060468RR Law and the Judicial System
Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer.
1. Lynn's attorney advises Lynn to resolve a case using med-arb. If Lynn and the defendant agree to use med-arb, this means
A. the case involves medical malpractice.
B. all issues will be decided by an arbitrator.
C. the case won't have an outcome unless Lynn and the defendant both agree.
D. Lynn is risking that some issues in the case will be decided by an arbitrator.
2. An advantage of ADR is that it
A. saves time and money.
B. improves the discovery process.
C. promotes the development of the law.
D. effectively handles constitutional law.
3. Which type of ADR involves time limits on presentations?
A. Early neutral evaluation
B. Summary jury trials
C. Med-arb
D. Mediation
4. Rosa sues her neighbor. Rosa's lawyer relies on persuasive precedent. Which of the following statementsis true?
A. The court must overturn the precedent because it's not binding.
B. The court is free to follow or ignore the persuasive precedent.
C. The court should disregard the precedent unless it's from a U.S. Supreme Court case.
D. The court must follow the precedent because it's binding.
5. Phillip and Lori have a two-car accident in Tennessee. Both of them reside in Tennessee. Phillip will be able to sue Lori in Tennessee federal court
A. if his damages are extraordinary.
B. under no circumstances.
C. if his damages exceed $75,000.
D. if the case involves application of federal law.
6. Rights of citizens are most likely to be found in which provisions of the U.S. Constitution?
A. Article 3
B. Article 1
C. The amendments
D. Article 6
7. Big Factory, Inc., and Save the Environment, an environmental group, have a dispute over whether making Big Factory, Inc., use certain expensive antipollution devices would contribute significantly to improving air quality. A type of ADR especially suited to this dispute is
A. summary jury trial.
B. private civil trial.
C. science court.
D. partnering.
8. Donovan, like thousands of other people, was injured by an over-the-counter cold medicine that caused his hair to fall out. Even though his hair has grown back, he wants to sue. His lawyer advises that doing so would be expensive and not cost-effective, given the small amount of damage that temporary hair loss caused Donovan and other people like him. Donovan and others in his situation can make a lawsuit cost effective by filing
A. a class action lawsuit.
B. a small-claims lawsuit.
C. in federal court.
D. in state court.
9. Carl was arrested under a New Jersey statute that made it a crime to be persistently unemployed. Carl argues that a similar statute was declared unconstitutional by the California state court, so the New Jersey state court is required to declare New Jersey's statute unconstitutional. Carl is wrong because
A. only federal courts can create binding precedent.
B. out-of-state cases aren't binding precedent in state courts.
C. more than one court has to rule a certain way before precedent is established.
D. state courts aren't bound by precedent.
10. Paula's lawyer originally filed in suit in Florida state court. Stephanie, the defendant, would prefer that the case be heard in federal court. To have the case heard in federal court, Stephanie must prove federal subject matter jurisdiction and file a
A. writ of certiorari.
B. motion to remove.
C. summary judgment motion.
D. motion of demurrer.
11. David was filing his income tax return when he learned that the IRS now requires taxpayers to file several new forms. David believes that the IRS can't require him to file these forms and that only Congress can do that. Which of the following is true?
A. David doesn't have to file the forms unless Congress approves them.
B. David has to file the forms because only agencies have the power to adopt statutes.
C. David doesn't have to file the forms because agencies have the power to adopt only nonbinding regulations.
D. David has to file the forms because agencies have the power to adopt binding regulations.
12. Doug's complaint asks for an injunction. Which of the following is true?
A. Doug seeks money damages.
B. Doug seeks an equitable remedy.
C. Doug has suffered great harm.
D. Money would be an adequate remedy.
13. The National Conference of Commissioners on Uniform State Laws developed a revised version of the UCC. Joe learned of this and, relying on one of the changes, acted in a way that was prohibited under the former version but permitted under the revised version. As a result, Joe was sued for his action. Both parties live in Joe's state, which is also where the transaction took place. Whether Joe wins or loses depends on
A. whether members of the commission that drafted the revision were from Joe's state.
B. which version of the UCC has been adopted by the legislature in Joe's state.
C. which party stands to gain the most from the lawsuit.
D. which version of the UCC the judge thinks is most equitable.
14. The police catch Matthew in the act of committing a crime. The likely order of the stages of Matthew'scriminal case is
A. arrest, formal charge, arraignment, preliminary hearing, and trial.
B. arraignment, formal charge, arrest, preliminary hearing, and trial.
C. arrest, preliminary hearing, formal charge, arraignment, and trial.
D. arrest, arraignment, formal charge, preliminary hearing, and trial.
15. Gary sues Dennis, relying on a state law. Dennis defends himself based on a federal law involving the same subject. If Dennis wins, it will be because of
A. preemption.
B. judicial review.
C. the federal register.
D. devolution.
16. State law prohibited public criticism of state officials. Kelly criticized the officials and was arrested. She argued that the law conflicted with the U.S. Constitution. The government argued that the law didn't conflict with the state constitution. The court agreed with both positions. Which of the following is true?
