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Name: __________________________ Date: _____________
1. A state statute defeats an inconsistent federal administrative regulation in case of a clash
between them.
False
2. A state homicide statute is an example of a substantive law.
True
3. Which of the following is an equitable remedy?
A) Arbitration.
4. Which of the following defeats a federal statute in case of a clash between them?
D) None of the above.
5. Which of the following is both civil and substantive?
A) A state's contract law.
6. Generally, forum selection clauses in form agreements are unenforceable.
False
7. In rem jurisdiction is based on the fact that property of the defendant is located within
the state.
True
8. Which of the following will not give a state trial court the power to hear a civil case?
C) In personam jurisdiction plus in rem jurisdiction.
9. Which of the following motions is made at trial and, if successful, essentially “takes the
case away from the jury” and gives a judgment to one party?
D) The motion for a directed verdict
10. Corporations engaging in political expression are entitled to the same First Amendment
protection as an individual engaged in such speech.
True
11. So long as Congress acts within one of its enumerated powers, it can discriminate on the
basis of race.
False
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12. Which of the following independent checks only blocks state laws and not federal laws?
B) The First Amendment
13. The rights to notice of the charges brought against you and to some kind of fair trial or
hearing to prove those charges are central requirements of:
C) Procedural due process
14. Today, government discrimination on the basis of race:
A) Is subject to full strict scrutiny, regardless of the victim's race and regardless of
whether the federal government or a state discriminates.
15. Under the stakeholder theory of corporate social responsibility, employees' interests are
considered.
True
16. “What would happen if everyone acted in this way?” is a question that Kant would ask.
True
17. Righteous Ron contracts to sell an eight-shot pump shotgun to crazy Mike. Later, Ron
finds out with absolute certainty that Mike plans to use the shotgun in a shooting spree.
Nonetheless, Ron sells Mike the gun. "A promise is a promise," says Ron. Which
general style of ethical thinking is best exemplified by Ron's action and his remark?
B) Teleology.
18. Kurt sat in his car at a two-way stop light late one night. No other car appeared on the
road, and the light was taking longer than usual to turn green. However, Kurt decides
not to drive through the light. This is an example of:
A) Act Utilitarianism.
19. Raj is considering installing a windmill in his front yard to save energy. He is thinking
about the effect that this action will have on his neighbors, and whether the energy
saved will help reduce demand for gas and electricity. Raj's decisionmaking process
illustrates:
A) Act utilitarianism.
20. The agency relationship may be formed even if the parties do not subjectively intend to
create it. .
True
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21. The principal's death terminates an agent's apparent authority.
True
22. In order to form an agency:
B) The principal must have capacity.
23. Which of the following depends to a significant degree on the third party's reasonable
belief that the agent has authority?
C) Apparent authority.
24. An agent is most likely to breach his duty of loyalty by:
D) Selling the principal's property to one's father, without the principal's knowledge
or consent.
25. In a suit by a third party against both the agent and principal:
B) The third party may collect from either the agent or the principal.
26. Which of the following is true regarding a disclosed principal's ratification of a contract
made by an agent without authority?
A) Ratification must be in writing.
27. A sole proprietorship is a legal entity separate from its owner.
False
28. A limited liability partnership:
D) Is similar to a partnership except that a partner's liability for his partner's
malpractice is limited to the partnership's assets.
29. Partners of a partnership:
A) Are liable for all the obligations of their partnership.
30. A limited partnership:
C) May be created only by complying with a state statute permitting limited
partnerships.
31. An S corporation:
B) May have only one class of shares.
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32. A Professional Corporation:
D) Both b and c.
33. Peter and Paul are partners. Peter is aware that Paul purchased $5,000 of computer
equipment for the partnership on account. When the invoice arrived, Peter claimed that
he did not authorize the purchase.
C) Peter's knowledge that Paul purchased the computer equipment for the
partnership is sufficient to bind Peter and the partnership.
34. Mark and Bonnie are partners. Mark contributed capital of $30,000 to the partnership
and Bonnie contributed $15,000. Mark does 70% of the partnership's work, and Bonnie
does 30%. They agree that Mark will assume 60% of partnership losses and Bonnie
40%. They have not agreed how to share profits. The partnership earns a profit of
$90,000. What is Bonnie's share of the profits?
D) $36,000
35. Which of the following partnership decisions must be approved by all the partners of a
partnership in the business of providing accounting and auditing services?
B) Making a contract to provide audit services.
36. Which of the following causes a dissociation of a partnership?
A) Withdrawal of a partner from a partnership at will.
37. Which of the following is not within the implied authority of a partner winding up the
business of an accounting partnership?
C) Make a contract to audit the financial records of a new client.
38. The primary reason to choose the limited liability limited partnership instead of a
limited partnership as a form of business is to:
C) Limit the liability of all of its owners.
39. Which of the following information must be contained in a limited partnership
certificate?
B) The signature of each general partner.
40. In order to pierce the corporate veil, a creditor must show:
D) Both “a” and “b”.
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41. The Due Process Clause of the Constitution of the United States:
D) Requires a foreign corporation to have sufficient contacts with a state before the
state may exercise jurisdiction over the corporation.
