused, to impose regulations affecting interstate commerce.

A) is also known as the "negative" aspect.

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 B) natural law C) legal realism D) common law

A) legal positivism

In most states dram acts apply to A) liquor stores, bars, and restaurants but not to social hosts. B) liquor stores, bars, restaurants and to social hosts. C) social hosts, liquor stores, and bars. D) None of the above

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

Sara sent letters to 1,000 people offering to send them information that would guarantee them a profit in the stock market if they sent her $99.95. If they sent her the money, the brief, generally known information she sent them said: "Buy stocks when their prices are low, and sell when the prices are high." Sara is guilty of: A) mail fraud B) larceny C) embezzlement D) nothing

A) mail fraud

The concept of stare decisis focuses most on: A) predictability B) flexibility C) legislative intent D) change

A) predictability

Important steps in the criminal process, in the proper order, include: A) probable cause hearing, search, arrest, indictment, arraignment, plea bargain, and trial. B) arraignment, booking, bail hearing, trial, and grand jury indictment. C) arrest, probable cause hearing, motion to suppress, booking, and trial. D) indictment, arrest, probable cause hearing, plea bargain, arraignment, trial, and appeal.

A) probable cause hearing, search, arrest, indictment, arraignment, plea bargain, and trial.

Eric was charged with attempted murder. His defense was that he was insane at the time of the act. A jury accepted Eric's defense. Eric will: A) probably be committed to a mental hospital and when that hospital determines he is no longer a danger to society, he will be released. B) be declared guilty, but will have to serve his sentence in a mental hospital rather than in prison. C) have to be committed to a mental hospital until he regains his sanity, at which time he will be retried. D) be sent to prison once he is released from the mental ward.

A) probably be committed to a mental hospital and when that hospital determines he is no longer a danger to society, he will be released.

The last protected trait added by Congressman Smith of Virginia to the bill which became Title VII of the Civil Rights Act of 1964 was: A) sex (gender) B) sexual orientation C) national origin D) race

A) sex (gender)

If in 1900 the Minnesota Supreme Court ruled that a minor can void a contract at any time during minority and in 2008 the courts in Minnesota still follow this ruling, this is an example of: A) stare decisis B) the bystander rule C) statutory law D) enabling legislation

A) stare decisis

In 1992, the NC SC 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 B) statutory law C) public law D) criminal law

A) stare decisis

Tommie, a six-year-old child, was seriously injured when he stuck a fork into an electrical outlet. His parents sued the restaurant where 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. B) the parents exercised enough supervision of their child. C) this is negligence per se. D) this is an ultrahazardous activity.

A) the incident was reasonably foreseeable.

A United States district court is A) the primary federal trial court B) an appellate court C) a small claims court only D) none of the above

A) the primary federal trial court

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 that: A) there was no way to foresee that the incident would happen. B) the incident occurred away from the office C) the killing was the result of a personal conflict between Wayne and the supervisor. D) even if the company had been aware of Wayne's difficulty with his supervisor, Wayne did not have any criminal history.

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

The primary purpose of RICO was A) to be a tool against organized crime B) to raise revenue C) to prosecute non-citizens D) to prosecute those engaged in tax fraud

A) to be a tool against organized crime

The biggest change in the litigation in the last decade is A) an explosive rise of electronic discovery. B) a decrease in the use of discovery. C) the replacement of interrogatories with depositions. D) the use of juries in appellate courts.

A)an explosive rise of electronic discovery.

21. Dusty dissociated from a partnership. To protect himself from debts of the partnership after he leaves, Dusty should: a. secure an indemnity bond. b. file a statement of dissociation with the Secretary of State. c. execute a formal written agreement with the remaining partners. d. demand that the partnership terminate

B

A board of directors is considering whether to invest a great deal of money into research and development. Such a decision could have a long-term beneficial effect for the company's future. As an alternative, the board could forego the expenditure into research and development and buy back its own shares in order to immediately increase the company's reserves. Which of the below groups would most likely favor the option to increase the company's reserves and not invest in more research and development? a. Management. b. Shareholders. c. Stakeholders other than the shareholders. d. Each of the above groups would probably feel the same way

B

A condition: a. is created only when the phrase "provided that" or a similar phrase introduces it. b. is an event that must occur before a party becomes obligated under a contract. c. must be expressly stated, although it can be created by informal language. d. will not be enforced by the courts unless formal language is used, regardless of the intent of the parties to create a condition.

B

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: a. an objective impossibility clause. b. a force majeure clause. c. a concurrent condition clause. d. a condition precedent clause.

B

A court: a. will enforce any express conditions intended by the parties. 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. c. requires strict performance if a clause of the contract expressly demands it. d. applies an objective standard whenever ruling on a personal satisfaction contract.

B

A force majeure event is: a. anything that makes the contract unprofitable for either party. b. a natural disaster that claims human life or leads to the declaration of a state of emergency. c. a disruptive, unexpected occurrence for which neither party is to blame that prevents one or both parties from complying with the contract. d. any happening that fulfills one of the conditions in the contract, making it enforceable.

B

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: a. no contract can be created. 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. c. the warranty term is an "additional term" that becomes part of the contract in most states. d. the warranty term is a "different term," which in most states becomes part of the contract unless the seller promptly objects.

B

Abby dies, and her good friend, Clay is appointed to administer Abby's estate. Abby's house was in poor condition, so Clay orally hired a contractor to make repairs. Clay also orally promised that if the estate could not pay the repair bill, he would pay it even though he does not live in the house and has no entitlement under Abby's estate. The estate does not pay the repair bill. Who can the contractor collect from, if anyone? a. The contractor can collect from either the estate or Clay. b. The contractor can collect from the estate only. c. The contractor can collect from Clay only. d. The contractor must collect from the estate first, and then collect any deficiency from Clay.

B

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: a. full performance. b. rescission. c. accord and satisfaction. d. novation.

B

Alex is a director of ABC, Inc. Alex wants to personally make a major purchase from Bravo Co. If it knew of the opportunity, ABC might be also interested in making that same purchase. Alex must: a. advise the boards of both corporations of his conflict of interest. b. first offer the opportunity to make the purchase to the disinterested directors of ABC or its shareholders. c. resign from the board of directors. d. abandon the idea of making the purchase himself

B

Brahma entered into an oral agreement to sell 50 jet skis to Summer Sports. Brahma delivered 20 of the skis on May 1. On June 1, Summer Sports notified Brahma that it will not honor the agreement. Which statement is correct? a. The contract is void since it was oral. b. The contract is enforceable for 20 jet skis. c. The contract is enforceable for the 50 jet skis d. The contract is obsolete.

B

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: a. sole proprietorship. b. partnership. c. joint venture. d. limited liability company.

B

Claude agrees to lease his house to Irvin for nine months, the lease to begin six months from the signing of the contract. Under the statute of frauds: a. the lease is not required to be in writing. b. the lease is required to be in writing because of the one-year rule. c. the parol evidence rule renders the lease voidable. d. the lease is a collateral promise which must be in writing.

B

Corporate stock can be divided into categories called ________, which can be further divided into ________. a. authorized shares, classes. b. classes, series. c. equity, assets. d. debentures, classes

B

Costs to store a vehicle for a short period of time after an auto dealer fails to complete the contract to purchase the vehicle would be: a. compensatory damages. b. incidental damages. c. consequential damages. d. punitive damages.

