1) Which of the following is a distinguishing feature of acommon law legal system?

A. Requiring guilt be proven beyond a reasonable doubt

B. The sole source of law is a comprehensive civil code

C. An appeal process

D. The making of law by the judges and the following ofprecedent

2) Which best describes the types of agency authority held byofficers of a corporation?

A. Vicarious authority

B. Express and obvious authority

C. Implied and apparent authority only

D. Express, implied, and apparent authority

3) If an LLC fails to follow formalities such as keeping minutes ofmeetings, which of the following is true?

A. Only the managers of a manager-managed LLC will lose limitedliability.

B. All members will lose their limited liability.

C. This failure will not result in imposing personal liability onany member.

D. Only the parties responsible for the failure will lose limitedliability.

4) Martha started a flower shop as a sole proprietor. After 1 year,she 
was forced to close the shop because business was so bad. At thattime, 
the business assets totaled $50,000, but the businessliabilities 
totaled $125,000. Which of the following statements is true?

A. Martha is personally liable for the additional $75,000.

B. Martha’s business creditors can collect only the $50,000 ofbusiness assets.

C. Martha’s business creditors can collect only the $50,000 now,but if 
Martha ever goes into business again, they can get the assets ofthe new
business.

D. Once Martha terminates the sole proprietorship, the businesscreditors cannot even get the $50,000

5) Partners of a general partnership

A. are protected from litigation against the partnership bystatute

B. are liable for the obligations of the partnership only to theextent of their capital contributions

C. do not have to pay taxes on the profits of the partnership thatare distributed to them

D. are liable for all the obligations of their partnership

6) Which of the following forms of alternative dispute resolutionallows
both parties to see the strengths and weaknesses of both sides ofthe 
case through the presentation of evidence?

A. Negotiated settlement

B. Minitrial

C. Mediation

D. Conciliation

7) A ___________ is a court-appointed party who conducts a privatetrial and renders a judgment

A. fact-finder

B. arbitrator

C. judicial referee

D. negotiator

8) What is a form of alternative dispute resolution that is oftenused 
when the parties involved do not want to face one another?

A. Arbitration

B. Fact-finding

C. Minitrial

D. Conciliation

9) Which of the following is true regarding mediation?

A. A mediator often meets with both parties at the same time

B. A settlement agreement is never reached with a mediator.

C. A mediator does not make a decision or award

D. If a settlement agreement is not reached in mediation, then theparties hire a new mediator

10) There are no accountants on the board of the OrioleCorporation, a 
privately held corporation. The board routinely relies on aCertified 
Public Accountant (CPA) to explain the financial situation ofthe 
corporation. The board does not do an independent analysis of theCPA’s 
report. In these circumstances, the board is

A. violating a duty of loyalty

B. violating a duty to exercise due care

C. violating the business judgment rule

D. not violating any duty

11) Self-dealing by a director of a corporation can best bedescribed as

A. A breach of a director’s duty of notification

B. A breach of a director’s duty of care

C. A breach of the Business Judgment Rule

D. There was no breach of duty

12) Which of the following is likely to be a breach of a corporateofficer’s or director’s duty of care?

A. Failing to anticipate a precipitous drop in consumer demand ofthe company’s product

B. Failing to make a reasonable investigation of relevant facts

C. Failing to predict the unexpected startup of a newcompetitor

D. Failing to foresee a sudden rise in the interest rate

13) In what ways may officers and directors be protected bythe 
corporation from liability for actions taken as an officer ordirector?

A. The officer or director must purchase personal liabilityinsurance to cover such losses.

B. Have the corporation purchase liability insurance and indemnifythe officers and directors

C. Officers and directors cannot be protected from liability

D. Officers and directors are automatically protected fromliability by virtue of corporate

14) If a plaintiff voluntarily participates in a risky activitythat 
results in injury, what is the most likely defense to a claim thatthe 
plaintiff assumed the risk?

A. Contributory negligence

B. Defendant was negligent per se

C. Defendant assumed the risk under the “danger invites rescue”doctrine

D. Comparative negligence

15) Mark is the treasurer of Sky-Hi Tech Corporation and, as such,he is
responsible for protecting the assets of the corporation. One ofMark’s
subordinates, Jill, is in charge of reconciling the monthlycorporate 
bank statements. Over a period of several months, Jill embezzled alarge
amount of money from Sky-Hi Tech, covering up the theft using herbank 
reconciliations. If Mark had adequately supervised Jill, she couldnot 
have embezzled this money. Mark’s actions (or inactions) constitutea 
breach of his duty of

A. due care

B. obedience

C. loyalty

D. good business judgment

16) Barry buys a new sports car. The car sits low to the groundand 
because of the styling, visibility to the rear is limited. About amonth
after Barry buys the car, he backs over his pet poodle as he isleaving
for work. In his strict liability suit against the carmanufacturer, 
Barry will

A. win because driving a sports car is an inherently dangerousactivity

B. win on the basis of design defect

C. win on the basis of packaging defect because the car could havebeen packaged in a differently styled body

D. lose because he assumed the risk of backing up in a car when hecould not see to the rear

17) If a judge rules that a party lost its case because of theStatute 
of Frauds, the judge has essentially stated which of thefollowing?

