Intro to Business Law - CLEP
Which of the following contracts would not be required to be in writing under the statute of frauds?
A contract to work at a job for life
The process by which judges declare laws unconstitutional was established through:
A decision of the US Supreme Court
Legal Positivism
A school of legal thought centered on the assumption that there is no law higher than the laws created by a national government. Laws must be obeyed, even if they are unjust, to prevent anarchy.
Which of the following, if passed, would likely be found constitutional, and therefore valid, by a court of law?
A state law that prohibits the sale and possession of child pornography
Lola is planning to leave the country for the next two years, and she makes an oral agreement with Armand to pay him $2,000 to take care of the house while she is away. When she returns, she finds that the house is dirty and refuses to pay the amount she agreed. Armand sues, saying that he thought taking care of the house only meant fixing anything that broke, not keeping the house clean. He therefore demands the full amount Lola agreed to pay. A court is likely to rule that
Armand cannot recover anything because the agreement was not in writing
Which of the following promises would be enforceable by the majority of courts?
Avery owes Bond $100, but the collection of this debt is barred by the statute of limitations. Later, Avery writes Bond a letter promising to pay Bond the $100.
Benson, a seventeen-year-old college freshman, was adequately supplied with clothes by his father. Smith, a clothing merchant, learned that Benson was spending money freely and solicited clothing orders from him. Benson bought $750 worth of luxury clothing from Smith on credit. Benson failed to pay Smith. If Smith sued Benson, the court would probably hold that
Benson can disaffirm the contract, return the clothing, and escape liability
Angela promises to work for Barbara during the month of July, and Barbara promises to pay Angela $600 for her services. In this situation, what kind of contract has been made?
Bilateral
If a large company induces an employee at a small corporation to breach her employment agreement and work for the large company, then the small corporation may do which of the following?
Bring a suit against the large company for the tort of intentional interference with contractual relations
Shaniqua contracts with Bruce to clean the entire interior and exterior of her car. Bruce cleans the car, but neglects to clean the glove compartment. If Shaniqua refuses to pay Bruce, which of the following statements is true?
Bruce could likely sue and recover for the full contracted amount because he substantially performed the contract
A department store publishes an advertisement in a local newspaper for a 60-inch large screen, high-defintion plasma TV. The price is listed as $200, but this is a typographical error, and it should have been $2,000. Customer Chris demands the right to purchase one of the TVs at the quoted price. Which of the following statements is correct under general contract law?
Chris has made an offer to buy the TV at $200, which the department store may accept or reject
The commerce clause of the United States Constitution authorizes
Congress to regulate interstate commerce
Which of the following best defines the employment at will doctrine?
Employers can terminate employees for any reason that is not discriminatory and employees can quit for any reason
In interpreting a contract, a court could look at all of the following except:
Evidence from a witness regarding what the parties intended when drafting the contract
ABC Company, incorporated under the laws of Delaware, has its principal place of business in the state of Georgia. ABC sells its merchandise at retail outlets located in all 50 states but sells the greatest percentage of its products in the five southern states of Alabama, Florida, Georgia, North Carolina, and South Carolina. For purposes of diversity jurisdiction in the federal courts, ABC is considered to be a citizen of
Georgia and Delaware
Ordinarily an employer is liable for which of the authorized acts committed by an employee for the benefit of the employer and in the scope of the employment? I. Torts II. Contracts III. Misrepresentations
I, II, and III
Webster insured her residence with Old Home Insurance Company. Assuming that the policy contained no provision with respect to assignment, which of the following statements is correct?
If Webster suffers an insured loss, she may assign the amount due under the policy to anyone
Which of the following is true about the concept of strict liability?
It does not require a showing of negligence
Which of the following is true of the Foreign Corrupt Practices Act?
It is a United States federal statute that applies only to United States companies
Which of the following is true about the doctrine of commercial speech?
It states that commercial speech is entitled to limited protection
Javier seeks to hire Doreen to perform repairs on his house. He sends Doreen a contract via e-mail offering to pay Doreen $500 for the work. Later the same day, Doreen sends an e-mail back agreeing to the contract. However, before Javier opens his e-mail from Doreen, he receives a separate e-mail from George offering to do the same work for only $250. Javier accepts George's offer and sends Doreen an e-mail telling her he has made other plans. Doreen seeks to sue Javier for breach of contract. A court is most likely to rule that
Javier breached a contract with Doreen because Doreen had already accepted his offer when he entered the new agreement with George
Florence, after shopping in Jesse's store, attempts to leave with merchandise concealed under her coat that she has not purchased. Jesse stops Florence, finds the merchandise, and brings her into the back room of the store. He then proceeds to search the rest of her bags and to lecture her on the evils of shoplifting for four hours before calling the police. Florence subsequently sues Jesse. Which of the following statements about the incident is true?
