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Which of the following would be an example of an embedded niche in the legal system?

A) Judges

B) Statutes

C) Constitution

D) Common Law

A sale of computer software _____.

A) was easily compared to a sale of products

B) presented the legal system with new actors

C) presented a challenge to the legal system

D) required a Constitutional amendment

UCITA stands for _____.

A) Uniform Commercial Information Technology Act

B) Uniform Computer Information Transaction Act

C) United Countries Information Transformation Act

D) Understood Computer Information Technology Act

Which came first in time?

A) U.S. Constitution

B) Articles of Confederation
C) Confederate States of America

D) U.S. statutory law

This article of the Constitution makes federal law the supreme law of the land.

A) Article II

B) Article IV

C) Article VI

D) Article VII

This amendment to the U.S. Constitution gave the right to vote to 18-year-olds.

A) 17th

B) 19th

C) 24th

D) 26th

State constitutions tend to be _____ the U.S. Constitution.

A) less detailed than

B) about the same legal detail as

C) more detailed than

D) No general statement is possible.

In ORC 1701.03 the "17" is read as _____.

A) chapter 17

B) title 17

C) section 17

D) part 17

This state still uses the Napoleonic Code:

A) New York

B) Florida

C) Louisiana

D) Maine


A judge in Texas is unable to find a Constitutional, statutory, or Texas court precedent to apply in
resolving a case. The judge should _____.

A) refuse to decide the case

B) do whatever seems reasonable

C) apply common law

D) request an advisory option from the U.S. Supreme Court

1 Emily believes that one should consider the special circumstances surrounding each ethical
problem. Emily is practicing _____.

A) social contract theory

B) utilitarianism

C) natural law theory

D) situational ethics
2 George decides not to speed in order to encourage others to drive safely and reduce the
number of traffic accidents. George is following _____.

A) social contract theory

B) natural law theory

C) ethical relativism

D) utilitarianism

Maria only considers what is most profitable for her business. Maria is following _____.

A) natural law theory

B) utilitarianism

C) utility thinking

D) social contract theory

Darby acts in a way to preserve individual freedom. Darby is practicing the ethical character trait of

A) integrity

B) compassion

C) fairness

D) honesty

The directors of ABC Company decide to use recycled materials even though these materials are more
costly than new raw materials. Shareholders threaten to sue the directors. The current legal position in
the U.S. makes the directors _____.

A) clearly liable
B) liable unless legislation requires the use of recycled materials

C) immune from this suit

D) immune from criminal prosecution only

A law creating a sales tax _____.

A) is immoral

B) has no moral content

C) is moral

D) is beyond morality

Those who believe that each person must surrender some personal freedoms in order to have security
in return are describing _____.

A) social contract theory

B) a state of nature

C) natural law

D) utilitarianism

A professional athlete is accused of cheating on her income tax. George decides that he should attempt
to cheat on his exam based upon this news. George is following _____.

A) natural law

B) utility thinking

C) role model ethics

D) utilitarianism

Jamie believes that there is an ethical theory that can be created for the entire world. Jamie is describing

A) utility thinking

B) social contract theory

C) rational ethics

D) ethical relativism


An auto manufacturing company installs crush resistant gas tanks on its cars because it will protect the
driving public from flash fires when the cars are involved in an accident. What ethical system is the
company following?

A) Role model ethics.

B) Situational ethics.

C) Utilitarianism.

D) Social contract theory.

June is found guilty of larceny by a jury. Who will sentence June?

A) The jury that found June guilty.

B) A different jury from the jury that found June guilty.

C) The judge.

D) The prosecutor.

Courts that have power to review a case for errors of law are courts of _____ jurisdiction.

A) original

B) appellate

C) general

D) special

Most federal cases begin in the federal _____ court.

A) division

B) claims

C) district

D) appellate

Pashca, a citizen of North Carolina, purchases a subscription to the New York Times newspaper. In a
$25,000 dispute involving a New York company, Pashca is sued in the New York state court since he
conducted business in New York by purchasing the New York Times subscription. Pashca's lack of
minimum contacts argument is based upon the lack of _____.

A) $25,000 being in dispute

B) federal law being involved

C) New York citizenship

D) reasonable foreseeable knowledge

Julie, a Michigan citizen, and Nicholas, a Montana citizen, are involved in a dispute that is being heard in
federal court under diversity of citizenship jurisdiction. What law should the court apply?

A) federal
B) Michigan

C) Montana

D) general law

Cyberspace jurisdiction in court cases is determined by _____.

A) a special federal statute

B) a case-by-case analysis

C) the state statutes where the plaintiff has citizenship

D) the state statutes where the defendant has citizenship

If a plaintiff wants a jury trial, this must be requested _____.

A) in the answer

B) in the service

C) in the complaint

D) at the pretrial conference

Lazarus and Chaluza are involved in a traffic accident and Lazarus sues Chaluza for damages to his car.
Chaluza wants to collect from Lazarus the damages done to her car. Chaluza should _____.

A) file a new lawsuit against Lazarus

B) file a complaint against Lazarus

C) file a cross-claim against Lazarus

D) file a counterclaim against Lazarus


A lawsuit involves a claim of malpractice in the preparation of income tax returns. A prospective juror
has previously had a malpractice claim against a tax consultant. The trial judge should _____.

A) caution the prospective juror to be impartial

B) interview the prospective juror in chambers

C) allow other prospective jurors to vote to accept or reject this prospective juror

D) reject the prospective juror


A grand jury issues a(n) _____.

A) indictment

B) requirement

C) arraignment

D) verdict of guilt or innocence

An undercover police officer meets with an angry college student who has received a low exam grade.
The undercover agent tells the student that he could vandalize the teacher's car in exchange for money.
The student asks the agent to plant a large bomb under the teacher's car wired to explode when the car
is started. The student is criminally charged with soliciting murder and asserts entrapment as a defense.
This defense will be _____.

A) effective since the undercover agent suggested vandalism

B) effective since the student was angry when he talked with the agent

C) ineffective since the student asked for the bomb to be planted

D) ineffective since the student's request is out of proportion to the perceived offense

A 125-pound man picks a fist fight with a 250-pound man. Unknown to the 250-pound man, the 125-
pound man has a gun. When the 250-pound man attempts to hit the 125-pound man, the 125-pound
man fatally shoots him. Why may self-defense not be asserted by the 125-pound man?

A) He started the fight.

B) The larger man did not know the smaller man had a gun.

C) The larger man was provoked by the smaller man.

D) The larger man failed to react.

Mary goes into the parking lot to retrieve her car but drove away in another car that looked like hers
and that her keys fit. Mary is charged with theft. Mary's mistake destroys what essential element to
impose criminal liability?

A) The action.

B) The state of mind.

C) The desire to profit from wrongdoing.

D) The competency to stand trial.

Joe is overheard stating that he could make a lot of money robbing a local bank that has no security
guards on duty. Joe may be criminally charged with ____.

A) planning a bank robbery

B) attempting a bank robbery

C) discussing an obviously illegal action

D) no crime

Fred and Charlie challenge each other to an illegal street race. What state of mind do they exhibit?

A) Purpose

B) Knowledge

C) Recklessness

D) Negligence

Amanda decides to engage in target practice in her backyard with her deer rifle. One shot she fires
accidentally misses her target and hits a neighbor who is mowing his yard. What state of mind has
Amanda exhibited?

A) Purpose

B) Knowledge

C) Recklessness

D) Negligence

A bank security guard is killed by a bank robber while the robbery is occurring. The bank robber has
committed which of the following crimes:

A) First-degree murder

B) Second-degree murder

C) Voluntary manslaughter

D) Involuntary manslaughter

A state legislature outlaws any speech that ridicules the religion of another with the intent to provoke
an angry response. This legislation is likely _____.

A) unconstitutional as being content specific

B) unconstitutional as prohibiting words

C) constitutional as designed to keep the peace

D) constitutional as dealing with the predictable consequences of words

The Identity Theft and Assumption Deterrence Act requires for conviction that the defendant _____.

A) use a computer to commit identity theft

B) pass himself off as another

C) commit a racketeering offense

D) commit an action that crosses state lines


The M'Naughten Rule focuses on _____.

A) self-control

B) the seriousness of the injury

C) knowledge

D) the unusual nature of the action

Nichole falsely states that Charlie, a business owner, cheats his customers. One week after these
statements are made, Charlie suddenly dies of an unexpected heart attack. Charlie's family sues Nichole
for slander. Nichole _____.

A) has no defense under the typical survival statute

B) has no defense under modern tort reform legislation

C) has a defense under the typical survival statute

D) has a defense if Charlie never heard the statement

The U.S. Supreme Court has mentioned that _____ times the compensatory damages would be an
appropriate amount of punitive damages.

A) three

B) five

C) seven

D) ten

At the conclusion of a tort trial the jury finds the plaintiff 10% responsible for the injuries she suffered
and the defendant 90% responsible for the injury. The jury determines the actual damages to total
$50,000. How much will the plaintiff recover under contributory negligence?

A) nothing

B) $5,000

C) $45,000

D) $50,000

Adam attends a professional golf tournament as a spectator on a cloudless day and is struck by lightning,
resulting in a serious injury. Adam sues the organizers of the tournament. For Adams suit to succeed, he
must prove that the tournament's organizers _____.

A) should have consulted the weather bureau

B) should have reasonably foreseen the risk of injury

C) should have known of the dangers of lightning

D) attracted him to the location by organizing the tournament


On newer model mobile phones, the E-911 locator is activated _____.

A) only when a 911 call is made

B) only when a special code is entered

C) only when the phone owner authorizes the activation in his/her contract

D) all the time

A landowner refuses to obey a court order to move his property fence that blocks access by an electric
company to its easement. The landowner has _____.

A) not committed any offense unless found guilty by a jury

B) committed contempt of court

C) committed a tort

D) committed a breach of contract

The purpose of an appeal bond is to secure _____.

A) the payment of money to the plaintiff

B) the following of a court order

C) the appearance of the defendant at sentencing

D) the compensation of the judges who hear the appeal

A scientific witness with a Ph.D. degree in a tort case plans to testify that the defendant must be liable
because "her nose is the nose of a violent person." This testimony _____.
A) cannot be excluded since the jury alone decides what witnesses to believe

B) cannot be excluded since the witness has an advanced education

C) can be excluded if the defendant has never acted violently in the past

D) can be excluded as junk science

Oscar discovers that the soft drink machine at his office will return his money and provide a drink can if
he hits the machine on the side while making a drink selection. If the owners of the soft drink machine
sues Oscar for their losses they can recover based upon the tort of _____.

A) strict liability

B) negligence

C) conversion

D) fraud


A customer accidentally overpays for merchandise and the store clerk keeps the excess money when she
discovers the excess money at the end of her shift. The clerk has committed a(n) _____ tort.

A) negligent

B) intentional

C) strict liability

D) No tort since the store was fully paid the listed price of the merchandise.

Determining whether or not the parties entered an agreement freely _____.

A) depends on the motives of each party

B) deals only with an agreement

C) will not enforce an outcome

D) is the underlying objective of contract law


The law presumes that anyone entering a contract has _____.

A) nothing better to do

B) legally surrendered negotiation

C) the legal capacity to do so

D) something to gain or receive

Maria offers to pay Alsad $100 if he makes and A in his business law class. While the business law class is
in progress, Maria's promise is _____.

A) unilateral and executed

B) unilateral and executory

C) bilateral and executed

D) bilateral and executory

Betty is awarded $10,000 damages against Ethyl in a damage suit arising from an auto accident. Betty
and Ethyl agree to the payment of this judgment at $100 per month. This payment agreement is
confirmed by the court and recorded. Betty and Ethyl now have a _____.

A) contract under seal

B) formal contract

C) contract of record

D) contract to contract

Phillip needs money and decides to paint Donna's house while she is out of town and bill her for the
work. Donna refuses to pay Phillip and Phillip sues. A court _____.

A) will not apply quasi contract doctrine

B) will apply quasi contract doctrine

C) might apply quasi contract doctrine if the painting were done very well

D) cannot apply quasi contract doctrine since Phillip and Donna did not have a written

Avia silently takes one candy bar each day from Jerry's candy store and pays for them at the end of the
week. On this particular day, Avia silently takes two candy bars from Jerry's candy store. At the end of
the week Avia only wants to pay for one candy bar since she believed that she should get one free for
being a good customer. A court will _____.

