Questions from Brandi Flashcards
1
Q
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.
A
b. successful, as there was consideration.
2
Q
Statutory law is to legislative bodies as common law is to a. rulemaking. b. agencies. c. courts. d. administrative regulations.
A
c. courts.
3
Q
Under Regulation D, institutions such as banks and insurance companies are considered to be what type of investors? a. accredited b. unaccredited c. restricted d. unrestricted
A
a. accredited.
4
Q
A union declares its workers are going on strike. The employer states the collective bargaining agreement is still in force for another eight months and that it contains a no-strike clause. The union claims the CBA’s no-strike provision is not binding since new union leadership is in place. Which of the following statements is correct?
a. The union can strike since new leadership is now in control.
b. The union can strike since no-strike provisions have been ruled by the courts to be unenforceable.
c. The union cannot strike, as strikes to exert economic pressure on management are prohibited by the NLRA.
d. The union cannot strike because of the no-strike clause in the contract.
A
d. The union cannot strike because of the no-strike clause in the contract.
5
Q
An example of the type of relationship required to find undue influence would be
a. a salesperson-purchaser relationship.
b. a bartender-customer relationship.
c. a doctor-patient relationship.
d. a neighbor-neighbor relationship.
A
c. a doctor-patient relationship
6
Q
Don received in the mail merchandise he never ordered. The package was addressed to him, and when he opened it he saw a brochure stating he could keep the products for only $19.95. If he chose not to keep the products he was instructed to mail them back within five days. Which of the following is correct?
a. Don can keep and use the merchandise without having to pay for it.
b. Don can keep the merchandise only if he pays the $19.95 charge.
c. Don must send the merchandise back within five days if he does not want it.
d. Don must return the merchandise within 30 days if he does not want it.
A
a. Don can keep and use the merchandise without having to pay for it.
7
Q
In 1969, the federal government estimated that consumer products caused 30,000 deaths, 110,000 disabling injuries and 20 million trips to the doctor. The product category causing the majority of harm was
a. automobiles.
b. children’s toys.
c. power tools.
d. food products.
A
b. children’s toys.
8
Q
Which of the following guarantees that a witness testifying in a court or legislature may never be sued for defamation?
a. recovery principle
b. protected right to slander
c. defamation privilege
d. absolute privilege
A
d. absolute privilege.
9
Q
In January 2014, Professor Noe entered into a contract with State University. She agreed to teach full time during the 2014-2015 academic year. Professor Noe died on May 31, 2014. 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.
A
b. is discharged from any further obligations under the contract.
10
Q
Which of the following statements could most likely create an express warranty?
a. “This is the best car available in town.”
b. “This motorcycle will double in value in the next ten years.”
c. “These tires have 10,000 miles on them.”
d. “This antique is quite a bargain.”
A
c. “These tires 10,000 miles on them.”
11
Q
Which of the following would be a breach of the implied warranty of merchantability?
a. A knife that cuts its user when slicing a bagel
b. A radio that does not pick up FM signals
c. A match that burns a spot in the carpet when accidentally dropped
d. A dress watch that does not keep accurate time after getting wet
A
b. A radio that does not pick up FM signals.
12
Q
Marco Manufacturing contracted to sell Kurtz Industries 3,000 iron clasps. The contract specified: F.O.B. Kurtz Industries. Upon arrival and inspection, the goods were rejected by Kurtz Industries because they did not conform to the contract specifications. In transit back to Marco Manufacturing, the common carrier’s truck overturned and completely destroyed the clasps. Which statement is correct?
a. Marco may sue Kurtz for the contract price, as risk of loss transferred to Kurtz at the F.O.B. point.
b. Kurtz will not be liable for the purchase price. The risk of loss had not yet transferred since the goods were nonconforming.
c. The loss will be split between the parties upon a 50/50 basis.
d. The loss will be assigned to the party who could best bear the loss.
A
b. Kurtz will not be liable for the purchase price. The risk of loss had not yet transferred since the good were nonconforming.
13
Q
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.
A
c. has both parties setting forth their intentions.
14
Q
Employees of Mega Corp. have gone out on strike seeking better pay. Mega Corp. announces that if the union does not end the strike it will begin hiring replacement workers. Which statement is correct?
a. Hiring replacement workers during a strike is an unfair labor practice.
b. Mega Corp can only hire replacement workers if the collective bargaining agreement expressly gives the company the right to do so.
c. Mega Corp can only hire replacement workers if it gives the union 14 days’ notice prior to actually bringing in the replacement employees.
d. Mega Corp can hire replacement workers at any time during a strike.
A
d. Mega Corp can hire replacement workers at any time during a strike.
15
Q
Which of the following questions could an interviewer safely ask a candidate in a job interview?
a. Are you a United States citizen?
b. When did you graduate from college?
c. Could you carry a 100-pound weight, as required by this job?
d. Are you married?
A
c. Could you carry a 100-pound weight, as required by this job?
16
Q
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
a. enforceable requirements contract.
17
Q
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 Conference Committee made up of representatives of both the House and Senate.
d. the voters of her state for approval.
A
b. the Full House.
18
Q
The money intended to restore a plaintiff to the position he was in before the injury is referred to as
a. punitive damages.
b. tortious payments.
c. compensatory damages.
d. conversion payments.
A
c. compensatory damages.
19
Q
The 1933 Act exempts all but which of the following from its registration requirements?
a. Short-term notes
b. Treasury stock
c. Government securities
d. Annuity contracts
A
b. Treasury stock.
20
Q
If the principal and agent agree in advance how long their relationship will last, their agreement is called
a. an agency at will.
b. an agency of purpose.
c. an express agreement.
d. a term agreement.
