1) The Federal Trade Commission is an example of
A. a branch of the U.S. Supreme Court
B. a temporary commission created by executive order that has become permanent
C. a corporation subsidized by the federal government
D. a federal agency created by the federal government
2) The doctrine of stare decisis concerns
A. using constitutional law to render a decision
B. staring at the facts of a case for a long time to make sure the correct decision is made.
C. making sure to do adequate research before making a legal decision
D. following precedents so that legal principles announced in a case are used to determine later cases
3) When statutes are passed only after considerable study, debate, and public input, this is an example of which function of the law?
A. Keeping the peace
B. Facilitating orderly change
C. Shaping moral standards
D. Maintaining the status quo
4) Marion owns a dress shop, where she personally makes all the dresses she sells. Marion sees a beautiful dress at a designer shop and buys it. She examines the dress carefully, so she can design a dress pattern to duplicate it. She duplicates the dress exactly, and sews the dress in several sizes to sell in her store for a lower price. Then she returns the dress to the store where she bought it for a full refund. Has Marion acted ethically?
A. Yes, because she is competition is fair in a capitalist society
B. No, Marion is undercutting the designer shop with merchandise that is deceptively similar.
C. No, because she is asking a lower price for her dress
D. Yes, the store was not hurt because the designer store’s customers would not go to her store anyway.
5) The Federal False Claims Act is also known as
A. The Statute of Frauds
B. The Whistleblower Statute
C. The Statute of Limitations
D. The Sarbanes-Oxley Act
6) Which of the following is correct with regard to the relationship between law and ethics?
A. Lawful conduct is always ethical conduct.
B. The law may not permit something that would be ethically wrong.
C. Although much of law is based on ethical standards, not all ethical standards have been enacted as law.
D. The rule of law and the golden rule of ethics demand the same response.
7) A defendant fails to answer a civil lawsuit, what is likely to happen?
A. The court will dismiss the case.
B. The court will grant a default judgment against the defendant.
C. The court will order that the defendant go to jail until he or she agrees to answer.
D. A court will contact the defendant and ask him to answer the lawsuit.
8) A court can enter a judgment notwithstanding the verdict when the following has happened?
A. The judge’s personal opinion is that the jury made the wrong decision.
B. The court finds that the jury acted out of a bias or after jury misconduct.
C. The jury was sequestered.
D. A jury could not reach an agreement on what the verdict would be.
9) If a defendant files a motion for summary judgment in a civil case, what is the defendant saying?
A. That the case is ready to go to the jury
B. That the court has no jurisdiction to decide the case
C. That even if what the plaintiff says is true, there is no basis for judgment against the defendant
D. That the plaintiff’s claims are false
10) Carlos is an investment broker, operating as a sole proprietor. William is his employee. Juanita, a new client, gives William $1,000,000 in cash to invest for her, and William gives her a receipt. Instead of investing the money, William takes the $1,000,000 and leaves the country. Carlos learns of the transaction for the first time when Juanita appears at the office a month later to discuss the allocation of her investments, and shows him the receipt signed by William. Juanita is upset to learn that Carlos does not have her money, and tells him she is going to sue. What will be the outcome of Juanita’s suit against Carlos?
A. Juanita will recover a judgment against Carlos for the entire amount.
B. Juanita will recover a judgment against Carlos for half the missing money.
C. Juanita will lose the case because she cannot find William to serve him with a lawsuit.
D. Juanita will lose the case because was not informed of the transaction.
11) Monica owed Bob $500, which was more than a year overdue. Bob got drunk at a party and told everyone that Monica had owed him $500 for over a year. Can Monica recover from Bob for defamation?
A. Yes, because Bob communicated the statement to third persons
B. No, because Bob was telling the truth
C. No, because Bob had been drinking
D. Yes, because Bob abused his conditional privilege
12) Damages intended to punish a defendant and deter the defendant and others from engaging in the same tortious conduct in the future are called
A. punitive damages
B. retribution damages
C. nominal damages
D. penalty damages
13) Pete and Vicky make the following agreement. Pete promises he will go into a store and buy something for $5 and pay for it with a $100 bill on which he has written “Happy Birthday Vicky!” Vicky promises that after Pete collects his change and leaves the store, she will go into the same store and buy something that costs $5 and pay with a $10 bill. When the clerk attempts to give her change for $10, Vicky will claim that the $100 bill that is in the cash register was money she just got for her birthday, and will demand change from a $100 bill. Then Pete and Vicky will split the extra money they think Vicky will receive in change. Is this a valid contract?