A) apply Avia's belief in resolving this dispute

B) be unable to resolve the dispute unless the parties agree

C) create a contract since no words were spoken

D) view Avia's actions as a reasonable person would have

Sarah purchases a car when she is a 15-year-old from OK Motors Inc. Sarah's contract is _____.

A) valid

B) void

C) voidable

D) unenforceable

Karaya contracts with Lance to have him mow her yard every two weeks while she spends the summer
in India. Lance only mows every four weeks and Karaya's yard looks very ugly. Karalya's neighbor, Zaya,
sues Lance for his failure to maintain Karaya's yard properly. A court will _____.

A) allow Zaya to sue since she sees the ugly yard next door

B) dismiss Zaya's suit since privity is lacking

C) allow Zaya to sue as an intended beneficiary

D) allow Zaya to sue as an incidental beneficiary

This theory of contract law focuses on the outward actions and the words of the parties:

A) will

B) equal value

C) good faith

D) formalistic


Jared, age 18, agrees not to smoke when his uncle Brandon, age 40, promises to pay him $1,000 for not
smoking until age 22. Will a court compel uncle Brandon to pay Jared $1,000 if Jared does not smoke?

A) No, because Jared has better health for having not smoked.

B) No, because uncle Brandon did not benefit from Jared's action.

C) Yes, because Jared and uncle Brandon are adults.

D) Yes, because Jared gave up a legal right.

Charlie tells Bo that he is looking for a new car. Bo says that he will sell Charlie his car for $12,000.
Charlie says he wants to think it over. In what stage of contract formation are Charlie and Bo?

A) negotiation
B) intention

C) acceptance

D) contract

How certain and definite must an offer be?

A) absolutely

B) somewhat

C) convencienly

D) reasonably

Alpha Inc. offers to purchase all the coal it needs from Mountain Mining Inc. Alpha and Mountain have
what type of agreement?

A) output

B) requirement

C) illusory

D) cost-plus

Janet promises to pay Roberto $20 to wash her car. Roberto may accept Janet's offer by _____.

A) promising to wash the car

B) specifying to wash the car

C) preparing to wash the car

D) washing the car


Norm offers to sell his horse to Gary for $1,000. Gary states that he accepts the offer provided Norm
includes a month of riding lessons. What is the legal status of Gary's statement?

A) counteroffer

B) acceptance

C) offer

D) implied acceptance

Cindi receives via FedEx a new DVD player that she did not order. What is Cindi's legal obligation?

A) none

B) hold the DVD player for a reasonable time

C) promptly return the DVD player

D) pay for the DVD player

Grandma Jones offers by mail to sell her house to Allen for $80,000. She dies unexpectedly. Allen sends
his acceptance the next day after her death. Is there an enforceable contract?

A) Yes, if Allen did not know of the death.

B) No, the death terminated the offer.

C) Yes, if Allen responded in a reasonable time.

D) No, since the death was unexpected.

Dexter is considering purchasing from Lisa a vacant lot and opening a fast food restaurant. However, he
heeds a month to obtain his financing. How may Dexter secure an enforceable offer to purchase the lot?

A) requirement contract
B) firm offer contract

C) option contract

D) security contract

Which of the following contains rules regarding cybercontract law:

A) The Uniform Electronic Transactions Act

B) The C-Sign Act

C) The Internet Contract Act

D) The Cyberspace Transactions Act


A cyberofferor should include the following terms in their offer:

A) payment criteria

B) liability disclaimer

C) return procedures

D) all of the above

In the granting of mutual assent, a "meeting of the minds" means that _____.

A) there were lengthy negotiations.

B) there is a complete understanding of all aspects of the agreement

C) both parties know the terms and have willingly agreed to be bound by them

D) both parties know the terms, have willingly agreed to be bound by them, and have had
a face-to-face meeting

Eva intentionally and falsely states that an old ring that she is selling to Julia was made in France. Julia, a
collector of French jewelry, pays $3,000 for the ring based upon these statements. Julia later learns that
the ring was made in Poland and is worth $6,000. May Julia successfully sue Eva for fraud?

A) No, because Julia has not suffered a loss.

B) Yes, because where the ring was made was a material fact to Julia.

C) No, because Julia was free to inspect the ring before purchasing it.

D) Yes, because Eva intentionally and falsely misstated a material fact.

Ichi covers the rust damage to a car he is selling to Henry with a new paint job. Henry does not ask about
rust damage. Has Ichi committed fraud?

A) No, because Henry didn't ask about rust.

B) Yes, because Henry cannot be expected to discover the rust.

C) No, because rusting is a natural process that Henry should understand.

D) Yes, because Ichi made the car look nicer than it really was.

In a case involving innocent misrepresentation, the court will allow _____.

A) damages

B) rescission and damages

C) rescission

D) rescission, damages, and an injunction

Beth contracts to sell Minda merchandise stored in a warehouse. Unknown to either person, the
warehouse burned the night before the contract was made, totally destroying the merchandise. In this
situation, Minda _____.

A) is bound to the contract

B) may successfully assert fraud

C) may successfully assert fraud and cancel the contract

D) may cancel the contract

Duress is characterized by _____ while undue influence is characterized by _____. What word goes in
each blank in order?

A) threats, pressure

B) pressure, threats

C) emotional appeals, mistaken beliefs

D) confusion, indecision

James operates the only gasoline station along a one hundred mile stretch of desert road and charges
four times the normal price for gasoline. A motorist purchasing gasoline from James _____.

A) experiences wrongful economic duress

B) experiences wrongful emotional duress

C) experiences wrongful undue influence

D) experiences no duress or undue influence

Bethany is an exceptionally persuasive sales representative. After signing a contract, customers

frequently feel that they were swept along without a meanful way to say no. Bethany has engaged in
A) undue influence

B) duress

C) both undue influence and duress

D) neither undue influence or duress

A fiduciary relationship involves _____.

A) trust

B) dependence

C) trust and dependence

D) trust, dependence, and domination


Aza and Ersaid both believe that a particular horse descended from a Kentucky Derby winner when in
fact the horse descended from a horse that came in last in the Kentucky Derby. This is most clearly an
example of _____.

A) mistake as to existence

B) mistake as to value

C) mistake as to description

D) mistake of law

Jay, age 16, purchases a new sports car with his inheritance from his grandfather. Nine months later he
wrecks the car, which is a total loss. What are Jay's disaffirmance rights in most states?

A) He may disaffirm.

B) He may disaffirm but must pay nine months rental value.

C) He may disaffirm but must pay the salvage value of the car.

D) He may not disaffirm.


LaVall, age 18, lives in a state in which the age of adulthood is nineteen. May she legally vote in a U.S.
Presidential election?

A) No, since adulthood in her state is nineteen.

B) Yes, since she is eighteen.

C) No, since it would be an unreasonable burden to separate federal and state elections.

D) Yes, since she pays federal income taxes on her wages.

A minor may become emancipated by _____.

A) giving up all parental support

B) a legally sanctioned court procedure

C) giving up all parental support or by a legally sanctioned court procedure

D) only becoming married or joining the armed forces

What constitutes as necessary _____.

A) is the same for all minors

B) varies according to local standards

C) varies according to the age of the minor

D) varies according to the minor's social status

Leo, age 16, has his wisdom teeth removed by Jane, a local dentist. Jane charges Leo $1,200 while most
dentists would have charged $900. Leo must pay _____.
A) $1,200

B) $1,050

C) $900

D) nothing if he disaffirms the contract

Margarita does not like the dinner her parents have prepared and leaves the house to purchase a $50
steak dinner at a local restaurant. How much must Margarita's parents pay the restaurant if Margarita
refuses to pay anything?

A) $50

B) a reasonable price

C) an amount to be determined in arbitration

D) nothing

Hector, age 16, decides to get free use of a computer by purchasing it and later disaffirming the
contract. Hector is using minority as _____.

A) a sword

B) a shield

C) both a sword and a shield

D) neither a sword or a shield

A minor may disaffirm a contract _____.

A) only while a minor

B) only after becoming and adult

C) both while a minor and after becoming an adult

D) only with the permission of a court

Which of the following circumstances always produces a lack of contractual capacity?

A) mental retardation

B) brain damage

C) drinking

D) appointment of a guardian


Vonnie appeared normal but in fact is mentally incompetent. If she decides to disaffirm a contract,
Vonnie _____.

A) has no obligation beyond disaffirming

B) must return all consideration received

C) must pay a reasonable price for any goods or services she received

D) must petition a court for permission to disaffirm

Woody promised to leave his twelve-year old niece, Matilda, a sufficient amount of money in his will to
enable her to attend college for four years. Matilda studied hard and dreamed of college life. However,
when Woody died, his will did not mention Matilda. What legal remedies, if any, does Matilda have?

A) She may sue Woody's estate for breach of contract.

B) She may sue Woody's estate under a quasi contract doctrine.

C) She may sue Woody's estate for a violation of public policy.

D) She may not sue.

Grandise advertised a $100 reward for the return of her lost high school ring that had her name
engraved on it. Mike found the ring at the city library and returned it to Grandise without knowing of
the reward. Grandise gave Mike nothing when he returned the ring but Mike sees the advertisement
later that day. What are Mike's legal rights?

A) Mike may collect the reward since he met the terms of the advertisement.

B) Mike provided past consideration and may not collect the reward.

C) Mike may collect the reward based upon promissory estoppel.

D) Mike did not have a written contract and may not collect the reward.

Tisha promises to pay the apartment rent due under her current lease if the landlord constructs covered
parking for her car. The landlord agrees. Tisha's promise to pay rent ____.

A) provides consideration for the landlord's agreement.

B) is not consideration for the landlord's agreement.

C) provides consideration only to the extent that the landlord has begun construction.

D) is not consideration but rather a firm offer under the UCC

Who makes a firm offer under the UCC?

A) any seller

B) any buyer

C) any merchant making an offer

D) any merchant making an acceptance

Promissory estoppel involves _____.

A) principles of justice and fairness

B) an analysis of the terms of the contract between the parties

C) an analysis application of what is customary

D) an analysis application of federal legislation

Dorinda's debt has been discharged by bankruptcy. When is Dorinda legally obligated to pay the debt?

A) Never.

B) When state law provides the obligation to repay.

C) When a court imposes the debt.

D) When reaffirmation occurs as provided by federal law.

Historically, a contract under seal _____.

A) required no consideration

B) required monetary consideration only

C) required equal value consideration

D) required all parties to swear to perform the contract.

An accord and satisfaction may be created _____.

A) if any partial payment is accepted by a creditor

B) if the debt is honesty in dispute

C) if the debt exceeds $500 and is evidenced by a written contract

D) if the debt is past due


The equal value exchange theory _____.

A) is still applied today to all contracts

B) is still applied today to contracts under seal

C) ended with the Industrial Revolution

D) allows the parties to determine what is equal value


The legal term used to describe the gain that each party to a contract experiences is _____.

A) legal detriment

B) legal full faith and credit

C) legal benefit

D) legal standing

Frankie and Johnie agree to rob banks and equally divide the proceeds. Frankie dies in a robbery
shootout and Frankie's heirs sue Johnie to force a division of the robbery proceeds. A court will _____.

A) enforce the agreement since the heirs are innocent of any wrong doing

B) only enforce the agreement to the extent of meeting any enforceable contracts that
Frankie had with his heirs

C) not enforce the agreement

D) not enforce the agreement above $500 of proceeds

If Clifford borrows $1,000 to cover his gambling debts and agrees to repay $2,000 one week later,

A) the agreement is enforceable if Clifford were not coerced

B) the agreement is usurious

C) the agreement is unconscionable if Clifford does not understand it

D) the agreement is void for vagueness

If Chester does not have a real estate license in Tennessee, Chester _____.

A) nevertheless, may collect a commission for selling a house in Tennessee

B) may collect a commission for selling a house in Tennessee if the seller knew Chester was

C) may not collect a commission for selling a house in Tennessee

D) may not collect a commission for selling a house in Tennessee for more than the
average market price

Laws prohibiting contracts being made of Sunday are _____.

A) uniform throughout the U.S.

B) determined by the federal Congress

C) subject to local option in some states

D) nonexistent today

Which of the following is not an agreement to obstruct justice?