A
d. a term agreement
21
Q
Sandy noticed an unauthorized electronic funds withdrawal on her bank statement. In order for her to not be liable for the withdrawal, she must notify her bank within _______ of the date of the bank statement.
a. 10 days
b. 30 days
c. 60 days
d. 90 days
A
c. 60 days
22
Q
Which of the following acts resulting in injury would be negligence per se?
a. Joe sold fireworks from his Indiana store (a legal activity) to Steve, an Illinois resident (a state that has made owning fireworks illegal).
b. June,while driving the speed limit, sideswiped the car next to her.
c. A retailer sold glue containing benzene to a 14-year-old boy in violation of state law.
d. Tammy accidentally dropped a heavy carton on Sasha’s foot while at work.
A
c. A retailer sold glue containing benzene to a 14 year old boy in violation of state law.
23
Q
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. negligence per se
A
a. Duty of due care
24
Q
Pursuant to a public offering, a CPA firm audited the financial statements. After the offering, omissions and misstatements were found. The CPA firm is now being sued by the purchasers of the stock. The purchasers are alleging that the erroneous financial statements in the registration statement caused them to suffer a monetary loss. The CPA firm can avoid liability if it can prove
a. that it used due diligence in auditing the financial statements.
b. the corporation was the party who made misstatements and omissions.
c. the firm believed that the statements were accurate.
d. None of the above will avoid liability.
A
a. that it is used due diligence in auditing the financial statements.
25
Which of the following states that if an agent is empowered to enter into a contract that must be in writing, then the appointment of the agent must also be written?
a. Duty to obey instructions
b. Balanced contract rule
c. Fiduciary duty
d. Equal dignities rule
d. Equal dignities rule.
26
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. wil not be able to establish a justification.
27
Daniel, his parents, and three brothers own all the stock of their family farm corporation and each person takes an active role in managing the enterprise. This corporation, which is taxed as a corporation, is most likely
a. an S corporation.
b. a professional corporation.
c. a close corporation.
d. a proprietorship.
c. a close corporation.
28
The IRS files criminal charges against Rich for evasion of federal taxes. Rich's accountant, Sonya, is summoned to appear in court to testify against Rich. The state where the incident occurred recognizes an accountant-client privilege. Does Sonya have to testify in federal court against her client?
a. Yes.
b. Yes, but only if she is granted immunity by her state.
c. No, the federal court must recognize her state's accountant-client privilege.
d. No, the federal accountant-client privilege will protect her from testifying.
a. Yes.
29
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. Until 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. Until January 16, the contract was executory.
30
A sales representative at Oxtren, Inc. orally told the purchasing agent at Wety, Inc. that its industrial saw is exceptional. Which statement is correct concerning the claim that the saw is exceptional?
a. The claim is an express warranty.
b. The claim is an implied warranty of merchantability.
c. The claim is not a warranty because it is not in writing.
d. The claim is not a warranty because it is sales puffery.
d. The claim is not a warranty because it is sales puffery.
31
Sally prepared financial statements for MegaCorp knowing that the company would be using her statements when applying for a loan at Big Bank. It is discovered she was negligent in preparing the statements and Big Bank sued her. Sally is liable under the
a. Ultramares doctrine.
b. foreseeable doctrine.
c. Restatement doctrine.
d. All the above.
d. All of the above.
32
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. a concurrent condition.
33
When the Food and Drug Administration prohibits a certain drug from being marketed in the United States, this is
a. private law.
b. an agency regulation.
c. legal negativism.
d. an executive order.
b. an agency regulation.
34
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. an illusory contract.
35
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 output contract.
36
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. may be held liable on the basis of negligent hiring.
37
Tony raped Jane in the parking lot of Joe's Brew Pub. The District Attorney's office prosecuted Tony on rape charges. Subsequently, Jane filed a lawsuit against Tony for money damages. Classify each legal action.
a. The District Attorney's case was a criminal case; Jane's lawsuit was a civil case.
b. The District Attorney'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 District Attorney's case was a criminal case; Jane's lawsuit was a civil case.
38
The phrase "piercing the company veil" applies to which type of organization?
a. a close corporation
b. a general partnership
c. a limited liability company
d. an S corporation
c. a limited liability company.
39
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.
40
There are four types of illegal activity under the Civil Rights Act of 1964. Which choice lists these four?
a. disparate treatment, disparate impact, hostile environment, and retaliation
b. disparate employment, unfair promotions, hostile environment, and unfair firing
c. false reports, retaliation, prima facie discrimination, sexual harrassment
d. religious disparaging, racial profiling, sexual harrassment, unfair promotions
a. disparate treatment, disparate impact, hostile environment, and retaliation.
41
A minor can undo a contract that has already been completed by having a court _______ the contract to formally cancel it.
a. affirm
b. rescind
c. disaffirm
d. ratify
b. rescind
42
Who owns and controls an accountant's working papers?
a. The client, in practice
b. The IRS
c. The accountant, in theory and practice
d. The client, in theory
a. The client, in practice
43
The elements in a defamation case are:
a. defamatory statement; falsity; 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. a defamatory statement; falsity; communication; and injury.
44
Mabel is a single 40-year-old who has borrowed money on numerous occasions. Her payment record has been good, except she has been delinquent in paying a few bills. Which of the following is true regarding credit information gathered on Mabel?
a. Since Mabel has been delinquent, she waives her right to see the credit files.
b. If Mabel is rejected for a loan because of the consumer report, the lender must tell her the source of the report.
c. Mabel has a right to have the information regarding her delinquency in paying a few loans stricken from her credit record because her record has generally been good.
d. Mabel's only legal remedy, if there is erroneous information in her credit file, is to report the problem to the FTC for enforcement.
b. If Mabel is rejected for a loan because of the consumer report, the lender must tell her the source of the report.
