uestion 1

A supervening illegality (that is, legality after the contract was entered into) is best described as

	Voiding the contract
	Resulting in a discharge of contract duties
	Having no effect on the contract
	Making the contract voidable

0.5 points

Question 2

A contract clause conditioned on the occurrence of an event may best be an example of

	An express condition
	A condition precedent
	An implied condition
	A covenant

0.5 points

Question 3

Which type of mistake usually will make a contract voidable at the option of the mistaken party?

	a.	A bilateral or mutual mistake
	b.	A unilateral mistake
	c.	A unilateral palpable mistake
	d.	Both a. and c.

0.5 points

Question 4

Which of the following is a TRUE statement?

	A.	For a court to refuse to enforce a covenant not to compete the covenant must be unreasonable in both time/duration and space/geography.
	B.	Regarding covenants not to compete, it is best for the employer to “err on the side of caution” and make the covenant as broad as possible for area and as long as possible for time.
	C.	Covenants not to compete are illegal and void in most states since they may prevent people from working in their fields and in their home towns.
	D.	As a general rule, courts will find a time period of six months to be a reasonable one in a covenant not to compete in an employment contract.

0.5 points

Question 5

Which of the following is a true statement?

	A.	The Uniform Commercial Code is an example of federal Congressional law in the United States.
	B.	The Uniform Commercial Code’s implied warranty of fitness for a particular purpose applies only to merchants.
	C.	To disclaim the implied warranty of merchantability the exact word “merchantability” must be used.
	D.	A Uniform Commercial Code contract must have a definite price term or it will be struck down for vagueness.

0.5 points

Question 6

Which is true about corporate criminal liability?

	Corporations have always been just as subject to criminal liability as individuals.
	Because a corporation cannot be sent to prison, they generally cannot be held criminally liable for the actions of their officers.
	If the criminal conduct can be traced to a specific person or persons, those persons will be liable and not the corporation.
	There can be liability for both the individuals who commit crimes and for the corporation on whose behalf the crimes were committed.

0.5 points

Question 7

Which of the following is true regarding the liability of the partners in a limited partnership?

	Both the limited and general partners have unlimited liability for the partnership debts.
	Neither the limited nor the general partners have unlimited liability for the partnership debts.
	The limited partners have limited liability and the general partners have unlimited liability for the partnership debts.
	The limited partners have unlimited liability and the general partners have limited liability for the partnership debts.

0.5 points

Question 8

Which is a FALSE statement about U.S. civil rights laws?

	a.	The Age Discrimination in Employment Act protects against age discrimination in the workplace.
	b.	Language discrimination in the form of “English-only” policies can be a form of national origin discrimination.
	c.	Even an employee at-will can sue for wrongful discharge if she was terminated because of her gender.
	d.	An employer is allowed to have an Affirmative Action plan that has rigid and fixed quotas for hiring based solely on race due to the history of discrimination in the United States.

0.5 points

Question 9

Which of the following kinds of jurisdiction would be necessary and sufficient for a court to hear a case?

	Subject matter and in personam and in rem.
	Subject matter or in personam or in rem.
	Subject matter and either in personam or in rem.
	In rem and either subject matter or in personam.

0.5 points

Question 10

The person who can accept an offer is known as

	The acceptor
	The offeror
	The assignee
	The offeree

0.5 points

Question 11

An oral contract in which Sally agrees to work for Jane for the rest of Jane’s life is:

	A guaranty contract.
	Unenforceable under the Statue of Frauds because it cannot possibly be performed within one year.
	Enforceable under the Statute of Frauds.
	A and C only.

0.5 points

Question 12

France has a civil law legal system. Civil law systems are principally based on

	administrative rules and regulations.
	case law.
	detailed codified law.
	executive pronouncements.

0.5 points

Question 13

Which of the following is NOT one of the aspects of the implied warranty of merchantability?

	A.	The goods are suitable for the ordinary purposes for which they are used.
	B.	The goods are adequately contained, packaged, and labeled.
	C.	The goods are priced justly and fairly.
	D.	The goods within each unit or part are of an even quality.

