Introduction to Business Law
Review Questions
Course Introduction
Introduction to Business Law offers students an overview of the legal principles and frameworks that govern business activities in modern society. The course covers foundational topics such as contract law, torts, agency, employment law, business organizations, and the regulatory environment. Through the exploration of case studies and real-world scenarios, students will learn how legal considerations impact business decision-making and operations. Emphasis is placed on developing a practical understanding of how the law shapes business practices and the ability to identify and analyze legal issues in a business context.
Recommended Textbook
Business Law Today Standard Text and Summarized Cases 10th Edition by Roger LeRoy Miller
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Page 2
Chapter 1: The Legal Environment
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Q1) Judge Julia decides that the precedent for the case she is hearing is no longer correct due to technological changes. She overturns the precedent when she decides the case. It is most likely that her case will
A) go unnoticed by the public.
B) be thrown out of court.
C) receive a great deal of publicity.
D) be ignored by the media.
Answer: C
Q2) Crater Tools Company is subject to regulations issued by the Occupational Safety and Health Administration (OSHA). Like other federal administrative agencies, the OSHA was created by
A) Congress, through enabling legislation.
B) the Federal Trade Commission, through the rulemaking process.
C) the president, through an executive order.
D) the U.S. Department of Labor, through a final order.
Answer: A
Q3) Administrative law includes only state regulations.
A)True
B)False
Answer: False
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Chapter 2: Constitutional Law
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Q1) California enacts a statute to ban advertising in "bad taste." This statute would likely be held by a court to be
A) an unconstitutional restriction of speech.
B) constitutional under the First Amendment.
C) justified by the need to protect individual rights.
D) necessary to protect national interests.
Answer: A
Q2) Symbolic speech is defined as nonverbal expressions of belief and is protected by the First Amendment.
A)True
B)False
Answer: True
Q3) In a country with a federal form of government, the national government and the states share sovereign power.
A)True
B)False
Answer: True
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Chapter 3: Courts and Alternative Dispute Resolution
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Q1) Cases involving diversity of citizenship arise only between citizens of different states.
A)True
B)False
Answer: False
Q2) ADR proceedings are always strictly regulated by federal statutes.
A)True
B)False
Answer: False
Q3) Solar Power, Inc., files a suit against Thunder Bay Utility Company and seeks to examine electronic documents in Thunder's possession. A legitimate reason for this examination is that the documents contain
A) evidence about the case.
B) private information about Thunder's operations.
C) public information about energy generation.
D) irrelevant data that can be eliminated from consideration.
Answer: A
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Chapter 4: Torts and Cyber Torts
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Q1) The courts consider legitimate competitive behavior permissible only if it does not result in the breaking of a contract.
A)True
B)False
Q2) Statements made by in judicial proceedings are NOT privileged communications and may be the basis for defamation.
A)True
B)False
Q3) The extreme risk of an activity is a defense against imposing strict liability.
A)True
B)False
Q4) In newspaper ads, Lo-Price Autos falsely accuses Hi-Value Vehicles, a competitor, of selling stolen cars. Hi-Value's sales decrease. Lo-Price has most likely committed
A) slander of quality.
B) slander of title.
C) wrongful interference with a business relationship.
D) none of the choices.
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6
Chapter 5: Intellectual Property and Internet Law
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Q1) Cybersquatting occurs when a person repeatedly visits a business's website.
A)True
B)False
Q2) To be patentable, an invention, discovery, or design must be novel, useful and not obvious in light of current technology.
A)True
B)False
Q3) A copyright owner must place a or an on the work to have the work protected from copyright infringement.
A)True
B)False
Q4) The need to protect intellectual property is recognized in the Declaration of Independence.
A)True
B)False
Q5) Copyright protection is automatic-registration is not required.
A)True
B)False
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Chapter 6: Criminal Law and Cyber Crime
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Q1) Bruno is a businessperson with investments in legal and illegal operations. Bruno may be subject to penalties under RICO
A) for making an unprofitable, but legal, investment.
B) for the commission of any business fraud.
C) only in a case involving a "racket."
