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. all issues will be decided by an arbitrator.

B. the case won’t have an outcome unless Lynn and the defendant both agree.

C. Lynn is risking that some issues in the case will be decided by an arbitrator.

D. the case involves medical malpractice.


Karen sues Ted, claiming that under an interpretation of law given in a previously decided case, Karen should win. If so, on which of the following concepts is Karen relying?

A. Stare decisis

B. Preemption

C. Devolution doctrine

D. Judicial review




060470RR – Contracts, Part 1


1. Jackie tells a group of friends that she plans to sell her home. Meg asks how much Jackie hopes to get for the house, and Jackie replies, “$50,000.” Meg says, “I accept your offer. I’ll purchase your house for

$50,000.” No contract exists because

A. the offer isn’t properly communicated.

B. Jackie doesn’t seriously intend to enter a contract.

C. the terms of the offer aren’t reasonably certain.

D. Jackie’s statements are merely preliminary negotiations.


2. On the Internet, Sara came across a software package she wanted to download. To download the

Software, she had to read a disclaimer and click an “I Agree” button. Sara didn’t bother to read the contents of the “Agreement and Warranties” disclaimer, but she clicked “I Agree.” The software caused her computer to crash. Sara filed suit against the company that ran the website, and the company’s defense is that the “Agreement and Warranties” disclaimer to which Sara agreed disclaimed any responsibility for such occurrences. The most likely result is that Sara will

A. lose her lawsuit because the disclaimer will be enforced.

B. win her lawsuit because she didn’t the read disclaimer.

C. win her lawsuit because disclaimers aren’t enforceable.

D. lose her lawsuit because she didn’t read the disclaimer, which isn’t enforceable.


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 the value of the consideration given for the covenant equals the value of the income loss that would be caused by enforcing the agreement.

D. restrictive covenants regarding future employment will be enforceable if they’re reasonable.




4. Larry thinks the necklace owned by Samantha is worth a million dollars. Larry offers a million dollars to

Samantha for the necklace, and she accepts. Later, Larry has the necklace appraised and learns it’s worth

only $10,000. Which of the following is true?

A. Larry can have the contract set aside on grounds of capacity.

B. Samantha has the right to rescind the contract and have the necklace returned.

C. Larry can’t have the contract set aside on grounds of mistake.

D. Larry can have the contract set aside on grounds of mistake.


5. Lance e-mails Fred, offering to buy his motorcycle for $750. Fred replies, agreeing. Later, Fred declines to honor the agreement, claiming that e-mail agreements aren’t enforceable. In both the initial e-mail and the reply Lance and Fred typed their names. Which of the following is true?

A. There’s no contract because the e-mails weren’t witnessed.

B. There’s no contract because e-mail agreements aren’t enforceable.

C. The e-mails constitute a contract if Lance and Fred have agreed that electronic signatures can be used to create the agreement.

D. There’s no contract because contracts must have hand-written signatures to be enforceable.


6. Tom is selling his motorcycle to Carl. Tom tells Carl that the motorcycle runs perfectly, though he knows that the motorcycle leaks oil. Carl purchases the motorcycle and discovers the problem. Which of the following is true?

A. Tom committed active fraud.

B. Tom hasn’t committed fraud.

C. Tom committed passive fraud.

D. Tom committed fraud in the inception.


7. 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. Illegality of consideration

B. Inadequacy of consideration

C. Lack of serious intent to contract

D. All of the above are potential grounds for setting aside the contract


8. Delivery of unordered merchandize is considered

A. a contract to purchase unless the recipient contacts the sender to reject the merchandize.

B. performance of a contract.

C. an offer to sell.

D. a contract to purchase if the items aren’t returned.


9. Ty and Cher were discussing a business venture over dinner. Cher had several glasses of wine and

became visibly intoxicated. Ty and Cher continued to discuss the venture and formed a contract in which