45
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.
46
Pamela is planning to sell her home decorating store to her daughter. Pamela has
a. a greater duty to reveal problems in the business because her daughter assumes she will be honest.
b. no duty to disclose hidden defects in the business.
c. a lesser duty to reveal problems in the business because she has a relationship of trust with the buyer.
d. a duty to report only any latent defects she knows about that her daughter should not be expected to discover herself.
a. a greater duty to reveal problems in the business because her daughter assumes she will be honest.
47
If a registration statement contains a material misstatement or omission
a. the company is liable and has no defense.
b. anyone other than the company who signed the statement is liable and has no defense.
c. all experts are liable and have no defense.
d. the company is liable unless it can show due diligence.
a. the company is liable and has no defense.
48
Ron, a minor, goes to the hospital for treatment of the flu. On the new-patient form Ron signs, he agrees to pay for any care or treatment he receives. When billed for the treatment
a. Ron must pay for the value of the benefit he received, because medical care is a necessary.
b. Ron must pay for the benefit he received because the contract is fully executory.
c. Ron must pay for the benefit he received because he ratified the contract.
d. Ron does not have to pay for the benefit he received.
a. Ron must pay for the value of the benefit he received, because medical care is a necessary.
49
Angie, a minor, wants to avoid a contract she made with Cumberland Cycles. Which is a valid way for Angie to disaffirm the contract?
a. by notifying Cumberland orally that she will not honor the agreement
b. by filing a lawsuit to have a court formally cancel the contract
c. by just refusing to perform her obligations under the contract
d. All of the answers are correct.
d. All of the answers are correct.
50
Millie ordered clothes from a mail order catalog. No time was specified as to when the goods would be shipped. In such a case the FTC requires that the company must ship the goods to Millie
a. within 3 business days after receiving the order.
b. within 10 business days after receiving the order.
c. within 30 days after receipt of the order.
d. within a reasonable time and within time lines consistent with industry standards.
c. within 30 days after receipt of the order.
51
Secondary boycotts
a. are generally legal provided the boycott is peaceful.
b. are generally legal provided the boycott does not involve public employees such as nurses or school teachers.
c. are not expressly permitted nor prohibited under federal law.
d. are generally illegal.
d. are generally illegal.
52
Larry is a certified public accountant in a firm which audits public companies. Larry is accused of unethical conduct. Is Larry required to abide by the ethical standards of the Public Company Accounting Oversight Board?
a. Yes.
b. He can be held liable only if he had actual knowledge of the particular guideline he is accused of violating.
c. No, the PCAOB establishes audit rules, not ethical guidelines.
d. No, the PCAOB has no authority over Larry.
a. Yes.
53
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. may not require consideration.
54
MegaCorp wishes to sell $25 million of securities. The only investors will be 20 unaccredited investors. Which of the following applies to this offering?
a. Rule 504, option 1 of Regulation D of the 1933 Act.
b. Rule 505 of Regulation D of the 1933 Act.
c. Rule 506 of Regulation D of the 1933 Act.
d. Rule 504, option 2 of Regulation D of the 1933 Act.
c. Rule 506 of Regulation D of the 1933 Act.
55
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. must indemnify Jim for Maureen's claim.
56
Under the TILA, a qualified mortgage (QM)
a. limits up-front points and fees to 5 percent.
b. limits all of a borrower's debt to 43 percent of his or her income.
c. allows balloon payments only if the borrower agrees up front.
d. must allow for negative amortization.
b. limits all of a borrower's debt to 43 percent of his or her income.
57
Section 16 of the 1934 Act prohibits short-swing trading on the part of officers, directors and controlling shareholders who
a. own more than twenty-five percent of the company.
b. are also on the board of directors of the company.
c. own more than ten percent of the company.
d. trade their shares in order to invest in another company.
c. own more than ten percent of the company.
58
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. $30,000.
59
An auditor who determines a company is materially misstating certain items on its financial statements should issue
a. an unqualified opinion.
b. a qualified opinion.
c. an adverse opinion.
d. a disclaimer of opinion.
c. an adverse opinion.
60
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. Y-K's promise to refrain from suing Alex was supported by legal consideration and is enforceable.
61
GBH, an accounting firm, was hired to prepare financial statements for E-treme. Great State Bank has asked to see GBH's working papers since it is thinking about extending a $4 million line of credit to E-treme. Which of the following statements is correct?
a. GBH can show the bank the working papers because Great State Bank has a proper purpose.
b. GBH can show the bank the working papers because Great State Bank is a known third party.
c. GBH cannot show the bank the working papers under any circumstances as they are not finalized.
d. GBH cannot show the bank the working papers unless E-treme gives permission.
d. GBH cannot show the bank the working papers unless E-treme gives permission.
62
The ruling in the landmark case of New York Times v. Sullivan was that a public official can win a defamation case
a. without proving the defendant acted with reckless disregard of the truth.
b. only by proving the defendant's actual malice.
c. without proving the defendant knew his or her statement was false.
d. only by proving the defendant has a history of reckless behavior.
b. only by proving the defendant's actual malice.
63
MoneyMaker Toy Company violated the safety standards set forth by the Consumer Product Safety Commission when it produced a toy gun that caused injury to hundreds of children. Because of MoneyMaker’s actions
a. the CPSC can impose civil penalties on the company.
b. the CPSC can impose criminal penalties on the company.
c. users can sue for damages, including attorney’s fees, if MoneyMaker knew it was violating a consumer product safety rule when it produced the guns.
d. All of the answers are correct.
d. All of the answers are correct.
64
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. limit the time in which an injured party may sue.