D) only in a case involving organized crime.
Q2) Briana, an employee of Cotillion Bank, is charged with embezzlement, which requires
A) fraudulently appropriating another's property.
B) obtaining lawful possession of property.
C) physically taking property from its owner.
D) the use of force or fear.
Q3) Gina sells "Bulk Up" steroids over the Internet. She is arrested and charged with the sale of a controlled substance. This is cyber crime, which is
A) a new category of crime that is not related to older types of crime.
B) a crime that occurs the virtual community of the Internet.
C) a crime that is less real than the same crime in the physical world.
D) no crime.
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Chapter 7: Ethics and Business Decision Making
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Q1) Flexo Trucking Company transports hazardous waste. Garn is a Flexo driver, whom the company knows drives longer hours than federal regulations permit. One night, Garn exceeds the limit and has an accident. Spilled chemicals contaminate Hill City's water source, forcing the residents to move away. Flexo acted unethically because A) Flexo showed reckless disregard for Hill City's residents and others.
B) Garn exceeded the federal time limit.
C) harm was caused by an unfortunate accident.
D) Hill City should have better protected its water source.
Q2) Straitway Company encourages its managers to behave ethically, reasoning that the employees will take their cues from management. One of the most important ways to create and maintain an ethical behavior workplace is for management to A) demonstrate a commitment to ethical decision making.
B) discreetly engage in unethical or illegal acts.
C) look the other way when an employee engages in an unethical act.
D) direct employees to "do as we say, not as we do."
Q3) Business ethics is not more complicated than personal ethics.
A)True
B)False
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Chapter 8: International Law in a Global Economy
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Q1) Bango! Business, Inc., a U.S. firm, may have committed, in Chile, acts that would constitute, in the United States, violations of U.S. antitrust laws. These laws apply
A) extraterritorially.
B) only to signatories of the North American Free Trade Agreement.
C) only to members of the World Trade Organization.
D) only within U.S. borders.
Q2) Wytex, Inc., a U.S. firm, and Findora Commercial, a Nigerian firm, are parties to a contract that specifies that the official language of the contract is English. This is
A) a choice-of-forum clause.
B) a choice-of-language clause.
C) a choice-of-law clause.
D) an arbitration clause.
Q3) The chief aim of the European Union and other trade organizations is to minimize trade barriers among their members.
A)True
B)False
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Chapter 9: Nature and Classification
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Q1) A check, like other negotiable instruments, is a formal contract.
A)True
B)False
Q2) The element of intent is not very important in determining whether a contract has been formed.
A)True
B)False
Q3) Contract law assures the parties to private agreements that the promises they make will be enforceable.
A)True
B)False
Q4) The only requirement for a valid contract is that the parties voluntarily entered into it.
A)True
B)False
Q5) A quasi contract arises from a mutual agreement between two parties.
A)True
B)False
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Chapter 9: Offer and Acceptance
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Sample Questions
Q1) The primary purpose of the Uniform Electronic Transactions Act (UETA) is to remove barriers to e-commerce.
A)True
B)False
Q2) May tries to start her new car with no success. She yells that she will sell the car to anyone for $10. Nick, a passerby who owns Nick's Pre-owned Autos, hands May $10. This is
A) a valid acceptance because May is seriously frustrated.
B) a valid acceptance because Nick is a car dealer.
C) not a valid acceptance because May does not seriously intend to sell.
D) not a valid acceptance because Nick is a car dealer.
Q3) In most states, revocation becomes effective on receipt.
A)True
B)False
Q4) Clean Health Insurance, Inc. sends Kathy a health insurance termination. The health insurance termination is
A) governed by the E-SIGN Act.
B) not governed by the E-SIGN Act.
C) governed by Article 2 of the UCC.
D) governed by Article 2A of the UCC.
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Chapter 11: Consideration, Capacity, and Legality
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Q1) After an accident with a driver for Onyx Security Company, Paul signs a covenant not to sue Onyx for damages in a tort action if it pays for the damage to his car. This covenant
A) bars recovery only if Onyx pays.
B) is an illusory contract.
