Authors:
Henry R.Cheeseman, University ofSouthern California
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BAM
521
Business
Law
Text: Contemporary Business and Online
Commerce Law
Sixth Edition, 2009
ISBN: 10:
0-13-601500-X
Publisher:
Pearson Prentice
Hall
———-
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Business Law
Multiple Choice Questions(Enter
your answers on the enclosed
answer sheet)
1)
What was the U.S. Supreme Court’s
reaction to a case where a business
executive was found guilty of aiding and abetting
in the bribery of an Internal
Revenue Service Agent even though the Internal Revenue Service agent had
been found not guilty of the bribery in a separate trial?
b.
Because one of the defendants had been
found guilty, then both should
have been fou nd gu i Ity.
c.
Because of the inconsistent
outcomes, a third combined trial was ordered to
reconcile the different outcomes.
d.
This simply underscores the fact that
there is always the possibility that dif-
ferent juries might
reach different results in a given situation.
e.
Because one of the defendants had been
found not guilty, they both should
have been found not gu i Ity.
f.
The decisions
in both cases were thrown out,making
it possible,though not
mandatory, that one or both defendants would have to face another trial.
2) The followers of this school of
jurisprudential thought are known as realists:
a.
the Sociological
School.
b.
the Analytical
School.
c.
the Command School.
d.
the PsychologicalSchool.
e.
the CriticalLegal
Studies School.
3)
The schoolof
jurisprudence
that believes that free market forces should
determine the outcomes to lawsuits is:
a.
The Command School.
b.
The SociologicalSchool.
c.
The Critical Legal Studies
School.
d.
The AnalyticalSchool.
e.
The Law and Economics School.
4) Which of the following is an example
of an equitable remedy?
a.
Aremedy
that may not be modified
from itsrigid
prescribed form.
b.
Aremedy
fashioned by a chancery court fashioned to fit the particular situa-
tion.
c.
Any remedy granted by the merchant court.
d.
A remedy required
to be approved by the law court.
e.
Any remedyissued
by a judge.
5) Which of the following
is true about the creation of courts in
England?
a.
The different types of courts were
created in order to handle different types of
cases, but the remedies available to the different courts
were the same.
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b.
Thelaw
courts were created to allow remedies that could not
be granted by
the law courts.
c.
The equity
courts were created to allow remedies that could not be granted by
the law courts.
d.
The merchant courts were created in
order to have more flexibility in fashion-
ing remedies than the chancery courts.
e.
The law courts were createdin
order to have broader jurisdiction than the
merchant courts.
6) Which of the following statements is
true about treaties?
a.
Treaties are valid only if they do not
conflict with a statute passed by Con
gress.
b.
The U.S. Constitution
provides that the president, with the advice and con-
sent of one-half of the Senate, may enter into treaties with foreign govern-
ments.
c.
The U.S. Constitution provides that the
president, with the advice and con-
sent of two-thirds of the Senate, may enter into
treaties with foreign govern-
ments.
d.
The U.S. Constitution provides that the
president,with the advice and con-
sent of three-fourths of the Senate, may enter into treaties with foreign gov-
ernments.
e.
Treaties are valid only if they do not
conflict with a statute passed by Congress
or any of the state legislatures.
7) A localzoning
lawis an example of which of the following?
a.
Statutes.
b.
Regulations.
c.
Executive Orders.
d.
Ordinances.
e.
Judicial mandates.
8) The process of critical legal
thinking includes which of the following?
a.
A judge must specify the issue presented
by the case.
b.
A judge must identify the applicable law
for the case.
c.
A judge must identify the key facts in
the case.
d.
A judge must apply the law to the facts
to come to a conclusion that answers
the issue presented.
e.
All the above involve the process of
critical legal thinking.
9)
Betty believes
that she has been discriminated against because of her sexual
orientation. Although federal law does not prohibit this
discrimination, Mary
believes that the law should be changed in order to make the members of
society more accepting of gay individuals. Mary’s beliefs most closely corre-
spond to which school of jurisprudence?
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a.
CriticalLegal
Studies School.
b.
Sociological
School.
c.
Natural Law School.
d.
HistoricalSchool.
e.
Psychological
School.
10) In what year was the U.S.
Constitution written?
a.
1812.
b.
1787.
c.
1865.
d.
1776.
e.
1782.
III
For which of the following in the U.S.
Congress can the number to which a
state is entitled change over time?
a.
Neither senators nor representatives.
b.
Both Senators and representatives.
c.
All members of the U.S. Congress.
d.
Representatives.
e.
Senators.
12) In relation to freedom of speech:
a.
commercial speech receives no protection
due to its profit motive.
b.
all speech receives the same degree of
Constitutional protection.
c.
it is not an absolute right.
d.
commercial speech receives
thesame protection as any other speech or any
person.
e.
most speech critical of the government
can berestricted because such
speech can be destabilizing.
13) Which of the following
is true regarding obscene speech?
a.
Because the definition
of obscene is so subjective,it
cannot be restricted or
prevented.
b.
Obscene speech and offensive speech
receive the same degree of protection.
c.
Even though the definition
of obscene speech is subjective, if speech is deter-
mined to be obscene, it loses all constitutional
protection.
d.
It cannot be prevented, but can be
subject to time, place or manner restric-
tions.
e.
The U.S. Supreme Court
has set out a clear definition of what speech is de-
fi ned as obscene and therefore unprotected.
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14)
Whichof the following types of speech are unprotected meaning that they are
not protected by the First Amendment and may be totally forbidden by the
government?
a.
Speech thatincites the violent or revolutionary overthrow of the government.
b.
Fighting words that are likely to provoke a hostile or violent response form an
average person.
c.