A) Paying an official to grant a pardon.

B) Paying a witness to give false testimony.

C) Paying a potential witness to move to Europe.

D) Paying a police officer to lose damaging evidence.


Helen, who is broke, gives all her remaining property to her grandson, William, and then Helen files for
bankruptcy. What, if anything, may Helen's creditors do?

A) Nothing.

B) Ask the court to void the transfer of property.

C) Seize the property from William.

D) File criminal charges against William.

Martha pays Hector $10,000 with a signed agreement so that Hector will not purchase and open a fast
food franchise during the next three years within two miles of Martha's restaurant. This agreement is

A) enforceable

B) enforceable if considered reasonable

C) enforceable only if there are other restaurants currently open within two miles of
Martha's restaurant

D) not enforceable

Omar, who is angry with the entertainment industry, purchases state-of-the-art copying equipment and
freely allows anyone to use the equipment to make copies of movies, music, and video games. Omar

A) is guilty of contributory copyright infringement

B) is not guilty of violation since he did not personally make the copies

C) is exercising his right to fair use

D) is producing legal derivative works

Harriet and Jane agree to engage in an illegal agreement to avoid paying sales tax. Harriet and Jane will
be said to be _____.

A) not in pari delicto

B) not in pari delicto if the sales tax rate is immeasurable

C) not in pari delicto if they gave the savings to charity

D) in pari delicto


A restrictive employment must be reasonable as to _____.

A) time

B) geographic area

C) both time and geographic area

D) neither time nor geographic area

1. Lata leases an apartment for fifteen months. Lata's lease contract _____

A) must be written.

B) need not be written since there is not a sale of land.

C) must be written only if the rent exceeds $500 per month.

D) need not be written if Lata pays rent monthly.

Martin agrees to build a pipeline for Henry to pipe water from Henry's windmill to Henry's house, one
hundred yards away. This agreement _____

A) involves a transfer of real property rights.

B) involves specially manufactured goods.

C) does not involve a transfer of real property rights but does involve specially
manufactured goods.
D) does not involve a transfer of land nor specially manufactured goods.

Deepti, an executor of his deceased uncle's estate, orally agrees to pay his uncle's debts to protect the
honor of the family. Deepti _____

A) is bound by his oral agreement.

B) is not bound by his oral agreement.

C) is bound by his oral agreement to pay debts that are less than $500.

D) is not bound by his oral agreement if his work as an executor takes longer than one

When a customer makes an order for items he does not have available in his store, Omar writes up an
invoice and has the customer sign it. The invoice _____

A) will be a sufficient writing to satisfy the Statute of Frauds.

B) will not be a sufficient writing to satisfy the Statute of Frauds.

C) will be sufficient writing to satisfy the Statute of Frauds only if this is customary in
Omar's line of business.

D) will not be a sufficient writing to satisfy the Statute of Frauds unless the customer's
signature is acknowledged.

The standard construction rule _____

A) only applies to real estate contracts.

B) only applies to sale of goods contracts.

C) applies to all contracts.

D) applies to all contracts only when the contract price exceeds $500.

Fatima signed a written contract because she was threatened with death if she did not sign. The Parol
Evidence Rule _____

A) does not allow testimony concerning duress.

B) does allow testimony concerning duress.

C) requires Fatima to have witnesses to the threats that she says constitutes duress.

D) requires the contract to exceed $500 before testimony concerning duress may be given.

Sue orally agrees to sell Sam $350 of computer cables. Subsequently they agree to modify the sale to
$575 of computer cables. Which of the following statements is false?

A) The original oral agreement is enforceable.

B) There can be evidence of the modification introduced in court.

C) There can be more than one modification to a contract.

D) The modification need not be written.

The Best Evidence Rule requires _____

A) testimony by the original parties to a contract.

B) testimony by the notary who acknowledged the signatures on a contract.

C) the original of a writing be introduced into evidence.

D) a witness to the signatures to testify in court

Facsimile signatures on a contract are _____

A) never valid.

B) always valid.

C) valid or not depending on federal law.

D) valid or not depending on state law.


In some states today a seal _____

A) furnishes consideration in a contract.

B) is used when a formal contract is signed.

C) both furnishes consideration in a contract and is used when a formal contract is


D) is required whenever a minor enters into a contract.

A person who must perform under a contract is a a(n) _____

A) assignor.

B) assignee.

C) obligor.

D) beneficiary.

Ichi names a friend, Myra, as a _____ beneficiary on his life insurance policy.

A) creditor

B) donee

C) incidental

D) death

Who has the legal responsibility to give notice of an assignment?

A) assignor

B) assignee

C) obligator

D) obligatee

4 Omar, a world-famous cricket player, contracts to give cricket lessons to Alan. Omar attempts to
delegate his duties under the contract to Cedrick, a competent, but not world-famous, cricket player.
This delegation of duties will _____

A) be valid.

B) be valid only if Alan is a beginning cricket player.

C) not be valid if Alan and Cedrick cannot get along.

D) not be valid due to Omar's unique skills.

Tom's promise to repair Samantha's truck in exchange for Samantha's promise to baby sit for Tom's
cousin Jane creates _____

A) an assignment.

B) a delegation.

C) a third party beneficiary contract.

D) an unconscionable contract.

A contract is typically not assignable if it involves _____

A) personal services.

B) the sale of goods.

C) the sale of land.

D) an oral contract.

Jason rented Janice's apartment under a one year lease. Six months into the lease Jason is transferred to
another city but his friend Patricia needs an apartment and is willing to assume Jason's lease. What
process will release Jason from any further liability under his lease with Janice?

A) An assignment by Jason to Patricia.

B) A delegation by Jason to Patricia.

C) A novation involving Jason, Patricia, and Janice.

D) Jason is liable under the end of his lease under all circumstances.

Tammy borrows money from Big Bank to purchase a house. She then sells the house to Felix who agrees
to make the payments to Big Bank. Which of the following statements is true?

A) Tammy's agreement with Felix releases her from liability to Big Bank.

B) Big Bank may validly object to the agreement between Tammy and Felix.

C) Big Bank is a creditor beneficiary of the agreement between Tammy and Felix.

D) Tammy cannot sell the house as long as she owes Big Bank.

When a contract is assigned _____

A) consideration is required.

B) no person may object.

C) the assignment creates a new contract.

D) if there is no consideration the assignor may repudiate the agreement prior to its

An assignment is valid _____

A) at the time it is made.

B) only when in writing.

C) only when notice of the assignment is given to the obligor.

D) only when the obligor consents to the assignment.

1 Tana agreed to repair the foundation of Marcus' house for $5,000 but failed to do the job and Marcus
found someone else who charged $7,000 to do the work. If Marcus sues Tana a court will likely award
him _____

A) actual damages in the amount of $7,000.

B) compensatory damages in the amount of $2,000.

C) punitive damages in the amount of $12,000

D) consequential damages in the amount of $5,000

What occurs in a termination by a waiver?

A) Both parties give up contractual rights.

B) Bother parties agree to replace an existing contract with a new contract.

C) One party gives up a contractual right.

D) One party terminates his or her contractual obligations.

Poqisa contracts to sell her antique sports car to Iris for $50,000 but later decides that she wants to keep
the car. Iris wants the car. What legal remedy is available to her?

A) specific performance
B) compensatory damages

C) punitive damages

D) liquidated damages

After his grandson Bob borrows $10,000 from Marcus, Marcus wants to completely release Bob from
any liability or the debt. Marcus should give Bob a _____

A) general release.

B) novation.

C) termination by terms of the contract.

D) tender of obligation.

Bailey's Construction Co., contracted to build a $12 million building for Friendly Finance Co., but failed to
install $3,000 of wooden cabinets called for by the contract. What legal rights does Friendly have?

A) None, as the missing cabinets are a minor detail.

B) Friendly may sue for specific performance.

C) Friendly may cancel the entire contract.

D) Friendly may demand reimbursement to install the cabinets.

Dorinda accepted a position at an accounting firm with the understanding that she will pass all sections
of the CPA exam or the employment offer is withdrawn. What is the legal status of the CPA exam
passage requirement?

A) condition subsequent

B) condition concurrent

C) condition precedent
D) performance barrier

An opera singer agrees to be a guest performer with a local group provided that her voice is sound.
When she gets the flu she cancels her performance. How have her contractual obligations been

A) by mutual recession

B) by terms of the contract

C) by operation law

D) by general release

Alfred contracts with Foliage Tours Inc., to take a bus tour of the northeast to see the fall leaves in full
color. Due to an early start of the winter and violent storms there are no fall leaves to see. What legal
doctrine releases Alfred from his contract?

A) commercial impractability

B) abandonment

C) substantial performance

D) frustration-of-purpose

Zoltan is contractually obligated to deliver merchandise by December 1 for Big Stores Christmas sale but
on October 1 Zoltan informs Big Stores that he will not meet that delivery deadline since he can get a
better price for the merchandise from another customer. What legal rights does Big Stores have on
October 1?

A) None, since December 1 is when delivery is to occur.

B) Big Stores may sue immediately for breach of contract.

C) Big Stores must wait a commercially reasonable time before taking any action.
D) Big Stores may seek alternative suppliers but must allow Zoltan to match their terms.


Outdoor Adventures contracts to buy ten tents from Tent Manufacturing with a May 1 delivery date.
Tent Manufacturing knows that Outdoor Adventures anticipates using the tents on May 15 to take
clients mountain climbing but delays delivery until June 1. The contract does not state that "time is of
the essence." What legal remedies are available to Outdoor Adventures if they have to cancel their May
15 client contracts?

A) compensatory damages only

B) compensatory and incidental damages only

C) compensatory, incidental, and consequential damages only

D) compensatory, incidental, consequential, and punitive damages

Newman offers at auction a gold watch with a fair market value of $10,000 but the highest bid is $1,000.
Newman may legally _____.

A) not reject the high bid

B) reject the high bid

C) insist that the bidder pay at least 50% of the fair market value

D) sue the auctioneer for the $9,000 balance

The seller's cousin Bud secretly bid $10,000 at an antique auction to raise the price. The buyer Helen bid
$8,000 and ultimately $12,000 to buy the item. If there is a sale, what is the price?

A) There is no sale and no price.

B) There is a sale for $8,000.

C) There is a sale for $10,000.

D) There is a sale for $12,000.


This transaction involves a transfer of title but no price:

A) sale

B) consignment

C) gift

D) bailment

Under the UCC the following contracts contain an obligation of good faith:

A) those involving a merchant

B) those involving a price above $500

C) those involving a consumer

D) every contract

This party may make a "firm offer."

A) merchant buyer

B) merchant seller

C) merchant buyer or seller

D) any party

Red contracts to sell Brown $300 of merchandise. Subsequently they amend the contract to include
loading the merchandise onto Brown's truck. Is this modification legally binding?

A) Yes.

B) No.
C) Yes, if both Red and Brown are merchants.

D) Yes, if Brown pays extra for loading.

The Reading Club orally orders $600 of T-shirts to be made by Shirt City containing the club name and
date of National Reading Week. Is this oral agreement legally enforceable?

A) No, since the price exceeds $500.

B) Yes, since Shirt City is a merchant.

C) No, since the Reading Club is not a merchant.

D) Yes, since the T-shirts are specially manufactured goods.

King Donut Co., orally orders a ton of flour for $550 from General Grain Co. who delivers it to King's
warehouse. King's donut sales fall and King demands that General Grain rescind the contract. Is King
legally entitled to rescind the agreement?

A) Yes, since it exceeded $500.

B) No, since the contract was executed.

C) No, since an implied condition of every contract is that goods be useful to the buyer.

D) Yes, since both parties are merchants.

How much detail must be contained in a written contract for the sale of goods?

A) Subject matter and parties only.

B) Subject matter and quantity only.

C) Subject matter, quantity, and parties only.

D) Subject matter, quantity, parties, and price.


CISG has what writing requirement of a sale of goods contract?

A) Written if above $500 in price.

B) Written if above $1,000 in price.

C) Written if above $5,000 in price.

D) It need not be written.

Joe stole Adia's DVD player and sells it to Tom who resells it to Alice. Tom and Alice knew nothing about
the theft. May Adia recover her DVD player?

A) No, since Alice is an innocent buyer.

B) Yes, since the DVD player does not qualify as a fungible good.