A. This is a voidable contract because Vicky can change her mind.
B. This is a void contract, because the parties agreed to commit fraud.
C. This is not an enforceable contract because the agreement is not in writing.
D. This is a valid contract. There was a promise in exchange for a promise, and both parties got what they wanted.
14) Which of the following best describes how e-mail contracts are viewed under the law?
A. E-mail contracts are valid so long as both parties sign a written copy printed out from the e-mail.
B. E-mail contract are valid only for contract less than $500.
C. E-mail contracts are generally treated similarly to contracts negotiated by other means.
D. E-mail contracts for goods can be valid, but not email contracts for services.
15) Ray and Nikki are in fifth grade together. Ray gets a new skateboard for his birthday and offers to sell Nikki his old one for $15. Nikki pays the money, and Ray gives her the old skateboard. Is this a valid contract?
A. This is a voidable contract because the parties to the contract were minors.
B. This is a void contract because the parties to the contract were minors.restraint of trade.
C. This is an unenforceable contract because Ray and Nikki can not file a lawsuit.
D. This is a valid contract. There was a fair consideration paid for the skateboard, and both parties got what they wanted.
16) A retailer ordered some inventory by phone from a manufacturer. The order was for 1,000 machines from the manufacturer’s inventory at $300 each. The manufacturer sent the retailer a fax a few moments later detailing the order. The retailer looked at the fax and was satisfied that it stated the terms of the contract, but never responded in any way. When the goods were delivered on time a month later, the retailer refused to accept them, asserting that the contract was unenforceable.
A. The contract is unenforceable because the retailer has not signed it in writing.
B. No writing is needed because of one of the exceptions to the Statute of Frauds.
C. The contract is enforceable because it would be unconscionable not to enforce it.
D. The contract is enforceable under the written confirmation rule.
17) Ted’s Gifts and Sweets enters into a written contract with Bannon Candies to supply Ted’s with 60 dozen boxes of coconut clusters each month for sale to the public. The agreement contained an integration clause. Before the first delivery under the contract, Ted and his warehouse manager called Debbie, the Bannon’s account representative, to request that the candies be delivered in special Valentine boxes. Debbie told Ted, “Don’t worry, I’ll tell the shipping department to take care of that.” When the candies were delivered, they were in standard cardboard boxes. Ted called Bannon and threatened to sue for breach of contract. Will Ted prevail in his suit?
A. No, Ted should have written a letter to change the type of boxes in the contract.
B. Yes, Ted made a valid modification to the parties’ original agreement.
C. Yes, Ted will prevail because he has a witness to the telephone call.
D. No, Ted will not prevail because his attempt to modify the agreement was not effective.
18) In February, Bradley stole a motorcycle from John’s driveway, and then sold it to a motorcycle parts dealer as a source of used motorcycle parts. In March, Jean bought the motorcycle from the parts dealer. In May, the police came to Jean and advised her that the motorcycle she bought had been stolen. According to the Uniform Commercial Code, must Jean give the motorcycle back to John?
A. No, because Jean is a good faith purchaser for value
B. Yes, because it was stolen and John did not intend for it to be sold to her
C. Yes, because John filed a police report
D. No, because it was John’s fault for leaving the motorcycle in his driveway
19) Melinda owns a rental property. She deeds the property to her son Jack, by warranty deed. Ten years later she sells the property to Brenda, her neighbor, and signs a quitclaim deed to the property in favor of Brenda. Who owns the property?
A. Jack owns the property.
B. Jack and Brenda each own half the property.
C. Brenda owns the property.
D. Melinda still owns the property, because neither deed was effective.
20) Jane and Bill are married. They purchase a house and lot as tenants by the entirety. Then Jane is killed in a car accident. Her will leaves everything to her sister, Ruth. What will happen to Jane’s interest in the property?