Dangerous speech (including suchthings as yelling “fire” in a crowded the-
ater when
thereisno fire).
d.
All the above are unprotected speech.
e.
None of the above are unprotected speech.
15)
Which of the following would be a violation of the freedom of religion protec-
tionsin the U.S. Constitution?
a.
The government preventing the practice of unpopular or
fringe religions.
b.
The government establishing a time in school for persons to
practice the reli-
gion of their choice.
c.
The government promoting a religion as better than other religions.
d.
a and b only.
e.
a,band c.
16) Substantive due process requires that:
a.
a law treat all persons the same.
b.
a notice and hearing be given before one is deprived of life, liberty
or prop-
erty.
c.
a defendant not be tried twice for the same crime.
d.
a criminaldefendant have an attorney present at all times.
e.
government statutes,ordinances and regulations be clear and
not overly
broad.
17)
Assume that the state of Coloradoinstitutes a law
requiring that persons
from outside the state of Colorado take a skiing
exam and obtain a skiing
Iicense before bei ng aIlowed to ski at a down hillresort on ru ns other
than
the beginner runs. The fee for thislicenseis $75. Colorado residents are
not required to get a license because most
resident skierslearn
to ski prop-
erly at an early
age. This statute could be challenged under:
a.
the EqualProtection Clause.
b.
the Interstate Commerce Clause.
c.
the Privileges and Immunities Clause.
d.
none of the above because thisis anintrastate commerce
issue that does not
unduly burden interstate commerce.
e.
a,band c.
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18) The generaljurisdiction
trial court in the federal system is called the:
a.
United States Circuit Court.
b.
United States Inferior Court.
c.
United States District Court.
d.
United States Trial Court.
e.
United States General Court.
19) Which of the following is true?
a.
Very important cases are usually
initially tried in the U.S. Supreme Court.
b.
In the federal court system, there are
usually two levels of appeal by right.
c.
The U.S. Supreme Court chooses to review
only half of those cases that it is
asked to review.
d.
When a case is appealed, the appellate
court usually holds a new trial.
e.
The U.S. Supreme Court chooses to review
only a small fraction of those
cases that it is asked to review.
20)
Which of the following
is an example of concurrent jurisdiction shared by
federal and state courts?
a.
Copyrights and trademarks.
b.
Bankruptcy.
c.
Federal questions.
d.
Patents.
e.
None of the above, each is considered
exclusive federal jurisdiction.
21)
There will never be a dissenting opinion
filed when the U.S. Supreme Court
has issued atn).
a.
majority opinion.
b.
opinion written by the Chief Justice.
c.
unanimous opinion.
d.
tie opinion.
e.
plurality opinion.
22) The concept of in personam
jurisdiction is that:
a.
the case has been filed
at the correct location with the state.
b.
special requirements must be met in
non-business cases involving individu-
als.
c.
a party has a personal stake in the outcome
of a particular case.
d.
the court has jurisdiction over the
property involved.
e.
a court has the power to make and
enforce a judgment against a particular
person.
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23) When
parties to a contract agree upon which state
court will have jurisdiction
shouldlitigation
become necessary, that contract clause
is called a:
a.
choice-of-law
clause.
b.
jurisdiction selection clause.
c.
standings clause.
d.
venue selection clause.
e.
forum-selection clause.
24) Two
friends, Mary and Dean,are hiking
in the Colorado mountains when a
dog being
walked byits owner, Wally,who
is from Wyoming, bites Dean,caus-
ing injury. Mary was not disturbed physically or emotionally
but wants Dean
to sue Wally. Dean does not want toincur
the cost.Which of the following is
true?
a.
Whether Mary has standing
depends on whether Mary files the suit in state or
federalcourt.
b.
Mary has standing
if Wally agrees she can sueinstead of Dean.
c.
Mary will have standing
only if she files the lawsuit in Wyoming.
d.
Mary does not have standing to sue Wally,
the owner of the dog.
e.
Mary has standing
ifDean consents to Maryfiling
the suit.
25) Which ofthe
following are in the proper order from first to
last filed?
a.
Reply; cross-complaint;answer;
complaint.
b.
Answer;complaint;
reply; cross-complaint.
c.
Complaint; answer; cross-complaint;
reply.
d.
Complaint;cross-complaint;reply;answer.
e.
Complaint;reply;cross-complaint;
answer.
26) In connection
with the pleadings in alawsuit,
what is an answer?
a.
The response of the plaintiff to questions
posed by the judge.
b.
The response of the defendant to
questions posed by the judge.
c.
The response of the defendant to the plaintiff’s
complaint.
d.
The response of the judge to the plaintiff’s
complaint.
e.
Both a and b.
27)
Live testimony taken under oath before
the trial is a discovery device known
as a/an:
a.
intervention.
b.
deposition.
c.
interrogatory.
d.
arbitration.
e.
production
of evidence.
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28) What is “voir dire?”
a.
A discovery method to learn about the other party’s case.
b.
The jury deliberation process in a trial.
c.
The U.S. Supreme Court’s case selection process.
d.
A motion to dismiss a case.
e.
The jury selection process in a trial.
29) The decision made by an administrative law judge is
calledatn).
a.
verdict.
b.
order.
c.
finding.
d.
decree.
e.
judgment.
30)
Which of the following is an example of an executive power
granted to an
administrative agency?
a.
The power to investigate a violation of a statute or
administrative rule.
b.
The responsibility to determine licensing requirements for pharmacists.
c.
The right to issue an interpretive rule.
d.
The right to adjudicate a case through an administrative
proceeding.
e.
The right to issue a substantive rule.
