ACFE CFE - Law (Certified Fraud Examiner - Law) Practice Test 6

Question 50

A fraud settlement creates two agency questions for a retail group. (1) The board expressly authorizes an outside representative to conclude a negotiated compromise up to a fixed amount; which concept determines whether that representative can bind the principal? (2) A regional sales employee commits a tort while carrying out assigned duties, and the employer is sued for that conduct; which theory can make the employer answer for another's acts? Choose TWO.

  1. Direct organizational negligence
  2. Capacity and representation
  3. Vicarious liability
  4. Agency authority

Explanation

Correct Answers

C:

An employer may bear responsibility for certain acts committed within the scope of employment, depending on the cause of action and law; it specifically answers numbered situation 2.

D:

An agent binds a principal only within actual, apparent or otherwise legally recognized authority under the governing law; it specifically answers numbered situation 1.

Incorrect Answers

A:

An entity may be liable for its own negligent hiring, supervision or control when the governing elements, including causation, are satisfied; the separate questions call for agency authority and vicarious liability, while no prompt asks for this additional rule.

B:

Legal capacity, standing and authorized representation determine who may sue or act for a party; professional expertise alone grants no right of audience; the separate questions call for agency authority and vicarious liability, while no prompt asks for this additional rule.

Question 51

A delivery employee briefly departs from an assigned route for a purely personal errand and causes an accident unrelated to the employer's work. Under ordinary respondeat-superior analysis, which factual issue is central to the employer's potential responsibility?

  1. Whether the company has any shareholders
  2. Whether the employee was acting within the scope of employment
  3. Whether the employer separately supervised the worker negligently
  4. Whether the victim has a contract with the employer

Explanation

Correct Answer

B:

Vicarious tort liability commonly turns on whether the conduct was within the scope of employment; a substantial personal departure may fall outside it, depending on local law.

Incorrect Answers

A:

Share ownership does not determine whether a worker's conduct is attributable to an employer under respondeat superior.

C:

Direct negligent-supervision liability requires proof of an employer's own breach of duty; it is a distinct theory from whether this off-duty departure falls within respondeat superior.

D:

A tort claimant need not ordinarily establish a direct contract with the employer to invoke this form of responsibility.

Question 52

A company is alleged to have directly failed to supervise employees despite warnings of repeated misconduct. Which alternative theory is considered?

  1. Agency authority
  2. Direct organizational negligence
  3. Vicarious liability
  4. Capacity and representation

Explanation

Correct Answer

B:

An entity may be liable for its own negligent hiring, supervision or control when the governing elements, including causation, are satisfied.

Incorrect Answers

A:

An agent binds a principal only within actual, apparent or otherwise legally recognized authority under the governing law; direct organizational negligence raises a different threshold from this alternative.

C:

An employer may bear responsibility for certain acts committed within the scope of employment, depending on the cause of action and law; that concept must be distinguished from Direct organizational negligence here.

D:

Legal capacity, standing and authorized representation determine who may sue or act for a party; professional expertise alone grants no right of audience; the circumstances point to Direct organizational negligence rather than that separate test.

Question 53

A claimant asks to stop an ongoing transfer of stolen records before final judgment. Which order may provide temporary protection?

  1. Compensatory damages
  2. Specific performance
  3. Declaratory judgment
  4. Preliminary injunction

Explanation

Correct Answer

D:

Interim injunctive relief can preserve rights or prevent imminent harm pending trial if the court's specified criteria are met.

Incorrect Answers

A:

Compensatory damages are designed to address proven loss rather than primarily punish or declare a legal status; the inquiry instead concerns Preliminary injunction, with its own elements.

B:

Specific performance is equitable relief compelling a contractual obligation when damages are inadequate and other conditions are met; the relevant step in this scenario is Preliminary injunction.

C:

Declaratory relief resolves a live legal uncertainty about parties' rights without necessarily ordering payment or specific performance; here the operative distinction is Preliminary injunction.

Question 54

A business asks the court to declare contract rights without awarding monetary damages. Which relief is sought?

  1. Preliminary injunction
  2. Declaratory judgment
  3. Specific performance
  4. Compensatory damages

Explanation

Correct Answer

B:

Declaratory relief resolves a live legal uncertainty about parties' rights without necessarily ordering payment or specific performance.

Incorrect Answers

A:

Interim injunctive relief can preserve rights or prevent imminent harm pending trial if the court's specified criteria are met; declaratory judgment addresses the distinct legal requirement stated in the facts.

C:

Specific performance is equitable relief compelling a contractual obligation when damages are inadequate and other conditions are met; declaratory judgment raises a different threshold from this alternative.

D:

Compensatory damages are designed to address proven loss rather than primarily punish or declare a legal status; that concept must be distinguished from Declaratory judgment here.

Question 55

A successful litigant asks the court to compel the transfer of a unique asset promised by contract. Which remedy fits?

  1. Specific performance
  2. Declaratory judgment
  3. Compensatory damages
  4. Preliminary injunction
  5. Parallel-proceeding management

Explanation

Correct Answer

A:

Specific performance is equitable relief compelling a contractual obligation when damages are inadequate and other conditions are met.

Incorrect Answers

B:

Declaratory relief resolves a live legal uncertainty about parties' rights without necessarily ordering payment or specific performance; specific performance is the issue raised by the described conduct.

C:

Compensatory damages are designed to address proven loss rather than primarily punish or declare a legal status; the inquiry instead concerns Specific performance, with its own elements.