65
Larson entered Forrester's Auto Mart to purchase a used car. Larson found a vehicle with a sales price of $11,000. After Forrester answered all of Larson's questions, Forrester and Larson agreed to a sale. As Larson was leaving to get the money to pay for the car, Forrester told Larson that he thinks Robert Redford formerly owned the car. Larson later learned that Robert Redford had never owned the car. If Larson seeks to rescind the deal based on Forrester’s statement, Larson will
a. win because he relied on the misrepresentation.
b. win because there was a misrepresentation of a material fact.
c. lose because he will not be able to prove reliance on the misrepresentation.
d. lose because Forrester made a unilateral mistake.
c. lose because he will not be able to prove reliance on the misrepresentation.
66
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. The law would not enforce Jane's promise, as it does not have a lawful purpose.
67
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. Sole proprietorship
c. Close corporation
d. Franchise
d. Franchise
68
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.
69
Which of the following statements concerning liquidated damages is NOT TRUE?
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. Liquidated damages are enforceable even if the amount is considered to be a penalty on the breaching party.
70
The accounting firm of Gray & Co. did accounting work for both Regional Bank and Carter Electronics. Without Carter’s knowledge or approval, Gray & Co. discussed Carter’s financial problems with Regional Bank. In this situation, Gray & Co.
a. breached a legal obligation to keep all client information confidential.
b. breached a moral, but not a legal, obligation of confidentiality.
c. did not breach any obligations to its clients.
d. acted properly because it was protecting its client, Regional Bank, from possibly making an unwise loan to Carter Electronics.
a. breached a legal obligation to keep all client information confidential.
71
Courts may award damages called quantum meruit, which means
a. "as much as he deserves."
b. "to the letter of the law."
c. "let the buyer beware."
d. "something for something."
a. "as much as he deserves."
72
One of the factors leading courts away from a laissez-faire approach to contract law was
a. the movement away from requiring written contracts with a seal affixed.
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. a change in relative bargaining power between parties to contracts.
73
John is auditing MegaCorp. He finds an accounts payable for 10,000 cases of ball bearings. He checks to make sure the paper actually arrived and that the receiving department had signed and dated the invoice. He also checks the original purchase order to make sure the purchase was properly authorized. This illustrates
a. tracing.
b. vouching.
c. following.
d. monitoring.
b. vouching.
74
A contract that requires a seller to deliver goods to the carrier is a
a. destination contract.
b. shipment contract.
c. C.I.F. contract.
d. C.O.D. contract.
b. shipment contract.
75
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 legislatures 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.
76
Mike sold his car to Beth, who was to pick the car up at Mike's house and pay for it then. In fact, when Beth arrived she discovered Mike's home and the car destroyed by a fire the night before. The risk of loss falls on
a. Mike because Beth had not taken possession of the car.
b. Beth because Mike was ready, willing, and able to tender the car.
c. Beth because under the UCC, the buyer bears the risk of loss.
d. Mike, because as a merchant he is responsible for the car.
a. Mike because Beth had not taken possession of the car.
77
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. full performance.
78
Vince has begun forgetting things and is becoming very difficult to get along with. He is 85, has been ill, and is very fond of his housekeeper Annie. He gives a deed to Annie for all of his real property. At Vince's death, his children, who got only his photograph albums according to the will, ask that the deed be set aside and the land be put back in the estate for purposes of division among all the children. What will be the probable result in this case?
a. Since Vince was 85 he was probably incompetent and the court would rule for the children.
b. Clearly Annie used her position of dominance to persuade Vince to deed her the property, and it will be set aside.
c. Unless the children can prove that Vince was unable to understand what he was doing, or that Annie used her position to improperly influence Vince, Annie can keep the property.
d. Annie will not be able to keep the property since she is not a family member.
c. Unless the children can prove that Vince was unable to understand what he was doing, or that Annie used her position to improperly influence Vince, Annie can keep property.
79
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.
80
Tuan, Inc. contracted to buy 200 monogrammed blankets from Titex, Inc. Before Titex segregated and monogrammed the blankets, Tuan filed for bankruptcy. Tuan does not own title to the blankets because
a. Tuan is a merchant.
b. the blankets were not identified to the contract.
c. Tuan became bankrupt after the contract was formed.
d. the goods were specially manufactured.
b. the blankets were not identified to the contract.
81
What legislation did Congress pass in 1932, that prohibited federal court injunctions in nonviolent labor disputes, thereby declaring that workers should be permitted to organize unions and use their collective power to achieve legitimate economic ends?
a. The Wagner Act
b. The Norris-LaGuardia Act
c. The National Labor Relations Act
d. The Labor-Management Relations Act
b. The Norris-LaGuardia Act
82
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 exhaust all possible appeals within the agency itself 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 exhaust all possible appeals within the agency itself before he seeks judicial review by a court.
83
Under the Truth In Lending Act, a lender must disclose all of the following EXCEPT
a. the average percentage rate charged by competitors.
b. the amount financed.
c. the annual percentage rate (APR).
d. the finance charge.
a. the average percentage rate charged by competitors.
84
A rule that is not automatically discriminatory, but which may be discriminatory in practice because it excludes too many people in a protected group is considered
a. disparate treatment.
b. prima facie discrimination.
c. unbalanced treatment.
d. disparate impact.
d. disparate impact.
85
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 considered
a. compensatory damages.
b. incidental damages.
c. consequential damages.
d. punitive damages.
b. incidental damages.
86
The issue in the Kruser v. Bank of America case involved
a. lost credit cards.
b. unauthorized withdrawals.
c. unfair interest rates.
d. privacy.
b. unauthorized withdrawals.