Ty received 80% of the profits resulting from the venture and Cher received 20%, even though Cher

agreed to invest the majority of the money. Ty agreed to contribute his expertise and services to the

venture. The next morning, Cher realized her terrible mistake. Cher’s best chance to avoid the contract with Ty is to say that

A. the contract is unconscionable.

B. Ty doesn’t have the expertise and services required for the venture.

C. she was drunk at the time the contract was formed.

D. the contract is fraudulent.






10. Angela, age 14, contracts to purchase medicine from the pharmacy. She and the pharmacist both know

that she needs this medicine to live and that it’s not being provided to her by anyone else. Which of the

following is true?

A. The contract can be avoided by Angela on grounds of duress.

B. The pharmacist can enforce the contract.

C. The contract is against public policy.

D. Angela can avoid the contract on grounds of lack of capacity.



11. Juan thinks he would like to purchase Tara’s house, but doesn’t know whether he will be able to save

enough money for a down payment on a loan. Juan agrees to give Tara $5,000 for the option to purchase

her house for $150,000 sometime within the next five years. Juan and Tara reduce their agreement to

writing, sign it, and Juan gives Tara $5,000. Two years later, Juan wins the lottery and now is financially

able to purchase Tara’s house. However, that same day Juan receives a letter from Tara revoking her offer

to sell for $50,000. Which of the following is true?

A. Juan can’t complain because he failed to accept Tara’s offer before it was revoked.

B. Tara’s revocation isn’t effective.

C. Tara’s revocation is effective as long as she refunds the $5,000.

D. Tara’s revocation is effective.



12. Eric, a 17-year-old, signs a contract with the armed services to enlist. Later, Eric changes his mind and

wants out of the contract. Can he void the contract based on incapacity to contract?

A. Yes

B. No

C. In some states

D. Yes, after he turns 18


13. 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?

A. No, because her silence in this case didn’t constitute acceptance.

B. No, because Madison didn’t specifically order the goods.

C. Yes, because the price is fair.

D. Yes, because her silence in this case constituted acceptance.


14. Ken threatens to tell everyone that Bob is a child molester unless Bob agrees to enter into a contract

with Ken. Bob agrees and signs the contract. If Bob later challenges the contract, what are the best grounds for doing so?

A. Fraud

B. Misrepresentation

C. Emotional duress

D. Economic distress


15. Patty visits Big Grocery store and sees a table with bananas on it. Patty picks up a bunch of bananas,

walks to checkout, and hands them to the cashier. This is

A. an express contract.

B. no contract.

C. an implied-in-fact contract.

D. an implied-in-law contract.


16. Dave is declared insane and committed to an asylum. Dave escapes and goes to a car dealership, where

he enters into a contract with Larry to buy a sports car. Which of the following statements is true?

A. Because Dave is legally insane, the contract is void.

B. Only Larry can void the contract.

C. Only Dave can void the contract.

D. To void the contract, Dave must prove he is insane.


17. 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 isn’t consideration.

B. Agreement not to sue is consideration only if it approximates what a court would have awarded.

C. Agreement not to sue is consideration.

D. Such contracts violate public policy and therefore are unenforceable.


18. Natalie contracts with Paula to paint her house for $100. Paula pays Natalie, but Natalie has yet to

paint. This contract is

A. executory as to Paula’s duty.

B. executory as to Natalie’s duty.

C. executory.

D. executed.

19. Carrie decides to offer Shelley the opportunity to purchase her motorcycle for just $500. Carrie told

Jim, a mutual friend of Shelley and her, that she intended to make the offer. Later, Carrie changes her

mind. Shelley approaches Carrie and says she accepts the offer. No contract was formed most likely


A. Carrie never communicated the offer to Shelley.

B. the terms of the offer weren’t definite enough to form a contract.

C. Carrie didn’t possess a serious, objective intention.

D. Jim was acting as an agent for Shelley without telling Carrie.


20. Daisy contracts with Mike that in exchange for $50 Daisy won’t whistle for a week. This contract is

A. not enforceable due to lack of consideration.

B. unenforceable due to fraud.

C. enforceable.

D. enforceable only if Daisy is a musician who whistles for a living and would suffer significant income loss by not whistling for a week.



