Business and Society Exam Materials
Course Introduction
Business and Society explores the dynamic relationship between businesses, their stakeholders, and the broader social, ethical, and environmental contexts in which they operate. The course examines how organizations balance profitability with social responsibility, addressing issues such as corporate governance, ethical decision-making, sustainable development, and global citizenship. Students analyze real-world cases to understand the impact of business strategies on society and learn how to apply frameworks for responsible business conduct in a rapidly changing world.
Recommended Textbook
Andersons Business Law and the Legal Environment Comprehensive 23rd Edition by Twomey
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51 Chapters
2716 Verified Questions
2716 Flashcards
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Chapter 1: The Nature and Sources of Law
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Sample Questions
Q1) The U.S. Supreme Court has held that the right of privacy does not apply to intrusions into our privacy by means of new technology.
A)True
B)False
Answer: False
Q2) A right is defined as:
A) an obligation of law imposed to perform an act.
B) a legal capacity to require another party to perform an action.
C) any written promise.
D) -a political power to do the right thing.
Answer: B
Q3) Statutory law can be created by all of the following except:
A) Congress.
B) state legislatures.
C) local governments.
D) by the courts.
Answer: D
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Chapter 2: The Court System and Dispute Resolution
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Sample Questions
Q1) A deposition is or can accomplish any of the following except:
A) the testimony of a witness taken under oath.
B) conducted outside of the courtroom.
C) can be used to impeach a witness.
D) can be used to dismiss the lawsuit.
Answer: D
Q2) A peremptory challenge to a prospective juror generally can be exercised without giving a reason.
A)True
B)False
Answer: True
Q3) The federal court system consists of three levels.
A)True
B)False Answer: True
Q4) An en banc decision within a U.S. Court of Appeal only requires a panel of three judges.
A)True
B)False Answer: False
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Chapter 3: Business Ethics, Social Forces, and the Law
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52 Verified Questions
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Sample Questions
Q1) Immanuel Kant's categorical imperative theory:
A) requires that we avoid one-sided benefits as a result of ethical decisions.
B) makes it easier to settle international business ethical decisions.
C) believes you have to be fair and ethical whether you want to be or not.
D) always elevates the ends over the means.
Answer: A
Q2) Freedom from economic domination is a personal right protected under United States law.
A)True
B)False
Answer: True
Q3) All of the following situations reflect a possible conflict of interest except:
A) A CEO offers a contract to a friend without checking competing bids.
B) A CEO hires a relative for a company position although another candidate is more qualified.
C) A manager buys a piece of realty that would be suitable for a planned company project.
D) A CEO takes a cut in pay to decrease company overhead.
Answer: D
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Page 5
Chapter 4: The Constitution As the Foundation of the Legal Environment
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Sample Questions
Q1) The United States utilizes a bicameral division of government.
A)True
B)False
Q2) The Due Process clause now guarantees protection against loss of property rights without a chance to be heard.
A)True
B)False
Q3) A business' right to commercial speech - or advertising - has the same protections as a natural person.
A)True
B)False
Q4) The privileges and immunities clause means that if a business owner moves from California to Texas, she can engage in the same business.
A)True
B)False
Q5) The power of the states to adopt laws to protect the general welfare of the people is called ex post facto.
A)True B)False
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Chapter 5: Government Regulation of Competition and Prices
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Sample Questions
Q1) Unfair competition is controlled by:
A) statutes.
B) administrative agencies.
C) administrative regulations.
D) all of these.
Q2) The Federal Trade Commission administers the law prohibiting unfair methods of competition.
A)True
B)False
Q3) Quickness Computer, Inc. is a manufacturer of computers. A Hollywood star indicated on national television that Quickness was his favorite computer. Buoyed by this comment, sales of Quickness computers surged. Since demand outpaced supply, Quickness decided to sell no more computers unless an accompanying software package was purchased. A competitor informed the Office of the Attorney General of this policy, asserting it was illegal. Decide.
Q4) When the effect of an antitrust violation is to raise prices:
A) damages are automatically considered doubled.
B) each plaintiff must sue individually.
C) imprisonment for the guilty is mandatory.
D) the state attorney general may bring a class action suit for damages.
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Chapter 6: Administrative Agencies
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Sample Questions
Q1) A significant difference between an administrative agency hearing and a court hearing is that:
A) a binding decision can only be made by an agency.
B) there is no right of trial by jury before an agency.
C) a court hearing allows no public intervention.