87
Ron and several fellow workers of Vicy, Inc., a small manufacturing company, wished to organize a union. When Vicy learned of this activity, it issued a bulletin to all workers stating that a union will only hurt the company and that "we are a family that can solve any problems ourselves -- we do not need union activists from outside our company trying to tell us what to do!" Which statement is correct concerning the bulletin issued by Vicy?
a. Vicy has committed an unfair labor practice. Vicy must remain neutral during the organizing drive.
b. Vicy has committed an unfair labor practice. The bulletin constitutes outrageous interference with the union organizing campaign.
c. Vicy has not committed an unfair labor practice. An employer may vigorously present anti-union views to its employees.
d. Whether Vicy has committed an unfair labor practice depends on whether the bulletin was approved by the NLRB.
c. Vicy has not committed an unfair labor practice. An employer may vigorously present anti-union views to its employees.
88
For the defendant to be liable in a negligence case, it must be proven that the type of harm caused by the defendant must have been reasonably foreseeable. This is referred to as
a. proximate cause.
b. duty of due care.
c. factual cause.
d. breach.
a. proximate cause.
89
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.
90
Laura intends to file a Title VII lawsuit against her employer. Which of the following is true?
a. Laura is required to first submit her claim to the Equal Employment Opportunity Commission.
b. Laura must first submit her claim to a state civil rights commission before she may proceed with her lawsuit.
c. If the EEOC determines Laura has no case against her employer, she may not file a lawsuit.
d. Laura may initiate a lawsuit or file with the EEOC as she so elects.
a. Laura is required to first submit her claim to the Equal Employment Opportunity Commission.
91
Under FTC rules, a customer can cancel a door-to-door sales contract within
a. three business days of the sale.
b. five business days of the sale.
c. one calendar week from the date the sale was made.
d. a “reasonable time” after the sale was made.
a. three business days of the sale.
92
```
When a stock underwriter acts as the company's agent in selling stock, it is called a
a. company underwriting.
b. express underwriting.
c. firm commitment underwriting.
d. best efforts underwriting.
```
d. best efforts underwriting.
93
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. not enforceable because Becky does not have a legal right to drink alcohol.
94
Which of the following statements express the purpose of the Truth-in-Lending Act?
a. To require lenders to charge a "reasonable" rate of interest
b. To regulate interest rates and terms of loans
c. To provide consumers with information necessary to make the best credit decision
d. To help lenders limit state laws
c. To provide consumers with information necessary to make the best credit decision.
95
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. conduct of the parties indicates they intended an agreement.
96
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 can only be held liable for intentionally injuring her or for gross misconduct.
c. It may depend on Kelley’s age.
d. Yes, the neighbor is strictly liable.
c. It may depend on Kelley's age.
97
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-presto are liable for tortious interference with a contract.
c. E-presto is liable for tortious interference with a contract.
98
Which of the following statements is correct?
a. Investors generally receive a copy of the registration statement.
b. Investors generally do not receive the company's prospectus.
c. A registration statement and a prospectus are essentially the same thing.
d. All investors must receive a copy of the prospectus before purchasing the stock.
d. All investors must receive a copy of the prospectus before purchasing the stock.
99
Marty, a 16-year-old, contracts with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. Marty agrees to make monthly payments until the purchase price plus interest are paid in full. Which of the following is correct?
a. The contract is voidable by Marty.
b. The contract is void as soon as it is made.
c. The contract is voidable by Cream-of-the-Crop Cycles.
d. The contract is voidable by either Marty or Cream-of-the-Crop Cycles.
a. The contract is voidable by Marty.
100
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. a bilateral contract requires one party to actually do something.
d. one is enforceable, the other is not.
b. only one promise is involved in a unilateral contract.
101
```
The Administrative Procedure Act imposes controls on agencies by requiring basic fairness in areas not regulated by the enabling legislation. This method of reining in powerful agencies is a form of
a. informational control.
b. political control.
c. judicial review.
d. statutory control.
```
d. statutory control.
102
Graham purchased a car and subsequently sold it to Harlow. Harlow paid full value for the car and had no reason to know that Graham had stolen the car and did not own the title. Which of the following best describes this situation?
a. Graham had good title and Harlow gets good title.
b. Graham had good title and Harlow gets a voidable title.
c. Graham had void title and Harlow gets void title.
d. Graham had void title and Harlow gets good title.
c. Graham had void title and Harlow gets void title.
103
Which of the following events would have the best chance of excusing 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. An unforeseeable trade embargo causes prices to triple.
104
Which of the following is NOT guaranteed under an implied warranty?
a. The goods are free of hidden security interests.
b. The goods are free of a rightful claim of copyright, patent, or trademark infringement.
c. The goods are merchantable.
d. The goods may be returned for a refund or replaced in the event of any defect.
d. The goods may be returned for a refund or replaced in the event of any defect.
105
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. when actual damages are difficult to determine.
106
Chance is a traveling marketing representative for a publishing company. He is an independent contractor and was hired without negligence. One afternoon while driving to a meeting, Chance 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. hold Chance but not the company liable.
107
Which of the following is NOT a true statement about fraud?
a. The plaintiff must prove that the defendant has knowledge of the falsity of his or her statement.
b. It is necessary for the plaintiff to show that he or she has suffered some type of detriment or injury because of his or her reasonable reliance on the defendant's false statement.
c. The defendant made the statement with the intent to induce the plaintiff to enter into the contract.
d. The plaintiff must show that although the defendant acted in good faith, the statement was material because the defendant expected the plaintiff to rely on it and enter into the contract.
d. The plaintiff must show that although the defendant acted in good faith, the statement was material because the defendant expected the plaintiff to rely on it and enter into the contract.
108
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. may "cover" and then receive the difference between the original contract price and the "cover" price.