0.5 points

Question 14

Under merchant’s protections statutes:

	Reasonable grounds for detainment are necessary only if the period of detainment is long.
	The length of detainment is not relevant as long as there is a reasonable grounds for detainment.
	Any investigation and the period of detainment must both be reasonable.
	Merchants do not have any ethical responsibility to investigate possible investigations of the suspect because this is the job of the police.

0.5 points

Question 15

Damages which are fixed in the amount to be awarded in the event of a breach are known as:

	Punitive damages.
	Liquidated damages.
	Consequential damages.
	Conditional damages.

0.5 points

Question 16

A contract where agreement between the parties is inferred, or assumed, based on their conduct is what type of contract?

	Bilateral.
	Unilateral.
	Quasi.
	Implied in fact.

0.5 points

Question 17

Which of the following is/are true about the principal agency relationship?

	a.	In a non-disclosed principal situation, the agent is typically initially liable to the third party.
	b.	Under the ratification doctrine, a principal can ratify and thus authorize an agent’s contract with a third party that was not originally authorized by the principal.
	c.	Under the imputed knowledge and notice doctrine, a principal can be charged with the knowledge of facts that had been disclosed to the principal’s agent.
	d.	All of the above.

0.5 points

Question 18

A party loses a lawsuit and files an appeal. The appellate court is most likely to review the trial court’s

	application of the law.
	consideration of the creditability of the evidence.
	findings of fact.
	interpretation of the conduct of the witnesses.

0.5 points

Question 19

Ron contracts with Gail under what Ron later learns to have been misrepresented facts. Ron has not yet suffered an injury. He can

	only obtain compensatory damages from Gail.
	rescind the contract and receive restitution
	either obtain damages or rescind the contract.
	none of the above.

0.5 points

Question 20

In determining the lawfulness of a merger, which of the following factors need not be shown?

	An actual lessening of competition.
	The relevant product market.
	The relevant geographic market.
	The likelihood of a substantially lessening of competition or the tendency to create a monopoly.

0.5 points

Question 21

To be convicted of a crime under U.S. laws, the prosecution typically must prove the case against the defendant:

	a.	By a preponderance of the evidence.
	b.	By clear and convincing evidence.
	c.	Beyond a reasonable doubt.
	d.	None of the above.

0.5 points

Question 22

Which of the following is a false statement?

	Securities include not only stocks and bonds but also other forms of investment contracts pursuant to U.S. legal interpretation.
	The common types of securities are stocks and bonds issued by corporations.
	When a security is offered to the public, the Securities and Exchange Commission generally requires that investors be provided with a prospectus.
	“Blue sky” laws refer to federal securities laws found in blue colored law books in the United States.

0.5 points

Question 23

Which of the following is FALSE regarding federal administrative agencies?

	a.	Congress typically delegates to administrative agencies the power to make laws in the form of rules and regulations.
	b.	Administrative agencies, such as the Occupational Health and Safety Administration, cannot conduct inspections since an inspection is a “search,” which can only be conducted by the police or other law enforcement agency pursuant to a traditional criminal law search warrant.
	c.	Administrative agencies typically can impose civil fines after a due process hearing in which a person or business is adjudicated to be in violation of an agency rule or regulation.
	d.	The decisions of administrative agencies can generally be appealed to the traditional court system assuming that procedural requirements for an appeal are met.

0.5 points

Question 24

The “fair use” doctrines applies to:

	a.	Patent law
	b.	The employment at-will doctrine
	c.	Copyright law
	d.	The National Labor Relations Act.

0.5 points

Question 25

Which of the following statements regarding product liability is not
true?

	One major problem with using negligence for product liability is that the plaintiff must show some specific act of negligence.
	Failure to warn about a generally or commonly known danger usually will lead to liability.
	Strict liability is a “no fault” system.
	To be held liable in strict liability, the product must be in essentially the same condition as when it left the defendant’s control.

0.5 points

Question 26

A non-essential term of an offer under the common law may be the

	Writing
	Parties
	Price
	Subject Matter

0.5 points

Question 27

What is the legal significance of the distinction between rule of reason violations and per se violations under the Sherman Act?

	Rule of reason violations must be proven beyond a reasonable doubt and per se violations must be proven with a preponderance of the evidence.
	Rule of reason violations require an agreement with at least one other party, but per se violations can occur without an agreement with others.
	Rule of reason violations relate to actions brought by private parties and per se violations relate to actions brought by the government.
	Rule of reason violations ultimately may be proven to be legally acceptable, but per se violations cannot be deemed to be acceptable under any circumstances.