C) is barred by the preexisting duty rule.
D) is unconscionable.
Q2) Genovese Contracting, Inc., agrees to build a warehouse for Hawthorne Distributors. Genovese runs into the types of difficulties that contractors ordinarily confront, and Hawthorne agrees to pay extra compensation to overcome them. Regarding the agreement to pay more, a court would likely
A) enforce it.
B) rescind it.
C) order the parties to renegotiate it.
D) not enforce it.
Q3) In general, minors are personally liable for their contracts.
A)True
B)False
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13
Chapter 12: Defenses to Contract Enforceability
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Sample Questions
Q1) Under the Statute of Frauds, oral contracts are void.
A)True
B)False
Q2) Seth offers to buy a house from Tia for less than Tia paid for it, stating that he would "hate to see anything bad happen to Tia or her house." Tia agrees to sell. Regarding this agreement, a court would likely
A) enforce it.
B) not enforce it.
C) reform it to reflect the true market value of the property.
D) order the parties to renegotiate the price.
Q3) Byron agrees to sell to Charity, for $1,500, a remote parcel of land. They believe the land to be worthless, but beneath it is a gold mine. A court would
A) cancel the contract due to Byron's failure to know the land's value.
B) cancel the contract due to Charity's failure to know the land's price.
C) cancel the contract due to the difference between the contract price and the market price.
D) enforce the contract.
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Page 14
Chapter 13: Third Party Rights and Discharge
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Q1) Performance that provides a party with most of the benefits of a contract, in spite of a deviation from the terms, is substantial performance.
A)True
B)False
Q2) A novation does not require the extinguishing of the old obligation.
A)True
B)False
Q3) In an assignment, the party receiving the rights is known as the assignor.
A)True
B)False
Q4) Banks may not assign their loan contracts to other firms.
A)True
B)False
Q5) A novation requires the existence of a previous, valid obligation.
A)True
B)False
Q6) An assignment of rights in real estate often cannot be prohibited.
A)True
B)False
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Chapter 14: Breach and Remedies
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Q1) Fashion Retail Center enters into a contract with Great Promotions, Inc., to provide Fashion with a plan to retool its merchandising strategy. If Great Promotions breaches the contract, Fashion has a duty to A) reduce the damages that Fashion might otherwise suffer. B) reduce the loss that Great Promotions might otherwise suffer. C) punish Great Promotions and deter others from similar acts. D) take no action.
Q2) The duty owed under the mitigation of damages doctrine depends on the nature of the contract.
A)True
B)False
Q3) A party seeking to recover compensatory damages cannot also recover incidental damages.
A)True
B)False
Q4) The injury suffered by a nonbreaching party due to the breach of a contract may be remedied by payment of compensatory damages.
A)True
B)False
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Chapter 15: The Formation of Sales and Lease Contracts
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Q1) A merchant is a person who deals in goods of the kind involved in the sales contract or who holds herself or himself out as having skill or knowledge peculiar to the practices or goods being purchased or sold.
A)True
B)False
Q2) All oral contracts are enforceable under the UCC.
A)True
B)False
Q3) If a nonmerchant-seller's offer expressly conditions acceptance on a nonmerchant-buyer's agreement to the terms of the offer, the buyer's positive response is an acceptance even if it contains additional terms.
A)True
B)False
Q4) The contract term "free on board" indicates that the selling price of goods includes transportation costs to the specific F.O.B. place named in the contract.
A)True
B)False
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Chapter 16: Performance and Breach of Sales Lease Contracts
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Q1) Leatherbound Stores, Inc., rejects a shipment of goods that does not conform to its contract with Cowhide Corporation, but is unable to obtain instructions from the seller. Leatherbound may
A) resell or return the goods only.
B) resell or store the goods only.
C) return or store the goods only.
D) resell, return, or store the goods.
Q2) The term cure refers to the right of the buyer to reject, adjust, or replace nonconforming goods.
A)True
B)False
Q3) If a seller asks a buyer to store nonconforming goods overnight, then the buyer is entitled to reimbursement for the costs involved.
