1) A corporation is considered a citizen of what state?
A. It is not a citizen because it is a business
B. The state where the majority of the employees live
C. The state where the president of the corporation lives
D. The state where it filed its Articles of Incorporation
2) The Federal Trade Commission is an example of
A. a corporation subsidized by the federal government
B. a federal agency created by the federal government
C. a temporary commission created by executive order that has become permanent
D. a branch of the U.S. Supreme Court
3) The doctrine of stare decisis concerns
A. making sure to do adequate research before making a legal decision
B. following precedents so that legal principles announced in a case are used to determine later cases
C. staring at the facts of a case for a long time to make sure the correct decision is made.
D. using constitutional law to render a decision
4) Utilitarianism is a moral theory, which states
A. ethics requires following the Golden Rule (do unto others as you would have them do unto you)
B. ethics requires a decision-maker to take actions which result in the greatest good to society
C. ethics requires acting according to the Bible or some outside source
D. ethics requires actions which use the most efficient tools
5) Which of the following statements is true regarding the relationship of law and ethics?
A. In some cases, ethics will require a higher standard of conduct than the law, but never vice versa.
B. The legal requirements will almost always be the same as the ethical requirement because the law is based on ethical standards.
C. Depending on the circumstances, the law can require a higher, lower, or the same standard of conduct as ethics demands.
D. In some cases, the law will require a high standard of conduct than ethics, but never vice versa.
6) The Federal False Claims Act is also known as
A. The Whistleblower Statute
B. The Sarbanes-Oxley Act
C. The Statute of Limitations
D. The Statute of Frauds
7) If a defendant files a motion for summary judgment in a civil case, what is the defendant saying?
A. That the plaintiff’s claims are false
B. That even if what the plaintiff says is true, there is no basis for judgment against the defendant
C. That the case is ready to go to the jury
D. That the court has no jurisdiction to decide the case
8) What facts justify a state court’s exercising personal jurisdiction over an out-of-state defendant?
A. The plaintiff lives in that state.
B. The state is most convenient for the plaintiff.
C. The defendant lives within 100 miles of that state.
D. The defendant has sufficient contacts with the state such that the state’s exercise of personal jurisdiction of him in not unfair.
9) A court can enter a judgment notwithstanding the verdict when the following has happened?
A. A jury could not reach an agreement on what the verdict would be.
B. The jury was sequestered.
C. The judge’s personal opinion is that the jury made the wrong decision.
D. The court finds that the jury acted out of a bias or after jury misconduct.
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 lose the case because was not informed of the transaction.
B. Juanita will lose the case because she cannot find William to serve him with a lawsuit.
C. Juanita will recover a judgment against Carlos for the entire amount.
D. Juanita will recover a judgment against Carlos for half the missing money.
11) What is the definition of a tort?
A. Any violation of an ethical duty
B. Any civil wrong that allows the injured person to recover damages
C. Any action done in violation of a prior agreement, which allows the victim to recover damages
D. Any crime or misdemeanor
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. penalty damages
B. nominal damages
C. punitive damages
D. retribution 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 valid contract. There was a promise in exchange for a promise, and both parties got what they wanted.
B. This is a voidable contract because Vicky can change her mind.
C. This is not an enforceable contract because the agreement is not in writing.
D. This is a void contract, because the parties agreed to commit fraud.
14) George says to Judy, “If you promise to train my employees within 6 months, I promise to pay you $3,000.” Judy replies, “OK, you’ve got a deal.” Judy appears at George’s office and successfully trains the employees, but the training is not completed until 6 months and 2 days later. Will Judy be able to enforce George’s promise to pay her the $3,000?
A. Yes, Judy will be able to recover the $3,000 because she substantially performed the contract.
B. No, Judy will not be able to collect the $3,000 because she took longer than 6 months to complete the training.
C. No, Judy will not be able to collect the $3,000 because there was no written agreement.
D. No, the parties have not reached an agreement about when George would pay Judy, so there is no contract.
15) Where a contract calls for action that violates a statute, in a breach of contract case the court will
A. impose the appropriate criminal penalty
B. order both parties to return any consideration received
C. order payments so that the parties to the illegal contract share any losses equally
D. ignore the contract and leave the parties where they are
16) Articles 2 and 2(A) of the UCC cover which types of transactions?