0.5 points

Question 28

Which of the following is a false statement?

	A.	A state court can use a Long-Arm statute to obtain in personam jurisdiction over non-residents.
	B.	A court can issue a summons ordering a defendant named in a complaint to appear in court.
	C.	Interrogatories are written statements given by witness after a trial.
	D.	Small claims courts have limited jurisdiction.

0.5 points

Question 29

What third party cannot sue to enforce rights in the original contract?

	a.	A third party creditor beneficiary
	b.	A third party done beneficiary
	c.	A third party incidental beneficiary
	d.	An assignee.

0.5 points

Question 30

Which of the following is a false statement?

	A.	An agent who has held herself out as having higher-than-customary knowledge and skills will be held to that higher standard when doing the principal’s business.
	B.	The “reasonable person” standard typically applies to the degree of care required of an agent when conducting the principal’s business.
	C.	Most information that comes to the attention of an agent is assumed to be known by her principal.
	D.	Duties of loyalty and accountability are not duties that the agent owes to his or her principal since the agent is not a fiduciary like a partner.

0.5 points

Question 31

The statute enacted to combat organized crime and which imposes liability on wrongdoers is:

	The Racketeer Influenced and Corrupt Organizations Act.
	The Organized Crime and Innocent Victims Act.
	The Crime Victims Compensation Act.
	The Habitual Criminal Damages Recovery Act.

0.5 points

Question 32

Which type of mistake usually will make a contract voidable at the option of the mistaken party?

	a.	A bilateral or mutual mistake
	b.	A unilateral mistake
	c.	A unilateral palpable mistake
	d.	Both a. and c.

0.5 points

Question 33

Which of the following is a false statement?

	In a limited partnership, the liability of the limited partner generally is limited to the amount of capital he or she has invested in the partnership.
	In most states, limited liability partnerships are available to all types of business people.
	In winding up a general partnership, creditors are paid before partners receive their capital contributions.
	A partnership technically legally “dissolves” when a partner ceases to be associated with the carrying on of partnership business.

0.5 points

Question 34

Tom is a minor who enters into a contract with Diane. All of the following are effective methods for Tom to ratify the contract EXCEPT

	expressly ratifying the contract after Tom reaches the age of majority.
	failing to disaffirm the contract within a reasonable time after Tom reaches the age of majority.
	ratifying the contract before Tom reaches the age of majority.
	impliedly ratifying the contract after Tom reaches the age of majority.

0.5 points

Question 35

A plaintiff in a fraudulent misrepresentation case must prove all of the following except:

	A.	Reasonable and justifiable reliance
	B.	False statement of material fact
	C.	Intent to deceive
	D.	Physical injury.

0.5 points

Question 36

Which of the following corporate acts is most likely to be held ultra vires today?

	Contribution to a private university to help fund an entrepreneurship center
	Generous gratuity paid to the young widow of the corporation’s founder
	Entering a joint venture with another business
	Installation of antipollution equipment not yet required by law

0.5 points

Question 37

Which of the following is a correct statement?

	Incorporators must sign and execute the articles of incorporation of a U.S. corporation.
	Most states in the U.S. limit the duration of a corporation to fifty years plus a day, which time period can be renewed.
	A tenancy at will under U.S. law is created by an express contract by which personal property is leased for a specific period of time.
	A quitclaim deed warrants more than any other deed under U.S. real estate law.

0.5 points

Question 38

Who can be deemed liable for trading on material inside information based on U.S. securities laws?

	a.	Misappropriators of inside information
	b.	Insiders and tipees in conspiracy with insiders
	c.	Inadvertent tipees who are in a fiduciary relationship with the disclosing party
	d.	All of the above.

0.5 points

Question 39

What is FALSE about a board of directors of the traditional business corporation?

	a.	The board must act as a collective body to legally bind the corporation.
	b.	The board is protected for poor business decisions by the “business judgment rule.”
	c.	The board is responsible for establishing of major corporate polices and exercises ultimate control of the corporation.
	d.	Board members are automatically entitled to compensation for serving on a board based on federal corporate law but the compensation must not be “excessive” and the shareholders must approve of the compensation “package.”