C) No, since stolen goods may only be recovered from the thief or the first person to buy
from the thief.

D) Yes, since it was stolen.

Gloria presents a false financial statement to Tom and persuades him to sell her goods on credit that she
resells to her customers. May Tom recover the goods from Gloria's customers?

A) Yes, since Gloria had a void title.

B) No, since Gloria had voidable title

C) Yes, since Gloria engaged in theft by instrument.

D) No, since Tom sold the goods to a merchant.

Zelda stored her fur coat with Coat Warehouse Co. who sold the fur coat to Yani, a customer. What
rights does Zelda have against Coat Warehouse Co.?

A) None.

B) A suit for specific performance only.

C) A suit for monetary damages only.

D) A suit for both specific performance and for monetary damages.

Inkem, living in Kansas City, contracts to sell goods to Javid who lives in Cedar Rapids. Delivery is to be
f.o.b. Kansas City via Red Line freight Co. Inkem takes the goods to the Red Line terminal on Saturday
afternoon, but is closed. Inkem stacks the cartons on Red Line's loading dock. On Sunday the goods are
stolen from Red Line's loading dock. What party has the risk of loss?

A) Inkem, since he did not deliver the gods to the carrier.

B) Javid, since this was a shipment contract.

C) Inkem, since this was a destination contract.

D) Javid, since he assumed the risk of Inkem's actions.

Madison, a St. Lousi seller, contracts to sell goods to Dolly, a Boston buyer, with delivery to be f.o.b.
Boston. The goods arrive in Boston on May 1 and the carrier attempts to contact Dolly who has gone on
vacation and does not return the carrier's May 1 voice mail message until May 7. When Dolly goes to the
carrier's terminal on May 7, the goods cannot be found. What party has the risk of loss?

A) Madison since this was a shipment contract.

B) Madison since Dolly did not receive notice until May 7.

C) Dolly since a reasonable time had passed since the May 1 notice for her to pick up the

D) Dolly since this was a shipment contract.

Goods are shipped without specifying if the shipment is to be a shipment or a destination contract.
What is the contract presumed to be?

A) destination contract

B) shipment contract
C) Evidence of trade usage will determine.

D) Neither, but the risk of loss remains on the seller until physically delivery to the buyer

Title to fungible goods held in bulk transfers when _____.

A) an undivided store is sufficiently identified

B) the goods are physically separated from the bulk

C) the holder acknowledges the sale

D) the buyer agrees to accept title

Charles gives Betty an ACE Warehouse receipt to goods that he has contracted to sell Betty. Charles has
the goods stored in an ACE Warehouse. When does risk of loss transfer to Betty?

A) When Betty obtains physical possession of the goods.

B) When Charles tells Betty where the goods are located.

C) When Betty verifies that the goods are in the warehouse.

D) When Charles gives Betty the warehouse receipt.

A buyer accepts a delivery of goods on May 1. Unpacking the goods on May 2 the buyer discovers that
the goods do not conform to the contact and notifies the seller that acceptance is revoked. On May 3
while the goods are still in the buyer's possession the goods are destroyed by fire. Who has the risk of
loss if the buyer has insurance coverage?

A) The buyer's insurance covers the loss.

B) The buyer since the goods had been accepted.

C) The seller since nonconforming goods were sent.

D) The seller since the buyer had revoked acceptance.


Charles obtained goods from Helen to display in his shop with the understanding that goods that were
unsold could be returned. When returning the goods some items had slight damage due to customers
having picked them up to examine them. Is Charles obligated to pay Helen for this damage?

A) Yes, since the goods must be returned in the same condition as they were received.

B) No, since ordinary wear and tear is allowable.

C) Yes, since Charles assumed all risk of loss.

D) No, since Helen assumed all risk of loss.

The parties to a sales contract may amend the statute of limitation in the following manner; _____.

A) extend it beyond four years

B) reduce it to one year

C) either extend it beyond four years or reduce it to one year

D) the parties may not amend the statute of limitations unless the attorney for each party
approves the change

A buyer of goods may sue the seller for specific performance if _____.

A) the goods exceed $500 in price

B) the goods are perishable

C) the goods are unique

D) the goods are subject to a contract under seal

In a $5,000 sale of goods contract, Ally and Jennifer agree that the damages shall be $300 if either party
breaches the contract. These damages _____.

A) are never enforced by the courts

B) must be approved by a trustee

C) must be customary in the trade

D) are called liquidated damages

On May 1 the seller breaches a contract with a contract price of $50 per case. The price of the goods
rises to $55 per case by May 15 and $75 per case by June 1. By June 15 when the buyer covers the price
is $100 per case. The buyer is entitled to for _____ per case.

A) $100

B) $50

C) $25

D) $5

A buyer breaches a contract and the seller decides to resell the goods. The sale may be _____.

A) only public

B) only private

C) public or private

D) public, private, or judicial

A contract calls for delivery to occur on June 1 but on May 1 the seller indicates that she will not deliver
the goods. The buyer may _____.

A) seek another source of goods

B) not take action until after June 1

C) seize the goods if this may be done without a breach of the peace

D) file criminal charges

Dan rejects nonconforming goods but refuses to tell the seller, Jody, precisely what problem makes the
goods nonconforming. Dan _____.

A) may seek legal recourse against Jody

B) may not seek legal recourse against Jody

C) may request that Jody make a second shipment

D) may not act after ten days from having received the nonconforming goods

A merchant buyer who rejects nonconforming goods _____.

A) may have a legal duty to resell the goods

B) never has a legal duty to resell the goods

C) may have the right to cure the nonconformity

D) always is entitled to monetary damages

A buyer _____ has a right to inspection before paying for goods.

A) always

B) never

C) usually

D) seldom

Tonka Manufacturing delivers oil well pipe to a petroleum drilling rig a 4AM. This delivery _____.

A) is not at a reasonable hour

B) may be at a reasonable hour

C) may only be made at a time precisely specified in the sales contract

D) is not in accordance with the perfect tender rule

An express warranty may include _____.

A) statements made by trade associations to the media

B) models contained in museums

C) the reasonable expectations of consumers

D) statements found inside a package

Meghan never uses the words "warranty" or "guarantee" when she sells her products _____.

A) but may still be creating warranties

B) so she is not creating any warranties

C) so she cannot be a merchant seller

D) but may be illegally selling products without Magnuson-Moss Act approval

Fast Auto Parts advertises a "Money-Back Guarantee" for a car wax but states in the advertisement that
the container that the wax is in must be returned unopened to receive a full refund of the purchase
price. This advertisement _____.

A) is allowed by Federal Trade Commission rules

B) is allowed in states that by legislation have overridden Federal Trade Commission rules

C) is not allowed by Federal Trade Commission rules

D) is only subject to state, not federal, regulation

Under the Magnuson-Moss Warranty Act, when a written warranty is given to a consumer on goods
costing more than _____, the warranty must disclose whether it is full or limited.

A) $5

B) $10

C) $15

D) $20

Veronica tells Antonio, a hardware store owner, that she needs "heavy duty rope" and Antonio
recommends on inch nylon rope. Veronica attempts to pull a two ton truck out of the mud with the rope
and the rope breaks causing serious damage to the truck. Antonio has _____.

A) breached the implied warranty of fitness for a particular purpose

B) breached the implied warranty of use

C) breached an express warranty created by his recommendation

D) breached no warranty

Kaitlyn sells thoroughbred race horses. Documents of pedigree are customary. Kaitlyn contracts to sell a
thoroughbred race horse but the contract says nothing concerning documents of pedigree. Are such
documents included in the sale?

A) Yes, because of usage of trade.

B) No, since they are not mentioned in the contract.

C) Yes, since Kaitlyn is a merchant.

D) No, since the buyer must indicate that the purchase is conditioned upon receiving the
documents of pedigree.

Chloe wants to exclude the implied warranty of fitness for a particular purpose when she sells goods.
Chloe must _____.

A) put the exclusion in writing

B) make the exclusion conspicuous

C) both put the exclusion in writing and make the exclusion conspicuous

D) use any reasonable method

Ryan does not turn on the television that he purchases at a pawn show even thought the pawn shop
owner asks him to. When Ryan turns the television set on at home, the picture constantly rolls. What
implied warranty has the pawn shop breached?

A) merchantability

B) fitness for a particular

C) title

D) none

Dylan purchases a ladder from Bigger Hardware Co. The ladder breaks while Dylan's wife is climbing on
it. Dylan's wife _____.

A) lacks privity of contract with Bigger Hardware

B) may not sue Bigger Hardware for a breach of contract

C) is not a foreseeable user of the ladder

D) can sue Dylan for having a defective ladder

In a strict liability case the plaintiff need not prove _____.

A) lack of reasonable care

B) that the seller was engaged in the business of selling the product

C) that the consumer sustained physical harm or property damage

D) that the product was unreasonably dangerous

Robert contests a charge on his credit card bill but the credit card company states that this will take
considerable time to investigate. How long does the credit card company have to make a decision?

A) 30 days

B) 60 days

C) 90 days

D) 120 days

Noah is told by Big Boats that their boat is the best fishing boat made. Noah buys a Big Boat and
discovers numerous defects and that Big Boat has been the subject of many consumer complaints and
suits. What legal rights does Noah have if any?

A) None since the "best fishing boat made" is sales talk.

B) Statements made about product durability and reliability may be fraudulent


C) None since Noah made the decision to buy without undertaking adequate research.

D) Statements about product durability and reliability must be verified by independent

research before they may be made.

Jackson sells his 1970 Ford to Marilyn. Jackson _____.

A) need not provide an odometer statement

B) must provide an odometer statement

C) need not provide an odometer statement unless Jackson claims that the car has less
than 100,000 miles

D) must provide both an odometer statement and a Buyer's Guide

Marissa buys $20 of fruit from a door to door sales representative. Marissa ____.

A) is entitled to cancel within three business days of the sale

B) is entitles to cancel within three calendar days of the sale

C) is entitled to cancel as long as the fruit has not gone bad

D) is not entitled to cancel

Tom orders a book from Elm Co. by telephone. No time is stated for shipment. How quickly must the
book be shipped?

A) 14 days

B) 30 days

C) 45 days

D) 60 days

The following category of discriminations is not prohibited under the Equal Credit Opportunity Act:

A) race

B) credit history

C) sex

D) religion

A credit card holder can avoid the $50 liability if the credit card issuer has not included on the card

A) an 800 number to report loss or theft

B) a method to identify the user of the card

C) a method to identify unusual charges

D) a limitation of liability notice

Besides the debtor, a debt collect may lawfully contact ______.

A) the debtor's spouse

B) the debtor's attorney

C) the debtor's employer

D) the debtor's spouse, attorney, and employer

The Federal Trade Commission regulates _____.

A) interstate commerce

B) intrastate commerce

C) both interstate commerce and intrastate commerce

D) interstate, intrastate and foreign commerce


A class action lawsuit based upon a deceptive trade practice usually must be brought within _____ of
the violation.

A) 180 days
B) one year

C) two years

D) three years

Personal property consists of the following kinds:

A) tangible and intangible

B) tangible, intangible, and chattels

C) tangible, intangible, chattels, and choses in action.

D) tangible, intangible, choses in action, and real estate

Community property is not _____.

A) personal gifts

B) personal inheritances

C) personal gifts and personal inheritances

D) personal gifts, personal inheritances, and personal earnings

Sihan witnesses a shipwreck and helps offload the cargo. What law governs this situation?

A) The law of finds

B) The law of salvage

C) The Abandoned Shipwreck Act

D) The law of abandoned property

The Uniform Transfer to Minors Act (UTMA) allows the following types of property to be transferred to a
custodian for the minor's benefit:

A) tangible

B) intangible

C) tangible and intangible

D) tangible, and intangible but not real property

A gift given in contemplation of death is called a(n) _____.

A) gift in causa mortis

B) gift inter vivos

C) inheritance

D) conditional deathbed gift

Jayce marks his invention "patent pending." This give Jayce _____.

A) the right to damages against infringers

B) the right to an injunction against infringers

C) the right to both damages and an injunction against infringers

D) no legal rights

This treaty provides for centralized filing procedures and a standardized application form:

A) Paris Convention for the Protection of Industrial Property

B) Patent Cooperation Treaty

C) Paris Patent Cooperation Treaty

D) Bern Treaty on Coordinated Filings

Charissa wants to create a protectable trademark for her small local business. This can be done _____.