31)
Brooke has fallen asleep on the beach. Eight guys, who are
all friends of
hers, getinto a circle around
her and one gets real close and screams,
“snake” into her ear. When she jumps up screaming, they all start
laughing
at her. What tort, if any, have they committed?
a.
Battery.
b.
Negligent infliction of emotional distress.
c.
Assault.
d.
All of the above.
e.
None of the above.
32)
The doctrine that is applied when a defendant violates an
existing statute
intended to prevent the injury in question to persons of a class that includes
the plaintiff is:
a.
negligence per se.
b.
concurrent statutory violation.
c.
proximate cause statute.
d.
res ipsa loquitur.
e.
negligence resipsa.
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33) A dram shopis
another name for:
a.
a factory thatillegally
uses childlabor.
b.
a pharmacy.
c.
a house of iII
repute.
d.
a bar or tavern.
e.
a seller
of second-hand
goods.
34)
In Wilhelm
v.Flores,
involving a death from bee stings,which
of the following
sets forth the ruling of the Court of Appeals
as to whether a defendant who
hires a person to work with bees can be held liable for the failure
to warn of
the dangersinvolved?
a.
A defendant whohad
knowledge of the dangers of working
with bees can be
heldliable
ona negligence
basis for the failure
to warn of some dangers, but
the danger of anaphylactic
shockis too remote for there to be a danger to
warn about that.
b.
There is noliability
for negligence
when the unpredictability of animals,birds
or bees isinvolved.
c.
Liability
would only exist
if the defendant was aware that the plaintiff
knew
nothing about bees andintentionally
kept the dangers a secret.
d.
There could benoliability
whatsoever since
it is assumed that if a person
agrees to work withbees,they
are aware of the dangers.
e.
A defendant who has knowledge of the
dangers of working with bees can be
heldliable
on anegligence
basis for the failure to warn of dangersincluding
the possibility of dying
from anaphylactic shock.
35)
Billand
Sam getinto aheated
argument regarding
over whether a political
candidate has beenguilty of fraud. Sam
makes a fist and actsasifheis
going tohit
Bill. Bill
is apprehensive of immediate harm, but
Sam drops his
arm before he actually hits bill and says he
was just kidding. Sam also apolo-
gizes for any inappropriate behavior. For which tort or torts could Sam be
heldliable?
a.
Assault only.
b.
Assault,battery,
and negligence.
c.
Battery only.
d.
Assault and battery.
e.
None of the above. Sam could
not be heldliable
for anything because he
said he was just kidding and apologized.
36)
The proximate
cause requirement for a negligence
tort is most likely not met
where:
a.
a customer
in a building
supply store carelessly
drops a small can of paint
that breaks open and is ignited from a spark caused when the metal can hits
theconcrete floor.
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b.
a patient becomes sick from a doctor
carelessly prescribing the wrong medi-
cine.
c.
the victim of an accident was aware,
prior to the actual accident, that the ac-
cident was likely to occur.
d.
a customer becomesill
from food that is carelessly packed at a processing
plant.
e.
a driver injures a pedestrian when
rounding a curve at twice the legal speed
limit.
37)
Probable cause is most directly
associated with which step of the criminal
process?
a.
Arraignment.
b.
Plea bargaining.
c.
Arrest.
d.
Indictment.
e.
Jury deliberations.
38)
In Atwater v. Lago Vista, Texas, in which
a mother sued for alleged violation
of her civil rights after she was handcuffed and arrested for a seat belt
viola-
tion, what did the U.S. Supreme Court decide?
a.
The mother’s Fifth Amendment rights were
violated by the unreasonable sei-
zure of her person.
b.
The mother’s Fourth Amendment rights
were violated by the unreasonable
seizure of her person.
c.
There was no violation of the mother’s
Constitutional rights.
d.
The mother’s First Amendment rights were violatedbythe stop.
e.
There was no violation of the mother’s
Constitutional rights only because she
struck the police officer before he arrested her.
39)
To find someone guilty of receiving
stolen property, it is sufficient to prove
that the defendant:
a.
was in possession of stolen property.
b.
took partin
the wrongfultaking of the property and intended to
deprive the
true owner of the property.
c.
knowingly received the stolen property
and intended to deprive the true owner
of the property.
d.
intended to keep the property himself.
e.
paid for the property and intends to
keep it himself.
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40) Which of the following statements is true?
a.
The Fifth Amendmentguarantee against self-incrimination does not prohibit
the taking of fingerprints against a suspect’s will.
b.
The Fifth Amendment guarantee against self-incrimination does
prohibit the
taking of fingerprints against a suspect’s will.
c.
Even if immunity from prosecution has been granted, the defendant may still
refuse to testify.
d.
The attorney-client privilege is the only privilege that has been
recognized
under the Fifth Amendment.
e.
The guaranteehas been extended toinclude all business
records and docu-
ments.
41)
In New York v.Berger,when a warrantless search of Berger’s junkyard uncov-
ered stolen vehicles and parts, Berger challenged the search and the Su-
preme Court said:
a.
warrantless searches arenevervalid unless the officer witnesses the crime
being committed.
b.
closely regulatedindustries enjoy less privacy protection than other types of
busi nesses.
c.
warrantless searches are allowed regarding all businesses but never
against a
citizenin their home.
d.
the expectation of privacyis the same regarding businesses andindividuals.
e.
a statute can never provide a constitutionally adequate substitution for a war
rant.
42) Mirandarights:
a.
are a combination of rights containedin the Fifth, Sixth and
Eighth Amend
ments.
b.
are all containedin the Sixth Amendment.
c.
are a combination of rights contained in the Fifth and Eighth Amendments.
d.
are a combinationof rights contained in the Fifth and Sixth Amendments.
e.
are all containedin the Fifth Amendment.