060471 – Contracts, Part 2


1. Tom and Zeke enter into a contract for Tom to paint Zeke’s house for $1,000 by August 5th. Tom

paints half of the house on August 6th, then demands pay. Which of the following is false?

A. Tom may not be in breach if the contract doesn’t make time of the essence.

B. Zeke may have to pay if payment is a condition precedent to the duty to paint.

C. The contract doesn’t violate the statute of frauds.

D. Tom’s duties are discharged under the doctrine of substantial performance.


2. Under the _______ rule, courts generally accept into evidence only the original of a writing, not a copy.

A. equal dignities

B. standard construction

C. parol evidence

D. best evidence


3. Kevin, a world-renowned violinist, agrees to play at the reception for Jay’s wedding. Something comes

up at the last minute, and Kevin delegates his duty to perform to Susan, a mediocre but professional

violinist. This delegation is

A. impermissible.

B. permissible if Susan performs well.

C. permissible if Kevin also assigns to Susan the right to be paid for playing.

D. permissible.


4. Paul enters into a contract with Harry. Paul agrees to put a new roof on Harry’s house, and Harry agrees

to pay Paul $5,000. Paul is late on a payment to Sam’s Supply House and tells Sam’s Supply House that he

will pay when he receives money from Harry. Sam’s Supply House has heard this from Paul before and

didn’t receive money. To ensure Paul pays his payment from the money Harry pays him, Sam’s Supply

House can

A. require an accord and satisfaction be entered into.

B. tell Harry that Paul is indebted to Sam’s Supply House, which automatically makes them a creditor beneficiary entitled to the payment.

C. have Paul assign his interests under the contract with Harry to Sam’s Supply House.

D. have Harry assign his interests under the contract with Paul to Sam’s Supply House.


5. James leases an apartment to Kyle for $900 per month rent. The written lease contains no prohibition

against assignment, nor does it expressly permit assignment. Kyle assigns his rights to Harley without any

consideration. James finds out and objects. The assignment is

A. invalid because the lease didn’t expressly permit assignment.

B. valid because the written lease didn’t prohibit it.

C. valid because there’s no consideration for the assignment.

D. invalid because James didn’t consent to the assignment.


6. Collin purchases a house, using a loan from Big Bank. As a condition of the loan, Big Bank requires that

Collin purchase life insurance payable to Big Bank, to the extent of the outstanding mortgage, if Collin dies

before fully paying the mortgage. Big Bank is

A. both a creditor beneficiary and a donee beneficiary.

B. an incidental beneficiary but not a donee beneficiary.

C. an intended beneficiary but not a donee beneficiary.

D. a creditor beneficiary but not a donee beneficiary.


7. Horatio agrees to paint Stella’s house for $1,000. Horatio fails to paint, and Stella hires Winston to paint the house for $1,000. Stella sues Horatio for breach of contract. Stella likely will receive __________ damages.

A. punitive

B. consequential

C. nominal

D. liquidated


8. Warren agrees to paint Abby’s restaurant for $1,000. Warren fails to paint. Abby may be entitled to punitive damages if

A. Warren doesn’t know how to paint, misrepresented himself as a painter, and never intended to paint.

B. the contract breached was both written and witnessed.

C. Abby has to pay substantially more than $1,000 for someone else to perform the job.

D. Abby loses profits as a result of the breach.





9. Denise orally authorizes Shaun to sell her house. Shaun enters into a written agreement with Eric to sell him the house for $140,000. Both Shaun and Eric sign the contract. Denise learns of the agreement after the fact and decides she doesn’t want to sell. If the contract is ruled unenforceable, the most likely reason is the __________ rule.