A) under common law

B) under a state statute

C) under the Federal Trademark Act

D) under common law, state statute, or the Federal Trademark Act

Morgan wants to trademark the phrase "Red Rampage" for his video basketball game, but is concerned
that it may be too similar to the phrase "Red Raiders." How is this issue resolved?

A) Trademark Office decides if likely to cause confusion.

B) Trademark Office decides if literally the same or not.

C) Trademark Office decides what is reasonable.

D) Trademark Office holds a drawing for the phrase.


Jose seeks a common law trademark on the term "mountain peak" to identify his line of mountain
climbing equipment. To successfully do so Jose must demonstrate _____.

A) the phrase is associated with mountain climbing equipment

B) the phrase is descriptive of an activity

C) the phrase has a secondary meaning associated with his equipment

D) the phrase is not unreasonable

1 To enforce a warehouse's lien against a merchant who stored the goods in the course of
business, the warehouse _____.

A) must give notice to all persons known to claim an interest in the goods
B) must advertise the pending sale in a local newspaper and give notice to all persons
known to claim an interest in the goods

C) must only give notice to the merchant who stored the goods

D) need not give any notice

For travel wholly within the United States, the maximum liability of an aircraft for lost luggage is _____
per passenger.

A) $1,000

B) $1,500

C) $2,500

D) $3,000

If a common carrier is not paid the shipping charges due, the carrier may _____.

A) sue for compensatory and punitive damages

B) sell the goods at public sale

C) sell the goods at private sale

D) transfer title of the goods to the Interstate Commerce Commission

Motor Transport Co., a common carrier, hauls cars and trucks. Maggie wants Motor to transport her car
and her household furniture. Motor _____.

A) may refuse Maggie's entire shipment

B) must accept Maggie's entire shipment

C) may refuse to transport the car

D) may refuse to transport the furniture


Happy Hotel has a fire caused by a guest burning candles in her room. Regarding damages to other
guest's property, Happy Hotel _____.

A) is not liable as an insurer

B) is liable as an insurer

C) is not liable as an insurer but must have posted a sign in all rooms prohibiting burning

D) is liable as an insurer unless this event were unforeseen

Jackson rents a lawnmower from Rental Inc. and for the first time uses the lawnmower to grind
sandstone rock into sand. Rental's contract said the lawnmower was to be used to cut grass but did not
permit this use. If the lawnmower is damaged, Jackson _____.

A) is not liable since Jackson had not done this before

B) is liable

C) is only liable if Rental can prove that Jackson knew that damage would result

D) is not liable since this use was not prohibited

"Reasonable care" is the degree of care that a _____ person would use under the same circumstances
and conditions.

A) ordinary

B) careful

C) reasonable educated

D) reasonably prudent

Venus rents a car from ABC Rental Inc. and a tire blows out while the car is being driven 45 miles per
hour in a 20 mile per hour school zone. Who is legally responsible for the blow out?

A) Venus

B) ABC Rental

C) Both Venus and ABC Rental

D) Neither Venus nor ABC Rental

Conversion is a _____.

A) tort

B) breach of contract

C) theft

D) transformation of the property into something else


Chin rents a Blunderbuss car from Acme Enterprise to drive Annie to a family reunion. What party is the

A) Annie

B) Acme Enterprise

C) Blunderbuss

D) Chin

In a community property state, a spouse who dies with a will _____.

A) transfers his or her property interests to a surviving spouse

B) transfers his or her property interests to whomever he or she names in the will
C) transfers a life estate to the surviving spouse with the remainder to the children

D) transfers his or her property interest to the state

Diana is in a joint tenancy with Silvia. Diana's will leave all her property to Peter. When Diana dies, her
interest in the joint tenancy goes to _____.

A) Silvia

B) Peter

C) Silvia and Peter in equal shares

D) the state

A life estate may be created by _____.

A) deed

B) will

C) law

D) deed, will, or law

Mark has the right to enter Viola's land and remover cedar wood to make cedar chests. Mark owns a(n)

A) easement

B) profit a prendre

C) license

D) right of dominion

At its earliest stage of existence, a fixture is _____.

A) real property

B) a license

C) personal property

D) an easement

Tonto digs a ditch so that rainwater drains on his neighbor Billy's vacant lot. This action requires _____.

A) a drainage easement

B) Billy's permission

C) Billy's permission and a drainage easement

D) a governmental permit

A small stream separates the property of Ronald and Amie. The boundary line is considered to be _____.

A) the center of the stream

B) the bank on each side of the stream

C) the low water mark of the stream

D) the high water mark of the stream

Donald flies his airplane very close to Francis' building. What is navigable airspace over populated areas?

A) 250 feet

B) 500 feet
C) 750 feet

D) 1,000 feet

Which of the following is not real property?

A) growing crops

B) fences

C) trees

D) buildings


Eminent domain may be available to a(n) _____.

A) telephone company

B) city

C) telephone company and a city

D) telephone company, city, and real estate developer

A landlord may take what actions to evict tenants? The landlord may _____.

A) use reasonable force

B) threaten the use of force

C) peacefully take possession of the premises

D) peacefully take possession of the premises or use reasonable force or the threat of
reasonable force

Which of the following eviction proceedings is more rapid?

A) Ejectment

B) Unlawful detainer

C) Ejectment and unlawful detainer are equally rapid.

D) This depends on factual matters so no general statement is possible.

Forcible eviction at the end of a court proceeding is accomplished by _____.

A) the Sheriff

B) the landlord

C) the moving company

D) the U.S. Marshall's service

Which of the following gives more legal rights to a landlord?

A) A license

B) A lease

C) Both a license and a lease give equal rights to the landlord

D) Only the tenant has rights under either a lease or a license

Which leasehold estate grants no legal rights to the tenant?

A) tenancy at will

B) tenancy for years

C) periodic tenancy

D) tenancy at sufferance

If a landlord accepts rent from a tenant for years whose lease has expired, a _____ is created.

A) tenancy at will

B) tenancy for years

C) periodic tenancy

D) tenancy at sufferance

What general legal rules apply to a lease?

A) tort

B) contract

C) constitutional

D) property

Rent control is designed to _____.

A) keep rent increases at the rate of inflation

B) keep apartment

C) keep rents affordable

D) keep new apartment construction continuing

Security deposit legislation covers _____.

A) residential leases
B) commercial leases

C) residential and commercial leases

D) all leases and license agreements


Quiet enjoyment means that the tenant _____.

A) will not be disturbed by noisy neighbors

B) will have undisturbed possession

C) will enjoy the rental premises

D) will not disturb other tenants

For a charitable trust to be valid, the identity of the person to be benefited must be _____.

A) certain

B) uncertain

C) reasonable

D) named

The rule against perpetuities requires the property to be owned by the beneficiary outright not later
than _____ years after the death of some person alive at the creation of the trust.

A) 18

B) 21

C) 50

D) 100

Probate occurs _____.

A) by agreement of all the heirs

B) by action of law when a death certificate is issued

C) under court supervision

D) under the supervision of private properties

The Uniform Simultaneous Death Act states that, when a husband and wife die simultaneously, property
owned jointly by both of the deceased is distributed _____.

A) equally

B) to the heirs of the oldest individual

C) to the heirs of the husband

D) to the heirs of the wife

Escheat occurs only when _____.

A) there is no will

B) there is no surviving spouse, issue, or kindred

C) there is no will and no friends

D) there is property in excess of $50,000 and no will, surviving spouse, issue, or kindred

6 Tom, a resident of Alabama, dies without a will while owning land in Colorado. His heirs live in
Nevada. The land passes according to the laws of _____.

A) Alabama

B) Colorado

C) Nevada
D) Alabama, Colorado, and Nevada

Undue influence causes the individual to be _____.

A) under duress

B) incompetent

C) afraid for their life

D) unable to express their real intentions

John is adopted. Jill is a natural child. Afred is a stepchild. Which will inherit from the adults who care for

A) John and Jill only

B) John, Jill and Alfred

C) Jill only

D) Jill, with John receiving only half as much as Jill.

Tony cannot read or write. Which of the following statements is true?

A) Tony cannot make a written will

B) Tony cannot make a holographic will

C) Tony cannot make a nuncupative will

D) Tony cannot make any will


A testatrix is a _____.
A) minor

B) trusted person

C) woman who makes a will

D) person who inherits under interstate succession

An instrument payable "when the next full moon appears in London, England" is _____.

A) payable at a definite time

B) not payable a t a definite time

C) not enforceable

D) void

An instrument payable "to left-handed citizens of Dover, Delaware who are over age sixty" _____.

A) is payable to order

B) is not payable to order

C) is payable to order and bearer

D) is payable to order, bearer, and the city of Dover, Delaware

"IOU $1,000" is _____.

A) not a promise to pay

B) not an order to pay

C) neither a promise nor an order to pay

D) negotiable since it acknowledges its debt


An instrument that states that it is "subject to a home improvement contract between Jones and
Vangard Co." is _____.

A) conditional

B) unconditional

C) conditional unless the amount is less that $1,500

D) unconditional unless and copy of the contract is attached

In order to be negotiable an instrument cannot be written _____.

A) in pencil

B) with a marker

C) with a red pen

D) on ice

A holder is a person who is in possession of a negotiable instrument that is _____.

A) issued or indorsed to that person's order

B) issued or indorsed to bearer

C) issued or indorsed to that person's order or issued or indorsed to bearer

D) written so that a bank is the drawee

If an instrument is conditional it is _____.

A) negotiable

B) a simple contract
C) void

D) unenforceable

An instrument that is "payable on June 6, 2066" is _____.

A) too distant in time to be negotiable

B) lacking in definiteness

C) unenforceable

D) payable at a definite time

Article 3 of the UCC was revised in _____.

A) 1980

B) 1985

C) 1990

D) 1995


A CD is repaid by _____.

A) a bank

B) the customer of a bank

C) the bearer

D) government

Wayne, an employer of Jackson Enterprises, mistakenly issues a check payable to Henry and his wife
Alice for work that Henry did for Jackson. Who must indorse this check?
A) Henry alone who may supply Alice's name.

B) Henry and Alice.

C) No one since the check was mistakenly issued.

D) Way on behalf of Jackson as well as Henry.

Ann pretends to be Anna and obtains payment by check payable to Ann of a debt Norman owed Anna.
What person suffers the loss if Ann cashes the check at Local Grocery Store?

A) Local Grocery

B) Ann

C) Anna

D) Norman

A check is made payable to "Brook and/or Betty." Who must indorse the check?

A) Brook alone may indorse.

B) Betty alone may indorse.

C) Either Brook or Betty alone may indorse.

D) Both Brook and Betty must indorse.

Bob, husband of Dee, forges Dee's signature on her income tax refund check and deposits the proceeds
in their joint checking account at Small Bank. When Small Bank discovers this forgery, it contacts Dee
who approves the signature. Does Bob have legal liability?

A) Yes, since Bob committed conversion in any event.

B) No, since Dee ratified the signature.

C) Yes, since Dee may not excuse a crime.

D) No, since Dee had a joint account with Bob.

Hal cashes his payroll check from Matrix Inc. by endorsing it to Little Bank. When the check is
dishonored what must Little Bank do to make Hal liable?

A) Notify Hal by midnight of the next banking day.

B) Notify Hal within thirty days.

C) Notify both Hal and Matrix by midnight of the next banking day.

D) Notify both Hal and Matrix within thirty days.

John cashes a check issued by Don that was altered by Cindy, who did not indorse, without John's
knowledge. John indorsed the check "without recourse" to Diamond Check Cashers. What party has
liability to Diamond for the altered amount?

A) John

B) Don

C) Cindy

D) John, Don, and Cindy

Which of the following statements about the warranties of indorsers is ?

A) An indorser who receives consideration makes warranties.

B) There are five warranties made by an indorser.

C) One warranty is that all signatures are genuine.

D) There is no warranty that an instrument is irregular.

"Without recourse" is a _____ indorsement.

A) restrictive

B) special

C) conditional

D) qualified

A holder may _____.

A) not convert a prior indorsement by writing words next to it

B) convert a blank special indorsement into a special indorsement

C) convert a special indorsement into a blank indorsement

D) convert a special indorsement into a specific indorsement


A blank indorsement makes the instrument a(n) _____ instrument.