43)
Which of the following is an effect of the Sony Bono Copyright
Term Exten-
sion Act of 1998?
a.
Copyright protectionwas extended from 17 to 20 years.
b.
The length of validity for a corporate copyright was extended to be
the same
as fora copyright held by an
individual.
c.
Copyright protectionfor music was extended so that it is now longer than
that
for other types of copyrighted material.
d.
Individuals were granted copyright protection for their
life plus 70 years.
e.
Copyright protectionwas extended to computer programs.
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44)
What was the resultin the case in which James W.Newton, Jr. sued after
the
Beastie Boys used six seconds of a Newton compositionin a song.
a.
The Beastie Boys use of Newton’s composition did not
constitute a fair use
because a song wasinvolved, and fair use is not a viable defense when a
claim is made that portions of a song were illegally used.
b.
The Beastie Boys use of Newton’s composition did not constitute a
fair use
because the Beastie Boys were
attempting to profit off of Newton’s composi-
tion.
c.
The Beastie Boys use of Newton’s composition was unfair,
and Newton did
not have to prove damages in order to recover.
d.
The Beastie Boys use of Newton’s composition was brief
enough to be consid-
ered fair use.
e.
The Beastie Boys use of Newton’s composition did not
constitute a fair use
because Newton could prove he suffered money damages because of the ac-
tions of the Beastie
Boys.
45)
Willful copyright infringement can be punished with a
statutory damage
award up to:
a.
$150.000.
b.
$500,000.
c.
$100,000.
d.
$350,000.
e.
$250,000.
46)
Each of the followingis a word that has lost
its trademark due to generic use
except:
a.
yo-yo.
b.
xerox.
c.
nylon.
d.
mimeograph.
e.
cornflakes.
47) Which of the following is true about the Paris
Convention of18837
a.
It protects copyrights only.
b.
It protects patents and trademarks only.
c.
It protects trademarks only.
d.
It protects copyrights and trademarks only.
e.
It protects patents only.
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48) Kantian ethics
is also
known as:
a.
ethical relativism.
b.
social contract theory of mortality.
c.
utilitarian ethics.
d.
duty ethics.
e.
fundamentalism.
49)
In Pizza Hut,Inc.
v.Papa John’s International,Inc.,
which Pizza Hut sued
Papa John’s claiming
that Papa John’s slogan “Better Ingredients. Better
Pizza” was false advertising,what
was the Court’s ruling?
a.
Papa John’s
had violated the False Advertising Act.
b.
The slogan was a statement of opinion,
not a statement of fact upon which
consumers would
bejustifiedin
relying.
c.
The slogan was an example
of “puffery” that is not actionable under the Act.
d.
Papa John’s
had violated the Lanham Act.
e.
Both band c.
50) The categoricalimperative
is an integral part of:
a.
moral minimum theory.
b.
Locke and Rousseau’s
theory of social contract.
c.
Kant’s duty ethics.
d.
maximizing profit theory.
e.
Rawl’ theory of social
justice.
51)
The theory of business social
responsibility that holds that a business has a
duty to generally do good for society is:
a.
moral maximum.
b.
corporate citizenship.
c.
moral minimum.
d.
stakeholder interest.
e.
maximizing profits.
52)
Mary finds a wallet
in the library that is filled with case. She
would like to
keep the money but decides to turn it in to the
lost-and-found office because
if it were her wallet,she would like the person
who found it to do the same.
Mary reached her decision in accordance with:
a.
Rawl’s social
justice theory.
b.
the categoricalimperative.
c.
Kantian ethics.
d.
utilitarianism.
e.
moral maximum.
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53)
Whichofthe followingis not needed in all cases in order to have a valid con-
tract?
a.
A signed written document.
b.
An agreement.
c.
A legalobject.
d.
Consideration.
e.
Contractualcapacity.
54)
How has the government rolein contract regulation changed since the
found-
ing of the United States?
a.
There is lessfederal,but more state involvement today than in the
past.
b.
Thereisless state and federalgovernmentinvolvement today than in the
past.
c.
There is greater state and federal government involvement
today than in the
past.
d.
Thereisless state,but more federal involvement today thanin the past.
e.
Thereis approximately the same degree of state and federalgovernmentin-
volvement today asinthe past.
55) Whichofthefollowing are two terms for the same concept or situation?
a.
Implied-in-fact contract and quasi-contract.
b.
Implied-in-Iaw contract and quasi-contract.
c.
Unilateralcontract andinformalcontract.
d.
Formal contract andimplied-in-Iaw contract.
e.
Implied-in-Iaw
contract andimplied-in-fact
contract.
56)
The United Nations Convention on Contracts for the International Sale of
Goods provides rules that govern:
a.
the enforcementofcontracts.
b.
the formationof contracts.
c.
the performance of contracts.
d.
all of the above.
e.
none of the above.
57) Which ofthe followingis nota formal contract?
a.
Negotiableinstrument.
b.
Recognizance.
c.
Contractunder seal.
d.
Letter of credit.
e.
New car purchase contract.
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58) A contract can be formed:
a.
as a result
of preliminary
negotiations.
b.
by an offermade
in jest.
c.
resulting
from an expression of opinion.
d.
by an offer madein
anger.
e.
in none of the above situations.
59) Whatis
necessary in order for an offer to be effectively
communicated?
a.
The offeree mustlearn
of the offer, but this knowledge can come from any
source.
b.
The offeror must communicate the offer
to at least one offeree,at which point
the offer willbe considered
to be communicated to anyone who later learns of
the offer by any means.
c.
The offer must be communicated
by either the offeror or the offeror’s agent to
the offeree.
d.