D) a court can enforce its decision.
Q2) Administrative agencies may make the rules, police the community to see the rules are obeyed, and sit in judgment to determine violations of their rules.
A)True
B)False
Q3) The United States constitution places the most significant limitations on administrative investigation in the area of:
A) search and seizure of the person.
B) aerial inspection.
C) search and seizure of papers and records.
D) guarantee against self-incrimination.
Q4) An administrative agency cannot hold a hearing without a jury.
A)True
B)False
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Chapter 7: Crimes
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Sample Questions
Q1) The Economic-Espionage Act (EEA):
A) makes it a crime to use a fraudulently obtained device to obtain money through an electronic fund transfer system.
B) makes it a crime to send unsolicited bulk emails.
C) makes it a crime to transfer proprietary files, documents and information from a computer to an unauthorized person.
D) all of these.
Q2) In some states, the taking of information from a computer without the consent of the owner is called _______.
A) unauthorized use of computers
B) diverted delivery by computer.
C) computer trespass.
D) economic espionage by computer.
Q3) For nonbusiness crimes, only those who are actually involved in the act itself can be convicted of the crime.
A)True
B)False
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Page 9
Chapter 8: Torts
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Sample Questions
Q1) People generally have a duty to act as a reasonably prudent person would in similar circumstances.
A)True
B)False
Q2) If a crime does not hurt an identifiable person, it is not a tort.
A)True
B)False
Q3) Libel is the printed equivalent of the spoken form of defamation known as slander.
A)True
B)False
Q4) Oral or spoken defamation is:
A) slander.
B) libel.
C) privilege.
D) perjury.
Q5) A tort is an interference with someone's person or property.
A)True
B)False
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Chapter 9: Intellectual Property Rights and the Internet
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Sample Questions
Q1) Smarts and Then Some, Inc. developed a software program after several years of research and development. The particular software program was then test-marketed, at which point a competitor filed suit claiming that the Smarts and Then Some program violated the competitor's copyright on a program they too were test-marketing. What is the test to determine whether a copyright has been violated?
Q2) Written computer programs are not given the same protection as other copyrighted material.
A)True
B)False
Q3) Trade dress refers to the packaging look and overall image of a product.
A)True
B)False
Q4) Trademark law categorizes marks along a spectrum of ______, based on a mark's capacity to serve ______.
A) suggestiveness, the characteristics of the service to which they relate.
B) fancifulness, the characteristics of the product to which they relate.
C) descriptiveness, a source-identifying function.
D) distinctiveness, a source-identifying function.
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Page 11
Chapter 10: The Legal Environment of International Trade
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Sample Questions
Q1) The World Trade Organization (WTO) provides a Dispute Settlement Body (DSB) to enable member countries to resolve trade disputes rather than engage in unilateral trade sanctions or a trade war.
A)True
B)False
Q2) In order to strengthen the ________, in 1982 Congress passed the ________ to provide clarity on the extraterritorial reach of antitrust actions against foreign companies that have a "direct, substantial, and reasonably foreseeable effect" on U.S. commerce.
A) Rule of Reason Doctrine, Foreign Trade Antitrust Improvements Act
B) Act-of-State Doctrine, Foreign Trade Antitrust Improvements Act
C) Sovereign Compliance Doctrine, Foreign Trade Antitrust Improvements Act
D) Sherman Act, Foreign Trade Antitrust Improvements Act
Q3) You plan to enter the export market with a new product that you have just developed. You feel that the product has great promise, but you are confused over whether you are required to obtain an export license. Further, your brother-in-law says that he knows someone in the Japanese government who could greatly assist you in your endeavors for a very modest fee. Discuss this situation.
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Page 12
Chapter 11: Nature and Classes of Contracts: Contracting
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Sample Questions
Q1) A bilateral contract is essentially an exchange of enforceable promises.
A)True
B)False
Q2) The subject matter of a contract may relate to:
A) the performance of personal services.
B) the construction of a house.
C) the transfer of ownership of property.
D) All of these
Q3) An offer of a reward for the arrest and conviction of a criminal is an example of a:
A) unilateral contract.
B) bilateral contract.
C) quasi contract.
D) formal contract.
Q4) The elements for a valid contract do NOT include:
A) a fair price.
B) capacity.
C) consideration.
D) assent.
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Chapter 12: Formation of Contracts: Offer and Acceptance
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Q1) If the offeree purports to accept an offer but in so doing makes any change to the terms of the offer, such action is a counteroffer that rejects the original offer.