A)True
B)False
Q4) Under the UCC, there are no exceptions to the perfect tender rule.
A)True
B)False
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Chapter 17: Warranties and Product Liability
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Q1) Barry buys a bulldozer from Big Sandbox Equipment Company. Barry is unaware that there is a lien against the bulldozer when he buys it. Under the UCC, if the creditor reposes the bulldozer, Barry
A) can recover from Big Sandbox Equipment for breach of warranty.
B) can do nothing.
C) can file criminal charges against Big Sandbox Equipment.
D) can recover damages from the creditor.
Q2) The brakes on a River Valley Railroad train malfunction and it rolls towards maintenance workers on the tracks. Everyone gets out of the way except Dick, who wants to show off. The train hits Dick, who sues Stops-it, Inc., the brakes' manufacturer. Stops-it can raise the defense of
A) a component-part manufacturer.
B) assumption of risk.
C) consumer participation.
D) product misuse.
Q3) An expression of opinion will usually create a warranty.
A)True
B)False
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Chapter 18: Negotiable Instruments: Transferability Liability
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Q1) Ada is the maker of a note, on which Bart is secondarily liable. Cash & Credit Company (C&C) is the current holder of the note. Bart will be obligated to pay the note if
A) Ada defaults on the note.
B) C&C breaches a transfer warranty.
C) C&C negotiates the note to Delta Collection Agency, a third party.
D) C&C presents the note for payment.
Q2) A person who transfers an instrument for consideration makes certain warranties to the transferee.
A)True
B)False
Q3) The good faith requirement applies to both the holder and the transferor.
A)True
B)False
Q4) A person cannot become an HDC if a defense against payment is apparent on the face of the instrument.
A)True
B)False
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20
Chapter 19: Checks and Banking in the Digital Age
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Q1) Each bank in a collection chain must pass a check on before noon of the day of its receipt.
A)True
B)False
Q2) Refer to Fact Pattern 19-2. Digital's bank is
A) the cashing bank.
B) the depositary bank.
C) the intermediary bank.
D) the payor bank.
Q3) Jacob writes Phillip an uncertified check for $500 on January 1. Seven months later, Phillip presents the check at the bank. The bank pays the check in good faith without consulting Jacob. The bank
A) does not have the right to charge Jacob's account for $500.
B) only has the right to charge Jacob's account for $250.
C) has the right to charge Jacob's account for $500.
D) can be held liable for breach of contract.
Q4) A bank is not obligated to pay an uncertified check presented less than six months from its date.
A)True
B)False
Page 21
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Chapter 20: Secured Transactions
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Q1) The "first-in-time" rule means that an unperfected security interest takes priority over a perfected security interest.
A)True
B)False
Q2) Joan borrows money from Jake under a security agreement. After borrowing the money, Joan buys a new kayak. The kayak is considered
A) a floating lien.
B) after-acquired property.
C) a future advance.
D) proceeds.
Q3) A financing statement must include the creditor's signature.
A)True
B)False
Q4) The method of perfecting a security interest does not depend on the classification of the collateral.
A)True
B)False
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Chapter 21: Creditors Rights and Bankruptcy
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Q1) Refer to Fact Pattern 21-1. Nina may recover
A) $0.
B) $30,000.
C) $50,000.
D) $60,000.
Q2) A mechanic's lien can be enforced to obtain payment for work that adds value to real property.
A)True
B)False
Q3) Bankruptcy proceedings are held in federal courts.
A)True
B)False
Q4) An artisan's lien is effective only if a creditor has possession of the property.
A)True
B)False
Q5) Liens usually do not take priority over other claims against the same property.
A)True
B)False
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Chapter 22: Mortgages Foreclosures After the Recession
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Q1) Federal mortgage disclosure requirements apply to the written materials that a lender provides and to any oral representations.
A)True
B)False
Q2) Federal law encourages private lenders to modify mortgages so as to lower the monthly payments of borrowers who are in default.
A)True
B)False
Q3) There are additional disclosure requirements for a loan that carries a high rate of interest or entails high fees for the borrower.