A) bearer

B) order

C) both an order and a bearer

D) altered

Akina is the holder of an instrument if it has been _____.

A) issued to her

B) indorsed to her

C) issued or indorsed to her

D) issued, indorsed, or stolen by her


A typed instrument has numerous changes made in ink. Cisco would take the instrument _____.

A) with notice of the defense of alteration

B) without notice of the defense of alteration

C) with notice of the defense of alteration only if he actually knew that he instrument were
improperly altered

D) without notice of the defense of alteration if he refused to inspect the instruments

An instrument is postdated when Claud receives it. Claud _____.

A) cannot be a holder in due course

B) may be a holder in due course

C) could receive the rights of a holder in due course but never become a holder in due

D) cannot be a holder in due course since the instrument is not negotiable.

Titan Industry had repair work done on a chiller unit and gave ACME Repairs a promissory note. ACME
negotiated the note to Friendly Finance Co. Titan may not assert the lack of satisfactory completion of
the repair work against _____.


B) Friendly Finance if Friendly is connected with ACME

C) Friendly Finance if Friendly is a holder in due course

D) Either ACME or Friendly

Korey gave a promissory note to Linda in exchange for furniture that Linda asserted were valuable
antiques. If the furniture were worthless, what defense to payment does Korey have?

A) Fraud in the essential nature of the transaction

B) Fraud in interstate commerce

C) Fraud in the incentives

D) Fraud in the inducement

Lila paid a promissory note but did not reclaim and destroy the note. What risk did Lila take?

A) She may have paid the wrong person.

B) She may have paid too much.

C) She may have to pay the note again.

D) She takes no risk if she obtained a receipt from the individual that she paid.

Sierra, age 15, gave a promissory note to Superior Health Services for medical treatment while her
parents were out of town. May Sierra lawfully refuse to pay the note?

A) Not if the treatment was necessary.

B) Not if Superior charged her only what was reasonable for necessary treatment.

C) Yes, since Sierra was a minor.

D) Yes, since Sierra should have an adult guardian named.

Before Madison filed for bankruptcy while owing a note. Charles, the note holder, gave the note to his
friend, Andrew. May Madison assert bankruptcy as a defense?

A) Yes.

B) No.
C) Only against Charles, but not Andrew.

D) Only against Andrew but not Charles.

Presentment may be made _____.

A) orally

B) in writing

C) electronically

D) by any commercially reasonable means


If a storm isolates Big Bank for three days, is Big Bank still bound by the notice of dishonor rules?

A) Yes, in all circumstances.

B) No in all circumstances.

C) Yes, since Big Bank should have foreseen the storm.

D) No, since the storm was due to circumstances beyond their control.

Utley calls his bank on June 1 and orally stops payment on a check. To prevent the oral stop payment
order from expiring, Utley must renew the order in writing no later than _____.

A) June 5

B) June 8

C) June 10

D) June 14

Johnson postdates a check for lawn mowing while he will be out of town and his bank charges his
account for the postdated item. Johnson may _____.

A) recover from his bank

B) not recover from his bank

C) recover from his bank only if he notified his bank reasonably in advance

D) not recover from his bank unless he noted on the check that it was not to be cashed
until the listed date

Overdraft protection is _____.

A) mandatory to 10% of the average daily balance

B) not mandatory

C) mandatory if the customer makes a written demand on her bank

D) not mandatory unless the bank uses substitute checks

A payor bank must settle or return checks by _____ if it is not the depositary bank.

A) midnight of the banking day of receipt

B) midnight of the next business day following the banking day on which it receives the
relevant item

C) midnight of three banking days after the receipt

D) midnight of five banking days after the receipt

Xena deposits her income tax refund check at her bank on Monday May 1. The bank makes the funds
available to her by _____.

A) May 2
B) May 3

C) May 4

D) May 5

Dick is declared mentally incompetent on July 1. He continues to write checks until July 8 and his bank is
notified of his incompetency on July 12. On what date should his bank have stopped paying checks?

A) July 1

B) July 8

C) July 12

D) July 22

When is a bank an agent of its customer?

A) When it pays an overdraft.

B) When the customer deposits cash.

C) When the bank processes checks that the customer deposits.

D) When it grants provisional credit on a deposit.

Under the UCC a business that orders money to be sent electronically is called the _____.

A) sender

B) originator

C) electronic transfer

D) beneficiary

If a bank customer fails to notify her bank of the theft of her ATM card within _____, her liability for loss
becomes unlimited.

A) two business days

B) five business days

C) thirty days

D) sixty days


Article _____ of the UCC governs electronic fund transfers made by banks.

A) 3

B) 3A

C) 4

D) 4A

Fred's fire insurance policy required Fred to provide Big Insurance Co. with written notice of a claim
within thirty days of a loss. When Fred's house burned Fred orally told the Big agent who told Fred that
the company would process the claim. Big denies coverage since Fred failed to give written notice. Is this
defense by Big successful?

A) Yes, Fred violated the terms of the policy.

B) No, the agent is personally liable to Fred as well as Big.

C) Yes, Fred should have known and followed the policy procedures.

D) No, Big is estopped to deny the claim.

Zoe agreed not to skydive when she obtained life insurance naming her husband Sam as beneficiary
from Small Insurance Co. Small knew that Zoe occasionally assisted the local skydiving club instructing
new members. If Zoe dies in a skydiving accident, who has the burden of proving that a warranty has
been violated by Zoe?

A) Small Insurance Co.

B) Sam has the burden of proving that Zoe did not violate the warranty.

C) Zoe's executor has the burden of proving that Zoe did not violate warranty.

D) The state Board of Insurance.

The amount of an insurance premium is determined by the _____.

A) nature of risk

B) character of the risk

C) likelihood of the risk occurring

D) the nature and character of the risk and the likelihood of the risk occurring

Alex is purchasing a house at 10:00 AM. At 9:00 AM Alex could arrange for Temporary insurance
coverage called a _____.

A) blinder

B) binder

C) pending policy

D) provisional policy

COBRA _____.

A) allows employers to deduct the cost of employee health insurance premiums from the
employers' income tax
B) requires employers to keep discharge employees' health insurance coverage for a
specified time

C) allows employees who have been discharged to pay premiums and keep health
insurance for a specified time

D) allows employees who have been discharge to obtain governmental funds to keep
health insurance for a specified time

A number of cars have been vandalized in Betty's neighborhood. To provide insurance coverage in the
event her car is vandalized, Betty should purchase _____ insurance.

A) comprehensive

B) no-fault

C) collision

D) capstone

Most flood insurance requires _____.

A) a building not be in a flood plane

B) communities to manage flood hazards

C) an area not flood more than once in 500 years

D) a building not be in a flood plane and communities manage flood hazards

Tom removes his property from his burning warehouse only to have it stolen while stacked along side of
the street. Tom's fire insurance policy _____.

A) will not cover the theft loss

B) will cover only 10% of the fair market value of the stolen property
C) will cover the theft loss

D) will cover theft loss unless Tom were guilty of negligence

Subrogation allows the _____.

A) insured to sue the insurance company

B) insured to sue the person who caused the damage

C) insurance company to sue the insured

D) insurance company to sue the person who caused the damage


Consideration in an insurance contract arises from _____.

A) the payment of premiums

B) the promise to pay the beneficiary if a certain event occurs

C) both the payment of premiums and the promise to pay the beneficiary if a certain
event occurs

D) the social need to spread the risk of loss

Sandra signs a security agreement with Big Loan Co. on October 1 with money to be deposited by Big
Loan into Sandra's account on November 1. Sandra's first payment is to be December 1. When will
attachment occur?

A) October 1

B) November 1

C) December 1

D) A reasonable date to be determined by the court.

What are filing locations for financing statements?

A) county recorder

B) secretary of state's office

C) county recorder and secretary of state's office

D) county recorder, secretary of state's office, and federal district clerk's office

Sam leaves property at Friendly Pawn Shop as collateral for a loan Sam is obtaining in order to pay Big
Body Shop that has made repairs on Sam's truck. Which party is the pledgee?

A) Sam

B) Big Body Shop

C) Friendly Pawn Shop

D) Both Sam and Friendly Pawn Shop

The buyer of goods in the ordinary course of business prevail over security interests in the seller's
inventory except for _____.

A) fungible goods

B) specially manufactured goods

C) fixtures

D) farm products

Which of the following methods will result in the most rapid transfer of the collateral to the creditor if
the debtor defaults:

A) pledge

B) repossession
C) mortgage foreclosure

D) civil damage lawsuit

A variable-rate mortgage must include a _____.

A) minimum interest rate

B) an average interest rate

C) a maximum interest rate

D) a daily interest rate

In general, when the homeowner's equity position reaches _____ percent of the original value of the
property, the lender must automatically cancel PMI.

A) 18

B) 20

C) 22

D) 24

A home equity loan is an example of a _____ mortgage.

A) junior

B) senior

C) subordinated

D) redemption

A mortgage may stop the mortgagee from assigning the mortgage by _____.

A) selling the property

B) paying the loan in full

C) requesting a court to grant specific performance

D) obtaining a second mortgage


A mortgagee may not discriminate against borrowers based upon all of the following except:

A) race

B) color

C) creed

D) age

In a Chapter 13 bankruptcy, how much future income must the debtor turn over to the trustee in order
to satisfy outstanding debts?

A) all, and the trustee distributes it according to a budget.

B) at least 75%

C) at least 50%

D) some portion that varies from case to case

A secured credit card typically requires:

A) money be deposited in the bank that issues the card.

B) property be given as collateral for the credit card.

C) cosigners to secure payment.

D) a credit score above a specified number.


In a voluntary bankruptcy, what person first indicates what property of the debtor is considered

A) the trustee

B) the debtor

C) the creditor

D) the clerk of the court

Jake owes the following creditors to whom he is not making payments: Abco Enterprises - $10,000;
Susan - $1000; Big University - $3000; Direct Auto Finance - $5000. Which of these creditors may force
Jake into involuntary bankruptcy?

A) any three

B) only Abco and Susan, and they alone are insufficient.

C) any three whose total debt exceeds $11,625.

D) any three whose total debt exceeds $17,425

Tina is filing for bankruptcy and owns her grandmother's wedding ring, valued at $3000. Will she be able
to keep the ring as exempt property?

A) No

B) Yes, if she uses part of her $9,300 exemption for household items.

C) No, since there is no exemption for jewelry.

D) Yes, since family heirlooms are exempt.

Farmer Brown is owed $10,000 of unsecured debt by the Green Grain Storage Co. that has filed for
liquidation bankruptcy. What priority for payment, if any, does Farmer Brown have?

A) He is a general unsecured creditor.

B) He has a $2,100 priority.

C) He has a $4,650 priority.

D) He has a $9,300 priority.

Elaine fails to list on her Chapter 7 bankruptcy petition a $5000 debt owed to her sister, Julia. After the
bankruptcy is completed, Julia demands payment from Elaine. What is the legal status of this debt?

A) Elaine owes it since it was not listed.

B) Elaine does not owe it since it is owed to an insider.

C) Julia should have objected during the bankruptcy and having failed to do so, the debt is

D) Julia cannot compel Elaine to pay an unsecured debt.

Jackson Enterprises files for bankruptcy under Chapter 11. The business is wholly owned by Jackson who
spent massive amounts of company money on elaborate "business trips" that appear to be vacations.
What actions may the creditors take?

A) Request a trustee be appointed to conduct an audit and perform other tasks.

B) Nothing, except request the proceedings be converted to a Chapter 7.

C) Require Jackson to post a performance bond.

D) Require criminal fraud charges be brought against Jackson by the Bankruptcy Court.

Jones operates a farm and is also a practicing accountant. Jones wants to file for bankruptcy under
Chapter 12. What percentage of his total debt must be farm expenses?
A) 40%

B) 50%

C) 60%

D) 80%


In order to file under Chapter 13, what is the maximum total debt from all sources that the debtor may

A) $250,000

B) $500,000

C) $750,000

D) $1,000,000

Eugene ratifies a contract made by Angela with Zena that requires that Eugene deliver fifty cases of
doodads in exchange for $5,000. Eugene accepts the $5,000 but refuses to deliver the goods, stating
that Zena must request delivery from Angela. Is this ?