109
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. NSB wins because the modification has to be in writing.
110
A court may pierce an LLC's veil if
a. members fail to provide adequate capital.
b. members treat the LLC like a separate organization.
c. members keep their assests and the assets of the LLC separate.
d. the LLC has too many members.
a. members fail to provide adequate capital.
111
```
"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. an illusory promise.
112
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. Police Officer Paul is not entitled to the reward because he was under a pre-existing duty to make the arrest.
113
What constitutes a social enterprise's "triple bottom line"?
a. employees, customers, and profits
b. assets, liabilites, and revenue
c. social concerns, shareholders, and sales
d. people, planet, and profits
d. people, planet, and profits.
114
Crytrin Manufacturing, Inc. contracted with Molfrey, Inc. to manufacture three large pieces of equipment. The contract contained a clause stating that Crytrin agreed to repair or replace any defective equipment, but that was the only remedy Molfry would have. This clause
a. is an effective disclaimer.
b. will not keep Molfry from obtaining consequential damages since, under the UCC, consequential damages cannot be excluded.
c. is a limitation of remedy clause, which limits or excludes normal remedies permitted under the UCC.
d. limits any express warranties made by Crytrin.
c. is a limitation of remedy clause, which limits or excludes normal remedies permitted under the UCC.
115
Employees of Truan went on strike because of unfair labor practices. After the strike, the striking workers are
a. entitled to get their jobs back.
b. not entitled to get their jobs back.
c. entitled to get their jobs back but only as they become available.
d. fired.
a. entitled to get their jobs back.
116
```
One morning, Miles accidentally dropped a thumbtack on the chair of the office manager where he worked. The office manager sat on the tack and two days later, 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.
```
a. Miles actions were negligent.
117
```
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. commercial impracticability.
118
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.
119
With regard to mortgages, the Consumer Finance Protection Bureau (CFPB) requires mortgage servicers
a. to contact borrowers who are 36 days late in making a payment.
b. to wait 180 days after nonpayment before beginning foreclosure.
c. to credit payments within 3 days after they are received.
d. to extend delinquent borrowers additional time to repay the loan.
a. to contact borrowers who are 36 days late in making a payment.
120
```
What level of owner's liability does a trespassing adult have?
a. lowest level
b. mid level
c. higher level
d. highest level
```
a. lowest level
121
```
Reformation is
a. a type of restitution.
b. the most common of all remedies.
c. a form of quasi-contract.
d. the least common of all remedies.
```
d. the least common of all remedies.
122
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. an injunction to prevent Trimble from working in competition with the former partners.
123
On impulse, you purchase a travel trailer and ask your acquaintance, Max, if you can leave the trailer at the edge of his restaurant’s parking lot until you can have a concrete pad built to store the trailer on your property. Max agrees. When you return for the trailer the next week, it is gone and you find out that Max sold it. You can
a. recover the trailer because Max did not have any ownership interest to pass.
b. recover, but only if Max bought insurance to cover the trailer while it was on his property.
c. not recover because you “entrusted” the trailer to Max, who then had a right to sell it.
d. not recover because Max had only a voidable title to transfer.
a. recover the trailer because Max did not have any ownership interest to pass.
124
An accountant is liable for fraud to
a. only her client.
b. only her client and any known user of her information.
c. any foreseeable user of her work product who justifiably relied on it.
d. any third party with the exception of investors or creditors.
c. any foreseeable user of her work product who justifiably relied on it.
125
An employer would be expected to make reasonable accommodations for a disabled worker, such as
a. creating a new job that the worker can do.
b. adapting the work environment for all employees so the disabled worker doesn’t feel segregated or stigmatized.
c. providing transportation to and from the worker’s home.
d. allowing a part-time schedule.
d. allowing a part-time schedule.
126
```
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. an S corp shareholder
d. a partner in a joint venture
```
c. an S corp shareholder.
127
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.
b. Liberty Farm wins; there was failure of a condition subsequent.
128
```
Clint is auditing MegaCorp. In reviewing the sales ledger, Clint saw that MegaCorp had sold 3,000 disk drives to CompSales, Inc. Clint reviewed the original invoice of this sale to ensure that the date, price, quantity, and customer's name all match. He then verified each step along the paper trail until the disk drives left the warehouse. This illustrates
a. tracing.
b. vouching.
c. following.
d. monitoring.
```
a. tracing.
129
```
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. an express, bilateral contract.
130
```
Sam 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. condition precedent.
131
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. This is a material breach, Jackie owes nothing to Charles.
132
```
Written defamation is _____; oral defamation is _______.
a. fraud; conversion
b. conversion; fraud
c. slander; libel
d. libel; slander
```
d. libel; slander.
133
The duty of fair representation created by the NLRA requires that
a. a union treat all members fairly, impartially and in good faith.
b. a union must pursue any member’s grievance against the employer.
c. an employer, in communications with employees during a union organizing effort, must fairly represent the effects it believes a union will have on the company.
d. the NLRB certify only proposed bargaining units that it thinks the union can properly represent.
a. a union treat all members fairly, impartially and in good faith.
134
```
Which approach to state regulation of securities requires an issuer to undergo a full-blown registration complete with a merit review?
a. Registration by qualification
b. Registration by notification
c. Registration by coordination
d. Registration by merit
```
a. Registration by qualification
135
```
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.
136
Which of the following statements, if made by a seller who knows the statement to be untruthful, would NOT be misrepresentation of material fact resulting in a cause of action for fraud?
a. "This horse is only six years old."
b. "There is no better car in the world."
c. "The tires have less than 5,000 miles on them."
d. "This car gets 28 miles per gallon. "
b. "There is no better car in the world."