A)True
B)False
Q4) Refer to Fact Pattern 22-2. Under federal law, if 24-Hour Credit fails to provide certain material disclosures with respect to the loan, Benny's right to rescind the loan
A) expires at midnight on the day the loan is finalized.
B) is immediately revoked.
C) is extended for up to three years.
D) is tolled for the duration of the loan payments.
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Chapter 23: Agency Relationships in Business
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Q1) In a principal-agent relationship, the parties agree that the principal will act on behalf and instead of the agent in negotiating and transacting business with third persons.
A)True
B)False
Q2) Ozzy is an officer of Prudent Financial Corporation. Ozzy serves in a representative capacity for Prudent Financial's owners. With respect to binding Prudent Financial to contracts, Ozzy is
A) an agent and has the authority.
B) an agent but does not have the authority.
C) not an agent and does not have the authority.
D) not an agent but does have the authority.
Q3) Sonia manages a Tasty Pastry store for United Food Company. To manage the business, Sonia's authority can be implied by
A) an inference from the position Sonia occupies.
B) any inference a reasonable customer or supplier would make.
C) any inference Sonia chooses to make.
D) no inference.
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Chapter 24: Employment, Immigration, and Labor Law
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Q1) All unemployed workers who are willing and able to work are eligible for unemployment compensation.
A)True
B)False
Q2) Individual states may pass their own right-to-work laws.
A)True
B)False
Q3) Hu, Ivan, and Juana apply to work for King Meatpacking Company. These individuals' identities and eligibility to work must be verified by A) the employer.
B) the individuals.
C) the individuals' countries of origin.
D) the U.S. Citizenship and Immigration Services.
Q4) Borealis Power Company is subject to mandatory workers' compensation laws in the states in which it does business. Chad and Dex work for Borealis as part of a crew that travels to remote locations to repair downed power lines and other damaged equipment. At a distant site, Chad is injured in an accident that is entirely Dex's fault. Chad files a claim for workers' compensation. Should the claim be granted? What would be Borealis's best defense against it?
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Chapter 25: Employment Discrimination and Diversity
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Questions
Q1) Lew, a member of a protected class, applies for a job with Mit-E Construction Company, but fails Mit-E's employment test and is not hired. Lew believes that the test has an unintentionally discriminatory effect. If so, this is
A) reverse discrimination.
B) disparate-impact discrimination.
C) disparate-treatment discrimination.
D) not discrimination.
Q2) Title VII of the Civil Rights Act of 1964 applies to which of the following?
A) An employer with five employees
B) An employer with ten employees
C) A labor union with twenty-five members
D) A labor union with twelve members
Q3) A plaintiff who proves unlawful discrimination may be awarded reinstatement, back pay, but not retroactive promotions.
A)True
B)False
Q4) The Civil Rights Act of 1964 does not protect against reverse discrimination.
A)True
B)False
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Chapter 26: Sole Proprietorships and Private Franchises
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Q1) Events Promotion Corporation licenses trademarks to Fandom Souvenirs, Inc., to use in selling caps, sweatshirts, and similar goods. This is
A) a franchise.
B) an entrepreneur.
C) a principal-agent relationship.
D) a sole proprietorship.
Q2) In raising capital, a sole proprietor is limited to his or her personal funds-a loan is not possible.
A)True
B)False
Q3) Paradise Footwear buys a franchise from Reliant Athletic Shoes Inc. This relationship, like all other franchise relationships, is governed by A) contract law.
B) no law.
C) the Franchise Disclosure Document, or FDD.
D) the rules of the National Collegiate Athletic Association.
Q4) Much franchise litigation involves claims of wrongful termination.
A)True
B)False
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Chapter 27: All Forms of Partnership
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Q1) Withdrawal from a partnership for a term prematurely does not constitute a breach of the partnership agreement.
A)True
B)False
Q2) Fay is admitted to Global Associates, an existing partnership. A partnership debt incurred before the date of her admission comes due. Fay is
A) not liable for the debt.
B) only liable for the debt up to the amount of his capital contribution.
C) personally liable only to the extent the other partners do not pay.
D) personally liable to the full extent of the debt.
