Question 1. Which of the following statements is true?
a. If one has entered into a contract, one is obligated to fully perform one's obligations under the contract, even if it becomes impossible to do so.
b. One must perform all promises made under a contract, even if performance subsequently becomes illegal.
c. There can be contractual conditions that aren't stated expressly in a contract, but are implied by law.
d. Performance under a contract that becomes more expensive gives rise to a right to void the contract by the party who would have to bear the increased expense.
Question 2. Which of the following statements are true?
I. The only legally recognized remedy for breach of contract is the award of money damages.
II. Courts may be called upon to determine the meaning of contract terms.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
Question 3. All of the following statements are true, EXCEPT:
a. Contracts that increase the burden of performance of the person obligated to perform under the contract cannot be assigned.
b. Third persons, who are viewed as intended beneficiaries under a contract, have rights to sue to enforce these contracts.
c. Contracts may have conditions, which make obligations contingent on some future event.
d. Even if one party to a contract has materially breached her duty to perform under the contract, she may still recover damages from the other party if he has failed to fully perform his obligations under the contract.
Question 4. Which of the following statements is true?
a. If a party demonstrates another party has breached a contract, and brings a lawsuit for this, the party can seek damages, but there is no other form of legal relief that may be sought by the party suffering the breach of contract.
b. A contract may specify penalties that will be due and owing if one of the parties beaches the contract, and such penalties will be enforced by the courts, even if they are much more than a reasonable approximation of the damages that will be sustained if there's a breach of contract.
c. Neither consequential nor punitive damages can be awarded in most breach of contract cases.
d. If a party agreeing to perform a personal service under a contract breaches the contract, that party may be ordered by a court to perform the service.
Question 5. Which of the following statements are true?
I. There can be no contract without consideration.
II. Under no circumstances can a minor have any obligations arising from a contract.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
Question 6. All of the following statements are true, EXCEPT:
a. Generally, courts will refuse to enforce contracts that involve illegal activities.
b. Generally, courts will refuse to enforce contracts that are determined to be contrary to public policy.
c. A court will not set aside a contract due to the mistake of the parties to the contract. This is true even if the mistake was made by both parties, and it affected a basic assumption upon which the contract was made that has a material effect on the agreed exchange of performances.
d. A contract will be set aside by a court if one of the parties was under duress at the time the contract was formed, or one party exercised undue influence on the other party.
Question 7. Which of the following questions are true?
a. The stakeholder theory of corporate responsibility asserts that the corporation should act in a way that most maximizes overall profit to the corporation.
b. Deontological ethical theories provide that one's course of action should be determined by discovering which choice maximizes the total benefits to society, regardless of whether the decision itself is just or moral.
c. One major problem of rights theories of ethical decision making is the difficulty of reaching agreement on the rights that must be protected.
d. The ethical theory of profit maximization is highly concerned with the distribution of wealth throughout society.
Question 8. Which of the following statements are true?
I. Contracts with people who lack capacity to enter into contracts are voidable by the party lacking capacity.
II. If one makes a contract with a minor and provides "necessaries" to the minor under the contract, the minor may disaffirm the contract, and the party providing the necessaries is not entitled to recover anything under any legal theory of recovery.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
Question 9. All of the following statements are true, EXCEPT:
a. Historically, corporate boards of directors have provided close supervision of the actions of corporate officers.
b. The Sarbanes-Oxley Act of 2002 requires public companies to have board audit committees comprising only independent directors.
c. Increasing the information and resources of members of the board of directors of a corporation would help facilitate greater accountability on the part of corporate management.
d. The Sarbanes-Oxley Act of 2002 has a provision by which fraudulently obtained stock option profits may be recovered by companies.
Question 10. Which of the following statements is true?
a. Analogies provide conclusive proof for the wisdom of taking an action on behalf of one corporation due to the success of the same action in another.
b. The logical fallacy of begging the question involves appealing to the board of directors to overrule actions of corporate officers, and to make certain key business decisions on its own.
c. The gambler's fallacy is encountered only if a corporate officer makes a highly risky decision that is inconsistent with the overall risk profile of the individual corporation.
d. A corporate officer who justifies spending additional money on a certain project in an attempt to recover money already spent and used up is likely guilty of committing the sunk cost fallacy.
Question 11. Which of the following statements are true?
I. In a lawsuit concerning a written contract, the parol evidence rule forbids the introduction of any evidence other than the contract itself, in all situations.
II. The overall goal of interpreting the meaning of a contract or its terms is to ascribe the meaning that a reasonable person would be expected to give to the term or matter at issue.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
Question 12. All of the following statements are true, EXCEPT:
a. Many contracts contain express conditions. These are certain things that must happen before one of the parties is expected to perform his obligations under the contract.
b. Under a contract for the construction of a building, if the builder only substantially performs, but doesn't completely perform, his contractual obligations, the other party has no further obligations under the contract whatsoever.
c. If one party to a contract makes it clear by word or act he won't perform his obligations under a valid contract, this constitutes a breach of contract by anticipatory repudiation.
d. If a party can't perform under a contract due to certain circumstances, or it becomes economically unfeasible to do so, performance under the contract may be excused, under certain conditions.
Question 13. Which of the following statements are true?