137
Which of the following statements is accurate concerning express conditions?
a. A court will enforce any express conditions intended by the parties.
b. A court 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. A court requires strict performance if a clause of the contract expressly demands it.
d. A court applies an objective standard whenever ruling on a personal satisfaction contract.
b. A court may refuse to enforce an express condition intended by the parties if the court determines it is unfair and harmful to the general public.
138
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. not set aside the agreement based on the adequacy of the consideration.
139
```
Adam claimed that N & A, its accounting firm, negligently prepared an audit. To hold the accounting firm liable, which of the following elements must be established?
a. Scienter or guilty knowledge
b. A fiduciary relationship
c. Failure to exercise due care
d. An executed engagement letter
```
c. Failure to exercise due care.
140
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 court.
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 for additional steps.
d. We don't know who wins yet because the case is being returned to the trial court for additional steps.
141
Deborah purchased a boat from Sun ‘N Surf Marine. She later learned that the salesman had made misrepresentations to induce her to make the purchase. Under UCC Section 2-721, Deborah can rescind the contract
a. only if the misrepresentation was fraudulent.
b. and sue for damages if the misrepresentation was fraudulent.
c. but cannot sue for damages even if the misrepresentation was fraudulent.
d. but must forego all other remedies.
b. and sue for damages if the misrepresentation was fraudulent.
142
```
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. franchise.
d. limited liability company.
```
b. partnership.
143
Jeff was a subcontractor, bidding on a contract for ACE Corp., the general contractor. When adding up the total of materials and labor, Jeff's secretary mistakenly moved the decimal point one place, ending up with a bid of $3500 rather than $35,000. ACE Corp. accepted Jeff's bid, mostly because all the other bids were over $30,000. When Jeff learned of the mistake, he tells ACE Corp. that he cannot do the job for $3500. If ACE Corp. sues to enforce this contract, what is the most likely result?
a. The contract is enforceable, since there was an offer, acceptance, and consideration.
b. This is a bilateral mistake, so the contract can be rescinded by either party.
c. This is a unilateral mistake, so the contract cannot be rescinded by Jeff.
d. This is a unilateral mistake, but one where ACE Corp. knew that a mistake had been made. Jeff should be able to rescind the contract.
d. This is a unilateral mistake, but one where ACE Corp. knew that a mistake had been made. Jeff should be able to rescind the contract.
144
```
An S Corporation cannot have more than ____ shareholders.
a. 100
b. 75
c. 50
d. 25
```
a. 100
145
A union declares it will be engaging in a partial strike whereby its employees will alternate between working for a period of time and then walking off the job for an indefinite time. Thus, employees may work for a few days or only a few hours before walking off the job again. The employer claims the union does not have the legal right to engage in a partial strike. Which statement is correct?
a. The employer is correct. The union must either strike or work—it cannot alternate between working and striking.
b. The employer is correct only if the union does not state the specific hours or days workers will be off the job. The law requires the union to provide the employer with at least seven days' notice of when workers will be off the job.
c. The employer is not correct since the NLRA expressly states workers have a right to engage in a partial strike.
d. Whether the employer is correct depends on state law.
a. The employer is correct. The union must either strike or work -- it cannot alternate between working and striking.
146
```
There are four types of illegal activity under Title VII of the Civil Rights Act of 1964. Which of the following is NOT one of them?
a. Disparate treatment
b. Retaliation
c. Unattactiveness discrimination
d. Hostile environment
```
c. Unattractiveness discrimination.
147
```
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.
```
c. makes the law more predictable.
148
Contemporary law’s principle of collective responsibility, such as all partners being personally responsible for the debts of the partnership, had its roots in the
a. Anglo-Saxon method of ensuring public order through tithing.
b. Anglo-Saxon practice of using “oath helpers.”
c. English use of “shire reeves.”
d. English system of feudalism.
a. Anglo-Saxon method of ensuring public order through tithing.
149
Which of the following is an advantage of a corporation?
a. It is easy to form a corporation.
b. It requires little expense to form a corporation.
c. It offers limited liability for its shareholders.
d. It is a flow-through tax entity.
c. It offers limited liability for its shareholders.
150
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. can sue Sea Rovers immediately for breach of contract.
151
```
The Minnesota legislature passed a law requiring that employers allow each employee adequate time within each four consecutive hours of work to utilize the nearest convenient restroom. This law is
a. an executive order.
b. an ordinance.
c. a statute.
d. a stare decisis.
```
c. a statute.
152
```
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
153
```
The buyer of a product is located in Des Moines, Iowa and the seller is located in Sacramento, California. The contract specifies F.O.B. Des Moines. What type of contract is this?
a. A destination contract
b. A mixed contract
c. A shipment contract
d. A carrier contract
```
a. A destination contract
154
John is a CPA in charge of auditing his client, McMillen & Co. John's duty of care to McMillen will most likely be breached if John
a. gives his client an oral report instead of a written report.
b. gives his client incorrect advice based on an honest error in judgment.
c. fails to give tax advice that would save his client money.
d. fails to follow generally accepted auditing standards (GAAS).
d. fails to follow generally accepted auditing standards (GAAS).
155
What is a whistleblower?
a. An employee who thwarts an attempt by fellow employees to form a union
b. An employee who crosses the picket line to return to work
c. An employee who discloses illegal behavior on the part of his or her employer
d. An employee who secretly gives information to his or her employer about union activity
c. An employee who discloses illegal behavior on the part of his or her employer.