B

One reason you may not need a written contract is: a. you are dealing with a party you do not know well, so you need to remain flexible. b. you are buying land from a member of your family. c. the terms of the agreement are simple and the value of the transaction is small. d. you have negotiated enough that you both know what the other person intends.

C

Pamela hired Lena to sell her business. Lena: a. can buy the business as long as the price is fair. b. can buy the business as long as she qualifies for financing. c. can buy the business only with Pamela's permission. d. cannot buy the business under any circumstances.

C

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? a. Police Officer Paul is not entitled to the reward because past consideration is never valid consideration. b. Police Officer Paul is entitled to the reward because he puts his life on the line every day. c. Police Officer Paul is not entitled to the reward because he was under a pre-existing duty to make the arrest. d. Police Officer Paul is not entitled to the reward but may have an argument under promissory estoppel.

C

Public policy means the law that comes from the: a. state legislature. b. executive branch of the government. c. courts that decide what would have a negative impact on society. d. Constitution.

C

Ralph is a professional football player. He signs a valid contract with the Jets. Later, he claims that he was also promised free use of the Jets' private jet, but this was not in the contract. What type of clause in his contract would prevent him from flying away with this claim? a. A complete agreement clause. b. A "no additional terms" clause. c. An integration clause. d. A severability clause.

C

Ralph is a professional football player. He signs a valid contract with the Jets. Later, the Giants offer him more money, so he signs a contract with them. If the Jets sue Ralph, the most likely result would be? a. The court will order Ralph to play with the Jets. b. The court will order Ralph to play with the Jets, but Ralph is entitled to be paid the amount he negotiated under the Giants contract. c. The court will enjoin Ralph from playing with any team other than the Jets. d. The court will order Ralph to pay compensatory damages in the amount of the difference between the two contracts.

C

Renita, a merchant, has received a signed, written confirmation from Merchants, Inc. referring to goods she had not ordered. Renita should: a. ignore the confirmation. b. call the seller and object to the confirmation as soon as she gets back from her two-week vacation. c. object to the confirmation in writing within 10 days. d. return the goods within two weeks of their delivery with a note attached saying she will not pay for the goods.

C

Seth told the salesperson at Outdoor Times that he wanted the sleeping bag that was advertised in the Sunday paper; one that would keep him comfortable if the temperature drops to 10 degrees Fahrenheit. The salesperson told Seth they were sold out of that bag, but there were two other styles that would meet his needs and were the same price. Seth insisted he wanted the advertised bag and threatened to sue for breach of contract. Which is true? a. Outdoor Times is guilty of "bait and swap." b. Seth will prevail in his case, as Outdoor Times is responsible for having sufficient stock of advertised items. c. Seth will not prevail, as the advertisement was simply an invitation to negotiate. d. Outdoor Times must provide Seth with a raincheck, ensuring he can buy the same bag at the sales price at a later date.

C

Alpha and Xenon companies are both major international conglomerates. They are negotiating a contract whereby Alpha will install a computer system for Xenon. One clause in the contract states that Alpha will not be liable for damages caused by the negligent installation of the computer system, except that Alpha warrants the system and will fix any problem for a period of two years following installation. Alpha completes the installation of the computer system. Xenon loads extensive amounts of information on the system, but all of it is destroyed because Alpha negligently installed the memory chips. Alpha fixes the memory, but Xenon incurred significant expenses in recreating the lost information. Xenon sues for these expenses. Alpha defends with the noted clause in the contract. a. Xenon wins; these types of clauses are never enforceable. b. Xenon wins; exculpatory clauses are sometimes valid, but this one would not be valid. c. Xenon wins; this exculpatory clause is not valid because it is unconscionable. d. Alpha wins; this exculpatory clause is enforceable.

D

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: a. Anne is not liable since the partnership was in the winding up phase. b. Anne is not liable since she did not consent to the work. c. Anne is not liable since Mike's conduct was wrongful. 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

D

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? a. Art, since the UPA presumes that profits and losses are divided in proportion to capital contribution. b. Art, since it would only be fair. c. Alma, because she works in the business. d. Alma, as the UPA provides that profits are split equally unless the partners agree otherwise

D

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? a. yStar is liable on the contract because the contract was signed in its name. b. yStar becomes liable on the contract as soon as it is incorporated. c. yStar is liable on the contract if the contractor knows that the corporation does not yet exist. d. yStar will be liable on the contract only if the corporation adopts the contract.

D

Compensatory damages are typically assessed against the breaching party: a. as a penalty for breaching the contract. b. only under the UCC when the sale of goods is the subject of the contract. c. to put the non-breaching party in the position it would have been in had the contract never been formed. d. to put the non-breaching party in the position it would have been in if the contract hadn't been breached.

D

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: a. charter. b. articles of incorporation. c. certificate of organization. d. All of the above. All of these terms are used to identify the same document

D

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? a. Dodger wins; the contract was substantially performed. b. Liberty Farm wins; there was failure of a condition subsequent. c. Dodger wins; courts will not enforce a time-of-the-essence clause. d. Liberty Farm wins; the impossibility doctrine applies.

D

E-mation entered into a contract with a consumer, Ezra, a recent immigrant to the United States, who 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 for enforcement the contract, what is the most likely result? a. The contract is enforceable because of the Statute of Frauds. b. The contract is enforceable because of the parol evidence rule. c. The contract is enforceable because of the underlying reference rule. d. The contract is unenforceable because it is unconscionable.

D

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? a. The court will order Marvin to return the $5000. b. The court will order Marvin to return the $5000 with interest. c. The court will order Marvin to obtain the trade secrets. d. The court will not do anything to help E-mation get its money back.

D

Eintz Corp. hired Jose to bribe a foreign government official into awarding a $3 million contract to Eintz. 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: a. be able to recover the $12,000. b. be able to recover the $3 million lost on the contract. c. be able to recover the $2,000 but not the $10,000. d. not be able to recover the $12,000.

D

Express authority can be created by: a. words spoken directly to the agent. b. conduct. c. written words given to one person to give to another person, the agent. d. All the above.

D

Factors influencing whether a servant is acting within the scope of employment include all but which of the following? a. The act is similar to the one the principal authorized. b. The act is not seriously criminal. c. The act took place during hours that the servant is generally employed. d. All of the answer choices are factors in determining if an act is "within the scope of employment."

D

Fashions, Inc. has 12 shareholders. The company is subject to the Model Act. What officers is Fashions, Inc. required to have? a. A president, secretary, and treasurer. b. A president and a secretary, and they can be the same person. c. A president, at least one vice-president, a secretary, and a chief financial officer. d. Whatever officers are described in the corporate bylaws.

D

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: a. Hank and Kelsey must receive their 2009 dividends before Oleg is paid any 2009 dividends. b. Oleg cannot receive any 2009 dividends until Hank is paid for the 2007 dividends. c. Kelsey cannot receive the dividends Wayside could not afford to pay in 2007. She will just lose them. d. All of the above

D

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: a. obligated to pay the $100. b. not obligated to pay under the commercial impracticability doctrine. c. not obligated to pay under the force majeure doctrine. d. not obligated to pay under the frustration of purpose doctrine.

D

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: a. a rescission. b. a contract modification. c. a preexisting duty. d. an accord and satisfaction.