The offeror must personally
communicate the offer to the offeree.
e.
So long as the offeris
in writing, any party who learns of the offer’s terms can
accept it.
60)
The requirement
that the terms of the acceptance be the exact same as those
of the offer is the:
a.
promissory
estoppeldoctrine.
b.
mirror image rule.
c.
identical terms rule.
d.
counteroffer equals rejection rule.
e.
doctrine
against offermodifications.
61) Which of the following
is true regarding acceptance of an offer?
a.
Generally,
an offeree must accept an offer by an
authorized means of commu-
nication.
b.
The common law recognizes certain
implied means of communication.
c.
The offercanstipulate
that acceptance must be by a specified means of com-
munication(e.g.,
registered mail).
d.
Most offers do not expressly specify the
means of communication required for
acceptance.
e.
All the above.
14
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Business
Law
62) Charlie
is a contractor
contacted by Hilda
to discuss repairing
termite dam-
agetoHilda’s
home.Thedamage
is so extensive
that Charlie doubts
the
home can be saved.Hilda
begs Charlie to try to repair thehome.
Charlie
tells Hilda
that hewilldo
the besthe canbut
cannot promisethatthe
he will
be successful.
He will charge
Hilda$60per hour whether or not he
suc-
ceeds.Hilda
agreesto
these
terms.Which
ofthe following
is true in this
situation?
a.
If Charlie encounters unforeseendifficulties
Hilda willnot
beobligated
to pay
him.
b.
The doctrine
of promissory
estoppelwill
allow Hilda
to recover from Charlieif
hefailsto
repairthedamage.
c.
Thisis
arequirementscontract
becauseit
states what each partyis
required
todo.
d.
Thisis
anillusory promise
because
Charlieisnot
obligated to repair
the dam-
age.
e.
Thisis
abesteffortscontractproperly
supported by consideration
onboth
sides.
63) Whenafter
reaching the age of majority aminor
legally indicates that the
minor intendsto
be bound by the terms of a contractentered
into as a minor,
theaction
isknownas:
a.
ratification.
b.
restoration.
c.
reinstitution.
d.
reaffirmation.
e.
restitution.
64) What
isthe effect
on contract obligations
of a person whoisinsane
muchof
thetimebut whoalso
hasperiodiclucid
intervals of sanity?
a.
Inorder
to avoidacontract,
thisperson
must not bein a lucidinterval
when
makingthedecision
toavoidacontract.
b.
All contractsentered
into bysuchaperson
are void
regardless of whenthey
were enteredinto.
c.
Contractsentered
into during alucid
intervalcannot be avoided.
d.
All contractsentered
intobythis
personwillbe
voidable regardless
ofwhen
they
were enteredinto.
e.
A person who
haslucidintervals
canavoid
contracts only afterbeing
adjudi-
cated insane.
65)
In order
for someone toavoid a contract
onthe grounds of intoxication,
the
level of intoxicationmust
havebeen:
a.
so great
that he didn’tcomprehendthenature
of the agreementhe was enter-
inginto.
15
u..jpg”>
Business
Law
b.
only
high enough
that he wasable tonotice
it.
c.
sogreat
that no reasonableperson
wouldhave
comprehended
the nature
of
theagreement
enteredinto.
d.
at orabove
thelegallimitto
operatea motorvehicle.
e.
at leastas
high as that of the
otherparty.
66)What
is an exculpatory clause
ina contract?
a.
Aclause
that prevents one
partyfrom
competing
with the other
party fora set
period
of time.
b.
A clause
that
releases
a party from
liability
for that party’s
negligence.
c.
Aclause
thatsets the
penalties
fora
breachof the contract.
d.
A clausethat
negates a minor’s
ability
todisaffirm
a contract.
e.
A clause
that saysthat
an innocent
partyis entitled
to extra damagesto
pun-
ishabreaching
party.
67) What
is anunconscionablecontract?
a.
Acontract
wherea strong
partyto
acontractmisused
its power tocreate
unfair contract
terms.
b.
Anycontract
involving a minor
or intoxicatedperson.
c.
A contract that was enteredinto
with bothparties
being fully
awareofitsil-
legality.
d.
Any contract thatiscontrary
to public
policy.
e.
Any contractwhere
the termsgreatlyfavor
one party.
68)
In WellsFargo
Credit Corporation
v.Martin,what
wasthe result
whena para-
legal misread
herinstructions
and bidlower
onsome foreclosed property than
shewas supposed to bid,and
someone
else boughtthe
property at auction?
a.
Theparalegal
was allowed to bidagain
for hercompany.
b.
Theparalegal
wasallowed
to taketitleto
theland only
if she matched
the bid
ofthe highest
bidder.
c.
The
paralegalwas
allowed
tobidagain
only because she
presented proof by a
disinterested
witnessof
her unilateral
mistake.
d.
The auction
was voided andconductedagain
because of theunilateralmis
take ofthe paralegal.
e.
Theperson
who madethe
highest bid,
not the paralegal,was
allowed to keep
theland.
69) Whatis
the significance
of requiringthat
a misrepresentation
relate to
a”ma-
terialfact”
in connection
with a fraud
intheinducement case?
a.
The misstatement
must havebeena
significant
factorin the
plaintiff’s
deci-
sionto
enterinto
the contract,and
cannot relate to an opinion or prediction.
16
v..jpg”>
Business Law
b.
Themisstatementmustnotinvolve anissue of law.
c.
The misstatementcanrelate to any fact before or after the contract was
formed.
d.
The misstatement must have been a correct statement at some point in the
past.
e.
The misstatementmust relate to the substance that the item is made of.
70) Whichof thefollowing best describes duress?
a.
A situation where one partyhas lied to the other to lead them to enter into a
contract.
b.