156
Tom, the production manager at Esday, was told by his supervisor to hire Elton, a 15-year-old boy, to operate an industrial machine. Hiring the 15 year old violates the child labor laws. What should Tom do in this situation?
a. Tom should hire Elton; he has a duty to obey Esday's instructions.
b. Tom should hire Elton; he has a duty of care to ensure that the government does not discover that Elton is 15 years old.
c. Tom should not hire Elton; he has a duty of care and he would not be caring for Elton.
d. Tom should not hire Elton; he has a duty to obey Esday's instructions only if they are legal and ethical.
d. Tom should not hire Elton; he has a duty to obey Esday's instructions only if they are legal and ethical.
157
In a breach of warranty case, the buyer must
a. notify the seller of defects within a reasonable time.
b. bring any lawsuit no later than three years after the defect was discovered.
c. extend the statute of limitations in writing rather than orally if they choose to allow a longer time for bringing suit.
d. notify the seller of defects within six months of their discovery or they cannot bring a lawsuit.
a. notify the seller of defects within a reasonable time.
158
Sharon fell while making an inspection of a machine at work and in the fall, she broke her arm. Can she collect workers' compensation for the time she had to be away from work as she recovered?
a. Yes, since the injury occurred while she was engaged in her job at work.
b. Yes, if she can prove that the injury was caused by a fellow employee.
c. No, she can only receive compensation for her medical expenses.
d. No, she will have to sue her employer if she wants to collect for lost wages.
a. Yes, since the injury occurred while she was engaged in her job at work.
159
```
A branch of tort law that imposes a much higher level of liability when harm results from ultrahazardous acts or defective products is referred to as
a. res ipsa loquitur.
b. strict liability.
c. heightened liability.
d. strict negligence.
```
b. strict liability.
160
Felicity brought a lawsuit under Section 11 of the 1933 Act against Mojo Corp. What will Felicity have to prove in order to prevail?
a. Only that she relied on the registration statement
b. That Mojo was negligent in preparing the registration statement
c. That there was a material misstatement or omission in the registration statement and she lost money
d. That Mojo intentionally tried to deceive investors
c. That there was a material misstatement or omission in the registration statement and she lost money.
161
Great State Bank claimed that Wiles Accounting committed fraud in the preparation of an audit. To hold the accounting firm liable, which of the following elements must be established?
a. Knowledge or reckless disregard of the truth
b. A fiduciary relationship
c. Failure to exercise due care
d. An executed engagement letter
a. Knowledge or reckless disregard of the truth.
162
```
When courts consider economic duress, they consider all the following factors EXCEPT
a. relative bargaining power.
b. financial distress.
c. legitimate business purpose.
d. relative size of the contract.
```
d. relative size of the contract.
163
```
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
164
```
The statute of limitations for breach of warranty under the UCC is
a. one year.
b. two years.
c. three years.
d. four years.
```
d. four years.
165
```
Ron's Furnace Repair advertised it would inspect any homeowner's furnace for free. Janet had Ron's come to inspect her furnace. The servicewoman dismantled the entire furnace then refused to put it back together unless Janet paid her $250. The FTC considers such a practice to be
a. an unfair practice.
b. a deceptive practice.
c. an act that violates public policy.
d. All the above.
```
d. all of the above.
166
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. the difference between Solomon's contract price and the amount paid by Renny.
167
```
Hasbro, Inc., the trademark owner of "Candy Land," sought a court injunction to stop Internet Entertainment Group, LTD from using the domain name, "candyland.com." Internet Entertainment Group had established a sexually explicit site at the domain name. This injunction would have to be issued by
a. a jury.
b. a judge.
c. an executive order.
d. a lawyer.
```
b. a judge.
168
Under the Americans with Disabilities Act, a person with a disabling illness
a. is not considered disabled once the illness is being managed with medicines.
b. is not considered disabled unless there is no known cure.
c. is considered disabled, but only at times when hospitalization is required for treatment.
d. is considered disabled, even if the illness is under control.
d. is considered disabled, even if the illness is under control.
169
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. Walter will lose, as he gave no consideration.
170
```
What element of a contract refers to the parties involved being "adults of sound mind"?
a. Consideration
b. Capacity
c. Consent
d. Legality
```
b. Capacity
171
```
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 all of the following EXCEPT
a. the plain meaning rule.
b. legislative history.
c. public policy.
d. enabling legislation.
```
d. enabling legislation.
172
```
When a partner leaves the partnership, whether it be voluntary or by expulsion, death or bankruptcy, it is called
a. dissociation.
b. termination.
c. detachment.
d. separation.
```
a. dissociation.
173
```
The notion that if a plaintiff is even slightly negligent, he or she recovers nothing is known as
a. comparative negligence.
b. reasonable negligence.
c. contributory negligence.
d. insignificant negligence.
```
c. contributory negligence.
174
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.
175
Which of the following are remedies available to a successful plaintiff under Title VII?
a. Hiring, reinstatement, and back pay
b. Front pay, reasonable attorney fees
c. Compensatory and punitive damages
d. All of the above are remedies under Title VII
d. All of the above are remedies under the Title VII
176
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 damages.
d. duty of due care, breach, causation, foreseeable harm, and damages.
177
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 the advent of the Industrial Revolution.
c. was first allowed in the State of New York around 1811 and is considered to be an American creation.
d. is a relatively new concept developed shortly after the Great Depression.
a. was first known and used by the greeks and then spread through the Romans to England.
178
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 absolute 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.
179
```
Which of the following types of property would be considered "goods" under the Uniform Commercial Code?
a. a promissory note
b. a stock
c. a patent
d. a computer
```
d. a computer.
180
Which of the following would be a reasonable accommodation under the ADA?
a. modifying a job description and job duties to accommodate the disabled worker
b. assigning a shadow employee to work with the disabled worker
c. providing part-time schedules to accommodate the disabled worker
d. creating a new job that the disabled worker can perform
c. providing part-time schedule to accommodate the disabled worker.