I. The protection against compulsory self-incrimination applies to individuals, partnerships and corporations. Thus, individuals who are custodians of corporate records may refuse to produce corporate records that may tend to implicate them personally.
II. The double jeopardy clause protects against more than one criminal proceeding being brought against someone by the government for the same offense, but doesn't prohibit a civil proceeding that is instituted after the conclusion of a criminal proceeding.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
Question 14. Which of the following statements are true?
a. It is not necessary to enact a statute to make an act a crime. There are common law crimes, which consist of offenses that are derived from legal principles enunciated by judges in cases brought against criminal defendants.
b. Anyone who violates a criminal statute may be convicted of a crime whether or not the defendant had the capacity to form criminal intent when the defendant committed the crime.
c. Criminal statutes do not require that criminal intent, or mens rea, be demonstrated by the prosecution.
d. A formal criminal charge may be brought either by an indictment or by an information, depending on the jurisdiction in which the charge is brought.
Question 15. Which of the following statements are true?
I. Corporate ethics codes have generally eliminated the need for ethical training and for greater corporate focus on ethical issues.
II. Corporate ethics codes cannot impose greater obligations on employees than those imposed under the law.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
Question 16. All of the following statements are true, EXCEPT:
a. Persons generally have no reasonable expectation of privacy in areas such as open fields or other similar areas open to the public.
b. As a general, rule, searches carried out without proper search warrants are considered unreasonable.
c. Due to the privilege against self-incrimination, no one may be compelled to provide physical evidence that may incriminate them such as fingerprints, blood, or hair samples.
d. Under the modern rule, a corporation may be held liable for criminal offenses committed by employees who acted within the scope of their employment and for the benefit of the corporation.
Question 17. Which of the following statements are true?
a. The Foreign Corrupt Practices Act prohibits giving things of value to foreign governments to influence their official actions.
b. Under RICO, a court may assess fines and imprisonment if a defendant is convicted, but the court may not seize, or forfeit, assets derived from a criminal enterprise.
c. There is currently no legal prohibition against using a computer to defraud someone.
d. Businesses cannot be convicted of crimes. Only individuals may be convicted of crimes.
Question 18. Which of the following statements are true?
I. The moral rights ethical approach holds that decisions must be consistent with fundamental rights and privileges, such as the right to privacy, freedom of conscience and property ownership, and that it is the duty of all to maintain the rights of others.
II. The justice principle of ethics is based on fairness and distributive justice.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
Question 19. All of the following statements are true, EXCEPT:
a. In general, auditors, consultants and securities professionals owe their clients a duty to exercise the care and skill of the ordinary prudent professional in the same circumstances.
b. Courts determine the specific standards of ordinary prudence in each profession, and do not defer at all to those in the profession in determining what constitutes ordinary prudence in the given profession.
c. Professionals owe their clients the duty to comply with contracts the professionals have entered into with their clients.
d. Professionals may not delegate their duty to perform under a contract to someone else without the consent of their client.
Question 20. Which of the following statements is true?
a. Securities professionals owe no obligation to make sure securities they recommend to their clients are suitable to their clients' financial circumstances.
b. In some circumstances, courts may allow professionals to defend themselves from legal liability to their clients because of their clients' contributory or comparative negligence.
c. There is no obligation of confidentiality owed by a professional to his or her clients.
d. Professionals will not be found legally responsible to persons with whom they have no contract to provide professional services.
Question 21. Which of the following statements are true?
I. There are two elements to the professional's duty of performance: reasonable skill and reasonable care.
II. Since embezzlement is a crime requiring specific intent, accountants may not be found liable to their client's for negligently failing to uncover employee fraud or embezzlement.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
Question 22. All of the following statements are true, EXCEPT:
a. A professional may be liable for fraud if he acts with scienter?that is he knows of the falsity of a statement, or acts in reckless disregard of the truth.
b. A professional may not disclose sensitive client matters such as income and wealth, or use secret information about a client's new product to purchase the client's securities.
c. In most cases, when the professional has committed fraud, liability of the professional may extend to persons beyond the professional's client, and will likely include all foreseeable users of the professional's work product who suffered damages proximately caused by the fraud.
d. Auditors or underwriters of securities cannot be held legally liable to purchasers of securities whether or not they are responsible for a defective registration statement.
Question 23. Which of the following statements is true?
a. Professionals may escape all professional liability by forming a Limited Liability Company (LLC).
b. RICO is an effective criminal and civil statute that can be used against organized criminal enterprises, but it may not be applied to otherwise legitimate businesses, such as corporations.
c. The attorney-client privilege may protect a lawyer's working papers from disclosure, as well as communications between clients and their attorneys.
d. There is no accountant-client privilege recognized by statute, or otherwise.
Question 24. Which of the following statements are true?
I. Professionals may be found legally liable for breach of contract, or for negligence.
II. Professionals owe their clients contractual duties to perform as they said they would under a contract with their clients.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
Question 25. All of the following statements are true, EXCEPT:
a. Learning about the law is fun and interesting.
b. I've learned many helpful legal rules and doctrines in this course.
c. Business persons should have a good working familiarity with key legal principles.
d. Non-attorney professionals have no need to know anything about the law?knowledge of the law is for lawyers only.