A. The losing party purposely deceived the other party about amaterial fact.

B. The losing party will not be allowed to introduce evidence tocontradict a written agreement

C. The losing party cannot enforce an oral contract that shouldhave been in writing

D. The losing party was found by the court to have lied, andtherefore will lose the case

18) What does the parol evidence rule do?

A. It limits the ability of parties to written contracts fromintroducing certain evidence related to the contract.

B. It sets the rules for admissibility of evidence relating toreleasing a criminal from a prison term

C. It sets the general rules for the admissibility of evidence incriminal actions

D. It determines which contracts are required to be in writing

19) ABC LLC and XYZ Corp. entered into a contract whereby ABC isto 
supply XYZ with widgets. After receiving the first shipment ofwidgets, 
XYZ finds that the widgets, while meeting the physicalstandards 
specified in the contract, do not perform as XYZ anticipated.The 
contract is silent as to performance specifications, but XYZsuspects 
that ABC knew that it was manufacturing and supplying widgets thatwould
not perform according to industry standard. XYZ initiates alawsuit 
against ABC, alleging that ABC knowingly supplied defectivewidgets. 
What process will XYZ use to help it develop its case againstABC? 

A. Pleadings

B. Motion for summary judgment

C. Discovery

D. Trial

20) Under the Employee Retirement Income Security Act (ERISA), anemployee’s benefits must vest

A. within 10 years

B. by the time of the employee’s retirement

C. in total within 5 years or gradually within 7 years

D. only as provided in the pension plan

21) Which of the following statutes provides that it is legal foremployees to organize a union?

A. The Norris-LaGuardia Act

B. The National Labor Relations Act

C. The Labor-Management Relations Act

D. The Worker Adjustment and Retraining Notification Act

22) William was a factory worker at the Spruce Industries plant.When 
management found out that William is gay, he was fired. Theplant’s 
action is

A. not prohibited under federal law

B. a violation of Title VII

C. a violation of the Equal Pay Act

D. a violation of the Americans with Disabilities Act

23) Janet is manager of a bank. She has all the qualifications tobe 
promoted to bank manager. In fact, she is better qualified than anyof 
the men being considered for the position. However, the owner ofthe 
bank believes that bank customers will not accept a woman asbank 
manager, so the owner promotes one of the males. The owner’sactions 
would best be described as what?

A. Quid pro quo

B. Hostile work environment

C. Gender discrimination

D. Pregnancy discrimination

24) Which one of the following statutes allows a prevailing partyto 
recover attorney’s fees in an action against the government foran 
action of an agency?

A. The Freedom of Information Act

B. The Government Compensation Act

C. The Administrative Procedure Act

D. The Equal Access to Justice Act

25) Which of the following would prevent someone from acquiringland by adverse possession?

A. The person never had to fight the original owner to remain onthe land

B. The person lived on the land secretly so that the original ownerwould not find out he or she was there

C. The person lived on the land without the original owner’spermission

D. The person was the only person who lived on the land inquestion

26) Which of the following would be classified as tangiblepersonal 
property, as opposed to other property categories, such as fixturesor 
intangible property?

A. A freestanding desk

B. Built-in cabinets in an office

C. A copyright to a literary work

D. A field of corn

27) As the CEO of a high tech company, you become aware that yourchief 
competitor is working on a new computer program that willrevolutionize 
your industry. You know that if you can find out several keyfunctions 
about the new product, your own programmers will be able toduplicate 
the function of the program without actually copying its code.Which of 
the following actions can you ethically take?

A. Paying the garbage company to deliver the competitor’s garbageto you

B. Hiring a former employee of the competitor and paying her abonus to tell you the competitor’s secrets

C. Hiring a researcher to review all available information aboutthe 
competitor, including patents, types and names of employeeshired, 
reports by the competitor, including all SEC filings

D. Hacking into the competitor’s computer systems to find out whatyou need

28) From a practical perspective, what are some of the elements ofSarbanes-Oxley?

A. Ensuring transparency, accountability and internal controls

B. Ensuring companies are profitable

C. Ensuring that CEOs do not make more than 10 times the lowestpaid employee

D. Ensuring that large shareholders do not have boardrepresentation

29) Under Title IX of the Sarbanes-Oxley Act, the penalty forsomeone 
who certifies “any statements as set forth in subsections (a) and(b) of
this section knowing that the periodic report accompanyingthe 
statement does not comport . . .” is

A. no more than $1,000,000.00 or imprisoned no more than 10 years,or both

B. no more than $500,000.00 or imprisoned no more than 6 months, orboth

C. no more than $2,000,000.00 or imprisoned no more than 3 years,or both

D. no more than $5,000,000.00 or imprisoned no more than 20 years,or both 

30) Which is prohibited under the Sarbanes-Oxley Act?

A. High salaries for corporate executives

B. Using an independent accounting firm for audit purposes

C. Public companies making personal loans to their directors andexecutives

D. Directors and executives attending board meetings on a regularbasis