A)True
B)False
Q2) An offer is terminated upon rejection by the offeree unless:
A) the period of time for which the offeror agreed to keep the offer open has not yet expired.
B) the offeror renews the offer.
C) the offeree revokes the rejection.
D) the offeree makes a counteroffer.
Q3) Offers, acceptances of offers, and revocations of offers are all effective when mailed in a properly-addressed envelope bearing the proper amount of postage.
A)True B)False
Q4) An option contract is a binding promise to keep an offer open for a stated period of time or until a specified date.
A)True
B)False
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14
Chapter 13: Capacity and Genuine Assent
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Sample Questions
Q1) In order for fraud liability to arise, the listener must actually rely on the false statement of fact.
A)True
B)False
Q2) All of the following statements refer to an element of fraud except:
A) the defendant desired to obtain a financial benefit.
B) the defendant made a false statement.
C) the defendant knew that the statement was false or was recklessly indifferent regarding its truth.
D) the defendant intended for the other party to rely on the false statement.
Q3) A contract made by an incompetent person after a guardian has been appointed is voidable.
A)True
B)False
Q4) A finding of undue influence would most likely not occur in a contract between:
A) parent and child.
B) attorney and client.
C) neighbor and neighbor.
D) guardian and ward.
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Chapter 14: Consideration
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Sample Questions
Q1) Consideration is the bargained-for exchange between the parties to a contract.
A)True
B)False
Q2) True consideration occurs only when the value of one promise is equal to the value of the promise given by the other party.
A)True
B)False
Q3) Which of the following is not a necessary element of promissory estoppel?
A) The promisor and the promisee must engage in a bargained-for exchange.
B) The promisor must intend or should reasonably expect that the promisee will rely on the promise.
C) The promisee must in fact rely on the promise in some definite and substantial manner.
D) Enforcement of the promise is the only way to avoid injustice.
Q4) The fact that the consideration supplied by one party is slight when compared with the burden undertaken by the other party is immaterial.
A)True
B)False
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16
Chapter 15: Legality and Public Policy
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Sample Questions
Q1) Which of the following is not illegal?
A) an office football "pool" with a cash entry fee and cash prize
B) a raffle with an entry fee to win a car
C) a "giveaway" to every tenth person who buys meat at a butcher shop
D) a "giveaway" to every tenth person entering a department store
Q2) Fees charged by a lender for the reasonable expense of making a loan, such as the cost of appraising property, are treated as interest for purposes of the usury law.
A)True
B)False
Q3) An illegal provision in a contract:
A) causes the entire contract to be void.
B) causes the entire contract to be rescinded.
C) can be ignored by the parties in their performance of the remaining legal provisions of the contract.
D) can be ignored by the parties, because an illegal provision in a contract is not deemed substantial.
Q4) Agreements not to compete are always void.
A)True
B)False
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Chapter 16: Writing, Electronic Forms, and Interpretation of Contracts
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Sample Questions
Q1) When persons enter into an agreement, it is presumed that they intent the agreement to have some effect.
A)True
B)False
Q2) To be enforceable under the statute of frauds, the note or memorandum must be signed by the party sought to be bound by the contract.
A)True
B)False
Q3) Parol evidence may be admitted to show that a provision was omitted as the result of:
A) fraud.
B) mistaken understanding.
C) oral additions.
D) oral modification.
Q4) A promise to grant a mortgage on real property does not require a writing because it is not a transfer of land.
A)True
B)False
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Chapter 17: Third Persons and Contracts
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Sample Questions
Q1) When a buyer assigns the right to goods under a contract, the buyer's liability to make payment to the seller is:
A) transferred to the third party.
B) terminated.
C) still in effect.
D) shared equally with the third party.
Q2) An obligor may delegate his or her duties to perform under a contract when the:
A) performance of the duty is standardized and nonpersonal.
B) obligor is unable to perform his or her duties.
C) contract is silent as to the right of assignment.
D) obligor is an expert in his or her specialized duties under the contract.
Q3) In a contract in which a tenant borrowed money from a bank for the purpose of adding a bathroom to her apartment, the landlord is:
A) a direct beneficiary.
B) in privity of contract with the tenant.
C) a third-party beneficiary.
D) an incidental beneficiary.
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19
Chapter 18: Discharge of Contracts
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Sample Questions
Q1) Which of the following events excuses a promisor from performing his or her contractual obligations?