A situationwhere a trust relationship has been violated in forming a contract.
c.
A situation where,after the contract was negotiated, circumstances have
changed sothat one ofthe partiesis in a desperate
circumstance and cannot
reasonably perform.
d.
A situation where a party has improperly given the other party no
alternative
but to enterinto acontract.
e.
A situation inwhich fraud has been committed by a third party to the con-
tract.
71) What does” incorporationbyreference”do in the context of contract law?
a.
Nothing asfarasthe Statute of Frauds is concerned because incorporation
cannot be used to satisfy the Statute of Frauds.
b.
Ithasnolegal significance.
c.
It makes separate writings part of a contract’s terms.
d.
It makesthe StatuteofFraudsinapplicable to the contract.
e.
It identifies the parties toa contract.
72)
Jack and Jillwerediscussing business over lunch when they agreed on the
sale of some goods.Because neither of
them had any paper with them,Jack
wrotethe following onanapkin:”Jill agrees to purchase
from Jack,
1,000
widgets to bedeliveredon July1, 2001, at a cost of
$10,000, payable on
delivery.”Jillsigned the napkin,although Jack did not sign it.Jack deliv-
eredthe widgets per the contract,but Jill refuses to pay for
them. If Jack
sues Jill
forthe priceof the goods,the mostlikely resu It is:
a.
Jackwillwin becausethe writingis sufficient under the Statute of Frauds.
b.
Jack will winbecause the Statute of Frauds does not apply to this situation.
c.
Jill willwin becauseJack did not sign the contract.
d.
Jill willwin becausethere was no reasonable basis for her to believe there as
an enforceablecontract.
e.
Jill will win because thiswritingis not sufficient under the Statute of Frauds.
17
w..jpg”>
Business Law
73)
When the government enters intoa contractonbehalf ofataxpayer,the
taxpayeris usually what kind of beneficiary?
a.
Incidental.
b.
Creditor.
c.
Donee.
d.
Cond itionaI.
e.
Covenanted.
74)
Whatisthe significance ofacontract clause stating that”time isof the
essence?”
a.
Itmeansthat performance by thestated timeis an express condition.
b.
It means that the contractisineffectiveif the time for performance is not
expresslystated.
c.
It putsaduty onthe partiesto a contractto perform as soonas possible.
d.
Itcreatesa legal goal for the parties.
e.
Itmeansthatif performanceofthecontract is completed withina short time
ofthestated time, it will beconsideredperformed at essentially the proper
time.
75)
Johnentered into a contract withBarb torestore Barb’s antique Ford for
$9,000. BecauseJohn oweshisyoungerbrother a large sum ofmoney,John
assigned, prior to notifyingBarbof the assignment,his right to receive pay-
ment to his brother.Johnbegan the restoration,but quickly stopped working
onthe car.Because of this,Barbretrieved the car from John. Almost no
restoration work had been performed. Whichofthe followingis truein this
situation?
a.
John’sassignment ofhisright to paymentwithout Barb’s consentwasimprop-
er and discharged John’s dutiesunderthe contract.
b.
John’sbrotherdoes nothavearightto collect the $9,000fromBarb.
c.
Because of the assignment, John’s brother was responsibleforJohn’s perfor-
mance.
d.
As aresu It of the assign ment, Joh n ‘s brotheris entitled to paymentdespite
the fact thatJohn didnot perform therestoration.
e.
Barb is obligated to allow John’sbrother to complete the restorationifhe so
desires.
76)
Janafinds ahome priced at $180,000that she would like tobuy. Sheis
concerned,however,about her ability toget aloan. Accordingly,she and
the seller
reachagreement that Jana willbuy the homeif she can get aloan
for$180,000 within 45 days. Whattype ofcondition is this
agreement?
a.
Anexpress condition.
b.
A concurrent condition.
c.
Acondition precedent.
d.
a and c.
e.
a, b, and c.
18
x..jpg”>
Business Law
77)
When an employee breaches a fixed-termemployment contract by quitting
before the end ofthe term,whatcanthe employer recover as
damages?
a.
Allamountsalreadypaid to the employeeunder the contract.
b.
Nothing, because courts donot orderanyone to perform a job against his or
her will.
c.
Only specific performance.
d.
Onlyamountspaid to the employeefor whichthe employee has not yet done
thework.
e.
The costsof hiring a replacement employee plus any increasein salary paid
to thereplacement employee.
78)
The doctrine that placesa duty onanon-breaching party to take reasonable
stepsto reduce damagesiscalled:
a.
garn ish ment.
b.
mitigation.
c.
liquidation.
d.
avoidance.
e.
reciprocalduties.
79)
Alicehasa contractwithasurgeontohave a medicalprocedure performed
on July17.The surgeonnotifies Alice on July 5 that heisin the Bahamas
and willbe thereuntilthe endofAugust and will not be able to dothe sur-
gery.Which ofthe following istrueat this point?
a.
Alice must give the surgeon90daysin whichto schedule the surgery after
July 17.
b.
There will be no breach untilJuly17.
c.
IfAlice contracts with anothersurgeon prior to July 17,andthis second sur-
geonis aware of Alice’s originalcontract, the second surgeon has
no obliga-
tionto perform.
d.
Alicemust wait untilJuly 17,andif the surgeon doesnot perform the proce-
dure, then Alice cancontract withanother surgeon.
e.
Aliceis free to contract withanothersurgeon.
80)
Aconstruction contractorentered into a contract to build a family room addi-
tion onto Harry’s home for $25,000. Inorderto encourage timely perfor-
mance,the agreement provided that the contractor wou Id be
penal ized
$5,000 as
liquidated damagesforeachday that the project was
latein get-
ting finished.Thecontractorwas30 days late infinishing theproject, but
otherwise metthe terms of theagreement.Whatis most likelyin this situa-
tion?
