Chapter 12 1.

Under the Uniform Commercial Code (UCC), the basic obligation of the buyer or lessee, with respect to contract performance, is to: pay for conforming goods. 2. Which of the following does a seller not need to do in a shipment contract? Resell the goods identified in the contract in a prompt and timely fashion. 3. Under the UCC's perfect tender rule, what options does a buyer have when the seller tenders nonconforming goods? The buyer may accept all, or part, or none of the goods. 4. When parties to a contract create an installment contract, the contract will be breached in which of the following circumstances? When one or more nonconforming installments substantially impair the value of the whole contract. 5. The performance of a party to a contract for the sale of goods will be excused on the ground of commercial impracticability only if: the contingency was unforeseeable and would not normally have been contemplated by the parties. 6. What distinguishes a C.O.D. order from a regular sales contract is: the buyer has no right of inspection. 7. As a general rule, which of the following may a nonbreaching party do when faced with an anticipatory repudiation by the other party? Wait and hope that the repudiating party will perform. 8. Assume that Karen contracts to buy 10,000 CDs from Larry. Larry ships the CDs to Karen and she accepts them, but then fails to pay Larry. In this case, which of the following may Larry do? He may sue to recover the purchase price. 9. Assume that Karen contracts to buy 10,000 CDs from Larry. Now assume that after the CDs have been loaded onto a truck and are en route to Karen, Larry discovers that Karen is bankrupt (insolvent). In this case, Larry may: stop the delivery. 10.Suppose that a sales contract stipulates that the buyer's only remedy on breach of warranty will be repair or replacement of the item. Further suppose that the warranty is breached, the item cannot be repaired, and there are no replacements available. In this situation: the remedy will no longer be exclusive because it failed in its essential purpose, and the buyer can pursue other remedies under the UCC. Chapter 13 1. Which of the following statements do not create an express warranty? The seller states that she purchased the goods from a reputable manufacturer. 2. The implied warranty of merchantability applies to food. Merchantable food would include which of the following? A can of peaches with a portion of a peach pit inside.

3. Strict product liability is imposed by law as a matter of public policy. On which of the following assumptions does the policy rest? That consumers should be protected from unsafe products. 4. When market-share liability is imposed: the plaintiff need not prove which particular distributor of a widely distributed product caused his or her injury. 5. Which of the following is a defense to product liability? Assumption of risk. 6. Joellen's General Store advertises cans of X-brand whole tomatoes for $.33 per can, although she does not have any in stock. When customers arrive to buy the tomatoes, Joellen tells them that her stock of X-brand canned tomatoes has been sold and that she cannot obtain more at the lower price. She then informs the customers that she has Y-brand canned tomatoes in stock, for $.55 per can, and that the Y-brand canned tomatoes are far superior to the X-brand canned tomatoes. What do you call Joellen's behavior? Bait-and-switch advertising 7. Regulation Z involves: rules designed to implement the provisions of the Truth-in-Lending Act. 8. In order for the Food and Drug Administration (FDA) to approve a drug for sale, what must a pharmaceutical company show? That the drug is both effective and safe. 9. If a creditor fails to follow exactly the provisions of the TILA, what may happen? A court may rescind the credit contract. 10.The Equal Credit Opportunity Act prohibits the denial of credit based solely on several characteristics. Which of the following IS NOT one of these characteristics? Disability Chapter 14 1. If you write a check to pay for a sweater that you buy, the check is: a negotiable instrument. 2. You write a check to pay for your haircut. In this transaction, who is the drawee? Your bank is, because it must pay the check. 3. In order for an instrument to be negotiable, the UCC requires that it be signed by whom? By the maker or drawer 4. If you write a check to pay for repairs to your automobile, presentment occurs when? When the person repairing the car presents the check to your bank. 5. An indorsement is defined as: a signature placed on an instrument, or to a piece of paper firmly attached to an instrument, designed to transfer ownership rights in that instrument. 6. Suppose that you receive a check from your mother. You sign the check on the back and transfer it to your friend, Kit, in payment for some of Kit's used books. When you signed the check on the back, you became: an indorser. 7. Which is the following is not a restrictive indorsement? A blank indorsement.