A) a riot
B) a shortage of materials necessary for production of goods and/or provision of services called for under the contract
C) an unanticipated increase in the cost of performance
D) destruction of the subject matter through no fault of either party
Q2) An agreement that does not specify the time for performance is not binding because it is too indefinite.
A)True
B)False
Q3) Which of the following is not an element of an accord and satisfaction?
A) a bona fide dispute
B) a proposal to settle the dispute
C) performance of the agreement to settle the dispute
D) reservation of rights under the federal Consumer Credit Protection Act
Q4) By operation of law, a party can be discharged in bankruptcy from debts.
A)True
B)False
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Chapter 19: Breach of Contract and Remedies
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Sample Questions
Q1) Which is not a correct statement concerning rescission of a contract?
A) The breach must be material.
B) The injured party who rescinds may recover money paid under the contract.
C) The contract remains in effect after the rescission.
D) Rescission is the undoing of the contract.
Q2) When the contract requires that both parties submit disputes to arbitration, this is an example of a limitation-of-remedies clause.
A)True
B)False
Q3) An innocent party to an anticipatory repudiation of a contract has the right to treat the repudiation as a present, material breach and may file suit.
A)True
B)False
Q4) Repeated breaches and waivers are generally interpreted to indicate:
A) poor business practices.
B) illegal behavior.
C) ignorance of the law.
D) modification of contract.
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21
Chapter 20: Personal Property and Bailments
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Sample Questions
Q1) Sylvia and Morris were married and owned their home as tenants by the entirety. When Morris died, his will said that he left his half of his home to his brother Tim. Who owns the home at Morris's death?
A) The home is now owned solely by Sylvia.
B) The home is now owned by a joint tenancy between Sylvia and Tim.
C) The home is now owned by a tenancy in common between Sylvia and Tim.
D) The home is now owned by Sylvia and the state, in equal and divisible shares.
Q2) At common law, a tenancy by entirety is created when property is transferred to both husband and wife.
A)True B)False
Q3) A gift causa mortis is considered a conditional gift.
A)True B)False
Q4) An ordinary gift made between two living persons is called an inter vivos gift. A)True B)False
Q5) The intent to make a gift requires an intent to transfer title at that time. A)True
B)False
Page 22
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Chapter 21: Legal Aspects of Supply Chain Management
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Q1) A bill of lading will be negotiable if its terms are that the goods are to be delivered to "bearer" or to "the order of" a named person.
A)True
B)False
Q2) A hotelkeeper has a bailee's liability regarding property expressly entrusted to a hotelkeeper's care.
A)True
B)False
Q3) The legal definition of a guest of a hotel requires that the person:
A) live at least five miles from the hotel.
B) is a guest of a registered occupant of the hotel. C) is a transient.
D) stay at the hotel for at least 24 hours.
Q4) Myra, a person who attended a wedding reception at the Hotel Miramar, is injured on the dance floor. Miramar is liable to Myra for her injuries.
A)True
B)False
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23
Chapter 22: Nature and Form of Sales
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Q1) Janet Durham orally agreed to purchase certain computer hardware priced at $10,000 from Ted Stallings. The sale of the hardware also included a one-time setup service visit priced at $100. The total contract price amounted to $10,100. The computer hardware was delivered and set up, and Durham paid $10,100. Afterwards, Durham discovered that she could obtain the same goods and services from another seller for a total contract price of $9,100. She now seeks rescission of the contract, based on the fact that more than $500 in goods were involved in the sales transaction, that the contract between her and Stallings was subject to the statute of frauds as a result, and that the oral agreement between them was therefore unenforceable. Durham wants to return the computer hardware to Stallings, and receive reimbursement of $10,000 (She is willing to waive her claim to reimbursement for the $100 setup service visit.) Evaluate Durham's legal position in this matter.
Q2) The parol evidence rule does not apply to the sale of goods.
A)True
B)False
Q3) A gift is a free transfer of the title to property.
A)True
B)False
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24
Chapter 23: Title and Risk of Loss
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Q1) When particular goods have been selected by either the buyer or the seller, or both, as being the goods called for by the sales contract, the goods are said to be
A) identified.
B) actualized.
C) realized.
D) materialized.
Q2) __________reserve auctions are those that give the auctioneer the right to withdraw the goods from the sale process if the bids are not high enough.
A) Qualified
B) Restricted
C) With
D) Without
Q3) A __________ is a completed sale with an option for the buyer to return the goods.