A. best evidence

B. equal dignities

C. parol evidence

D. fairness


10. A substitution, by mutual agreement, of a new party for one of the original parties to a contract is called a

A. condition concurrent.

B. novation.

C. mutual rescission.

D. complete performance.


11. Elmer borrows money from Big Bank, who then assigns the promissory note and mortgage to Financial

Institution for valuable consideration. Elmer isn’t given notice of the assignment and continues to pay Big

Bank. Financial Institution files suit, claiming Elmer is in default because Elmer failed to pay monthly payments to Financial Institution. Which of the following statements is true?

A. Big Bank must forgive Elmer’s loan because they failed to notify him.

B. Financial Institution was obligated to give notice to Elmer of the assignment.

C. Financial Institution must pay Big Bank for the payments Elmer made.

D. Elmer is in default to Financial Institution because he didn’t pay them.


12. Tom and Zeke go out to a restaurant for dinner. Tom orders a steak, and Zeke orders lasagna. After they’ve finished eating, they pay their bill. Assuming all parties performed in the order they were required to under this contract, which of the following is true?

A. There was no contract.

B. Service was a condition precedent to payment.

C. Service and payment were conditions concurrent.

D. Payment was a condition precedent to service.


13. Will contracts with Grace to sell her 100 lamps for $1,000. Will breaches his contractual duty to deliver the lamps, and Grace buys 100 lamps for $2,000 from another dealer. Grace sues Will for breach of contract. She will most likely receive what type of damages?

A. Consequential damages of $3,000

B. Compensatory damages in the amount of $1,000

C. Compensatory damages in the amount of $2,000

D. Nominal damages of $100


14. Danielle purchases life insurance on her own life with Big Life Insurance and makes her husband,

Walter, the beneficiary. Which of the following statements is true?

A. Big Life Insurance is a creditor beneficiary.

B. Danielle is a donee beneficiary.

C. Walter is a donee beneficiary.

D. Danielle is an intended third-party beneficiary.


15. Which of the following acts is designed to cut down on identity theft related to the use of credit cards?

A. Uniform Computer Information Transactions Act

B. E-Sign Act

C. Uniform Electronic Transactions Act

D. Fair and Accurate Credit Transactions Act


16. Stan contracts to sell his house to Bonnie for $150,000. Stan then finds a buyer who will pay $200,000 and tells Bonnie he won’t perform. Bonnie wants to make Stan honor his contract. The remedy she should seek is

A. compensatory damages.

B. punitive damages.

End of exam

C. specific performance.

D. consequential damages.


17. Jack and Jane formed a contract in which Jack agreed to sell Jane a large amount of apples. Jack knew that Jane planned to resell the apples at the farmers’ market the following weekend. Jack failed to deliver the apples as promised. Jane will most likely be able to recover

A. punitive damages only.

B. both nominal and punitive damages.

C. both compensatory and consequential damages.

D. compensatory damages only.


18. One name for a promise made by one party to pay another person’s debts, if that person fails to pay the debt, is

A. collateral contract.

B. signature requirement.

C. prenuptial agreement.

D. condition precedent.


19. Which of the following is an example of discharge by operation of law?

A. Xavier agrees to paint Rita’s house for $1,000. Rita later tells Xavier that she won’t pay him. As a result, Xavier decides not to paint.

B. Xavier agrees to paint Rita’s house for $1,000. Rita changes her mind and asks Xavier not to paint. Xavier agrees.

C. Xavier agrees to paint Rita’s house for $1,000. Xavier paints, but before Rita pays him, she files bankruptcy. As a result, Xavier doesn’t get paid.

D. Xavier agrees to paint Rita’s house for $1,000. Before Xavier can paint, Rita’s house burns down.


20. Barb and Ned exchange e-mails in which Barb agrees to paint Ned’s house for $1,000. Which of the following statements is true?