Jesse may be liable to Florence even though she shoplifted because he held her too long before calling the police
The authority of a court to hear and decide cases is known as
Jurisdiction
Statutory Law is best defined as
Legislative enactments
In a common-law system, rules governing begavior can be developed by:
Legislatures, Administrative Agencies, and Judges
Which of the following elements is NOT necessary to establish liability for negligence?
Malice
In the landmark case of Marbury v Madison (1803), the United States Supreme Court held that
Marbury was entitled to his appointment, but the congressional stature granting the federal courts the power to compel Madison to deliver his appointment was unconstitutional (thus creating the idea of judicial review)
Martha hires Janet to work for her as a sales representative. Martha specifically tells Janet that any sale worth over $10,000 and any sale with a discount greater than 8 percent must have Martha's express approval. Janet signs a contract with a long-standing customer who is aware of the approval requirements that Martha imposes on her sales representatives. The contract calls for an 11 percent discount and is for the purchase of $25,000 worth of goods. Janet did not get Martha's approval prior to signing. Which of the following is true of this contract?
Martha is not obligated to honor the contract
Wanda owns a hair salon. One week, she takes out an advertisement in the local weekly newspaper saying that all haircuts this week will be $5. However, the response is so large that Wanda decides to stop the sale after the 50th customer. Thus, when Joan comes in expecting a $5 haircut, Wanda tells her that the sale is over, and she must pay the $30 non-sale price. Can Joan successfully sue for breach of contract?
No, because Wanda's advertisement does not constitute a contractual offer
If a state supreme court rules on an issue of state law, can that decision be overturned by the United States Supreme Court?
No, unless the state supreme court decision violates federal law or the US Constitution
Sam was spending his vacation at a local ski resort. While skiing down a groomed run, he noticed an area off to the side that went into the woods. At the entrance to this area, Sam saw two red sticks stuck into the snow in the form of an upright X. Being of a curious nature, Sam skied over and looked into the woods and wondered what was in there. He decided to ski in. After a short distance, he fell into a crevice that was hidden by the snow cover. Sam was found quickly, but he suffered hypothermia and frostbite on his toes. Should Sam sue the resort for his injuries?
No. He will lose based on the defense of assumption of the risk, since the danger was obvious, and he decided to proceed anyway
Which of the following decisions could NOT be made by an appellate court?
Ordering a case to be tried in the appellate court
Which of the following will apply if the parties to a contract knew or should have known that a word has a customary usage in their particular trade or community?
Parol evidence may be used to define the meaning of the word
Maxine initiates a lawsuit against Jason by filing and serving Jason with a summons and complaint, and Jason responds to Maxine's complaint with a document called an answer. Maxine's complaint and Jason's answer are referred to as
Pleadings
Bridge Building Corp. is bidding for a government contract to build a bridge in a foreign country and is told that it can only get the contract if it offers as part of the deal to pay $25,000 to the local government official in charge of awarding the contract. If the company makes such an offer, the company will be subject to which of the following legal consequences?
Prosecution in the United States under the Foreign Corrupt Practices Act
In a case to be tried before a jury, the judge may perform all of the following duties except:
Resolve dispited factual issues
Procedural Law
Rules that define the manner in which the rights and duties of individuals may be enforced.
If a business decides to allow consumers to buy its products on credit and pay over time, which of the following is not a legal regime that might regulate these pay-over-time transactions?
The Fair Credit Reporting Act
Benjamin's jewelry manufacturing corporation decides it wishes to set up an unpaid internship program to help junior jewelers spend 6 months learning the trade by working in the factory supervised by more experienced jewelers. This program might run afoul of which federal statute?
The Fair Labor Standards Act
Deceptive advertising is regulated by:
The Federal Trade Commission
Which of the following administrative agencies regulates unfair trade practices and the formation of monopolies that restrain competition?
The Federal Trade Commission
Fred is an attorney who wants to advertise that he is Austin's best lawyer. He buys a billboard and posts his message. The State Bar of Texac wants him to take down the billboard. Which of the following constitutional principles best supports Fred's position?
The First and Fourteenth Amendments
If Joan contracts with Danny to paint her house and the next day, before Danny can do the painting, a hurricane destroys Joan's house, what clause of their contract is implicated?