A. Sales of goods and sales of real property
B. Sales of goods and contracts for the providing of services
C. Sales of goods and leases of goods
D. Sales of goods and leases of goods and real property
17) Patty went to a used car lot and purchased a car. Two weeks later, the transmission fell out as she was driving to work. She contacted the dealer to complain, but the dealer told her the car had been sold “As Is”. The dealer advised her to check in the glove compartment of the car, where Patty found a notice that stated, “This vehicle is sold AS IS. The purchaser will bear the expense of any repairs that are necessary to this vehicle.” Does the notice mean that Patty has no rights against the dealer with respect to the condition of the vehicle?
A. Yes, Patty should have inquired about the warranty when she bought the car.
B. Yes, the notice operates to void any warranty on the vehicle.
C. No, the notice is there for subsequent purchasers of the car.
D. No, the notice was not conspicuously displayed on the vehicle.
18) 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. Yes, Ted made a valid modification to the parties’ original agreement.
B. Yes, Ted will prevail because he has a witness to the telephone call.
C. No, Ted will not prevail because his attempt to modify the agreement was not effective.
D. No, Ted should have written a letter to change the type of boxes in the contract.
19) Bruce and Diane are ranchers. Bruce owns the property next to Diane’s property. Bruce needs more pasture for his cattle, so he rents five acres of Diane’s ranch for pasture land. This arrangement continues for more than 20 years. Then Diane sells her ranch, and the new owner tells Bruce to stop using the pasture land. Bruce claims ownership of the land by adverse possession. Will his claim succeed if the case goes to court?
A. Yes, Bruce has had actual possession of the land for more than 20 years, so he owns the land under the doctrine of adverse possession.
B. Yes, Bruce will own the pasture land, but he will have to pay rent to Diane’s purchaser.
C. No, Bruce has failed to show that the value of the land was equal to the rent.
D. No, Bruce failed to show that he claimed the land adversely to Diane’s interest.
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 tenants by the entirety.
B. Bill will be the sole owner of the property.
C. Bill will have to buy out Ruth’s interest in the property.
D. Ruth will own the property with Bill as joint tenants.
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 the entire house, as the community survivor.
B. Mary owns half interest in the house, and the adult children own the other half.
C. Mary and the adult children each own a quarter interest in the house.
D. Mary and the adult children become tenant in the entirety.
22) John and Jake are partners in a bowling alley. Business has been bad lately, and they need more operating capital, so they invite Lisa to become a partner. What liability does Lisa have for partnership debts?
A. She owes one third of all the partnership debts.
B. She owes an equal share in all debts incurred after she became a partner.
C. Her liability is limited to the amount she invested.
D. She owes an equal share of all partnership debts.
23) Ricardo and Robert operate a hardware store as general partners. Robert is unmarried, while Ricardo is married to Jenna. Ricardo is killed in an accident and his will leaves all his property to Jenna. What happens to Ricardo’s interest in the partnership?
A. Jenna inherits Ricardo’s partnership interest and becomes Robert’s partner in running the business.
B. Robert becomes sole owner of the hardware store and owes Jenna nothing
C. Ricardo’s interest is divided equally between Robert and Jenna.
D. Robert becomes sole owner of the hardware store, but owes Jenna the value of Ricardo’s interest in the business.
24) Which of the following is true when a general partnership is converted to an LLC?
A. The property must be sold to a third party who then immediately sells it to the LLC.
B. The conversion can be made retroactive for up to two years.
C. The members will retain unlimited personal liability for obligations incurred while the business was a partnership.
D. The profit and loss sharing terms must remain the same as they were in the partnership.
25) The alter ego doctrine provides as follows:
A. That a corporation becomes the alter ego of its owner
B. That the president is the decision maker of a corporation
C. That protection from personal liability can be forfeited if corporate formalities are not observed
D. That the board of directors is the alter ego of a corporation
26) 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 has hidden assets against which the creditor may levy
B. persuade a court that the corporation is inadequately capitalized, in hopes the court will lift the corporate veil
C. force the corporation to refinance its debts
D. force the corporation to raise its prices to increase income
27) 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 maintain the corporate formalities and records.