A. Ruth will own the property with Bill as joint tenants.
B. Ruth will own the property with Bill as tenants by the entirety.
C. Bill will be the sole owner of the property.
D. Bill will have to buy out Ruth’s interest in the property.
21) Mary and George are a husband and wife who reside in a community property state. For 30 years, George has been the sole provider while Mary cared for the children and home. George dies, leaving a will that leaves his estate to their three children, now adults. How is the ownership of the house affected?
A. Mary owns half interest in the house, and the adult children own the other half.
B. Mary owns the entire house, as the community survivor.
C. Mary and the adult children become tenant in the entirety.
D. Mary and the adult children each own a quarter interest in the house.
22) Which is true of a limited partnership?
A. The liability of all owners is unlimited.
B. The liability of all owners is limited to the amount of their contribution to the business.
C. At least one of the partners must be a general partner with unlimited personal liability.
D. A partnership is limited to doing business in the state of incorporation.
23) Which of the following is true when a general partnership is converted to an LLC?
A. The conversion can be made retroactive for up to two years.
B. The property must be sold to a third party who then immediately sells it to the LLC.
C. The profit and loss sharing terms must remain the same as they were in the partnership.
D. The members will retain unlimited personal liability for obligations incurred while the business was a partnership.
24) Which of the following is true of a limited liability company?
A. Limited liability companies have limited duration.
B. Limited liability companies are managed by members or managers.
C. Documents do not have to be filed with the state to create one.
D. Limited liability companies are automatically taxed like corporations.
25) If a creditor is owed money by an insolvent corporation, its best bet to collect is to try to
A. persuade a court that the corporation is inadequately capitalized, in hopes the court will lift the corporate veil
B. persuade a court that the corporation has hidden assets against which the creditor may levy
C. force the corporation to raise its prices to increase income
D. force the corporation to refinance its debts
26) Fred wants to start an adult daycare business, but is worried about potential liability. He hires an attorney to incorporate his business, but does not want to keep paying the attorney, so he dismisses the attorney as soon as the incorporation is accomplished. What else must Fred do to make sure he holds on to his protection from personal liability?
A. He must buy malpractice insurance.
B. He must maintain the corporate formalities and records.
C. He must post a disclaimer, advising persons who visit the property that the management is not responsible for injuries to guests.
D. He must hire an independent contractor to take over the care of the patients.
27) Rita is the sole shareholder of an auto repair shop that is incorporated. She is at work one day when her sister comes in and tells her she needs $100 for schoolbooks. Rita looks in her wallet, and seeing that it contains no money, opens the cash register and takes out $100, which she hands to her sister. The sister looks worried, but Rita tells her, “Don’t worry; I take money out of the cash register all the time for my personal expenses. It’s my business, so I can take money out whenever I want.” Her customer, who is waiting to pick up his car, tells Rita that she is risking the piercing of the corporate veil. Is the customer correct?
A. Yes, Rita is not the board of directors.
B. No, Rita is the only shareholder and can do what she wants.
C. No, the customer is wrong.
D. Yes, Rita is co-mingling personal assets with corporate assets.
28) Rover Corporation is a regular corporation that has not elected S corporation status. In 1992, Rover earned $100,000; in 1993, Rover distributes $50,000 to its shareholders. Which of the following best describes the tax consequences to rover and its shareholders?
A. Rover is taxed on $100,000 in 1992; the shareholders are not subject to tax.
B. The shareholders are taxed on $100,000 in 1992; Rover is not subject to tax.
C. Rover is taxed on $100,000 in 1992; the shareholders are taxed on $50,000 in 1992.
D. Rover is taxed on $100,000 in 1992; the shareholders are taxed on $50,000 in 1993.
29) What types of business can be converted to an LLC?