Q3) Noah and Orin do business as Personnel Partners. In most states, for purposes of suing and being sued, Personnel Partners would be treated as
A) an aggregate of the individual partners.
B) a natural person.
C) an entity.
D) a non-existent party.
Q4) On a partner's dissociation, his or her duty of loyalty to the partnership ends.
A)True
B)False
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Chapter 28: Limited Liability Companies Special Business
Forms
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Q1) A syndicate may be organized as a corporation but not as a partnership.
A)True
B)False
Q2) Homer's Remodeling, LLC, is a limited liability company. Among the members, a dispute arises that their operating agreement does not cover. No statute applies. The dispute is governed by the principles of
A) corporate law.
B) partnership law.
C) sole proprietorship law.
D) joint venture law.
Q3) Buyers Club is an incorporated cooperative. Like other incorporated cooperatives, Buyers Club distributes profits to its owners on the basis of A) the amount of capital they contribute.
B) the degree to which they participate in management.
C) their transactions with the cooperative.
D) the requirements of the state in which it was incorporated.
Q4) The members of a limited liability company enjoy limited liability.
A)True
B)False
30
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Chapter 29: Corporate Formation, Merger, and Termination
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Q1) A corporation has perpetual existence in most states unless the articles of incorporation state otherwise.
A)True
B)False
Q2) Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation. Lily and Moe are Kleen's officers. As in other corporations, the responsibility for the overall management of Kleen rests with A) the board of directors.
B) the officers.
C) the owners.
D) the shareholders.
Q3) A corporation does not possess the same right of access to the courts as natural persons.
A)True
B)False
Q4) A corporate director is an "owner" of the corporation.
A)True
B)False
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Chapter 30: Management and Ownership of a Corporation
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Q1) Etta is a director of Trendy Stuff Corporation. Without informing Trendy, Etta goes into business with GR8 Things, Inc., in competition with Trendy. Etta is liable for breach of A) no duty or rule
B) the business judgment rule.
C) the duty of care.
D) the duty of loyalty.
Q2) After the first board, the directors are chosen by the corporate officers.
A)True
B)False
Q3) Corporate business matters are presented at a shareholders' meeting in the form of A) resolutions.
B) proxies.
C) articles of incorporation.
D) bylaws.
Q4) Cumulative voting refers to the accumulation of proposals presented annually for a shareholders' vote.
A)True
B)False
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Page 32
Chapter 31: Investor Protection, Insider Trading, Corp Gov
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Q1) Players Video Game Centers, Inc., wants to issue stock of $1 million in a single offering. Players must provide all investors with material information about itself, its business, and its securities if
A) all investors are accredited.
B) under any circumstances.
C) any investors are accredited.
D) any investors are unaccredited.
Q2) Generally, stock offerings that involve a small dollar amount are exempt from the registration requirement.
A)True
B)False
Q3) Readmore Bookstore Corporation files a registration statement with the Securities and Exchange Commission and provides a prospectus describing the securities to investors. These items are intended to provide sufficient information so that the financial risks involved can be evaluated by
A) market professionals to explain to all investors.
B) government regulators to disclose to the general public.
C) sophisticated investors only.
D) unsophisticated investors.
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Page 33
Chapter 32: Promoting Competition
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Q1) Under an exclusive-dealing contract, a seller promises a buyer a certain territory in which the buyer will have no direct competition.
A)True
B)False
Q2) A market division by class of customer between rival firms violates antitrust law.
A)True
B)False
Q3) The primary measure of monopoly power is a competitor's assessment of the acts of a firm under review.
A)True
B)False
Q4) HVAC Parts Company charges different buyers different prices for identical goods. HVAC's prices are subject to evaluation under
A) the Clayton Act.
B) the Federal Trade Commission Act.
C) the Sherman Act.
D) no antitrust law.
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Chapter 33: Consumer and Environmental Law
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Q1) Consumer Finance Corporation (CFC) extends credit to consumers. CFC is subject to the Equal Credit Opportunity Act, which prohibits credit discrimination based on A) intelligence. B) education. C) income. D) race.