A. The law will be held invalid because of the Commerce Clause.
B. The law will be upheld because it's a state law and is consistent with the state constitution.
C. The law will be held invalid because the U.S. Constitution is the supreme law of the land.
D. The law will be held invalid because a law is invalid if it conflicts with any state constitution.
17. April's attorney informs her that they've been served with interrogatories. Which of the following istrue?
A. April will have to answer questions under oath about the case.
B. April will be required to make oral statements in front of a court stenographer.
C. April's attorney will have to answer questions under oath about the case.
D. April will be required to submit to a physical examination.
18. John sues Sally under a statute that has ambiguous language. Which of the following is true?
A. John will have to find a different legal basis for his claim.
B. The statute is invalid because of the ambiguous language.
C. The court will interpret the statute to resolve the ambiguity.
D. A legislative body will have to clarify the statute before the court can apply it to John's case.
19. Miguel, an Idaho resident, sues Kurt, an Alabama resident, in Idaho state court. Miguel's lawyer warns Miguel that the Idaho court may be unable to exercise authority over Kurt. This suggests that there may be
a problem obtaining ______jurisdiction.
A. general
B. original
C. subject matter
D. personal
20. George and Tanya are in a legal dispute. However, they're friends, and they would like to control the outcome of the case rather than letting a judge or other third-party decide it. What is their best ADR option?
A. Private civil trial
B. ADR contract clause
C. Binding arbitration
D. Mediation
060469RR - Business Organizations
1. Melanie and Clay are partners in a law firm that's a general partnership. Melanie fails to respond to a lawsuit against a client in time, and the client is found liable on a $1 million verdict. The client files a lawsuit suit against Melanie and Clay. Which of the following statements about this set of facts is true?
A. Only Melanie can be held liable because Clay wasn't involved with the case.
B. Only Melanie can be held liable because she committed the wrong.
C. Only the partnership can be held liable; Melanie and Clay aren't personally liable.
D. Either Melanie or Clay may be held jointly and severally liable.
2. Adam is president of Well, Inc. The board of directors instructs Bob not to borrow any money on behalf of the corporation. Bob does so anyway, and the corporation lacks income and assets to pay the debt. Bob will be personally liable for the debt under the
A. fairness rule.
B. actual authority rule.
C. business judgment rule.
D. corporate opportunity doctrine.
3. Crawford, Inc., would like to own some land owned by Toxic Waste, Inc., to build a storage warehouse for inventory. However, Crawford doesn't want to be responsible for the liabilities of Toxic Waste. The best method of accomplishing Crawford's goals is
A. stock acquisition.
B. consolidation.
C. asset acquisition.
D. merger.
4. If a regulation affecting corporations is federal, the authority for that regulation likely derives from
A. police power.
B. executive orders.
C. the Commerce Clause.
D. the Supremacy Clause.
5. Under the Revised Uniform Partnership Act,
A. the partnership is an aggregate rather than an entity in its own right.
B. partners don't have transferable economic interests.
C. partnership property is owned by the partnership.
D. partners are co-owners of partnership property.
6. Brenda is on the board of directors for Money Company. Brenda rarely attends board meetings and doesn't pay attention when she does attend. Brenda usually votes like her friend Sadie, who is also on the board. Brenda voted for some proposals that harmed the company. Brenda likely violated
A. her duty of obedience.
B. the fairness rule.
C. the actual authority rule.
D. her duty of due diligence.
7. Ken is the president of a large energy company. Company executives approached Ken about purchasing some smaller companies to expand the business. Ken read the reports explaining the potential risk and return of the investment, and he decided the purchase appeared to be a good investment. Unfortunately, Ken was wrong, and the purchase caused the company to lose millions of dollars. Based on these facts, Ken
A. should benefit from the business judgment rule.
B. violated his duty of loyalty to the corporation.
C. violated his duty of due diligence to the corporation.
D. should benefit from the fairness rule.
8. An advantage of an S corporation is that shareholders can avoid
A. estoppel.
B. double taxation.
C. bylaws.
D. insider trading.
9. Steve decides to incorporate his business, but he thinks it's too expensive to hire an attorney to advise him of the requirements. Steve merely changes the name on the sign outside from Steve's to Steve, Inc. One of Steve's customers brings suit against Steve, Inc., based on an allegedly defective product sold through his business. Steve defends on the basis that Steve, Inc., doesn't exist. Which of the following statements about this set of facts is true?
A. Steve is wrong; a de facto corporation exists.
B. Steve is wrong; a de jure corporation exists.
C. Steve is wrong; a corporation by estoppel exists.
D. Steve is correct; no corporation exists.
10. Jennie owns shares in Superstore, Inc. A vote about whether Superstore should expand its operations to China is coming up. Jennie thinks this is a good idea, but she doesn't own enough shares to control the outcome of the vote. Jennie could increase the chance that the vote will go her way by
A. entering into a pooling agreement.
B. offering to give someone else a proxy.
C. filing a derivative suit.
D. making a shareholder proposal.
11. Sidney and Nikki are law partners in a general partnership. Nikki decides to take a position at another law firm. Nikki notifies Sidney that she's leaving the partnership. This set of facts constitutes a dissociation and dissolution by