8. The UCC requires that HDCs take instruments in good faith. This means that: the holders must have acted honestly and observed all reasonable commercial standards of fair dealing. 9. Anyone who does not qualify as an HDC, but who derives her title through an HDC, can acquire the right and privileges of an HDC. This principle is known as: the shelter principle. 10.One universal defense to liability for payment on a negotiable instrument is: forgery. Chapter 15 1. In the event that a conflict arises between the provisions of Article 3 and Article 4 of the UCC: Article 4 controls. 2. With a cashier's check, which party is both the drawer and the drawee? The bank. 3. Lynn loses three checks from her checkbook: #536, #537, and #538. She requests and executes a written stop-payment order with her bank, ordering the bank not to pay these checks. Three months later, her bank pays check #537 in the amount of $1,500, causing Lynn's account to be overdrawn. In this situation: the bank is liable. 4. When a customer writes a check on her account, what kind of legal relationship arises between the bank and the customer? An agency relationship 5. A stale check is one that: was not presented for payment within six months of its date. 6. A drawer may be liable for a forged check if: the drawer's negligence contributed to the loss. 7. One of your main duties as a bank's customer is: to examine bank statements and report any forged signatures or indorsements promptly. 8. The bank on which a check is drawn is known as: the payor bank. 9. The Electronic Fund Transfer Act states that you will only be liable for $50 if someone steals your debit card, as long as: you report the theft within two days of discovering it. 10.The Federal Reserve System, which clears many checks in the United States, is: a network of twelve district banks located around the United States and headed by the Federal Reserve Board of Governors. Chapter 16 1. When payment of debt is guaranteed by personal property owned by the debtor or in which the debtor has a legal interest, the transaction is known as: a secured transaction. 2. In the context of secured transactions, attachment: gives the creditor an enforceable security interest in the collateral. 3. Perfection is the legal process by which secured parties: protect themselves against the claims of third parties who want their debts satisfied out of the same collateral.

4. A purchase-money security interest (PMSI) is created when: a seller or lender extends credit to the buyer for part or all of the purchase price of consumer goods. 5. One of the basic remedies for default is: execution and levy. 6. LaVon contracts with Phil to remodel and retile Phil's bathroom. LaVon finishes the job and gives Phil a bill for $14,000 for labor and materials. Phil refuses to pay. In this case, LaVon may seek: a mechanic's lien. 7. What are the two goals of bankruptcy law in the United States? To give debtors a fresh start and to provide equitable treatment to creditors competing for debtor assets. 8. The type of bankruptcy proceeding used most commonly by corporations is a reorganization under: Chapter 11. 9. One of the advantages of Chapter 13 repayment plans is that: they are less expensive and less complicated than reorganization proceedings or liquidation proceedings. 10.Chapter 12 of the Bankruptcy Code is aimed at helping which group? Family farmers. Chapter 17 1. Agency is defined as: the fiduciary relationship reflecting one party's agreement to act on behalf of another party and be subject to her control, with the second party's consent. 2. When determining whether a worker is an employee or an independent contractor, a key element to consider is: the extent to which the employer controls the actions of the worker. 3. Which of the following is not a way for an agency relation to arise? By rescission 4. Ratification means: the act of approving or affirming a contract made by someone who was not an agent or by an agent who was not authorized to form the contract. 5. Which of the following is not a duty of an agent? Payment 6. Under the equal dignity rule: if a contract must be in writing to be executed, an agent's authority must also be in writing. 7. When a principal causes a third party to reasonably believe an agent has authority to act on the principal's behalf, even if the agent does not have such authority, this is known as: apparent authority. 8. With respect to a principal's ratification of an agent's unauthorized act, which of the following is not necessary? The third party must withdraw before the principal affirms. 9. Under the legal doctrine of respondeat superior: the principal is responsible for the agent's torts, as long as they are committed within the scope of employment. 10.Which of the following does NOT terminate an agency? The principal calls for an accounting.

Chapter 18 1. The term "employment at will" means that: either party (employer or employee) may terminate the employment relationship at any time and for any reason or no reason, so long as the termination does not violate a statutory law or an employment contract. Either party (employer or employee) may terminate the employment relationship at any time and for any reason or no reason, so long as the termination does not violate a statutory law or an employment contract. 2. The Fair Labor Standards Act (FLSA) did not do which of the following? Restrict the power of federal courts to issue injunctions against unions. 3. The Family and Medical Leave Act of 1993 requires employers who have fifty or more employees to provide employees with: up to twelve weeks of unpaid family or medical leave during any twelve-month period. 4. In order to comply with current immigration laws, employers must verify a new hire's right to work through completion of: an I-9 Employment Eligibility Form. 5. Which federal law provides workers who have been terminated with continued access to health insurance? COBRA 6. In cases brought by employees alleging that their privacy has been invaded by e-mail monitoring: the courts have tended to hold for the employers. 7. If Min is able to show that she is qualified for the job, and that Tiffany, a Caucasian who is less qualified, is hired instead of her, what has Min done? Made a prima facie case of illegal discrimination. 8. Assume that Min lives in an area with a high percentage of Asian workers. Many of these workers are legal immigrants who have relatively little college training. If, when Min applies for her job, she is given an examination designed for a college graduate, and if she and most Asian applicants fail to pass the test, what problem might the employer have? The employer might be engaged in disparate-impact discrimination. 9. People recovering from alcoholism: are protected by the ADA. 10.The most important federal statute that works to prohibit employment discrimination against members of protected classes is: Title VII of the Civil Rights Act of 1964. Chapter 19 1. The simplest form of business is: a sole proprietorship. 2. Assume that when Kyle and Larsen formed their partnership, Kyle contributed 90 percent of the capital, and Larsen, 10 percent. They did not agree, however, on what percentage of the profits each partner would receive. Further assume that they make $35,000 in profits in 2007. In this situation, what is Larsen's share of the profits? $17,500