D

If a court awards nominal damages it will generally: a. award compensatory damages as well. b. not make a determination as to whether there has been a breach of the contract. c. award punitive damages for the intentional breach of the contract. d. award a very small amount of money.

D

If an offer specifies no time limit in which to accept: a. the offeree has 30 days to respond. b. the offeree has 10 days to respond. c. the offer is not valid and therefore it does not matter when the offeree responds. d. the offeree has a reasonable period during which to accept.

D

If the agent is disloyal to the principal: a. the agency agreement automatically terminates and the principal may rescind the transaction. b. the principal has the right to collect any actual damages sustained as a result of the agent's disloyalty. c. the principal has a right to recover any profits earned as a result of his agent's disloyal conduct. d. All the above are correct.

D

In which case is the offer still valid at the time the acceptance is made? a. Hal offered to sell a book to Sid. Hal died, and Sid sent an acceptance two days later. b. By-Waste Co. telephones XXX Co. offering to dispose of XXX Co.'s chemical waste by a particular method. XXX says it has another way to dispose of the waste. Then XXX finds out the method it planned to use violates environmental protection statutes, so it sends a letter of acceptance to By-Waste. c. Ray offers to sell his AT&T stock for a particular price by May 1. On May 2, Kathy agrees to buy the stock. d. In a face-to-face transaction, Pat offers to sell Mike his stereo and Mike accepts. e. All of the above.

D

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? a. This is substantial performance. Jackie must still pay something to Charles. b. This is a material breach. Jackie must still pay something to Charles. c. This is substantial performance. Jackie owes nothing to Charles. d. This is a material breach. Jackie owes nothing to Charles.

D

Jamie is building a 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: a. Jamie wins, as Earnie was under a preexisting duty to dig the basement. b. Earnie wins as this modification is governed by the UCC and consideration is not required to enforce a modification of the agreement. c. Jamie wins as Earnie was not acting in good faith and just wanted to put Jamie in a situation where she didn't have a choice but to agree to more money. d. Earnie wins, as the modification was due to unforeseen difficulties.

D

Rachel and Cyndi started a retail business called Zebra Toy Company. The business is operated as a partnership. Under partnership law: a. Rachel is personally liable for any business contracts entered into by Cyndi. b. Rachel is personally liable for any business debts, regardless of whether she or Cyndi created the obligation. c. Rachel is personally liable for any negligent act committed by Cyndi in the scope of the business activity. d. All the above.

D

Reformation is: a. a type of restitution b. a form of quantum meruit. c. a form of quasi-contract. d. uncommon.

D

Robin and Bellman, both merchants, orally agree to a contract for the sale of $5000 of accessories. Bellman, the buyer, sends to Robin, the seller, a written confirmation of the sale, which is sufficient against Bellman under the statute of frauds and which Bellman signs. Robin does not sign. Robin fails to perform the contract and does not ship out the goods. Bellman sues. This contract is: a. unenforceable, because Robin did not sign any contract. b. unenforceable, because Bellman did not pay for the goods. c. enforceable, because Bellman sent the written confirmation of the sale, thereby partially performing the contract. d. enforceable even without Robin's signature because both parties are merchants.

D

The Kelsoe v. International Wood Products, Inc. case was an example of: a. promissory estoppel. b. partial performance. c. illusory promises. d. lack of consideration.

D

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? a. The contract is unenforceable because the option to cancel clause makes the contract an illusory promise. b. The contract is unenforceable because the $2,000 is past consideration. c. The contract is unenforceable because only one party has the option to cancel. d. The contract is enforceable because the option to cancel clause is supported by consideration.

D

The UCC deals with unconscionability in a contract by providing that a court may: 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. d. All of the above.

D

The advantage of a corporation over a partnership is: a. shares are easily transferable to another person. b. perpetual existence. c. it is easier to raise funds. d. All the above.

D

The common law governs contracts for A) services B) real estate C) employment D) all of the above

D

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? a. Yes. The United States Supreme Court has ruled that a publicly held corporation that purposefully sets about to eliminate cumulative voting to prevent a person from getting herself elected to the board has acted illegally. b. Yes, but only if the company is incorporated in a state that has adopted the Model Act. c. No, provided the company did not change its cumulative voting provision solely for the purpose of preventing a particular person from taking advantage of that right. d. No. Under the Model Act, regardless of MegaCorp's motives, it had the right to act as it did.

D

The equal dignities rule relative to agency law applies to an agent: a. hired to contract for a booth at a trade show scheduled to occur in two years. b. selling real estate for the principal. c. authorized to enter into a two-year lease for her principal. d. All the above.

D

The intent of the offeror to extend an offer to the offeree is generally determined by reference to: a. the beliefs of the offeror. b. the subjective intention of the offeror. c. the assumptions of the offeror. d. the words and conduct of the offeror.

D

The title of a contract should be: a. general, like "Memorandum of Agreement.". b. written like a sentence, with only the first letter capitalized. c. short -- no more than five words. d. descriptive of the agreement, and typed in all capital letters.

D

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? a. Yes, Bobbi was legally required to secure Theresa's permission before leaving the partnership. b. Yes, Bobbi had a legal duty to stay in the partnership until Theresa was willing to agree to end the relationship. c. Yes, Bobbi had a legal duty to stay in the partnership until a new partner could be found. d. No, in a partnership at will, a partner has the right to leave the partnership at any time

D

To be valid, a noncompete clause must be: 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. d. All of the above.

D

Tom, the production manager at Esday, was told by his supervisor to hire Elton, a 15- year-old, to operate an industrial machine. Hiring the 15-year-old violates the child labor laws. Tom: a. should hire Elton. Tom has a duty to obey Esday's instructions. b. should hire Elton. Tom has a duty of care to ensure that the government does not discover that Elton is 15 years old. c. should not hire Elton. Tom has a duty of care and he would not be caring for Elton. d. should not hire Elton. Tom has a duty to obey Esday's instructions only if they are legal and ethical.

D

Under the UCC, which of the following contracts may be enforceable, even without a written memorandum? a. The seller is specially manufacturing the goods for the buyer. b. The seller admits in court that there was a contract. c. The seller has delivered the goods. d. All of the above.

D

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? 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. d. Any one of the above may be correct. The answer depends on the particular state law.

D

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? a. Robert wins; this is an enforceable contract with complete and definite terms. b. Robert wins; the UCC will decide which 40 acres are to be sold. c. Wally wins; the original offer was not intended to be an offer but merely an invitation to negotiate. d. Wally wins; this agreement is too indefinite since it does not identify which 40 acres are to be sold.

D

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: a. an unenforceable exculpatory agreement. b. an unenforceable usurious agreement. c. an enforceable bailment agreement. d. an enforceable agreement not to compete.

D

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? a.This is an implied, unilateral contract and she must pay the price requested by the man. b. This is an express, voidable contract that either party may avoid. c. The court would order Myrtle to pay the reasonable value of the yard work because of the benefit conferred on her. d. Myrtle would not have to pay for the yard work.

D

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? a. Limited liability company. b. Business trust. c. Close corporation. d. Franchise

D

Which of the following must be approved by the shareholders if a company is attempting to avoid a hostile takeover bid? a. White knights. b. Staggered board of directors. c. Supermajority voting. d. All the above

D

Which of the following offers are considered to be irrevocable for a given period? a. Firm offers. b. Option contracts. c. A writing signed by a merchant offering to hold open an offer for the sale of goods for a stated period. d. All of the above.