A) No, ratification accepts both the benefits and the obligations of a contract.

B) Yes, Angela lacked authority when she entered into the contract and is liable.

C) No, Eugene received in essence a gift of the $5000.

D) Yes, ratification does not release the agent.

Cade agrees to "watch" Cassie's house while she backpacks in the Andes. One day a severe hailstorm
breaks a number of windows in Cassie's house and Cade contracts with Clear Glass Co. to replace the
windows and bill Cassie. Is Cassie required to pay Clear or is Cade?

A) Cade, since he entered into the contract without authority.

B) Cassie, since there was an agency by necessity.

C) Cade, since there were alternatives other than replacing the windows.

D) Cassie since she owns the house.

Trudy is employed by Pike to sell Pike's house. The contract between Trudy and Pike must be written
under what legal rule?

A) Statute of Frauds

B) Del Credere agency

C) Equal Dignities

D) Equal authority

Charles, Monica and Daisy are partners. Monica employs George to negotiate a purchase of a building
for the contract. What is the legal status of this situation?

A) Charles and Daisy are not bound to the contract.

B) Monica is bound to the contract only if Charles and Daisy are also bound.

C) George is the only person bound to the contract.

D) Charles, Monica and Daisy are bound to the contract.

David and Juanita enter into a contract. Juanita does not know that David represents Henry, but
subsequently learns of this agency. What person or persons may Juanita hold to the contract?

A) David only

B) Henry only

C) both David and Henry

D) either David or Henry but not both


Paris is authorized by Mechanical Enterprises Co. to negotiate the purchase of a new dragline by
Mechanical Enterprises. Paris is a(an) _____.

A) general agent

B) special agent

C) del credere agent

D) factor

Jiro employs Marshall to sell his merchandise to local stores. Marshall kills Hasan, an employee of a
competitor of Jiro, to prevent Hasan from making sales to stores that Marshall is visiting. Is Jiro
criminally liable for the killing of Hasan?

A) No, since Marshall acts on his own.

B) Yes, since this should be foreseeable.

C) No, since he did not authorize the crime.

D) Yes, since the crime furthered Jiro's business.

How does the law distinguish between intentional torts that cause physical harm committed by an
employee and those that do not result in such harm?

A) The master is always liable for a physical tort.

B) The master is never liable for a nonphysical tort.

C) The master is rarely liable for a physical tort.

D) The master is only liable for certain types of nonphysical torts.

The "scope of employment" involves _____.

A) a limited group of activities that the principal is engaged in.

B) a range of activities for which the servant is engaged.

C) a technical legal definition.

D) a list of duties specified in an employment contract.


An agency relationship is:

A) contractual.

B) always performed by an independent contractor.

C) consensual.

D) an appointment.

Julia allows her housekeeper to purchase a variety of household items on Julian's credit account at
Home Supply Co. One day the housekeeper purchases all new appliances, charged to Julian's credit
account, and after having them loaded on a truck, disappears. What legal doctrine may make Julian
liable to Home Supply Co. for this purchase?

A) Express authority

B) Implied authority

C) Apparent authority

D) Authority by operation of law

Andrew, agent for Carmen, signs her income tax return with her permission. This action is _____.

A) contrary to public policy.

B) an allowable exception to the nondelegable acts.

C) only allowable with judicial approval.

D) an allowable exception to the commingling rules.


Mark, without pay and as a friend, promises to pay Todd's property taxes when they come due While
Todd is out of the country on business. Mark neglects this task, causing late penalties and interest
changes to accumulate. Mark _____.

A) has violated the duty to exercise reasonable skill and judgment

B) has no liability since this was uncompensated

C) has violated the duty to account

D) has no liability since this was a nondelegable duty

Wayne, an agent for Vadra, learns that the submission date for bids on a Titan Co. construction contract
Vadra wants to obtain and has received bid information concerning, has been changed from December
1 back to November 15. Wayne fails to tell Vadra, who submits a bid on November 30 which is rejected.
What legal rule governs this situation?

A) Vadra did not know of the change and therefore has submitted the bid on time.

B) Wayne had no duty to inform Vadra.

C) Titan Co. had no right to inform Wayne.

D) Wayne's knowledge is imputed to Vadra.

Phoenix collects illegal bets for Odilia. When Phoenix is arrested, what legal obligation does Odilia have
to Phoenix?

A) A duty to indemnify.

B) A duty to cooperate and indemnify.

C) A duty to remain silent.

D) No duty.

A principal recalls the agent's authority to act by _____.

A) revocation

B) renunciation

C) renewal

D) recall

Mei-Ling is briefly mentally incapacitated. Authority to represent her by her agent Sanjay is _____.

A) terminated

B) subject to recall

C) suspended

D) renounced

Global Grain Co. acts as agent for Big Farm Co. in exporting grain abroad. The President orders an
embargo of grain exports. Global Grain's _____.

A) authority continues

B) authority is terminated

C) authority is transferred to domestic sales

D) authority is suspended for at least three years

Nami, agent for Titan Co., informs Titan that she plans to offer customers a ten percent discount to
stimulate sales. Titan does not object, but when the discounted orders come in, Titan rejects the orders.

A) Nami has no authority to offer discounts.

B) Nami has to obtain written permission to offer discounts.

C) Nami has express authority.

D) Nami has to personally pay Titan the ten percent discount.


Hospitals may best prevent granting apparent authority by _____.

A) posting notices

B) requiring waivers from patients

C) obtaining indemnity contracts from physicians

D) giving verbal warnings to patients

Boss Smith tells employee Jones at an employee meeting, to "beg not to be fired." Jones does but Smith
fires him anyway. Does Jones have legal recourse against Smith?

A) Not if this happens in an employment-at-will state.

B) Yes, for intentional infliction of emotional distress.

C) No, since Jones could have simply walked away.

D) Yes, for fraud since he was fired anyway.

To preserve employment-at-will, a handbook disclaimer must _____.

A) be written in clear language, be conspicuously placed, and be acknowledged by the


B) be written in clear language, be conspicuously placed, and be approved by an attorney

for the employee

C) be written in clear language and be conspicuously placed

D) be managed in a reasonable manner


Sam, a valuable skilled employee of Alpha Industries, agrees to continue working for Alpha when Alpha
agrees to pay the college tuition expenses of his children. Alpha subsequently refuses to honor this
promise. What legal recourse does Sam have?

A) None, since he was paid for his work.

B) Sam may sue for a violation of the FLSA.

C) Sam may sue based upon an implied contract.

D) Sam may sue based upon promissory estoppel.

As Lila's commission sales earnings rise, Acme Co. changes the compensation scale percentages to avoid
paying Lila's greater income. Acme Co. _____.

A) has violated an implied contract

B) has done nothing unlawful

C) has violated ERISA

D) has acted reasonably

What party must document the employment eligibility of new workers?

A) The Department of Labor


C) The Department of Immigration and Naturalization.

D) The employer.

In order to receive unemployment insurance benefits, a claimant must _____.

A) accept any available full time employment

B) be ready to look for work when requested

C) be ready, willing, and able to accept suitable full time employment

D) accept major pay cuts in order to be employed

Jane knows when her baby will likely be born and must give her employer _____ notice of her intentions
to take FMLA leave.

A) nine months

B) six months

C) three months

D) thirty days

Men earn more than women at Acme Enterprises, even when doing comparable work. This is _____.

A) never allowable

B) allowable if the women are agreeable

C) allowable if based upon differences in training

D) allowable if the men have more dependents

The Civil Rights Act of 1964 as originally written, outlaws employment discrimination based upon all of
the following reasons except:

A) sex

B) race

C) religion

D) age

Acme Co. does not want to install an elevator in their building to provide access to a second floor
storage loft since only one of their seventy-five employees might need elevator access. Acme's best
defense to a charge of discrimination would be _____.

A) infrequency of use

B) undue hardship

C) unreasonable accommodation

D) undue expense

The NLRB was created by which legislation?

A) Landrum-Griffin Act

B) Taft-Hartley Act

C) Clayton Act

D) Wagner Act

Titan Industries only wants to hire union members to avoid labor conflict. This action creates a _____.

A) union shop

B) agency shop

C) closed shop

D) management shop

Right-to-work laws are _____.

A) federal laws outlawing the closed shop

B) federal laws outlawing the union shop

C) state laws outlawing the closed shop

D) state laws outlawing the union shop

Big Union refuses to work on products made by nonunion employees. This action is a _____.

A) secondary boycott

B) lawful bargaining tactic

C) violation of a union shop agreement

D) feather bedding tactic

Big Union pays a member $15,000 to work on the organization campaign at Small Co. Big Union _____.

A) has no responsibility to report his payment

B) must report this payment

C) has not responsibility to report this payment if it only covers travel, meals, or lodging

D) must report his payment if it is made in a lump sum

The NLRB consists of _____ members.

A) three

B) five

C) seven

D) nine

The Supreme Court allowed injunctions to stop labor strikes _____.

A) only if the objective of the strike were unlawful

B) only if the strike were conducted in an unlawful manner

C) if the objective of the strike were unlawful or if the strike were conducted in an
unlawful manner

D) whenever a court determined the strike to be unreasonable

Big Company tells employees that it will "be forced to transfer their work to independent contractors" if
the employees vote for a union. This statement is _____.

A) lawful free speech

B) an unlawful threat

C) a lawful management decision

D) a lawful statement of opinion

A bargaining unit _____.

A) may consist of individual employees of Big Co

B) is a group of employees for collective bargaining

C) must have at least fifty employees grouped for collective bargaining

D) does not have to bargain collectively


A union must _____.

A) give notice of an intention to strike

B) not strike for more than eighty days

C) not strike if the strike would affect interstate commerce

D) give a fixed list of demands before striking

1 A certificate of limited partnership must be filed with _____.

A) the county clerk's office where the partnership's principle office is located

B) the state secretary of state's office

C) the federal secretary of state's office

D) the federal district clerk's office

Maria, a limited liability partnership member, is sued by Stan who was injured when Maria hit him with
a truck she was driving on partnership business. Maria _____.

A) may be sued by Stan

B) may not be sued by Stan

C) may require that Stan only sue the partnership

D) may not be sued by Stan, but Stan may sue Maria's partners

Io wrongfully takes partnership funds. The other partners may _____.

A) only sue Io for fraud

B) sue Io for fraud and request a court to dissolve the partnership

C) request a court to dissolve the partnership but may not sue Io for fraud

D) only request an accounting.

Cindy makes a poor investment with partnership funds. The other partners _____.

A) may not sue Cindy

B) may sue Cindy

C) may not sue Cindy if she acted with ordinary skill and competence

D) may sue Cindy if the loss exceeded ten percent of the partnership's assets

Tulan learns all about the funeral business while being a partner in Slumber Funeral Home. Tulane

A) may not enter into competition with Slumber while a partner

B) may start her own business while a partner

C) is required to wait three years before starting a funeral business

D) is required to move outside of Slumber's market area before starting a funeral business

What is nontransferable about Omar's interest in a partnership?

A) Economic interests.

B) Economic interests and management rights.

C) This is determined solely by the partnership agreement.

D) Management rights.

Luke and Mark inherit their father's farm. Luke and Mark _____.

A) have become partners

B) are only co-owners of the land

C) are partners by estoppel

D) are partners by operation of law

A partnership agreement may arise by _____.

A) written contract only

B) written or oral contract only

C) written, oral, implied, or default contract

D) written, oral, implied, or default contract

The RUPA favors the _____ theory of partnership.

A) entity

B) aggregate

C) combination

D) estoppel

10 Tom lends money as a business loan to Sandra, a sole proprietor whose business name is Threads
and Pins. Who is liable to repay the loan?

A) Sandra.

B) Threads and Pins.

C) No one.

D) Sandra or Threads and Pins.

Jane wants to create a corporation to promote AIDS research. Jane should create a _____.

A) private, for profit

B) private, nonprofit
C) public, for profit

D) public, nonprofit

Luis incorporates ABC Co. in West Virginia but wants to transact business in Ohio and Virginia also. ABC
Co. must obtain a certificate of authority from _____.

A) West Virginia

B) Ohio only

C) Ohio and Virginia only

D) West Virginia, Ohio, and Virginia

A close corporation has fewer than _____ shareholders.