A. act of a partner.
B. consent.
C. operation of law.
D. judicial decree.
12. Sal is a shareholder in XYZ Corporation. XYZ Corporation made defective products, and many individuals have filed lawsuits due to the defects. As a shareholder, Sal may
A. be held personally liable only if the corporation was aware of the defects.
B. be held personally liable for the defects.
C. not be held personally liable for the defects.
D. be held personally liable only if the plaintiffs name Sal as a defendant.
13. Herbie owns a pizza parlor in New York. Herbie didn't file any documents to create the business entity, he makes all the business decisions, and he retains all profit after overhead is paid. Herbie owns a
A. corporation
B. limited liability company.
C. partnership.
D. sole proprietorship.
14. Stuart and Cole enter a business venture in which they both agree to contribute funds, money, and time to a sporting goods store. Furthermore, the two agree to equally split all profits. Stuart and Cole have entered into a
A. limited liability company.
B. sole proprietorship.
C. partnership.
D. corporation.
15. Tom is president of Big Drug, Inc. Tom receives a phone call from a federal agency informing him that a new drug owned by Big Drug will be approved for sale to the public. Tom knows that this drug will be very popular and will cause a significant increase in the company's profits. Tom quickly purchases as much Big Drug stock as he can afford. Then, when the federal agency formally announces approval of the drug, Big Drug stock triples in value, and Tom becomes rich. Tom has violated the
A. business judgment rule.
B. insider trading rule.
C. corporate opportunity doctrine.
D. fairness rule.
16. Robert owns shares in Products, Inc., and suspects that Zach, one of the directors of the company, has been stealing corporate assets. Robert complains to the corporation, but no action is taken. Robert should file a
A. direct suit against Products, Inc.
End of exam
B. derivative suit against Zach on behalf of Products, Inc.
C. derivative suit against Products, Inc., on his own behalf.
D. direct suit against Zach.
17. Which of the following types of company offers protection for personal liability?
A. Sole proprietorship
B. Limited liability partnership
C. General partnership
D. Term partnership
18. The difference between a limited partnership and a registered limited liability partnership (RLLP) is that
A. all partners have limited liability in a limited partnership, but not in an RLLP.
B. a limited partnership can have secret partners, while an RLLP can't.
C. all partners have limited liability in an RLLP, but not in a limited partnership.
D. an RLLP can have secret partners, while a limited partnership can't.
19. Bob is the CEO of Realty, Inc., a company that purchases and develops property for shopping centers. Bob learns that certain real estate, which would be excellent for a shopping center, is about to go up for sale. Bob purchases the property himself without telling anyone at the corporation. Bob has violated the
A. corporate opportunity doctrine.
B. insider trading rule.
C. fairness rule.
D. business judgment rule.
20. Crawford, Inc., wants to acquire the assets of Toxic Waste, Inc., but Toxic Waste won't sell. Toxic Waste is a publicly held company with widely dispersed share ownership. What technique can Crawford use to accomplish its goal?
A. Takeover bid
B. Merger
C. Consolidation
D. Asset acquisition
060470RR - Contracts, Part 1
1. Tyler offers to dance naked on Main Street if Corey will mow Tyler's yard. Corey mows Tyler's yard.
Which of the following statements is not potential grounds for setting aside the contract?
A. Lack of serious intent to contract
B. Illegality of consideration
C. All of the above are potential grounds for setting aside the contract
D. Inadequacy of consideration
2. Josh runs over Barbara's dog. Barbara promises not to sue Josh if he pays her $200. Josh pays $200. Then Barbara sues, claiming an agreement not to sue doesn't constitute consideration. Which of the following is true?
A. Agreement not to sue is consideration only if it approximates what a court would have awarded.
B. Such contracts violate public policy and therefore are unenforceable.
C. Agreement not to sue isn't consideration.
D. Agreement not to sue is consideration.
3. Candice hires Otto to work as a tax preparer in Candice's tax return business. The employment contract restricts the ability of Otto to set up a competing business or engage in tax preparation services if Otto leaves Candice's employ. Otto discovers he likes this kind of work and wants to set up his own tax return business. He asks you whether the restrictions in his contract with Candice will be enforceable. You should tell him that
A. any restriction regarding employment is unenforceable as against public policy.
B. any restriction regarding employment will be enforceable as long as there was adequate consideration.
C. restrictive covenants regarding future employment will be enforceable if they're reasonable.
D. restrictive covenants regarding future employment will be enforceable if the value of the consideration given for the covenant equals the value of the income loss that would be caused by enforcing the agreement.
4. Delivery of unordered merchandize is considered
A. a contract to purchase unless the recipient contacts the sender to reject the merchandize.
B. a contract to purchase if the items aren't returned.
C. an offer to sell.
D. performance of a contract.
5. Madison enters into a contract with a DVD club to purchase four DVDs during the coming year. The agreement provided that she would receive an advertisement listing the main selections, which would be sent to her automatically, unless she sent a reply to stop the shipment. The DVD club sent the first month's advertisement and Madison did nothing. When Madison later received the main selection for that month she complained that she hadn't accepted it. Must Madison pay for it?