The Force Majeure Clause
If a financial institution fails to adopt protocols to adequately safeguard consumers' confidential financial information, the financial institution is likely in violation of which federal statute?
The Gramm-Leach-Bliley Act
Under which of the following situations would a principal be liable for the tortious act of its agent under the doctrine of respondeat superior?
The agent was an employee of the principal and the act was within the scope of the employee's duties
Which of the following is a distinction that can be drawn between civil and criminal law?
The burden of proof in a civil case is "a preponderance of the evidence" standard, while the burden of proof in a criminal case is "beyond a reasonable doubt" standard
Sheila is given a company car by her employer in order to travel around town and inspect job sites that she manages for the company. On her way home after work coming from one of the job sites, she gets into an accident while driving the car, and the driver of the other car sues her. Which of the following statements is not true?
The company cannot be held liable because the accident occured after work hours and so was not in the scope of employment
In interpreting the terms of a written contract, courts may rely on which of the following in addition to the written words of the contract?
The course of dealing, the manner in which the parties acted in performing the contract, the way the terms of the contract are customarily used in the industry
Which of the following is not an essential element of a cause of action for negligence?
The defendant failed to help the plaintiff once the injuries were caused
Larry delivers newspapers for a living; he hires Fred to help with his route, paying him 5 cents per paper. Fred runs into a customer's car while delivering papers. Which of the following statements is true?
The facts suggest that the doctrine of respondeat superior would apply
If Congress enacts a law, signed by the President, imposing new regulations on a particular industry, which, if any, of the following statements is not true?
The law is subject to strict scrutiny by courts to determine whether the regulations are narrowly tailored to achieve their purpose.
Appliance Co. wishes to erect a billboard on the roof of its store. The city where the store is located refuses to permit the billboard because by local ordinace billboards are not allowed to be placed at a height above 250 feet. If Appliance Co sues the city, a court is most likely to rule that:
The ordinance is a constitutionally permissible time, place, or manner restriction
Two parties enter into a contract whereby one agrees to paint the other's house in return for an established sum of money. After the house is painted, the owner does not pay the agreed-upon amount. Which of the following is not a potentially viable defense to a breach of contract lawsuit brought by the painter?
The painter had a friend do the actual paint job without getting permission from the owner first
An internet service provider wishes to contest a fine imposed on the provider by the Federal Communications Commission. What are the provider's legal options?
The provider can challenge the FCC's action in a proceeding before an Administrative Law Judge at the agency
Saul purchases an electric drill by mail order from Drills, Inc. As sson as he takes the drill out of the box and turns it on, the drill malfunctions and injures Saul. In what state can Saul bring suit against Drills, Inc?
The state where Drills, Inc has its headquarters, where it is incorporated, or the state where the injury took place
Which of the following is true of federal administrative agencies?
Their actions are subject to judicial review
Zack and Josh open a coffee shop. They have no written agreement, but intend to sell coffee and bagels together in order to make a profit. Which of the following describes Zack's and Josh's business relationship?
They are partners
The State of Missouri passes a law to ban commercial establishments from advertising in the state if the advertisements mislead consumers. If this law is challenged in court, it probably will be:
Upheld, but only if the law is limited to false and misleading advertisements
Curtis is injured while performing his duties for his employer, Choice Banking Company. In most states, Curtis will be compensated for his injuries under which of the following
Worker's Compensation
Francisco, who lives in Georgia, wants to file a negligence suit against Machine, Inc, a company incorporated in Delaware with its corporate headquarters in Kentucky. Can Francisco file this suit in federal court?
Yes, because the parties are from different states
Iris is a Buddhist, but none of her co-workers is Buddhist. The other workers continually tease Iris about being a Buddhist. Could this teasing give rise to a legal cause of action brought by Iris?
Yes, because the teasing may be sufficient to establish hostile workplace discrimination under federal employment discrimination law
Which of the following contractual agreements would not be required to be in writing?