0.5 points

Question 40

X offers to sell Y a computer. Y sends an acceptance via the mail. This acceptance is generally effective when it is

	in transit.
	received.
	sent or dispatched.
	written.

E2

Question 1

One advantage of the Utilitarian ethical principle is that:

	It is very egalitarian as all people and groups affected are counted.
	It has a broad stakeholder component that is similar to modern business constituent group analysis.
	It conforms to the way most people think about acting by focusing on the consequences of an action.
	All are advantages.

0.5 points

Question 2

World Development Corporation suggests that its employees apply the Categorical Imperative to ethical issues that arise at work. This theory requires that the employees

	Seek to overthrow unjust governments by any means at their disposal
	Categorize the issues according to profitability and legality
	Evaluate their actions in light of how they treat human beings
	Take whatever steps are necessary to survive since one can say categorically that it is a “moral jungle” in the business world.

0.5 points

Question 3

Which of the following is the most accurate statement?

	Immanuel Kant would support the Golden Rule of religion (“Do unto others as you would have them do unto you”).
	Ethical relativism has been widely adopted as an ethical theory because of its universal moral norms and strict guidelines.
	A corporation that moves jobs overseas to take advantage of lower pay scales is usually adhering to a broad stakeholder theory of social responsibility.
	Social audits are now the legally mandated norm in the corporate world.

0.5 points

Question 4

Bribery, though commonly thought wrongful, arguably can be considered moral pursuant to:

	a.	Utilitarian ethics if the overall greater good is achieved by paying the bribe even though there are certain negative consequences for some stakeholders (such as the competition and the host society).
	b.	Ethical egoism from the vantage point of the company paying the bribe if they really need the contract with the foreign government and they have a policy of “letting the locals deal with the locals.”
	c.	Ethical relativism if making the lavish “gifts” (that is, “bribe” payments”) to foreign government officials is considered to be an acceptable and appropriate practice and custom in the host county.
	d.	All of the above.

0.5 points

Question 5

Nora’s best criticism of Utilitarianism is that it

	Encourages unethical behavior
	Fosters conformance with society’s standards
	Mandates acting in the employer’s best interest
	Results in human costs that many persons find unacceptable.

0.5 points

Question 6

What is FALSE about whistleblowing laws?

	A.	A whistleblowing employee may be able to bring a lawsuit against his or her employer pursuant to the common law Public Policy doctrine even if his or her state does not have a whistleblower protection statute.
	B.	Pursuant to Florida law, the whistleblowing employee must first report the legal wrongdoing to his or her supervisor and then up the chain-of-command.
	C.	Pursuant to New Jersey law, the whistleblowing employee can sue for emotional distress damages.
	D.	The federal Whistleblower Protection Act protects whistleblowing employees who report legal and moral wrongdoings on the part of their employers.

0.5 points

Question 7

According to the Natural Rights theory of John Locke,

	a.	All people possess in the State of Nature and thus by the Natural Law certain inalienable rights – the right to life, liberty, and property.
	b.	Natural Rights supersede any legal, government, or political laws.
	c.	Natural Rights supersede any social conventions and local customs.
	d.	All of the above.

0.5 points

Question 8

The “golden rule,” “Do unto others as you would have them do unto you,” is most directly reflected in which moral theory?

	Ethical relativism.
	Utilitarianism.
	Ethical fundamentalism.
	Kantian ethics.

0.5 points

Question 9

Pete, an employee of Quality Sales, Inc., takes a Kantian duty-based approach to ethics. Pete believes that he must

	achieve the greatest good for the most people.
	avoid unethical behavior as determined by reason regardless of the consequences.
	conform to society’s standards.
	place his employer’s interest first.

0.5 points

Question 10

Which statement is NOT part of Kant’s Categorical Imperative?

	a.	When in Germany, do as the Germans would do.
	b.	Treat people always with dignity and respect.
	c.	Act only under those maxims that you would be willing to have as universal “laws.”
	d.	Act only if you would be willing to be the agent/giver or the receiver of the action.

E3

Question 1

Kilgore, an electrician, was testing various fuses with a standard tester. Kilgore had not purchased any of