ANZ Inc., a cement manufacturer, releases hazardous chemicals into the atmosphere and also into nearby streams. The pollutants released into the atmosphere exceed acceptable levels and the company is facing a suit from the residents of nearby towns. Under which of the following acts can the company be sued?

1. Sherman Act

2. Clayton Act

3. Resource Conservation and Recovery Act

4. Clean Air Act

Activities that are illegal regardless of their effect are known as _____.

1. per se violations

2. multiple-party violations

3. compensatory violations

4. antitrust violations

Which of the following is true of government regulation of business?

1. Government regulations only affect the operation of certain businesses.

2. Government regulations do not affect product prices.

3. Government regulations are used to eliminate abuse in business.

4. Government regulations are used to improve quality of life for only certain sections of society.

The Racketeer Influenced and Corrupt Organizations Act includes civil sanctions as well as criminal ones.

1. True

2. False

The doctrine of strict liability can make the manufacturer of a dangerously defective product liable, even if there's no proof of negligence.

1. True

2. False

Which of the following best describes the difference between civil law and criminal law?

1. Penalties under civil law are more severe than penalties under criminal law.

2. Civil law deals with the enforcement or protection of private rights, whereas criminal law deals with offenses against society.

3. The standard of proof required to convict a defendant is greater in a civil case than in a criminal case.

4. In civil law, a defendant is entitled to an attorney, regardless of his or her ability to pay for one, whereas criminal defendants do not have a right to legal representation.

Which of the following is true of a contract between two minors?

1. Only the person of a lower age has the right to avoid the contract.

2. Each minor has the right to avoid the contract.

3. Each minor is bound by the contract

4. Each minor is bound until he or she reaches the age of majority.

Blake has subscribed to a local charitable association where he needs to make a monthly payment of $100. However, a few months later, Blake stops paying this amount. Which of the following exceptions to the requirement of consideration will enforce that Blake pays the amount?

1. Composition of creditors

2. Voluntary subscriptions

3. Forbearance to cancel monthly subscriptions

4. Modification of sales contracts

Mark, a civil engineer, entered into a contract with David. As per the contract, Mark agreed to design and build a house for David for a specified fee. Mark provided David with an estimation of the total cost and the contract was mutually agreed upon. However, during construction, when Mark increased the price due to a miscalculation on his part, David refused to pay the amount. This scenario is an example of a _____ mistake.

1. mutual

2. collective

3. collateral

4. unilateral

Which of the following is true regarding parties who make mutual mistakes of law?

1. The contract becomes null and non-binding on the parties.

2. One of the parties can annul the contract stating that it is a mistake of law.

3. The parties are expected to have knowledge of the law when making the contract.

4. Both parties can claim relief and compensation through a court of law.

_____ is a means of destroying another's free will by one party obtaining consent to a contract as a result of a wrongful threat to do the other person or family members some harm.

1. Passive fraud

2. Duress

3. Misrepresentation

4. Undue Influence

Which of the following is an example of passive fraud?

1. A homeowner tells a home buyer that the basement of the home never floods, when in fact the homeowner knows it has several significant leaks.

2. An attorney fails to tell his or her client of an offer to settle a case.

3. A thrift store sales clerk mistakenly tells a customer that a table is oak instead of pine.

4. A car salesman tells a customer that he believes the latest model of certain pickup truck is more reliable than previous models.

Which of the following is true of undue influence?

1. It occurs when one party threatens to cause physical harm to another.

2. It refers to one party injuring another financially to influence him to enter into a contract.

3. It takes place between people who are not known to each another.

4. It refers to a person in a special relationship causing another's action contrary to free will.

The legal rate of interest is a rate:

1. that is higher than the contract rate.

2. at which no interest is charged.

3. that is over and above the rate that is lawfully allowed.

4. that is applied when no rate is specified.

Which of the following is an example of a contract contrary to public policy?

1. A purchases a motorcycle from B at a price much lower than its real value.

2. A agrees to sell 1000 tonnes of rice to the local government.

3. A agrees to appoint B as sheriff, provided he helps him win the local elections.

4. A agrees to give $100 to B if he wins the lottery.

Which of the following statements best describes the term "assignment"?

1. It is the conveyance of rights in a contract to a person who is not a party.

2. It is the termination and replacement of an old contract.

3. It is the transfer of duties alone without a transfer of rights.

4. It consists of an assignee who is the party making the assignment.

When an assignment is made by an act of the parties, which of the following is true?

1. The assignment must be made orally.

2. If the original contract was required be in writing, the assignment must also be in writing.

3. The assignment must be supported by consideration.

4. The assignee may receive greater rights than the assignor held in the contract.

A joint contract is one in which:

1. not more than two parties can be involved.

2. parties promise to do their individual part of the performance.

3. parties are not collectively entitled to the performance of another party.

4. each obligor is bound for the performance of the entire obligation.

A force majeure clause in a contract is a contract provision that excuses performance by a party when:

1. an extraordinary event outside the party's control occurs.

2. death or physical incapacity occurs, making it impossible to perform the services of the contract.

3. the performance is made impossible by the wrongful act of the other party.

4. an act that was legal at the time of the contract, is subsequently made illegal.

In a written contract, Sheldon agreed to tutor the children of Mrs. Smith for a certain period of time. However, Sheldon, prior to starting classes, announced that he would not be able to tutor the children due to other commitments of his. In this case, there has been a(n):

1. anticipatory breach.

2. rescission.

3. negligent breach.

4. malpractice.

In which of the following cases will a court refuse to enforce the provision of liquidated damages on a party?

1. When the actual damages are difficult to be proved

2. When the liquidated damages were established prior to the breach of contract

3. When the amount of liquidated damages fixed by the contract is unreasonable

4. When the parties refuse to pay the liquidated damages established in the contract

How are sales contracts handled when terms are missing?

1. If a sales contract does not state the price of goods that will be sold to the buyer, the contract is considered invalid.

2. If the price term is not expressly stated, it will be held to be the reasonable price for the same goods in the market.

3. When a contract includes the supply of both services and goods, the contract is considered to be a contract for the sale of goods only if the terms expressly state it is subject to the UCC.

4. If parties indicate that the price of goods must be fixed at a later date, and no price is thus fixed, the goods must be supplied at whatever price the seller sets.s not.

Which of the following statements is true of illegal sales?

1. If a sale is divisible with a legal and illegal part, then neither part is enforceable by the law.

2. An indivisible sale with an illegal part makes the entire sale illegal.

3. If a sale involves several separate items but it is a lump-sum sale, then the sale is considered divisible.

4. If a party is completely innocent and has entered into an illegal sale, the court will not intervene to aid the party.

What is the essential element in determining who bears the risk of loss of goods?

1. The party producing the goods bears the risk of loss.

2. Risk of loss follows the cash in a transaction.

3. Contracts attempting to shift the risk of loss are void due to illegality.

4. The party with control over the goods bears the risk of loss.

When might a seller retain its right to possession of goods after delivery?

1. By stamping them "not for retail sale".

2. By making the shipment cash on delivery.

3. When the buyer has not yet made full payment for goods.

4. When the risk of loss has not passed to the buyer.

Which of the following warranties applies to all sellers?

1. warranty of merchantability

2. warranty of title

3. warranty against infringement

4. warranty of fitness for normal use

Which of the following is true of a warranty of merchantability?

1. It imposes the duty to employ a particular design, on the merchant, for safety reasons.

2. Warranty of merchantability exists even after the risk of loss has passed to the buyer.

3. Warranty of merchantability relates only to the fitness of the product made or sold.

4. Unless excluded or modified, merchants do not make an implied warranty of merchantability.