A. The contract is enforceable.

B. The contract can’t be enforced because there’s no handwritten signature.

C. The contract is unenforceable due to the statute of frauds.

D. The contract can’t be enforced because electronic contracts aren’t legally binding.




060472 – Agency and Employment Law


1. Sal hires Antoinette to sell his house and gives her power of attorney that authorizes her to do, but the power of attorney says nothing about price. Sal tells Antoinette to take nothing less than $200,000. Harry offers Antoinette $195,000 for the house, and Antoinette accepts. If Sal is bound by the sale contract, the most likely reason is __________ authority.

A. express

B. implied

C. actual

D. apparent


2. Polly hires Nick to sell her house and gives him power of attorney that authorizes him to do, but the power of attorney says nothing about price. Polly tells Nick to take nothing less than $200,000. Lola offers

Nick $195,000 for the house, and Nick accepts. Nick violated his duty of

A. loyalty.

B. account.

C. due diligence.

D. obedience.


3. Bob’s company was found in violation of ERISA. The violation likely relates to

A. failure to pay overtime.

B. workers’ compensation.

C. Bob’s pension plan.

D. workplace safety.


4. Lee hires Zeke to sell her house. She tells Zeke to ask for $200,000, but says she will take $175,000.

Zeke’s friend Victor asks Zeke about the house, and Zeke tells him that Lee will take $175,000. Victor offers $175,000, and Zeke accepts. Zeke violated his duty of

A. due diligence.

B. obedience.

C. account.

D. loyalty.


5. Sandy works as a clerk in Big Department Store. After she finishes work one day, she heads out to her car in the parking lot to drive home. There, she sees Petra, someone she detests. Sandy and Petra argue, and Sandy punches Petra in the nose, causing an injury. Which of the following statements is true?

A. Neither Sandy nor Big Department Store are liable for Petra’s injury.

B. Both Sandy and Big Department Store are liable for Petra’s injury.

C. Only Big Department Store is liable for Petra’s injury.

D. Only Sandy is liable for Petra’s injury.


6. Sally works for Big Tech, Inc. One day, the boss calls her into his office and says, “Women just don’t get tech. You’re fired.” Sally sues. In the course of the litigation, the company discovers that Sally was pilfering paper from the company storage, and under the employee handbook, this is grounds for termination. Sally’s discharge is

A. not wrongful because the employer discovered evidence that justifies the firing.

B. wrongful because the employer intended to fire her based on gender.

C. wrongful because evidence can’t be used in a gender discrimination case.

D. not wrongful because gender is a bona fide job qualification for working in tech.


7. Jane works for Big Business, Inc., as a sales representative. The boss decides to fire her because she isn’t a Mets fan. The boss can

A. not fire Jane if here work was satisfactory.

B. not fire Jane if she agrees to become a Mets fan.

C. not fire Jane because of the Civil Rights Act of 1964.

D. fire Jane.


8. Bob’s company was found in violation of OSHA. The violation likely relates to

A. racial discrimination.

B. failure to pay overtime.

C. workplace safety.

D. workers’ compensation.



9. Javier gives written authorization to Tamara to sell his house. Javier dies on the October 4. On October

8, Tamara enters into a written contract on behalf of Javier to sell the house to Trudy for $100,000. Before

Tamara entered into the contract, she showed the written authorization to Trudy. Javier’s estate is

A. not liable.

B. liable if the price is fair.

C. obligated to sell for $100,000 because Tamara had express authority.

D. liable if Tamara knew Javier was deceased at the time of the contract.


10. Tony tries to start a union at Big Tech, Inc. His employer learns of his attempt to organize a union and fires him. Big Tech’s actions

A. constitute an unfair labor practice.

B. are permitted if they first give Bob notice forbidding the union.

C. are permitted.

D. are permitted if the state has adopted right-to-work legislation.


11. Norma has worked for Big Factory for 15 years, has never missed a day of work, and has always been an excellent worker. One day, without warning, Norma’s supervisor fires her without any explanation.