B. He must buy malpractice insurance.
C. He must hire an independent contractor to take over the care of the patients.
D. He must post a disclaimer, advising persons who visit the property that the management is not responsible for injuries to guests.
28) What types of business can be converted to an LLC?
A. General partnerships only
B. Corporations, general partnerships, and limited partnerships
C. General partnerships and limited partnerships only
D. Corporations and limited partnerships only
29) The uniform law, issued in 1984 by the Committee on Corporate Laws of the American Bar Association, that regulates the formation, operation, and termination of corporations is
A. The Model Business Corporation Act
B. The Standard Incorporation Act
C. The Uniform Commercial Code
D. The Revised Model Business Commercial Code
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. common stock
B. noncumulative preferred stock with a liquidation preference
C. preferred stock
D. cumulative preferred stock with a liquidation preference
31) Which is true about the two kinds of discrimination that are actionable under Title VII?
A. Disparate impact and disparate treatment are both based on how an employer treats a specific individual.
B. Disparate impact refers to individuals and disparate treatment refers to protected classes.
C. Disparate impact and disparate treatment are both based on how an employer treats a protected class.
D. Disparate treatment refers to individuals and disparate impact refers to protected classes.
32) Marie works as a receptionist for a plumbing company. She works from 9:00 a.m. to 6:00 p.m. on Monday through Friday. She earns $12 per hour, and is told how to do her job and what she should be working on at any particular time. Her boss does not withhold any taxes from her paycheck. Which of the following is true?
A. Marie would be treated as an employee because she is paid for the work that she does.
B. Marie would be treated as an independent contractor because the employer doesn’t take any taxes out of her check.
C. Marie would be treated as an employee because of the control exercised by the plumbing company over her work.
D. Marie would be treated as an independent contractor because she is paid hourly.
33) Which of the following people is protected from employment discrimination on the basis of age?
A. A 90-year-old person who wants a job as an airline pilot
B. A 10-year-old person who wants a job as a bartender
C. A 50-year-old person who wants a job as an accountant
D. A 30-year-old person who wants a job as a waitress
34) What is generally the effect when an exception to the employment at will doctrine applies?
A. The employer is required to hire a certain employee.
B. Employees can be prohibited from quitting a job.
C. There is some sort of limitation on at least one party’s ability to terminate the employment relationship.
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. Labor unions
B. Most federal agencies
C. State and local governments
D. Indian tribes
37) Which of the following is true about misappropriation of trade secrets?
A. Although it is not necessary that the trade secret be patented, the secret must be such that it could be patented.
B. The plaintiff can recover only if the defendant acquired the secret through illegal means.
C. Trade secrets are protected regardless of the actions of the trade secret owner.
D. Injunctions are generally not available to protect trade secrets.
38) The Biosafety Protocol provides as follows:
A. Genetically engineered food must state that it may contain modifications.
B. Vaccinations must contain live virus.
C. Medical waste must be safely disposed.
D. Employees must wash hands when preparing food.
39) In general, trademark protection is granted based on whether the trademark is
A. novel and useful
B. understandable to the general public
C. the original creation of the trademark registrant
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 independent contractors.
B. They are principals.
C. They are employees.
D. They are partially disclosed agents.
41) Barbara owns a dairy farm. One of her pastures needs cutting, so she hires Jed to do the work for $150. While oiling his riding mower, Jed hurts his arm, so he hires Bill to cut the pasture for $130. Bill takes his own mowing machine to Barbara’s pasture. During the mowing, Bill damages the fence, and some of the dairy cattle are later able to pass directly to a neighbor’s corn field, where they eat some of the corn, and trample the crop, causing the crop to be almost a total loss. Who is responsible for the damages caused by the cattle?
A. Barbara is responsible, because they are her cattle.
B. Jed is responsible, because Bill is Jed’s employee.
C. Barbara is responsible, because Jed is an independent contractor.
D. Bill is responsible, because he is an independent contractor.
42) The primary factor that determines whether someone is an independent contractor or an employee is
A. whether the worker clocks in and out of the job
B. whether the employer controls the details of the job performance
C. whether the worker has other clients
D. whether the employer withholds taxes or not
The primary factor that determines whether someone is an independent contractor or an employe