D

Which of the following persons is an agent? a. Diane, a shoe salesperson for a retail store. b. Tim, a real estate broker for a large real estate company. c. Craig, a telephone marketing employee. d. All the above.

D

Which of the following promises ordinarily must be in writing to be enforceable? a. Promises made as a part of a prenuptial agreement. b. The agreement to sell a car for $1500. c. The promise by an executor of an estate to pay a debt of the decedent. d. All of the above.

D

Which of the following statements is correct? a. Bonds are long-term debt secured by company assets. b. Debentures are long-term unsecured debt. c. Notes are short-term debt and may be secured or unsecured. d. All the above are correct.

D

Which of the following statements is incorrect concerning liquidated damages? a. A liquidated damages clause will be enforced if, when the contract was made, it was difficult to estimate actual damages. b. The amount of liquidated damages must be a reasonable estimation of the actual harm resulting from a breach. c. Nominal damages are not the same thing as liquidated damages. d. Liquidated damages are enforceable even if the amount is considered to be a penalty on the breaching party.

D

Which of the following would be evidence that two people intend to be partners? a. An agreement to share profits of a business. b. Referring to each other as "partners." c. Agreeing to share in the business's losses. d. All of the above are evidence of a partnership

D

Which of the following would suffice for a signature on a writing under the statute of frauds? a. A stamped signature. b. A handwritten signature. c. A name keyed at the bottom of an e-mail. d. Any of the above would suffice. Judges define "signature" very broadly.

D

Which statement is true about definitions in a contract? a. All ambiguous terms must be defined. b. Definitions must be grouped together in a separate section of the contract. c. Definitions must be located on the same page where the term is first used. d. The parties to the contract may be defined with shorter designations than their actual names.

D

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? A) A case can be settled provided it has not been filed with the court. B) A case can be settled provided that discovery has not commenced. C) A case can be settled provided the jury has not heard any testimony. D) A case can be settled at any time.

D) A case can be settled at any time.

Nevada passed a law banning all commercial billboards along state highways to improve the appearance of the environment. If this law were to be challenged, which of the following would a court examine to determine if the law is constitutional? A) It would have to be established that the law furthers an interest of the state of Nevada to create a more aesthetically pleasing environment. B) It would have to be shown that the law directly and materially advances the state's goal of a more aesthetically pleasing environment. C) It would have to be shown that the law reaches no further than necessary to promote the state goal. D) All of the above

D) All of the above

Advantages of Alternative Dispute Resolution (ADR) include: A) ADR is faster than litigation. B) ADR keeps the parties talking rather than fighting. C) ADR is less expensive than litigation. D) All of the above are advantages of ADR.

D) All of the above are advantages of ADR.

Which of the following acts resulting in injury would negligence per se? A) Janet driving 40 mph over the posted speed limit. B) Ted keeping explosives in his private, locked garage without complying with state law regulating the storage of such materials. C) A retailer selling glue containing benzene to a 14-year-old boy in violation of state law. D) All the above acts are negligence per se.

D) All the above acts are negligence per se.

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: A) Angela will be able to submit the additional medical bills to the court for payment. B) Tom will have to pay the additional medical bills. C) Tom will have a qualified privilege and only have to pay a portion of the additional medical expenses. D) Angela will have no recourse against Tom or the court for the medical expenses as long as the original award was reasonable.

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

Shortly after Brian started to work at Trevit, Inc., a co-worker, Ann, began asking him out. Brian said no. Nevertheless, Ann persisted. One day Ann playfully, but intentionally touched Brian "below the belt." Which statement is correct? A) Ann defamed Brian B) Ann committed the tort of trespass C) Ann committed the tort of interference with a prospective advantage D) Ann committed the tort of battery

D) Ann committed the tort of battery

The government itself prosecutes the wrongdoer in a case involving behavior so threatening that society outlaws it altogether. This kind of case involves A) Procedural Law B) Private Law C) Civil Law D) Criminal Law

D) Criminal Law

E-trex, Inc. wanted Prince, a professional basketball player, to endorse its products. Prince, however, was not interested. E-trex was not deterred and hired a person who looked and sounded liked Prince for its commercials. A) E-trex has defamed Prince. B) E-trex has interfered with a contract. C) E-trex has interfered with a prospective advantage. D) E-trex's conduct raises the issue of commercial exploitation.

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

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. A) Jim is liable to Diane for defamation. B) Jim is liable to Diane for defamation unless he can show a legitimate reason for having to tell Lana about Diane's prison history. C) Jim is liable to Diane for defamation only if she is a public figure. D) Jim is not liable to Diane for defamation.

D) Jim is not liable to Diane for defamation.

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? A) Yes. His equal protection rights have been violated. B) No. His fundamental right of cohabitation has not been violated. C) Yes. He and Diane are being treated differently than married couples. D) No. Constitutional protections do not extend to privately owned apartment complexes.

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? A) Yes. Jerry committed slander. B) Yes. Jerry committed libel. C) No. Ben is, in fact, using drugs. D) No. Jerry is protected by the qualified privilege defense.

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

Tina is an undercover police officer. One evening she is posing as a prostitute in a bar. Larry, a salesman who is attending an out-of-state convention, begins talking with Tina. After about ten minutes, Tina suggests going to her room for a good time but points out he will need to "donate" $100 to her. Arriving at Tina's hotel room, Larry asks if she is a policewoman. Tina lies and says she is not. When Larry gives her $100, Tina shows him her identification and arrests him. A) Larry appears to have been the victim of entrapment since Tina lied about being a police officer. B) Larry appears to have been the victim of entrapment since Tina was the one who suggested the activity that resulted in Larry's arrest. C) Both of the above are correct. D) None of the above is correct.

D) None of the above is correct.

The doctrine of preemption is based on the Constitution's: A) Commerce Clause B) Due Process Clause C) Equal Protection Clause D) Supremacy Clause

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? A) Procedural Due Process B) The Takings Clause C) Substantive Due Process D) The Equal Protection Clause

D) The Equal Protection Clause

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: A) Curtis automatically wins because he won in the lower court. B) Ulhoff automatically wins because he lost in the lower cour C) Neither party wins because the case is being thrown out D) We don't know who wins yet because the case is being returned to the trial court of additional steps

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

Which of the following is not an example of a trial court of limited jurisdiction? A) a probate court B) a juvenile court C) a small claims court D) a general civil division court

D) a general civil division court

The Environmental Protection Agency was investigating whether Exgrow, Inc. violated the Clean Air Act. Exgrow refused to give the EPA its computerized reports concerning pollution. To get the reports, EPA should use: A) a stare decisis B) a de novo C) an excaliber D) a subpoena duces tecum

D) a subpoena duces tecum

Sarah, an employee of Amex Corporation, committed a serious criminal act in an attempt to obtain a large sales order for her employer. A court found her guilty of the felony and also found the corporation guilty of criminal conduct. The company was fined $1 million. The court: A) erred in fining the company since finding both Sarah and the corporation guilty violates the Double Jeopardy Clause of the Constitution. B) acted properly if this were a federal proceeding; however, it did not act properly if this were a state proceeding. C) acted properly if this were a state proceeding but not if this were a federal case. D) acted properly in this case