Norma knows of no reason for the termination. Which of the following statements is true?

A. Norma can’t do anything unless she lives in an employment-at-will jurisdiction.

B. Norma may file a bad faith action against Big Factory.

C. Norma may file a bad faith action against her supervisor.

D. Norma can’t do anything as long as the reasons were nondiscriminatory.


12. Bob works for the government and belongs to a union. Bob’s union goes on strike. Which of the following statements is true?

A. If the strike is lawful, Bob must be a federal employee.

B. The strike is lawful because only government employees can strike.

C. If the strike is lawful, Bob must not be a federal employee.

D. The strike is unlawful because only nongovernment employees can strike.


13. Eric has gradually been losing his eyesight, which has adversely affected his work. When the boss fires

Eric, she tells him that she’s letting him go because he can’t see anymore. Eric’s discharge is

A. wrongful because once hired, employees can’t be discharged due to disability.

B. not wrongful if he can’t perform the job without reasonable accommodations by the employer.

C. not wrongful because it didn’t involve a hiring decision.

D. wrongful if the employer can make a reasonable accommodation for his disability.


14. Shauna creates a website that sells shoes. Meagan chooses shoes, enters her credit card information, and purchases the shoes. She then receive an e-mail confirming the purchase. The website is programmed to perform these functions, and Shauna has no personal knowledge of the transaction. Shauna was on vacation at the time of the transaction and didn’t personally approve it. She returns from vacation, checks the site, and discovers the transaction. Was a contract created?

A. Yes, because agency by necessity applies.

B. No, because Shauna never confirmed the purchase.

C. Yes, because the computer is an agent for Shauna.

D. No, because the computer isn’t an agent for Shauna.


15. The union at Big Tech goes on strike. The president can petition the attorney general to seek an injunction stopping the strike for 60 days if the

A. strike would endanger the nation’s health or safety.

B. demands of the union are unreasonable.

C. strike would result in large losses to the company.

D. union failed to give 60 days’ notice of its intent to strike.


16. The right to notice of a plant closing or massive layoffs due to sale of a business is derived from the

A. Hart-Scott-Rodino Antitrust Act.

B. Employee Retirement Income Security Act.

C. Worker Adjustment and Retraining Notification Act.

D. Antitrust Procedures and Penalties Act.


17. Irene hires Mark to do work for her. In the course of performing that work, Mark causes injury to a third party. Which of the following statements is true?

A. If Mark is an independent contractor, Irene is liable for the injury.

B. If Mark is an employee, Irene is liable for the injury.

C. Irene isn’t liable for the injury whether Mark is an employee or an independent contractor.

D. Irene is liable for the injury whether Mark is an employee or an independent contractor.


18. Anna gives Doris a power of attorney. Doris does business with Big Bank as Anna’s agent. Anna then revokes the power of attorney. Anna is not liable on any contracts Doris made

A. after the date of termination but before notice was received by Big Bank.

B. that weren’t fully performed at the time notice was received by Big Bank.

C. after her agency was terminated.

D. after Big Bank received notice that she was no longer an agent.


19. Molly borrowed $5,000 from Larry and, as collateral, gave him jewelry and authority to sell the jewelry if she defaulted. Afterward, Molly had second thoughts and revoked the agency. Which of the following statements is true?

A. Molly can’t terminate the agency unless she claims bankruptcy.

B. Molly can’t terminate the agency unless Larry sold the jewelry.

C. Molly can terminate the agency if she paid the loan.

D. Molly can terminate the agency based on impossibility of performance.


20. State right-to-work laws prohibit

A. agreements requiring union membership to get or keep a job.

B. union shops, but not closed shops.

C. closed shops, but not union shops.

D. employees from forming labor unions and bargaining units.


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