19
y..jpg”>
Business Law
a.
Theliquidated damages clausewould notbe enforced due toits being exces-
sive.
b.
Theliquidated damages clause would not be enforced because the parties
madea
mutual mistakeaboutwhen the contract would be finished.
c.
Theliquidated damagesclause would be enforced only if it can be shown that
thecontractor
has madethat much inprofits over the past six
months.
d.
Theliquidated damagesclausewouldbe enforced.
e.
Theliquidated damagesclause would belimited to $25,000,the amount of
thecontract price.
81)
Thehighest price paid to date for the purchase of a domain name has been
to purchase:
a.
.wine.com./”>www.wine.com.
b.
.wallstreet.com./”>www.wallstreet.com.
c.
.sex.com./”>www.sex.com.
d.
.rockandroll.com./”>www.rockandroll.com.
e.
.drugs.com./”>www.drugs.com.
82)
Under the UniformComputerInformationTransactions Act,whatis the effect
of puttingadditional termsinto an acceptance
delivered through an electron-
ic agent?
a.
The acceptance is treatedas a counteroffer.
b.
The additionaltermsare ignored and a contractis formed based on the origi-
nal terms.
c.
The acceptance is treatedas arejection.
d.
The acceptanceis treated isif itneveroccurred, leaving the original offer
open.
e.
The additionalterms become part of the agreement unless objected to within
10 days.
83) Licensingof informational rights can usually best be described as:
a.
granting any rightsto usethe information,which can differ greatly in scope
andduration.
b.
theright to temporarily use thedomain name of another.
c.
grantinglimitedrightsto use thatcannot be simultaneously granted to others.
d.
a leaseof tangible personal property tothe licensee.
e.
a saleoftheunderlyingintellectualproperty rights.
84)
Underthe Uniform ComputerInformationTransactions Act,howlong does a
party have in which to commence a cause ofaction?
a.
Twoyearsafter thebreach was orshouldhave been discovered,but not more
than fiveyears after the breachactuallyoccurred.
20
z..jpg”>
Business
Law
b.
One year
afterthe
breachactually
occurredonly.
c.
Oneyear
after the
breach was orshould
have been discovered,but
not more
than five yearsafterthe
breachactuallyoccurred.
d.
Two years
after the breach was orshouldhave
been discovered, but not more
than three yearsafter
the breach
actually
occurred.
e.
Oneyear after the
breach wasorshould
have been discovered,but not more
than four years after
the breach actuallyoccurred.
85) The
parol evidencerule
would notallowwhichof
the following itemsinto
evidence wheninterpreting
a written contract?
a.
Evidence
based on prior conduct insimilarcontracts
betweenthe parties
to
explain
the meaning of an ambiguoustermin
the contract.
b.
Evidence of an oral
statement regardingthe
contractprice
made when the
written contract was signed
that was different
from the pricein
the written
contract.
c.
Evidenceof
the meaning
ofa term in the parties’
line of business
that differs
from the meaning
of that term ineveryday
language.
d.
Evidence
of a price change agreed
uponafter
the contract was signed.
e.
All the above would be allowed
intoevidence
underthe
parolevidence
rule.
86) For the firm
offer rule to apply, who mustbeamerchant?
a.
Theofferee.
b.
Theofferor.
c.
Both the offeror and the
offeree.
d.
Neither the offerornorthe
offeree.
e.
Theofferee
onlyif the offereeis
acorporation.
87) Susan
decides to buy new carpet
for her
home.She goes to Carpet City
and
chooses the carpet shelikes.As
partofthe
deal,CarpetCity
agrees to install
thecarpet.The
carpetisinstalled
while Susanis
at work. When she returns
home and seesit,
Susan immediatelynotices
problems. The carpet is not the
same quality of carpet she ordered,andthe
coloris off. Does the UCC apply,
and why or why not?
a.
TheUCC
does notapply
becauseit doesnot
apply to mixed contracts of
goods and services.
b.
The UCC does not apply
becausethedealwith
Carpet City included
service
that is not covered by the
UCC.
c.
TheUCC applies
because the predominant
part of the transaction between
Susan and Carpet City
wasthesale
ofgoods.
d.
The UCC does not apply
because Susan
and Carpet City did not agree in writ-
ingbeforethe
carpet wasinstalled
that the UCC would apply.
e.
TheUCC
appl ies because it appl ies
toservice
contracts as wellas to con-
tractsfor
the sale of goods.
21
aa..jpg”>
BusinessLaw
88)
Which ofthefollowing situationscreates a sale that fallsunder UCC sales law
rules?
a.
Katherine contractsto pay Mike$880.00 to have her bedroom painted.
$800.00isfor labor and $80.00isfor the paint.
b.
All of the aboveareUCC sales contracts.
c.
Katherinemakes a contractto purchase ashedthat requires assembly. The
contractpriceisfor$8,000.00 which includes$400.00 for labor.
d.
Abc rentalsrents a cement mixer to Katherine.
e.
Dr. Mackey agreestoteach at yahoo university for1 year.
89)
Seller whoislocatedinAtlanta,Georgiacontracted to sell a shipment of
peachestothe1910fruitgum company located in Buffalo,New York. The
peachesweresold f.o.b. Buffalo.Seller delivered the peaches to the proper
carrier inAtlanta and the peaches were destroyed during shipping. Under
thesefacts:
a.
Sellerand buyer sharethe risk ofloss.
b.
Sellerbearstherisk ofloss andisresponsible.
c.