D:

Interim injunctive relief can preserve rights or prevent imminent harm pending trial if the court's specified criteria are met; the relevant step in this scenario is Specific performance.

E:

Courts use applicable priority, abstention or stay doctrines to avoid conflicting proceedings, but the exact rule depends on the forums; here the operative distinction is Specific performance.

Question 56

A plaintiff seeks a monetary award equivalent to an established fraud loss. Which remedy is most direct?

  1. Compensatory damages
  2. Specific performance
  3. Parallel-proceeding management
  4. Declaratory judgment
  5. Preliminary injunction

Explanation

Correct Answer

A:

Compensatory damages are designed to address proven loss rather than primarily punish or declare a legal status.

Incorrect Answers

B:

Specific performance is equitable relief compelling a contractual obligation when damages are inadequate and other conditions are met; those prerequisites should not be confused with Compensatory damages.

C:

Courts use applicable priority, abstention or stay doctrines to avoid conflicting proceedings, but the exact rule depends on the forums; compensatory damages addresses the distinct legal requirement stated in the facts.

D:

Declaratory relief resolves a live legal uncertainty about parties' rights without necessarily ordering payment or specific performance; compensatory damages raises a different threshold from this alternative.

E:

Interim injunctive relief can preserve rights or prevent imminent harm pending trial if the court's specified criteria are met; that concept must be distinguished from Compensatory damages here.

Question 57

A party objects that a proposed case is already being decided elsewhere between the same parties. Which litigation-control doctrine may be implicated?

  1. Stay of proceedings
  2. Answer to complaint
  3. Service of process
  4. Appeal
  5. Parallel-proceeding management

Explanation

Correct Answer

E:

Courts use applicable priority, abstention or stay doctrines to avoid conflicting proceedings, but the exact rule depends on the forums.

Incorrect Answers

A:

A stay temporarily halts designated proceedings or enforcement and differs from a final ruling on underlying fraud allegations; the circumstances point to Parallel-proceeding management rather than that separate test.

B:

An answer responds to allegations and asserts permitted defenses rather than deciding truth without evidence; parallel-proceeding management is the issue raised by the described conduct.

C:

Service gives legally prescribed notice and is distinct from both jurisdictional merits and informal awareness of allegations; the inquiry instead concerns Parallel-proceeding management, with its own elements.

D:

Appellate review tests specified errors under standards of review and applicable deadlines, not automatically a full retrial of facts; the relevant step in this scenario is Parallel-proceeding management.

Question 58

A court decides whether a defendant received proper formal notice of a new civil claim. What procedural step matters?

  1. Service of process
  2. Appeal
  3. Stay of proceedings
  4. Parallel-proceeding management

Explanation

Correct Answer

A:

Service gives legally prescribed notice and is distinct from both jurisdictional merits and informal awareness of allegations.

Incorrect Answers

B:

Appellate review tests specified errors under standards of review and applicable deadlines, not automatically a full retrial of facts; here the operative distinction is Service of process.

C:

A stay temporarily halts designated proceedings or enforcement and differs from a final ruling on underlying fraud allegations; those prerequisites should not be confused with Service of process.

D:

Courts use applicable priority, abstention or stay doctrines to avoid conflicting proceedings, but the exact rule depends on the forums; service of process addresses the distinct legal requirement stated in the facts.

Question 59

A judgment is final, but the losing party asks a higher court to review alleged legal error. Which procedure applies?

  1. Parallel-proceeding management
  2. Stay of proceedings
  3. Appeal
  4. Service of process

Explanation

Correct Answer

C:

Appellate review tests specified errors under standards of review and applicable deadlines, not automatically a full retrial of facts.

Incorrect Answers

A:

Courts use applicable priority, abstention or stay doctrines to avoid conflicting proceedings, but the exact rule depends on the forums; that concept must be distinguished from Appeal here.

B:

A stay temporarily halts designated proceedings or enforcement and differs from a final ruling on underlying fraud allegations; the circumstances point to Appeal rather than that separate test.

D:

Service gives legally prescribed notice and is distinct from both jurisdictional merits and informal awareness of allegations; appeal is the issue raised by the described conduct.

Question 60

A fraud claimant asks a court to preserve the status quo while a jurisdiction challenge is decided. Which mechanism is appropriate?

  1. Parallel-proceeding management
  2. Service of process
  3. Stay of proceedings
  4. Failure to state a claim
  5. Answer to complaint
  6. Appeal

Explanation

Correct Answer

C:

A stay temporarily halts designated proceedings or enforcement and differs from a final ruling on underlying fraud allegations.

Incorrect Answers

A:

Courts use applicable priority, abstention or stay doctrines to avoid conflicting proceedings, but the exact rule depends on the forums; the relevant step in this scenario is Stay of proceedings.

B:

Service gives legally prescribed notice and is distinct from both jurisdictional merits and informal awareness of allegations; here the operative distinction is Stay of proceedings.

D:

Pleading sufficiency concerns whether alleged facts support a recognized cause of action, not whether the plaintiff will ultimately prove them; those prerequisites should not be confused with Stay of proceedings.

E:

An answer responds to allegations and asserts permitted defenses rather than deciding truth without evidence; stay of proceedings addresses the distinct legal requirement stated in the facts.

F:

Appellate review tests specified errors under standards of review and applicable deadlines, not automatically a full retrial of facts; stay of proceedings raises a different threshold from this alternative.

Certified Fraud Examiner - Law (CFE - Law) Practice Tests