Q2) Milo buys an all-terrain-vehicle (ATV) from No-Limit Toys, Inc., on credit but makes no payments on the account. Odell, the owner of No-Limit Toys, calls Milo at home on a Monday morning at three a.m. Odell represents himself as PayNow Collection Agency and demands payment "or else." The next day, Odell sends Milo notice that he has thirty days in which to request verification of the debt and that its payment will be suspended during that time, but that if he does not pay the full amount due within five business days, Odell will arrange for the "destruction of Milo's good credit rating." Which laws has Odell violated, if any, and in what ways?
Q3) Vague generalities and obvious exaggerations constitute deceptive advertising. A)True B)False
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Page 35
Chapter 34: Liability of Accountants Other Professionals
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Q1) Lucille, an accountant, is subject to the accounting conventions, rules, and procedures that constitute generally accepted accounting principles (GAAP). GAAP are determined by
A) the International Accounting Standards Board.
B) the American Bar Association.
C) the American Institute of Certified Public Accountants.
D) the Financial Accounting Standards Board.
Q2) Estes, an accountant, contracts to perform services for Frasier. In performing those services, Estes uncovers a suspicious financial transaction. Estes is most likely not liable if he
A) acted negligently in failing to discover the transaction sooner.
B) conceals the discovery and otherwise finishes the work.
C) investigates and reports the discovery to Frasier.
D) obtains restitution from the perpetrator without Frasier's knowledge.
Q3) An accountant is required to discover every impropriety, defalcation, and fraud in a client's books.
A)True
B)False
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Chapter 35: Personal Property and Bailments
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Q1) A person who holds the entire bundle of rights in property is the owner in fee simple.
A)True
B)False
Q2) A gift to a dying donee is a gift causa mortis.
A)True
B)False
Q3) French's Fast Fries (3F) requires that its employees wear uniforms and protective clothing while on the job. 3F provides a locker room for the employees to leave their street clothes and personal items while working. A sign on the back of the locker room door states, "French's is not responsible for the loss of any property in the locker room." Grant, a 3F employee, changes his clothes in the locker room before starting work and leaves his wallet and watch in a pocket of his jacket hanging in his locker. When he returns after his shift, the wallet and watch are gone. Does Grant's leaving personal items in the locker room constitute a bailment? If so, what type of bailment? If not, what legal relationship is it? Does 3F's sign exculpate the company for Grant's loss? Why or why not?
Q4) A bailment must be in writing to be valid.
A)True
B)False
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Page 37
Chapter 36: Real Property and Landlord-Tenant Law
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Q1) Jacob owns five acres of land in northern California. On his land Jacob has a house and a toolshed. There are ten large maple trees around the house that were there when Jacob bought the land. Since buying the land, Jacob has planted an apple tree. Jacob's real property includes
A) the house and toolshed only.
B) the house only.
C) the house, toolshed and maple trees only.
D) the house, toolshed, maple tress and apple tree.
Q2) Real estate sales contract are often made contingent on the buyer obtaining financing.
A)True
B)False
Q3) A fixed-term tenancy is created when a lease does not specify its duration. A)True
B)False
Q4) Even after a tenant assigns a lease, the tenant may be obligated to pay rent.
A)True
B)False
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Chapter 37: Insurance, Wills, and Trusts
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Q1) Amelia executes a separate written instrument to amend her prior will. This separate document is
A) a codicil.
B) a holographic will.
C) a living will.
D) a nuncupative will.
Q2) Lani is asked to serve as a witness to Mona's will. To qualify, Lani must be
A) a collateral heir.
B) a lineal descendant.
C) eighteen years of age or older.
D) mentally competent.
Q3) Cliff dies without a will. His survivors include his spouse Dana and his two children, Efrem and Fay. Under applicable laws, Dana will probably receive
A) all of Cliff's estate.
B) none of Cliff's estate.
C) one-half of Cliff's estate.
D) one-third of Cliff's estate.
Q4) Dieter's will provides for a distribution of his assets on his death. Who will "distribute" Dieter's property, and what are the steps involved?
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