A) 100

B) 75

C) 50

D) 25

The _____ run the daily operations of an L.L.C.

A) directors

B) officers

C) managers

D) agents

Jill, a promoter, wants to be released from a preincorporating contract. Jill needs a(n) _____ contract.

A) novation

B) adoption

C) relinquishment

D) beneficiary

The work of a promoter typically ends when _____.

A) a statutory agent is appointed

B) an organizational meeting is held

C) articles are filed with the Secretary of State

D) a charter is issued

Depending upon state law, an L.L.C. operating agreement may be _____.

A) oral

B) written

C) implied

D) oral or written

Ann attempted to incorporate ABC Co. but failed to designate a statutory agent. Ann has created a
_____ corporation.

A) de facto

B) de fine

C) de credere
D) de romaro

An S corporation uniquely _____.

A) avoids double taxation

B) avoids personal liability

C) avoids all taxes

D) avoids double taxation and personal liability


A corporation name _____.

A) may not be reserved

B) may be reserved

C) may only be reserved if a court approves

D) may be reserved if no private party objects

What determines the actions that a member-managed LLC will be bound by?

A) The LLC statute only.

B) The operating agreement only.

C) Either the LLC statute or the operating agreement.

D) Only a majority vote of the members.

When do shareholders have the right to share in dividends?

A) When declared by the board of directors.

B) When funded by the board of directors.

C) In any fiscal year in which there is a surplus.

D) In any fiscal year in which the shareholders vote to have a dividend.

Under recent rules, a corporate director who finds a legal violation by her corporation must _____.

A) only notify the local police

B) not engage in a cover-up

C) not ask or tell about related wrongdoing

D) allow the activity to continue in order to catch all guilty parties

Under insider trading rules, the following person would not be considered an "insider":

A) Administrative assistants to executives.

B) Major shareholders who are not corporate officers.

C) Researchers at corporate labs not at company headquarters.

D) Cleaning staff that wash windows at company headquarters.

The duty of due diligence requires the same level of care as that of a _____.

A) ordinarily prudent person in a comparable situation

B) skilled professional

C) person with a MBA degree

D) ordinary person who might work for a comparable company


John buys 500 shares of Matrix Corp. stock from Henrietta. Matrix refuses to transfer the stock to reflect
Henrietta as a shareholder of record since she is the CEO of a Matrix competitor. Henrietta may _____.

A) bring a derivative suit

B) only ask John to sue on her behalf

C) bring a direct suit

D) not sue

Shareholder Adams is angry that XYZ Co. management refuses to provide Adams with XYZ product
samples to give as Christmas gifts. Adams wants to present this as a shareholder proposal. XYZ managers

A) must include this proposal

B) may reject this proposal

C) may request that Adams to first have other shareholders sign a petition

D) may request that Adams to first demonstrate at least a ten percent support of the
proposal by voting shareholders

The actual document that Sarah will use to ask Alex for his voting right is called a _____.

A) proxy

B) proxy solicitation

C) proxy request

D) proxy contract

Samantha is a director of ABC Corp. Samantha _____.

A) may not be an officer

B) may not be a shareholder

C) may be an officer and a shareholder

D) must request SEC approval to be an officer or a shareholder


If Jozelle wants to resign from the board of Alpha Corporation, she must, in many states, _____.

A) send a typed resignation to the corporation

B) send a handwritten resignation to the corporation

C) send a resignation to the corporation in any reasonable manner

D) send a resignation to the corporation and to the SEC

The federal government proposes allowing a private developer to construct a ski resort in a national
forest. What requirement is triggered by this proposal?

A) An environmental impact statement must be prepared.

B) An antitrust analysis must be conducted.

C) The Department of Labor must be informed of the workplace consequences.

D) The Federal Trade Commission must review any proposed advertising.

Big Co. plans to close a plant that employs 250 employees in Smallville. Big must give a _____ notice
before the plant closing.

A) 30 day

B) 45 day

C) 60 day

D) 75 day

Steve, a majority shareholder in Small Co., brings a court action to dissolve Small Co. because Small
management is using Small Co. assets for their personal benefit. What action may the court take?

A) The court may not take any action.

B) The court may liquidate the assets of Small.

C) The court may transfer Small's assets to the state.

D) The court may give Steve all the assets of Small and deny other shareholders any of the

Which of the following actions effectively put an LLC out of business?

A) Dissolution

B) Expulsion of a member

C) Bankruptcy of a member

D) Winding up

If a judge deviates too much from _____ justice, she risks a political upheaval.

A) individual

B) regulatory

C) distributive

D) preemptive

The primary purpose of the two major federal securities acts is to protect business investors by making
certain that they _____.
A) are informed

B) have a neutral party reviewing their investments

C) have a right to sue for fraud

D) have the means to collect a judgment

On January 1, Charles, an officer of Titan Co., buys one hundred shares of Titan, and on May 1, Charles
sells these one hundred shares at a profit. Who is entitled to the profit?

A) Charles.

B) All Titan Co. shareholders.

C) Titan Co.

D) The state.

Bigger Co. and Smaller Co. agree to set a fair price for their competing products in Smallville so that each
may keep their store open in Smallville. Their agreement is _____.

A) judged by the rule-of-reason

B) judged by the likelihood of being unfair to consumers

C) judged by the full faith and credit standard

D) judged to be a per se violation

The Wheeler-Lea Act authorizes the FTC to act against deceptive acts _____.

A) only if it is anti-competitive

B) in any event

C) only if it is tending to create a monopoly

D) in all cases of domestic or foreign commerce where the amount exceeds $500,000


Greenmail benefits _____.

A) the target's shareholders

B) the bidder

C) the white knight

D) the business community in general

An incompetent physician injures a patient at Hope Hospital. Hope had not revoked the physician's
credentialing in spite of a history of drug abuse. On what basis is Hope liable for the injury?

A) Negligent credentialing

B) Negligent retention

C) Negligent staffing

D) Negligent treatment

HIPPA contains restrictions on the disclosure of _____ records to the patient.

A) all medical

B) physical therapy

C) psychotherapy

D) medical testing

An informed consent form for medical treatment typically requires _____.

A) a patient signed form witnessed by a third party

B) a patient and physician signed form

C) a patient signed form with a signature notarized

D) a patient and friend signed form

Which of the following professionals are least likely to be liable to third parties?

A) accountant

B) architect

C) public contractor

D) attorney

The Securities and Exchange Act of 1934 is chiefly designed to prevent _____.

A) fraud

B) accountant negligence

C) an uninformed investor

D) attorney malpractice

Which of the tests for accountant liability is the strictest?

A) Specifically foreseen third parties

B) Actually named third parties

C) Reasonably foreseen third parties

D) Generally known third parties


Accountant malpractice is based on a failure to _____.

A) meet a duty of care

B) meet a strict standard of care

C) meet an expected result

D) meet an anticipated standard of care

The accountant-client privilege does not extend to _____.

A) a court's request for information

B) a spouse's request for information

C) an agency's request for information

D) a bank's request for information

What entity created the Accountant Code of Professional Ethics?






To become a CPA typically requires _____ years of experience.

A) two

B) three
C) four

D) five

Charles does not want to reveal too many details in his patent application because he fears that
competitors will duplicate his invention. How specific must a patent application be?

A) reasonably clear

B) full, clear, concise, and exact

C) full, clear, and complete

D) an outline is sufficient

Which of following poses the most difficult question of patent protection for software?

A) stand alone software

B) software that is part of a longer more conventional process

C) software that is a design concept only

D) software that has been used by the public

The NET Act makes it illegal to duplicate more than one copyrighted work for financial gain within a
_____ day period.

A) 30

B) 60

C) 90

D) 180

Jake has developed accounting software for client use and wants to protect his property rights in the
software. Jake should typically _____

A) have the client sign a nondisclosure agreement.

B) have the client post a bond.

C) have the client sign a licensing agreement.

D) have the client access the software via the Internet.

If Jill has a trade secret, the Uniform Trade Secrets Act requires Jill to use _____ attempts to protect it
from disclosure.

A) reasonable

B) extreme

C) modest

D) fair

Which of the following remote conferencing methods is typically simpler?

A) video conference

B) web conference

C) dedicated line conference

D) removed conference

UCITA is called a _____ statute.

A) mandatory

B) vague
C) customized

D) default

The Patriot Act requires consumer reporting agencies to turn over to the federal government a
consumer's records if those records _____ related to a governmental intelligence operation.

A) are definitely

B) are reasonably

C) sometimes are.

D) may be

The right to privacy is _____.

A) recognized only in common law

B) recognized only in constitutional law

C) recognized in common law and constitutional law

D) recognized only by statute


The easiest way for states to address cybercrime is by _____

A) the cybertrespass approach

B) requesting a judicial opinion

C) specific legislation

D) analogy

How should a science court deal with appeals?

A) No appeals are needed.

B) An appeal stage should be provided.

C) Appeals should go to a judicial court.

D) Appeals must be informal.

The rule created by negotiated rule making is expected to reflect _____

A) complete agreement.

B) moderate agreement.

C) a consensus.

D) the best possible rule.

During settlement week cases are nominated by _____

A) judges only.

B) attorneys only.

C) judges and attorneys.

D) judges, attorneys, and mediators.

If Joe, and arbitrator, fails to provide each party a written decision written within five days of ending the
procedure as its ADR contract clause requires, a court _____

A) may revoke the ruling Joe makes.

B) will not intervene.

C) may conduct a special hearing on this issue.

D) will ask Joe to provide a written explanation.


Jane and Adam want to include an ADR clause in their prenuptial contract. Is this allowable?

A) Not unless specifically allowed by state.

B) Not unless a judge approves in advance.

C) Not until the parties have ten days to change their minds.

D) Yes, unless specifically prohibited by statute.

Jurors who serve on juries at private civil trials are generally selected from _____

A) a general jury pool.

B) law students or paralegal students.

C) those who recently served on an official jury.

D) the friends of the litigants.

In a summary jury trial a conference is held after the trial to _____

A) discuss an immediate settlement.

B) discuss the outcome.

C) discuss what the jury found.

D) make trial arrangements.

Early neutral evaluation does not involve _____

A) an independent evaluator.
B) an impartial assessment of the legal rights of the parties.

C) a pro forma agreement.

D) a determination of the amount of the award that should be rendered.

An arbitration hearing can be planned and executed _____

A) only by the arbitrator.

B) by the parties themselves.

C) by the court only.

D) by the witnesses.


An effective mediator _____

A) can cut to the center of a dispute.

B) has advocacy skills.

C) is an effective judge.

D) is a therapist.

Consumers in Europe have all the following rights with regard to computer data except _____

A) the right to adjust data.

B) the right to delete their computer data.

C) the right to obtain any computer data stored on them.

D) the right to deny another party the use of computer data.

The overall goal of NAFTA is the creation of _____

A) a trading market without internal tariff barriers.

B) a unified governmental structure.

C) a common currency.

D) a trading market without internal tariff barriers, a unified governmental structure, and a
common currency.

Which part of the World Bank handles loans to the world's most economically challenged nations?

A) International Bank for Reconstruction and Development.

B) International Agency for Economic Development.

C) International Development Association.

D) International Aid and Lending Agency.

In a contract governed by CISG, when must a contract for the sale of goods be written?

A) When the price exceeds $500.

B) When the price exceeds $1,500

C) When the price exceeds $5,000.

D) There is no requirement that the contract be written..

The International Criminal Court is physically situated in _____

A) the Hague.

B) Geneva.

C) New York.
D) Berlin.

Which of the following nations is not a permanent member of the UN Security Council?

A) China

B) United States

C) India

D) Russia

Which of the following is the primary criticism of a preemptive war?

A) It is based on preventing possible evils.

B) It is not a last resort.

C) It hard to weight the possible harm against the actual harm.

D) It is expensive.

Holding a press conference to celebrate the death of enemy combatants would violate the _____

A) principle of honorable surrender.

B) principle of restoration.

C) principle of justice.

D) principle of repentance.

The United Nations was created as a result of a meeting held in _____

A) Geneva.

B) Berlin.

C) San Francisco.

D) Paris.


When may a U.S. court issue an opinion?

A) Whenever requested to do so by private parties only.

B) When faced with an actual case.

C) Whenever requested to do so by government agencies only.

D) Whenever requested to do so by private parties or governmental agencies.