A. General partnerships and limited partnerships only
B. General partnerships only
C. Corporations and limited partnerships only
D. Corporations, general partnerships, and limited partnerships
30) A particular issue of stock carries a stated dividend rate of 8 %; that if this dividend is not paid during a particular year, it will be paid in a subsequent year before common stock dividends are paid; and that upon liquidation of the corporation, the owner will receive $300 per share before the common stockholders get anything. This stock is
A. preferred stock
B. noncumulative preferred stock with a liquidation preference
C. common stock
D. cumulative preferred stock with a liquidation preference
31) Which of the following people is protected from employment discrimination on the basis of age?
A. A 50-year-old person who wants a job as an accountant
B. A 10-year-old person who wants a job as a bartender
C. A 90-year-old person who wants a job as an airline pilot
D. A 30-year-old person who wants a job as a waitress
32) What is the primary purpose of the Occupational Safety and Health Act?
A. Its purpose is to reduce the application of industry standards to workplace conditions.
B. Its purpose is to promote the provision of healthcare benefits by employers having more than 15 employees.
C. Its purpose is to protect the safety of workers and the safety of those who purchase the employer’s products or services.
D. Its purpose is to compel employers to provide a work environment that is free from recognized hazards that could cause death or serious injury.
33) Which of the following rejected applicants may have a valid claim for discriminatory hiring practices?
A. A Catholic school did not hire a teacher because he was not Catholic.
B. A university did not hire a 22-year-old woman to be a director of faculty because she was too young.
C. A public health service did not hire a registered nurse because his shaking hands prevented him from administering injections.
D. A trucking company did not hire a truck driver because she was pregnant.
34) What is generally the effect when an exception to the employment at will doctrine applies?
A. There is some sort of limitation on at least one party’s ability to terminate the employment relationship.
B. Employees can be prohibited from quitting a job.
C. The employer is required to hire a certain employee.
D. The Fair Labor Standards Act will set the terms, such as pay, for the employment relationship.
35) Company employee handbooks have been found to amount to a(n) ______________ exception to the employment at will doctrine.
D. public policy
36) Which of the following employers have been expressly excluded from Title VII?
A. State and local governments
B. Indian tribes
C. Labor unions
D. Most federal agencies
37) The Biosafety Protocol provides as follows:
A. Medical waste must be safely disposed.
B. Employees must wash hands when preparing food.
C. Genetically engineered food must state that it may contain modifications.
D. Vaccinations must contain live virus.
38) In general, trademark protection is granted based on whether the trademark is
A. the original creation of the trademark registrant
C. novel and useful
D. understandable to the general public
39) The law gives the consumer what protection from aggressive tactics of door-to-door salespersons?
A. The customer may keep the product without paying for it.
B. The customer may file a police report.
C. The customer may rescind the transaction within 3 days.
D. The customer may send the product back for a refund within 30 days.
40) Peter has a bus company, and hires drivers to drive his buses. He does not take any taxes out of their paychecks. The bus drivers have to drive the buses according to a particular schedule, and must follow a certain route, and follow the driving rules that are listed in the Driver’s Manual that Peter has provided. What is the employment status of the drivers?
A. They are employees.
B. They are partially disclosed agents.
C. They are independent contractors.
D. They are principals.
41) William owns his own business, performing document delivery for various clients. He is driving in his delivery van, taking some important documents to the courthouse for an attorney’s office, when he makes a wrong turn and causes an accident, damaging Ruth’s car. May Ruth recover a judgment against the attorney’s office?
A. No, because William was on a dual-purpose mission
B. No, because William is an independent contractor
C. Yes, because William was on an errand for the attorney at the time he caused the accident
D. Yes, because the attorney has more money than William, so Ruth will be able to collect
42) Patricia owns a Mexican restaurant, famous for home-made tortillas. The tortillas are made by several women, who make the tortillas in their homes and sell them to the restaurant. Some of the women have been making tortillas for Patricia for years, while others have just started. Patricia pays for the tortillas by the dozen. What is the nature of the employment relationship between the women and Patricia?
A. The women are part-time employees of the restaurant.
B. The women are agents of the restaurant.
C. The women are employees of the restaurant.
D. The women are independent contractors.
Patricia owns a Mexican restaurant, famous for home-made tortillas. The tortillas are made by several women, who make the tortillas in their homes and