a contract for goods worth $300
A legal action by a defendant against a plaintiff is known as
a counterclaim
Two days after his daughter was born, Bill decided to take out a life insurance policy so that in the event he dies, there would be enough money to raise his daughter. This life insurance policy is an example of
a donee beneficiary contract
A contract will be unenforceable if
a statute declares such a contract illegal
All of the following have the right to enforce a contract except
a third party incidental beneficiary
Griffin offers to pay Jack $200 if Jack locates Griffin's missing cat and returns the cat to him. After searching for hours, Jack find the missing cat and delivers the cat to Griffin. Griffin and Jack have formed
a unilateral contract
international customary law
actions and concepts that have developed over time to the extent that they are accepted by the international community and have become law
color of authority
actions taken under the law
In general, an appeal of an administrative decision to the courts must show that
administrative remedies have been exhausted
The doctrine of respondeat superior can be used by an injured party to hold
an employer responsible for the torts of its employee
Recovery in quasi contract is based on a judgment that determines the presence of
an unjust enrichment
Public Law
applies to everyone, law dealing with the relationship between government and individuals
The concept of judicial review originated
as the result of a decision by the United States Supreme Court
Barry sneaks up behind Caesar and hits him over the head with a bat. Caesar suffers a concussion and incurs damages exceeding $50,000.00. Under these facts, Caesar will most likely win a suit against Barry for
battery
Clyde received the following letter from Joe: "I will sell you the books you examined yesterday for $10 each or $100 for the entire set." Clyde, not sure he would get much use from the books, told his brother, Michael, about the offer. Michael tendered Joe $100 for the books, but Joe refused to sell the books to Michael. If Michael sued Joe, the court would probably hold that Michael
cannot accept the offer because it was not made to him
Smith suddenly attacks Jones as Jones walks down the street. In this case, Smith has committed
criminal act and a tortious act
Proximate cause means that the
defendant will be held liable for only those damages that were reasonably foreseeable and a natural and probable consequence of his breach of duty
Why do we need a formal legal system?
fairness, consistency, order
Due Process
fundamental fairness and decency in government actions
In a legal action alleging damages suffered for breach of contract, the plaintiff is a citizen of New York and the defedant is a corporation organized under the laws of California. Considering the details of this case, a United States district will
have jurisdiction based on diversity of citizenship
Natural law
idea that humans possess certain inalienable rights that are not the product's of human-made law
Secondary Sources of Law
influence primary sources, summarize and clarify the primary sources of law
A national discount chain has a well-known name. A local department store opens with a name that has the same pronunciation as the name of the national discount chain and is spelled differently by only one letter. The local store derives its name from the name of its owner. The local store has most likely
infringed upon another business' trademark
John Roberts contracts to convey land to Sarah Simmons in consideration of Sarah's promise to pay $5,000 to his wife, Rhonda, with whom John wishes to make a settlement. Rhonda would have a contract claim against Sarah in Rhonda's status as
intended beneficiary
Legal Realism
law itself is far less important than the consideration of who is in the position to enforce the law
Jurisprudence
philosophy of law
Substantive Law
refers to matters of substance and creates legal rights and duties
Jerry purchases flowers for his wife from Flowers Galore. He pays extra to have the flowers delivered to his wife's office on the day of their anniversary. If Flowers Galore fails to deliver the flowers, what rights, if any, does Jerry's wife have under the contract?
she is a donee beneficiary and can enforce the contract
Primary Sources of Law
sources that establish the law
If the directors of a corporation vote to make the well-being of its employees one of the core priorities of the company, the directors are adopting what theory of the firm?
stakeholder theory
Primary responsibility for establishing a corporation's social responsibility standards is exercised by the
stockholders
Homeowner orally promises to sell her house to Mr. and Mrs. Youngpeople, who promise to buy it. The Youngpeoples then draft a letter containing the terms of the agreement, sign it, and send it to Homeowner. Under these circumstances the contract may be enforced against
the Youngpeoples only
Ed lives in Maine, a state that has a so-called merchant protection statute (or shopkeeper's privilege). One day Ed goes to the grocery store to shoplift some steaks for dinner. The owner of the grocery store catches Ed red-handed in the act of shoplifting. He and an employee gently restrain Ed in the back room, feeding him gourmet food and wine until the local sheriff finally shows up three days later. If Ed sues the grocer for the tort of false imprisonment, he will win if he can prove that
the grocer detained him for an unreasonable time after reasonably suspecting him of shoplifting
insider trading
the illegal trading of a company's stock by people using confidential company information
Private Law
the rules and regulations parties agree to as part of their contractual relationships
If one company forms a contract to purchase illegal slot machines from the other, the contract will be:
unforceable
A new drug has been tested and although it causes serious illness in some patients, it cures many more patients. If a federal agency approves the drug despite the harm, it is doing so based on what philosophical theory?
utilitarianism
Acting in a manner that results in the greatest good for the greatest number is an ethical principle known as
utilitarianism
Manuel is hired by Star Players Theater to design and maintain the theatre's Web site. Mango Theater learns of Manuel's work and convinces him to leave Star Players to come work for Mango. Mango Theater is probably liable for the tort of
wrongful interference with a contractual relationship