D) acted properly in this case

The Occupational Safety and Health Administration promulgated a rule requiring warehouse employees to wear hardhats when in the vicinity of an operating forklift. The purpose of the hardhats is to protect employees from danger of falling objects. This rule is: A) an executive order B) a statute C) common law D) administrative law

D) administrative law

Federal jurisdiction based upon a "federal question" includes cases based on: A) the United States Constitution B) a federal statute C) a federal treaty D) all of the above

D) all of the above

In awarding punitive damages, a court must consider: A) the reprehensibility of the defendant's conduct. B) the ratio between the harm suffered and the award. C) the difference between the punitive award and any civil penalties used in similar cases. D) All of the above

D) all of the above

The U.S. Supreme Court was asked to decide whether same-sex sexual harassment is a violation of Title VII of the Civil Rights Act. This law forbids discrimination in employment on the basis of sex. In interpreting statutes, the court may use which of the following? A) the plain meaning rule B) legislative history C) public policy D) all of the above

D) all of the above

The power of federal agencies is limited by A) statutory control in the enabling legislation and the Administrative Procedures Act B) political control by Congress and the President C) judicial review D) all of the above

D) all of the above

Which of the following is a valid defense to a defamation claim A) The statement was true B) The statement was only an opinion C) The person making the statement made it only to the plaintiff, not to any third parties D) All of the above

D) all of the above

Barden Corporation was convicted of violating federal RICO laws. Accordingly: A) the government may file criminal charges against both the company and the individuals associated with the criminal acts. B) the government may file a civil lawsuit against the company to obtain injunctions and other relief. C) individuals may file civil lawsuits against the company for violating the RICO statute to recover losses sustained by the criminal act. D) all the above are correct

D) all the above are correct

When an appellate court hears a case, it may: A) affirms the decision B) reverse the decision C) modify the decision D) all the above are correct

D) all the above are correct

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: A) mediate the claim with the advertiser. B) bring an individual lawsuit against the advertiser in a state appellate court. C) bring an individual lawsuit in a U.S. District Court. 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.

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.

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: A) judgment on the pleadings. B) summary judgment. C) pretrial conference. D) default judgment.

D) default judgment

In a negligence case, the plaintiff must establish: A) duty, strict liability, causation, and injury. B) mens rea, breach, foreseeable harm, and injury. C) duty, actus reus, foreseeable harm, and causation. D) duty of due care, breach, causation, foreseeable harm, and injury.

D) duty of due care, breach, causation, foreseeable harm, and injury

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: A) he may file the lawsuit in an Arizona state court. B) he may file the lawsuit in a federal district court in Arizona. C) he must file the lawsuit in a federal district court because the federal courts would have diversity jurisdiction in this case. D) either a or b

D) either a or b

Karen is a strong swimmer. One afternoon she is having a picnic at a lake and sees a man she does not know drowning. Generally, Karen: A) has a legal duty to rescue the man. B) has a legal duty to rescue the man, but only if her efforts will not pose a serious threat to her own safety. C) has a legal duty to rescue the man since, as a strong swimmer, she is treated as a "special class" of persons who must get involved in such situations. D) has no legal duty to rescue the man.

D) has no legal duty to rescue the man

After answering a summons and 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: A) a request for admission. B) a request for the production of documents. C) a deposition. D) interrogatories

D) interrogatories

If Oregon passed a statute that prohibited liquor stores from engaging in any kind of advertising, that statute would be: A) valid as an exercise of police power. B) valid, as alcohol is illegal for minors. C) invalid as a violation of the Commerce Clause. D) invalid as an unreasonable restriction of free speech.

D) invalid as an unreasonable restriction of free speech

A jury decision in a civil case: A) must be unanimous B) must be reached in the same day the case is heard. C) depends on whether or not the parties have agreed to have their case decided by less than a unanimous verdict. D) is achieved by informal deliberations.

D) is achieved by informal deliberation

The doctrine of precedent requires: A) that the victim testify B) that the defendant testify C) a 12-member jury of the defendant's peers D) judges to base rulings on previous cases

D) judges to base rulings on previous cases

The idea that courts should not be heavily involved in lawmaking, but rather should only rule in cases where the Constitutionality is clear is known as: A) judicial review B) judicial activism C) judicial reform D) judicial restraint

D) judicial restraint

Jerry offers to shovel the snow from Ben's driveway for $35. Ben replies "OK." This is an example of: A) an implied, unilateral contract. B) an express, unilateral contract. C) an implied, bilateral contract. D) an express, bilateral contract

D

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: a. made an offer to anyone within hearing distance and will be bound by his offer to the first person who produces $100. b. made a firm offer and will be bound by his offer for a reasonable period of time. c. made an acceptance to the first person who can produce $100. d. not made an offer because under the circumstances a reasonable person would not conclude that John had intent to make an offer.

D

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: a. made an offer to anyone within hearing distance and will be bound by his offer to the first person who produces $100. b. made a firm offer and will be bound by his offer for a reasonable period of time. c. made an acceptance to the first person who can produce $100. d. not made an offer because under the circumstances a reasonable person would not conclude that John had intent to make an offer..

D

Laurie is incorporating her business. The business's home state is Wisconsin. Business will be conducted in California, Michigan, Pennsylvania, and Virginia. Laurie: a. must incorporate the business in Wisconsin, the home state. b. must incorporate the business in Wisconsin, California, Michigan, Pennsylvania and Virginia. c. must incorporate in Delaware. d. can incorporate the business in any state.

D

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. a. Linda must give $2000 for the dog, but only if the dog was insured. b. Linda must give $2000 for the dog, but only if Missy can find a replacement dog within a reasonable time. c. Linda must give $2000 for the dog. d. None of the above; the contract duties are discharged.

D

Linda borrowed $2,500 from Tonya. They agreed that Tonya could take a grouping of Linda's antiques as collateral. If Linda could not pay, then Tonya could sell the antiques to recover her money. When Linda could not pay off the loan, Tonya sold the antiques and paid Linda the proceeds after deducting the balance of the loan. Which of the following statements is correct? a. This is an irrevocable agency relationship. b. This is a power coupled with an interest. c. Linda has neither the power nor the right to terminate the relationship. d. All the above are correct.

D

Martin, Leah, and Pablo are considering forming a business. What factors should they consider in making a choice of organization? a. Ease of creation and operation. b. Whether there is personal liability for the owners. c. How the owners will be taxed. d. All of the above

D

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: a. executed, bilateral, express contract. b. executory, bilateral, implied-in-law contract. c. executory, unilateral, express contract. d. executory, bilateral, express contract.

D

Mohammad was an employee in the new product development department of Estay Inc. Mohammad was directly involved in the development of a new product that Estay intended to launch in 6 months. Estay took great care to keep information concerning the new product a secret. Ceries, Inc., a competitor of Estay, persuaded Mohammad to leave Estay to direct Ceries' marketing department. Which statement is correct? a. Mohammad can share with Ceries the confidential information he knows about Estay's new product because he was directly involved in its development. b. Mohammad can share with Ceries the confidential information he knows about Estay's new product because his agency relationship with Estay is terminated. c. Mohammad cannot share with Ceries the confidential information he knows about Estay's new product because of the equal dignities rule. d. Mohammad cannot share with Ceries the confidential information he knows about Estay's new product because he has a duty not to disclose confidential information he acquired during the agency.