3. If Frank, a dentist who is a member of an LLP, negligently harms Kathy while attempting to complete a root canal, what is the liability of the other members of the LLP? Only the supervising partner will be liable, if there is a supervising partner. 4. In order for a limited partnership to be legally valid, it must: file a certificate of limited partnership. 5. The key characteristics of a limited liability company (LLC) are: the tax characteristics of a partnership plus the liability of a corporation. 6. A key advantage of the LLC is that: the liability of members is limited to the amount of their investments. 7. The major difference between a joint venture and a partnership is: a joint venture is essentially a one-time association, whereas a partnership is ongoing. 8. A joint-stock company has many features of a corporation. Which of the following IS NOT one of the ways in which a joint-stock company is like a corporation? Its shareholders have personal liability. 9. A local Taco Bell restaurant is an example of which kind of franchise? A chain-style business operation. 10.If a court determines that a franchisor has arbitrarily or unfairly terminated a franchise: the franchisee will be provided with a remedy for wrongful termination. Chapter 20 1. One of the key advantages of the corporate form of business is: the limited liability of shareholders. 2. Articles of incorporation contain: information about the corporation, including its purpose, organization, and functions. 3. Stock may be described as: an ownership interest in the corporation. an ownership interest in the corporation. 4. The best definition of a quorum is which of the following? A quorum is the minimum number of members of a decision-making body that must be present before business may be transacted. 5. The duty of loyalty that directors and officers owe to the corporation involves: the duty of directors and officers to subordinate their personal interests to the welfare of the corporation. 6. Lysco, Inc. gives to all 15,000 of its shareholders the right to purchase newly issued shares of Lysco stock in proportion to the percentage of shares they currently own and before anyone else is offered the shares. This right is known as: a preemptive right.

7. When a corporation suffers a wrong and the corporate directors fail to take action to redress that wrong, one effective and appropriate way to obtain redress is through: a shareholder's derivative suit. 8. Rothman Corporation and Zenco, Inc., combine and form a new company that retains the name, Rothman Corporation. When combining their firms, Rothman purchases all of the assets and assumes all of the liabilities of Zenco. This is an example of: a merger. 9. If Company F and Company G join and become Company H, what legal process has taken place? A consolidation. 10.Dissolution is best defined as: the legal death of a corporation. Chapter 21 1. Which of the following is not one of the major responsibilities of the SEC? Issuing government bonds. 2. The Securities Act of 1933 was designed to do which of the following? Prohibit various forms of fraud and stabilize the securities industry by requiring disclosure of all relevant information concerning the issuance of securities to the public. 3. The 1933 Securities Act requires that nonexempt organizations must file a registration statement with the SEC. Which of the following items must the statement contain? A financial statement certified by an independent public accounting firm. 4. Which of the following is most likely to be an accredited investor? An insurance company. 5. One of the major goals of Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 is: to prevent insider trading. 6. In response to problems created by SEC Rule 10b-5, especially concerning companies that issue optimistic financial forecasts, Congress enacted: the Private Securities Litigation Reform Act. 7. SEC Rule 10b-5 is applicable: in virtually all cases concerning the trading of securities. 8. Section 16(b) of the 1934 Securities Exchange Act provides for: the recapture by a corporation of short-swing profits realized by insider trading. 9. In order for a prosecutor to successfully litigate a criminal case under Section 10(b) of the 1934 Securities Exchange Act, what must the prosecutor prove? That the insider trader had scienter. 10.Blue sky laws: are state laws regulating intrastate sales of securities. Chapter 22 1. The basis of antitrust law is: to foster competition.