42. National Shoe is incorporated in Nevada but has a nationwide sales force. Joe, a
salesman based in the Pacific Northwest (Washington, Oregon, and California), solicits
orders from businesses in the state of Washington, but final acceptance occurs in
Nevada. Washington wants National Shoe to qualify to do business in its state. Most
likely:
D) Qualification is required, since it has a salesman calling upon customers in
Washington.
43. While at home, Kyle Kinston, the president and chief executive officer of Remstat, Inc.,
is called by the CEO of Viokam Corporation, who asks whether Remstat would be
interested in buying about 25% of the outstanding shares of Viokam. Remstat is a
billion dollar conglomerate that has eyed Viokam for some time, but Kinston tells
Viokam's CEO that Remstat is not interested. Kinston tells the CEO, however, that
KKIM, Inc., is willing to buy the shares. Kinston is the 100% shareholder of KKIM.
Viokam sells the shares to KKIM for $35 million. A year later, KKIM sells the shares
for $55 million to a mutual fund company. When Remstat's directors discover KKIM's
purchase and sale of the Viokam shares, they sue Kinston on behalf of the corporation.
Which of the following is correct?
D) Kinston has usurped a corporate opportunity.
44. Gath Meat Packing Company is a meat processing business. To reduce costs and
increase profits, the president and CEO of Gath orders Gath's employees to violate
federal criminal meat processing laws. The United States Department of Justice
prosecutes Gath for criminal violations of the meat processing law. Has Gath
committed criminal violations?
A) Yes, because the president and CEO, a high-level administrator of Gath,
authorized the commissions of the crimes.
45. Shareholders may bring a suit on behalf the corporation against the board of directors.
Such a suit is generally called a(n) ______ suit.
B) derivative action.
46. Kamm Corporation has 10,000,000 common shares outstanding. Its 4 directors are
elected by cumulative voting. To elect one director, a shareholder must own at least:
B) 2,000,001 shares.
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47. Which of the following is not required to effect an ordinary merger of two corporations?
A) The shareholders of the surviving corporation must approve the merger.
48. Which of the following is not a security under the Securities Act of 1933?
B) A promissory note due in 15 months issued by a corporation to a bank to evidence
the corporation's obligation to repay a loan by the bank.
49. Which of the following issuers is not required to file periodic reports under the 1934
Act?
A) An issuer with assets worth $8 million and 600 holders of its debentures.
50. Under the Sarbanes-Oxley Act of 2002 audit firms are banned from performing which
of the following types of services for audit clients?
D) A and B.
51. A offers to mow B's lawn for $100. B says in reply: "This is outrageous! You're taking
advantage of me! But I accept." B indeed has accepted A's offer.
True
52. Under the CISG, if an offeree's reply to an offer for the sale of goods changes the price,
then:
C) The reply is considered a rejection of the offer/
53. On Thursday, Trista receives a letter from Charlie in which he offers to sell her a
diamond ring. The letter states: “if you choose to accept, you must do so prior to 2:00
p.m. tomorrow.” Trista had a telegram of acceptance dispatched before 2:00 p.m. on
Friday. The telegram is delivered to Charlie's home at 2:15 p.m. Do Trista and Charlie
have a contract?
B) Yes, because Trista dispatched the telegram prior to 2:00 p.m.
54. Tony was offered a position as Regional Sales Director for Acme Company starting on
July 1, 2003. Acme Company sent Tony an employment contract for his signature.
Tony crossed out “July” and wrote “August,” signed and returned the contract to Acme
Company's Human Resources Department. Tony also writes an e-mail to his future
boss, Ann, Vice President of Sales, telling her that he looked forward “to working with
her on August 1.” On July 2, Acme telephones Tony to tell him that his position has
been given to another individual. Which of the following statements is most accurate?
B) Acme's silent response to Tony's e-mail may be considered an acceptance of Tony's
counteroffer.
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55. A makes B an offer for the sale of land. The offer says that B "must accept by
registered letter." B accepts the offer with a regular letter. Which of the following is
true? Assume that the Restatement (Second) of Contracts does not apply.
A) There is no acceptance and no contract.
56. If a promisor fails to ask for anything in return, then the promise is not enforceable.
True
57. A promise to refrain from smoking is not consideration because it does not convey
anything of economic value to the other party.
False
58. In return for services B performed for A in the past, A promises to pay B $1000. There
is no consideration for A's promise.
True
59. Junior is a senior at State University. Dad, Junior's father, is concerned about Junior's
study habits, given that Junior spends most of his evenings at the campus pub instead of
the library. Dad promises Junior that he will send him on an expense-paid trip to
Europe after his graduation if Junior spends at least five evenings a week studying in the
campus library for the remainder of his senior year. After returning home from his
graduation, Junior asks Dad about the European trip. Dad replies, “your education was
your reward. I do not owe you a trip to Europe.” Dad:
A) is correct: Junior has already gained a benefit of the bargain.
60. X and Y have a contract which obligated X to sell Y 100 boxes of screws for $100. The
parties orally modify the contract so that X will sell Y the same 100 boxes of screws for
$125. The second agreement:
D) Is binding.
61. A party who has the right to rescind a contract may do so at any time.
False
62. Mutual mistake is more likely to make a contract voidable than is unilateral mistake.
True
63. Which of the following makes a contract voidable?
D) All of the above
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