D

Nikki was an tax accountant with HBR Accounting. Nikki decided to do some tax consulting in the evenings and on weekends. HBR is unaware of Nikki's consulting work. Which statement is correct? a. Nikki has not breached a fiduciary duty to HBR since her consulting is done after her work for HBR. b. Nikki has not breached a fiduciary duty to HBR since her behavior does not reflect badly on the accounting firm. c. Nikki has not breached a fiduciary duty to HBR since Nikki has a contractual relationship with her clients, not her employer. d. Nikki has breached a fiduciary duty to HBR since she is competing with HBR.

D

Oxtron, Inc. substantially performed its obligations under a service contract. Oxtron is entitled to receive: a. the full contract price. b. substantially nothing. c. the fair market value of its performance. d. the full contract price minus the value of the defects.

D

Phillip was waiting for a bus at a bus stop. Across the street and down the block, a mechanic negligently overinflated a tire he was intending to put onto Marsha's pickup truck. The exploding tire injured Marsha and frightened a neighborhood dog, which ran down the street and knocked Phillip down, injuring his knee. Phillip sued the mechanic. In applying the Palsgraf v. Long Island Railroad Co. decision to this case, Phillip would: A) win because the mechanic was negligent in overinflating the tire, which led to Phillip's injury. B) win based on negligence per se. C) lose because the court would apply the doctrine of res ipsa loquitur. D) lose because, although the mechanic's conduct was negligent toward Marsha, it was not a wrong in relation to Phillip, who was far away. The mechanic could not have foreseen injury to Phillip and therefore had no duty to him.

D) lose because, although the mechanic's conduct was negligent toward Marsha, it was not a wrong in relation to Phillip, who was far away. The mechanic could not have foreseen injury to Phillip and therefore had no duty to him.

A subpoena duces tecum is different from an ordinary subpoena in that a subpoena duces tecum A) can only be given to an expert to require a personal appearance before a court or administrative hearing. B) is binding on a person even if it is mailed to the person rather than handed to her by a process server. C) allows for privileged or confidential information to be turned over the a court or administrative agency. D) requires the person to bring specified documents to the court or administrative hearing.

D) requires the person to bring specified documents to the court or administrative hearing

A successful insanity defense A) results in the defendant's being back on the streets within a much shorter time than if the defendant were convicted and sent to prison. B) is used in about ten percent of all criminal cases. C) is a favorite outcome for juries since they ordinarily dislike convicting felons and sending them to prison. D) results in a "not guilty" verdict, even if the prosecution proves the defendant committed the criminal act.

D) results in a "not guilty" verdict, even if the prosecution proves the defendant committed the criminal act.

The intent required to commit a burglary would be: A) general intent B) reckless conduct C) strict liability D) specific intent

D) specific intent

The states have a severely restricted power to enact laws that affect interstate commerce. This concept is called A) federalism B) the undue burden concept C) constitutional hierarchy D) the dormant aspect of the Commerce Clause

D) the dormant aspect of the Commerce Clause

The purpose of the Freedom of Information Act (FOIA) is: A) to give the government access to information concerning citizens, businesses, and organizations. B) to limit the amount of information that the government can collect about its citizens, businesses, and organizations. C) to permit warrantless searches and seizures of evidence when necessary to ensure safety. D) to give citizens, businesses, and organizations access to information that federal agencies are using.

D) to give citizens, businesses, and organizations access to information that federal agencies are using.

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: A) does not violate the Lanham Act because of the First Amendment freedom of speech. B) does not violate the Lanham Act because Wholesome did not act with actual malice. C) does not violate the Lanham Act because comparative ads are exempt from the law. D) violates the Lanham Act.

D) violates the Lanham Act.

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 its products but 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: A) will be able to establish a justification since E-presto was acting to protect an existing economic interest. B) will be able to establish a justification because, in talking to Mia, E-presto was exercising its First Amendment freedom of speech. C) will be able to establish a justification because to decide otherwise would subject Mia to involuntary servitude. D) will not be able to establish a justification.

D) will not be able to establish a justification.

TECO Coal Corporation mines and ships more than six million tons of coal annually. TECO is comprehensively regulated by the U.S. Bureau of Mines. The U.S. Bureau of Mines may conduct a surprise inspection of one of TECO's mines: A) only if it has a search warrant. B) only if it has a subpoena. C) only if it has reason to believe a violation of a regulation has occurred. D) without a search warrant to ensure safety.

D) without a search warrant to ensure safety

An organization that does not pay income tax on its profits but passes them through to its owners who pay the tax at their individual rates is called a

Flow-through tax entity

James was a partner in a large firm. He died unexpectedly. His son, Frank, wanted to take over for his father in the partnership and as 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?

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

The Federal Trade Commission requires franchisors to

Give prospective franchisees disclosure document at least 14 business days prior to signing of a contract or payment of any money

• Which of the following is an advantage of a corporation?

It offers limited liability for its shareholders

The advantage to an S corporation is

Its treatment of shareholders for income taxation purposes

Jill owns a retail business by herself and 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?

Jill can only be liable to the amount she initially invested in the business

The business form that offers the limited liability of a corporation and the tax status of a flow-through entity is

Limited Liability Company

• A court may pierce an LLC's veil if

Members fail to provide adequate capital

Which of the following would NOT be personally liable for the debts of the business

S Corp shareholder

What federal agency requires that the seller of a franchise give the potential buyer Franchise Disclosure Document (FDD) and audited financial statements?

The Federal Trade Commission

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

The shares are publicly traded

Which of the following statements regarding social enterprise is TRUE?

Unlike charities, social enterprises can sell stock to investors

The corporate form of business

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

An agreement to pay a lesser amount to settle an unliquidated debt is: a. enforceable, as there is consideration. b. unenforceable, as there is no consideration. c. enforceable in only some states. d. unenforceable as a violation of public policy.

a

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. b. bilateral, implied contract. c. unilateral, express contract. d. bilateral, express contract.

a

Noncompetition agreements are: a. more common today than they were in the past, although policy issues they raised in the 1700s have never gone away. b. now illegal, as they violate antitrust laws. c. infrequently litigated. d. relatively recent developments, first used following the Great Depression in the United States.

a

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. b. On January 16, the contract was executed. c. This contract is a unilateral contract. d. There is no contract until January 27.

a

Which of the following represents a unilateral offer? a. "I will pay you $50 if you mow my lawn." b. "I will pay you $50 if you promise to trim that tree." c. "I will pay you $50 for your CD player." d. "I will pay you $50 for your backpack."

a

Zena enters into a contract with Steeley Company to purchase a washer and dryer. She doesn't understand the financing terms, but signs 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. Steeley sues. The court would: a. be exercising judicial restraint if it requires Zena to pay as she promised, even if the agreement was unfair and unwise. b. have to rewrite the contract to be fair to both parties. c. have to declare the contract void since it contained terms unfavorable to the weaker party to the transaction. d. use the theory of promissory estoppel to remedy any unfavorable terms in the contract.

a

Charles and Becky are partners. If they have a disagreement, the Uniform Partnership Act will govern their respective rights with each other: a. despite any written partnership agreement they may have signed. b. only if they do not have a written partnership agreement that addresses the issue of dispute. c. only if they agree to be bound by the UPA. d. only if their written partnership agreement states that they will be bound by the terms of the UPA.

