Unit 1 of 5
Study guide for CLEP CLEP Introductory Business Law — Unit 1: The Legal System. Practice questions, key concepts, and exam tips.
261
Practice Questions
15
Flashcards
4
Key Topics
Try these 5 questions from this unit. Sign up for full access to all 261.
What is a design defect in product liability?
A flaw in the manufacturing process
A problem with the product's instructions
A breach of contract
A failure to warn consumers about potential hazards
A flaw in the product's design that makes it unreasonably dangerous
Answer: E — A flaw in the product's design that makes it unreasonably dangerous is correct because a design defect refers to a flaw in the product's design that creates an unreasonable risk of harm to consumers.
A US company agrees to arbitrate disputes in London under the New York Convention. What is the likely outcome?
The arbitration will be governed by US law
The arbitration will be governed by English law
The arbitration will be governed by the law of the contract
The arbitration will be heard in a US court
The arbitration will not be enforceable
Answer: C — The arbitration will be governed by the law of the contract is correct because the New York Convention typically applies the law of the contract.
Which constitutional principle is based on the idea that power should be divided among the branches of government?
Federalism
Individual rights
Checks and balances
Separation of powers
Judicial review
Answer: D — Separation of powers is correct because this principle, as outlined in the Constitution, divides power among the legislative, executive, and judicial branches to prevent any one branch from becoming too powerful.
What is the difference between a counterclaim and a cross-claim?
A counterclaim is filed by a plaintiff, while a cross-claim is filed by a defendant
A counterclaim is filed in response to a complaint, while a cross-claim is filed in response to an answer
A counterclaim is filed in federal court, while a cross-claim is filed in state court
A counterclaim is filed by a defendant against a plaintiff, while a cross-claim is filed by one defendant against another defendant
A counterclaim is filed by a judge, while a cross-claim is filed by a jury
Answer: D — A counterclaim is filed by a defendant against a plaintiff, while a cross-claim is filed by one defendant against another defendant is correct because it highlights the key difference between the two types of claims.
What type of breach occurs when a party indicates that they will not perform their contractual duties?
Material breach
Non-material breach
Anticipatory breach
Fundamental breach
Total breach
Answer: C — When you hire a contractor to build your dream home and they suddenly tell you they won't show up to start work, you're facing a situation where a party indicates they won't perform their duties. This is an example of an Anticipatory breach, where one party explicitly states they will not fulfill their contractual obligations. In contrast, a Material breach, which might seem like a plausible answer, occurs when a party actually fails to perform their duties, not just announces their intention not to.
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