2. One of the most powerful tools that the federal government has for maintaining a competitive economy is: The Sherman Act. 3. Monopoly power is defined as: that power that exists when a firm has an extremely great amount of market power and the ability to dictate what takes place in a given market. 4. The Sherman Act applies solely to restraints that affect: interstate commerce. 5. Which of the following is a type of anticompetitive agreement that is considered to be so blatantly and substantially anticompetitive that it will be deemed a per se violation of Section 1 of the Sherman Act? A price-fixing agreement 6. Assume that executives from competing producers of the two leading dog-food brands get together and decide to charge a certain price for their lamb and rice dog food. This would be an example of: a horizontal restraint of trade. 7. Predatory pricing occurs when: a firm prices products substantially below cost to drive competitors out of the market. 8. When a court applies the "market-share test," what does it consider in deciding what the "relevant market" for a good or service is? It considers what the product market and geographical markets are for the good or service. 9. If a seller requires that a buyer purchase all of its copier paper from the seller, this may violate which part of the federal antitrust laws? The Clayton Act's prohibition on exclusive dealing. 10.One of the government agencies that enforces federal antitrust laws is: The U.S. Department of Justice (DOJ). Chapter 23 1. A key distinction between real and personal property is that: real property is not movable. 2. Carla buys a motorcycle with cash and is its sole owner. What kind of ownership right does Carla have? A fee simple 3. Suppose that Carla and Bill buy a motorcycle together but on Carla's death, Bill is entitled to inherit Carla's ownership interest in the motorcycle. This arrangement describes which type of ownership? A joint tenancy 4. Which of the following is not a way of acquiring ownership rights in personal property? By bailment 5. Jill claims that Fred gave her a gift of a pearl necklace. Fred says he never made such a gift and that Jill has wrongfully retained his property. If this dispute goes to court, what will the court need to determine? If Fred had donative intent. 6. Suppose that Ann finds a World War II-era rifle in the woods. If the rifle is lost property, what title does Ann take in the rifle? Title against all but the true owner.

7. In order for a transfer of property to become a bailment, three conditions must be met. Which of the following is not one of the conditions? The bailment must involve realty. 8. Arnold loans Janie his laptop computer to use while she writes a term paper. In this case, Janie is: the bailee. 9. Bob and Kathy have been married for four years. They decide to open a bakery where they both will work. Bob decides it might be a good idea to get a life insurance policy on Kathy, who will manage the store. What does Bob need before he can insure Kathy's life? An insurable interest in her life. 10.When a provision in an insurance policy is ambiguous or unclear, the courts usually: interpret the provision against the insurance company. Chapter 24 1. When airplanes fly over your home, are your property rights violated? Normally, no, unless the flights are low and frequent. 2. A fee simple absolute is defined as: an ownership interest in land in which the owner has the greatest possible aggregation of rights and privileges. 3. If Betty gives her friend Roger the right to walk his Irish wolfhound across her property to the beach, what kind of property right does Roger acquire? An easement 4. Which type of deed conveys the greatest number of things and provides a buyer with the greatest legal protection? A warranty deed 5. Under what conditions may the U.S. government take your land? For a public purpose and with just compensation. 6. An implied warranty that often applies to leased property is: The implied warranty of habitability. 7. The National Environmental Policy Act (NEPA) requires which of the following? That an environmental impact statement be prepared for any major federal action that significantly affects the quality of the environment. 8. Those who violate the Clean Air Act may be subject to: civil and criminal penalties. 9. The federal legislation governing the clean-up of leaking hazardous waste disposal sites is: CERCLA, or Superfund. 10.Joint and several liabilities under CERCLA mean that: all "potentially responsible parties" may be liable jointly or individually for clean-up costs. All "potentially responsible parties" may be liable jointly or individually for clean-up costs. Chapter 25

1. The term comity means: the deference one nation shows for the laws and judicial decrees of another nation. 2. The act of state doctrine is frequently employed in what kinds of cases? Expropriation cases 3. Exporting may take one of two forms: direct and indirect. 4. You enter into a contract with Misha, a distributor from St. Petersburg, Russia. In your contract you specify that any disputes arising under the contract should be litigated in New York state courts. This would be called: a forum-selection clause. 5. You enter into a contract with Misha, a distributor from St. Petersburg. If in your contract with Misha you want to specify that U.S. law will apply to a contract in the event of a dispute over the contract's terms, you should include ________ in your contract: a choice-of-law clausea choiceof-law clause 6. The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards: has been implemented in nearly one hundred countries, including the United States. 7. The foreign exchange rate is: the price of a unit of one country's currency in terms of another country's currency. 8. Suppose that the U.S. government charges $1.50 to import each and every DVD player made in Taiwan. This tax is: a tariff. 9. The international organization charged with the responsibility for eliminating trade barriers, including tariffs, is: The WTO. 10.Which of the following is not a source of international law? International common law