b

Jennifer has offered to sell her laptop computer for $750 to Jack. She tells Jack that the computer is only six months old but, in fact, it 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: a. a void agreement because of the fraud involved. b. a voidable contract, one that Jack can void. c. a voidable contract, one that Jennifer can void. d. a void contract because of the UCC.

b

John enters into a contract to paint Chad's house. When Chad decides on a color, John will buy the paint and paint the house for the price of $2,500. This contract is governed by: a. the common law of contracts governs because this is a mixed contract (one for services and goods). b. the common law of contracts governs because the predominant factor of the contract is for the sale of services and not goods. c. the Uniform Commercial Code governs because a sale of goods is involved. d. both the common law and the Uniform Commercial Code will govern this contract.

b

One of the factors leading courts away from a laissez-faire approach to contract law was: a. the movement away from requiring a writing and a seal on contracts. b. a change in relative bargaining power between parties to contracts. c. the assumption that promises are not legally significant. d. the assumption that parties had freedom to contract and would have to live with the consequences.

b

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 the day after turning 18 and returns the stereo. a. This contract was a valid contract, Robert cannot disaffirm. b. This contract was a voidable contract, Robert can disaffirm. c. This contract was a void contract. d. This contract was unenforceable because it needed to be in writing to be enforceable.

b

The basic distinction between a bilateral contract and a unilateral contract is that: a. only one promise is involved in a bilateral contract. b. only one promise is involved in a unilateral contract. c. the Statute of Frauds applies to one and not the other. d. one is enforceable, the other is not.

b

The courts will find an implied contract when: a. justice demands it. b. conduct of the parties indicates they intended an agreement. c. there is promissory estoppel. d. there is undue influence.

b

An express contract: a. must be in writing. b. may be inferred by the conduct of the parties involved. c. has both parties setting forth their intentions. d. is not valid in many states.

c

In the historic case of Hamer v. Sidway, the nephew: a. lost, as there was no consideration. b. lost, as the uncle was dead. c. won, as there was consideration. d. won, as there was a completed gift.

c

Larry purchased a Leisure Lawnmower because the company salesperson intentionally misled him by assuring him that the mower was self-propelled, had a mulching feature, and had a five-year unlimited manufacturer's warranty. When Fred finds out that his new Leisure Lawnmower is not self-propelled, does not mulch, and has a 90-day warranty, he may successfully sue for: a. reformation of the contract only. b. restitution only. c. restitution and possibly punitive damages. d. compensatory damages only.

c

Walter enters a dentist office and points to a damaged tooth. The dentist, Matt, treats the tooth. If Walter refused to pay and Matt sued: a. Walter would win as there was no contract. b. Walter would win because of the UCC. c. Matt would win; this is an implied contract. d. Matt would win in quantum meruit.

c

Courts may award damages called "quantum meruit": 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 was no valid contract entitling the plaintiff to it. d. All of the above.

d

For the purposes of the statute of frauds, an interest in land includes: a. a house. b. a real estate mortgage. c. an easement. d. All of the above.

d

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 makes one payment and then stops with no explanation. If Patty sues, what is the likely result? a. Fred would win, as he did not ask Patty to quit her job. b. Patty would win, as a contract was formed when Fred promised to pay her the support. c. Fred would win, as family members cannot sue each other for breach of an oral promise. d. Patty may win under the doctrine of promissory estoppel.

d

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? a. The law would enforce this valid, enforceable contract. b. Jane would win as this is a voidable contract. c. Shelly would win as this is a unilateral contract. d. The law would not enforce Jane's promise, as it does not have a lawful purpose.

d

What phrase explains how a requirements contract can be valid? a. "will buy 100 percent of output" b. "willing to accept the entire quantity" c. "no consideration needed" d. "in good faith"

d

Which of the following types of property would be goods under the Uniform Commercial Code? a. A promissory note. b. A stock. c. A patent. d. A computer.

d

• All the business forms listed below have limited liability EXCEPT the

o General partnership

Alfred orally promised to pay Robert a salary of $30,000 per year for five years and his moving expenses up to $10,000 if Robert would quit his job and come to work for him at his manufacturing plant. Robert agreed to do so, but requested a written contract. Alfred assured him that the company attorney would prepare such a contract as soon as possible, but Alfred needed Robert to start at once. Accordingly, Robert sold his house, moved his family, and commenced to work for Alfred. He was fired without cause two months later. No written contract was ever executed. Can Robert enforce Alfred's oral promise? a. No. This was a contract for longer than one year. Without a writing it violates the statute of frauds and is not enforceable. b. Maybe. Robert should go to court under the theory of promissory estoppel. Alfred made an oral promise that Robert relied upon, and the way to avoid injustice is to enforce the promise. c. Yes. This is a personal satisfaction contract, and Alfred gave no reason for dissatisfaction. Robert can recoup the loss he took on the sale of his house. d. Yes. This is a partial performance of the sale of goods. Robert can recoup the loss he took on the sale of his house.

B

All the business forms listed below have limited liability except the: a. limited liability company. b. general partnership. c. Subchapter "S" corporation. d. corporation.

B

Amy is on the board of directors of Computers Plus. Computers Plus is looking for a warehouse to purchase. Amy owns a warehouse. In order for Amy to sell her warehouse to Computers Plus: a. the transaction must be fair to both Amy and Computers Plus. b. the disinterested members of the board of directors may approve the transaction. c. she must resign her position on the board of directors of Computers Plus before any negotiations for the warehouse begin. d. a court must review the opportunity to determine its favorability

B

An agency will be terminated in all but which one of the following situations? a. The principal and agent agree on an agency relationship to sell a boat, and the boat is sold. b. A travel agent files for individual bankruptcy under Chapter 13. c. The agent violates his duty of loyalty. d. An electrician, an agent of a contractor, has her license revoked

B

An agreement in which a buyer agrees to buy all the goods produced by a manufacturer is known as: a. a requirements contract. b. an output contract. c. an exclusive dealing contract. d. an option contract.

B

An exculpatory clause is generally unenforceable when: a. it attempts to release a party from liability for ordinarily negligent behavior. b. it involves public transportation. c. it is written clearly and in bold, large print. d. the affected activity is a recreational activity.

B

An unliquidated debt can be described as: a. a debt in which both its existence and amount is in dispute. b. a debt in which the existence or amount is in dispute. c. a debt disputed by the creditor but not the debtor. d. a debt undisputed by either party.

B

As English judges were developing the common law of contracts in the twelfth and thirteenth centuries: a. most promises were found to be enforceable. b. promises were found not binding unless written and sealed. c. the term "contract" became common. d. changes in the law occurred rapidly.

B

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: a. equally, unless otherwise agreed. b. 60 percent to Astrid and 40 percent to Razi, unless otherwise agreed. c. according to their capital contributions to the partnership. d. in whatever proportion provides the greatest tax advantage for the partners that year.

B

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 effects of the judgment. How does the jury's award fit into the guidelines offered by the U.S. Supreme Court? A) The punitive award is excessive because it exceeds the Supreme Court's suggested ratio of compensatory damages to punitive damages. 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. C) The punitive award is excessive both because of the ratio of compensatory damages to punitive damages and because the punitive damage award was based partly on the defendant's wealth. D) The jury award is not excessive based on the Supreme Court's guidelines.

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.