Thisisa trick question;goods can’t beshippedf.o.b. Buffalo.
d.
Buyerbearstherisk ofloss andisresponsible.
e.
Neither the seller nor the buyer bear risk ofloss, thecarrier bearstheriskof
loss.
90)Which of thefollowingistrue regardingashipment contract?
a.
Such contractsrequirethe sellerto beartheriskof losstothe goods during
their transportation.
b.
It requiresthe sellertodeliverconforminggoods to the buyerbyuse of the
seller’s own trucks.
c.
Theriskof lossdoes not pass untilthegoods are tendered to the buyer atthe
specifieddestination.
d.
It requiresthe seller to deliverconforming goodsto a specificdestination.
e.
Itrequiresthe seller to ship goods conformingto the contract toa buyer via a
carrier.
91)
UnderArticle2AoftheUCC,forwhich types oflease(s) is the risk of loss on
thelessorduringthetermofthelease?
a.
Loss-shiftingleases.
b.
Both ordinaryand financeleases.
c.
Ordinaryleases.
d.
Financeleases.
e.
Neither ordinary norfinanceleases.
22
bb..jpg”>
Business Law
92)
In Lindholmv.Brandt,when Malmberg sold Lindholm’s”Red Elvis”to
Brandt, the COJrtfound that:
a.
Malmberghad beenentrusted with the artwork andcould pass the voidable
title to Brandtbecause Brandt qualifiedas a good faith purchaser.
b.
Malmberghad beenentrusted with the artwork and could pass the void title
to BrandtbecauseBrandtqualifiedasa good faithpurchaser.
c.
Malmberghad stolen theartwork andcould pass the void title to Brandtbe-
cause Brandtqualified as a good faith
purchaser.
d.
Malmberghad beenentrusted with the artwork but had a void title because
hebreachedthe terms ofthe entrustment sohecouldn’t pass good title to
Brandt.
e.
Malmberghadstolen the artwork, so he couldn’t pass his void title to Brandt.
93) Adestination contractrequiresthat theseller:
a.
assistthebuyerin handling goodsoncereceivedby the buyer.
b.
give proper and adequatenotice to the buyer.
c.
deliverthe goods tothe buyer.
d.
a and c.
e.
band c.
94)
Ifa seller hasdeliverednonconforminggoodsthat have been rejected by the
buyer,the seller has a rightto cure:
a.
only ifthe buyeragrees.
b.
onlyif the contract specifically allowsfor cure.
c.
under some circumstances,evenif theoriginal time for performance has
passed.
d.
onlyifthetimefor performance hasnot yet expired.
e.
only for24hours.
95)Whichofthe following statementsis true regarding installment contracts?
a.
Tobe aninstallment contract, the contractmust state that each deliveryis a
separatelotorwords to that effect.
b.
The buyermayreject the entireorder forany nonconformity.
c.
The buyermayreject the entire orderonlyif the nonconformityin one ship-
ment affects the value of the entire contract.
d.
a, band c.
e.
aand conly.
96)Whichofthefollowingis trueabouta buyer’s right ofinspection?
a.
Ifnot mentionedinthe contract,thebuyer hasthe right to inspect goods in a
reasonabletime,place and manner once thegoods have been
accepted.
23
cc..jpg”>
Business Law
b.
Thisright must be agreed to inthe contract inorder forit to apply.
c.
Ifnot mentioned in the contract, the buyerhas the right to inspect goods in a
reasonable time,place and mannerprior to accepting or paying for them.
d.
Thisrightexistsevenif notmentionedin the contract, and the buyer has the
soleright to determinethe time and placethe right may be
exercised.
e.
Thisright existsevenifnot mentionedinthe contract, and the seller has the
soleright to determinethetime and placethe right may be exercised.
97)
Whichofthefollowingisnot necessaryin order for theimplied warranty of
fitnessfor aparticularpurpose toapply toa sale of goods?
a.
The goodsare purchased.
b.
Thebuyer relieson theseller’s skillandjudgment.
c.
The sellerknows orhas reason to knowofthe buyer’s intended use of the
good.
d.
The selleris a merchant.
e.
The seller statesthat the goodswillservethe purpose of the buyer’s intended
use.
98)
What wasthe result inShoshone Coca-Cola Bottling Company v. Dolinski, in
which theplaintiff becameillafterconsuming a soft drink with a
dead mouse
init and
sued the manufacturerofthe drink?
a.
Thedefendant won because theplaintiffcould not explain how the mouse got
inthe
drink.
b.
Plaintiff wonbecausehe couldprovenegligence on the part of the defendant.
c.
Plaintiff wonbecausethe defendant washeldliable under the doctrine of
strictliabilityintort.
d.
The defendant won becauseit had beenascareful as possible in bottling the
drink.
e.
Thedefendant won becauseplaintiff’s drinkwas the only drink in the appli-
cablelot or batchthatwasdefective.
99)
Which of thefollowingis notatypical waythat a manufacturing defect
arises?
a.
Failuretoproperly check thequalityof the completed product.
b.
Failure to properly design the product.
c.
Failure to properlyassembletheproduct.
d.
Failure to properly test theproduct.
e.
Failure to properlyengineer the product.
24
Business
Law
.jpg”>
100)
In Sta-Rite
Industries,Inc.v.
Peterson, the
court found Sta-Rites pool drain
defectively
designed
based on whichofthe
following except:
a.
there wasno
shut off mechanism.
b.
itwasascrew
down designthat
frequently cameloose.
c.
the300
to400pounds
ofpull
was excessive and unnecessary for the
prod-
uct.
d.
there
had beenover
20 priorsuctionrelated
accidents with Sta-Rite drain
covers and pumps.
e.
all of the
above.
25
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