Tina wishes to learn what records the IRS has about her. Under the Freedom of Information Act (FOIA), A) Tina can only obtain copies of declassified information B) Tina is entitled to all information the IRS has about her C) Tina can only obtain information about the IRS, not records concerning herself D) Tina cannot obtain any information since the IRS is exempt from the FOIA

B) Tina is entitled to all information the IRS has about her.

Which of the following statements is correct? A) Violent street crime results in a greater monetary loss to society than white-collar crime. B) White-collar crime results in a greater monetary loss to society than violent street crime. C) Studies are not able to calculate the estimated value of white-collar crime since most white-collar crime is never publicly disclosed. D) Studies are not able to accurately calculate the estimated value of either violent street crime or white-collar crime.

B) White-collar crime results in a greater monetary loss to society than violent street crime.

Miguel reprogrammed a cellular telephone so that it intercepted electronic funds transfers and rerouted them to Miguel's bank account. What crime has he committed? A) Insurance fraud, since the bank's insurance will have to cover the misdirected funds. B) Wire fraud C) Mail fraud D) Embezzlement

B) Wire fraud

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". The Internet Entertainment Group had established a sexually explicit site at the domain name. This injunction would have to be used by: A) a jury B) a judge exercising equitable powers C) a executive order D) a subpoena

B) a judge exercising equitable powers

President Nixon issued wage-price controls in an effort to stabilize the economy. This use of executive power was A) an illegal usurption of legislative powers which belong to the Congress B) a valid use of power, known as an executive order C) a valid use of power creating a treaty D) an illegal usurption of the regulatory powers of administrative agencies

B) a valid use of power, known as an executive order

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: A) statutes B) administrative law C) executive orders D) common law

B) administrative law

SharCo and Blyron Productions are each applying for a television license. In deciding which applicant is better qualified, the FCC will hold an initial hearing before: A) the OSHA B) an administrative law judge C) an administrative mediator D) a House-Senate Conference Committee

B) an administrative law judge

When the Food and Drug Administration prohibits a certain drug from being marketed in the United States, this is A) private law B) an administrative regulation C) legal negativism D) an executive order

B) an administrative regulation

The most accurate statement regarding appellate courts is A) appellate courts often hear new evidence and testimony. B) appellate courts generally accept the factual findings of the trial court. C) only the federal court system has appellate courts. D) appellate courts hear only criminal cases.

B) appellate courts generally accept the factual findings of the trial court.

The President of the United States: A) creates federal common law B) can veto Congressional legislation C) determines the constitutionality of statutes D) passes statutes

B) can veto Congressional legislation

The criminal penalties under RICO include all EXCEPT A) imprisonment B) capital punishment C) confiscation of property acquired through criminal activity D) fines

B) capital punishment

The United States Supreme Court has the power to: A) appoint judges to serve on the Supreme Court B) declare an act of Congress unconstitutional C) issue executive orders D) ratify treaties

B) declare an act of Congress unconstitutional

Mulcare Corp. started a compliance program to prevent and detect criminal conduct within the company and had specific, high-level officers in charge of overseeing the program. The company effectively communicated the program to its employees and monitored those employees who were in a position to cheat. It promptly disciplined anyone who broke the law. One effect of having this program is: A) federal investigators would no longer investigate the company since Mulcare could take care of any problems internally. B) federal investigators might be convinced to limit any prosecution to those directly involved rather than attempting to get a conviction against high-ranking officers or against the company itself. C) the Federal Sentencing Guidelines no longer apply. D) any cases would be prosecuted in state, rather than federal, court.

B) federal investigators might be convinced to limit any prosecution to those directly involved rather than attempting to get a conviction against high-ranking officers or against the company itself.

Once a provision is in the corporate charter, it can only be changed by: a. a vote of the shareholders. b. filing an amendment with the Secretary of State. c. Both of the above are necessary to change a corporate charter. d. Neither a nor b is necessary to change a corporate charter. The board of directors merely needs to file a change of charter form

C

Martin, Human Resources Director for Spring Co., sent Lynn the following signed letter: "This letter confirms our offer to you. We will pay for your moving expenses, up to $1,500. Your starting date will be February 1, and you will become eligible for health care benefits as of May 1. You will receive a starting salary of $36,500 annually, with reviews and eligibility for increases at six months, 12 months, and annually thereafter. Vacation will be for two weeks a year after one year." Spring fired Lynn eight months after she started to work, and Lynn sued arguing the letter constituted a memorandum of an oral contract for employment for five years. Is the letter sufficient to satisfy the statute of frauds? a. Yes, to satisfy the statute of frauds, a memorandum is sufficient if it evidences an oral contract between the parties and is signed by the defendant. b. Yes, the memorandum is signed by the defendant and states with reasonable certainty the subject matter and essential terms of the agreement. c. No, to satisfy the statute of frauds, the memorandum must contain all essential terms of the contract. d. No, the letter was not formal enough to satisfy the statute of frauds.

C

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: a. Mary's balance will automatically be paid in full if the $3,800 amount was a liquidated debt. b. Mary's balance will automatically be paid in full regardless of whether the amount of $3,800 was liquidated or unliquidated. c. the check may be subject to a UCC exception to the general rules for accord and satisfaction cases involving checks. d. Mary's balance will automatically be paid in full if the $3,800 amount was an unliquidated debt.

C

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? a. Nothing. He is free to use partnership property for his own uses. b. Nothing, but he will be removed from the partnership for violating his fiduciary duty. c. He must turn over any profits he earned from this activity. d. He must pay the fair market value for the use of the house.

C

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? a. MegaCorp may only defend against a lawsuit in Michigan if it first registers by paying back fees, taxes, and penalties. b. Yes, MegaCorp can bring or defend against a lawsuit in any state regardless of whether the corporation is registered to business in that state. c. Yes, MegaCorp can defend against a lawsuit in Michigan regardless of whether MegaCorp is registered to do business in that state. d. No. Jolene must sue and MegaCorp may defend a lawsuit only in Delaware

C

MegaCorp purchased 10,000 shares of its own stock that had previously been owned by private investors. The stock MegaCorp repurchased is called: a. authorized and unissued. b. authorized and issued. c. treasury stock. d. repurchased stock.

C

Miles purchased a lawnmower with an attached warning that said, "The manufacturer is not responsible in the case of an 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: a. lose, as he agreed to not hold the lawnmower manufacturer liable. b. lose, as he assumed the risk. c. win, as this warning would be unenforceable. d. win, as all lawnmower manufacturers are strictly liable.

C

Mulligan Domestics Co. breached a contract by refusing to accept its order for 60 bolts of fabric from Wellington Mills, although the fabric met the contract specifications. Wellington: a. has at least four remedies under the UCC. b. may resell the goods to someone else and, if it sues Mulligan, Wellington will be assured of being awarded the difference between the original contract price with Mulligan and the price received from the resale. c. may choose not to resell the fabric and settle for the difference between the contract price and the market value. d. would be awarded consequential damages by most courts.

C

Nate works as a carnival barker. His employment contract specifies that he can be fired if he "loses his voice." This is an example of: a. vagueness. b. extortion. c. ambiguity. d. duress.

C

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: a. was not formed because the revocation was effective before the acceptance was sent. b. was not formed because the revocation was effective before the acceptance was received. c. was formed on January 18. d. was formed on January 20.

C