A) conditional sale
B) contingency sale
C) sale or return
D) sale on approval
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25
Chapter 24: Product Liability: Warranties and Torts
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Sample Questions
Q1) A seller cannot be held liable for the breach of an express warranty if the seller honestly believed that the warranted statement was true.
A)True
B)False
Q2) The theories of product liability
A) are mutually exclusive.
B) are not mutually exclusive.
C) are set forth exclusively in the UCC.
D) are set forth exclusively in the common law.
Q3) Under the concept of ______, only the original parties to a sales contract could sue each other.
A) exclusivity of contract.
B) privity of contract.
C) privacy of contract.
D) priority of contract.
Q4) An inadequate warning label about a product's dangers can be considered a defective product.
A)True B)False
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Chapter 25: Obligations and Performance
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Q1) All of the following can be considered an acceptance by the buyer except:
A) An express statement of approval by the buyer.
B) The buyer's examination of the goods.
C) The buyer's retention of goods for an unreasonable period of time.
D) The buyer's modification of the goods.
Q2) A buyer has the right to accept some commercial units of a shipment and reject other commercial units.
A)True
B)False
Q3) If appropriate assurance is not given in response to a demand for assurance of performance, the demanding party may:
A) treat the contract as repudiated.
B) sue for libel.
C) file for an insurance payment.
D) not replace the repudiated contract.
Q4) When goods are shipped COD:
A) the buyer always has the right to examine them before making payment.
B) the underlying contract must specify when the buyer may inspect the goods.
C) the buyer has no right to examine the goods until payment is made.
D) the buyer gives up all rights to inspection of the goods.
Page 27
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Chapter 26: Remedies for Breach of Sales Contracts
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Q1) When a seller breaches a contract for the sale of goods to a buyer, the buyer is entitled to specific performance of the contract if the:
A) goods are unique.
B) market cost of the goods has increased.
C) goods can be purchased in any major city in the country.
D) buyer's customers will be disappointed if the buyer does not obtain the goods.
Q2) The statute of limitations for breach of a sales contract:
A) may be reduced between merchants to one year.
B) may be expanded by the buyer and the seller to six years.
C) begins to run from the signing of the contract.
D) always requires a notice to the seller to activate the statute.
Q3) The tort statutes of limitations tend to be __________the UCC statute of limitations.
A) shorter than B) longer than C) equal to D) excluded by
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Chapter 27: Kinds of Negotiable Instruments and Negotiability
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Sample Questions
Q1) George was the maker of a written promissory note that stated that $500 would be paid on the sale of George's automobile. George initialed the note instead of writing his full name. The promissory note stated that it would be payable six months from the date. The promissory note was not dated. You now have come into possession of this note. Is this note negotiable? Discuss the elements of negotiability and whether each one has been met.
Q2) A check is an order by a bank itself to pay a sum of money to the order of another party.
A)True
B)False
Q3) Antedating an instrument affects an instrument's negotiability.
A)True
B)False
Q4) In a negotiable instrument, the promise or order to pay must be unconditional.
A)True
B)False
Q5) Revised UCC Article 3 refers to drawers, indorsers, and accommodation parties as "secondary obligors."
A)True
B)False
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Chapter 28: Transfers of Negotiable Instruments and
Warranties of Parties
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Q1) If a lost negotiable instrument is in bearer form at the time of the loss, the finder is entitled to enforce payment.
A)True
B)False
Q2) An indorsement "for deposit only" is:
A) restrictive.
B) qualified.
C) special.
D) blank.
Q3) Negotiation of bearer paper requires:
A) delivery only.
B) indorsement only.
C) both indorsement and delivery.
D) neither indorsement nor delivery.
Q4) When the name of the payee is spelled incorrectly, the payee:
A) must indorse the instrument with the incorrect spelling of the payee's name.
B) must indorse the instrument with the correct spelling of the payee's name.
C) may indorse the instrument with either the correct or incorrect spelling of the payee's name.
D) may not indorse the instrument.
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Chapter 29: Liability of the Parties Under Negotiable Instruments
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Q1) Illegality, such as a note for gambling, is a universal defense.
A)True
B)False
Q2) The primary party on a certificate of deposit is the drawer.
A)True
B)False
Q3) Jones issued a check to Smith in return for Smith's promise to do work. Smith never did the promised work, but offered to buy goods from Gomez by endorsing the check to Gomez. Gomez had had no prior dealings with Jones or Smith, but accepted the check in payment. Gomez:
A) cannot be a holder in due course.
B) is considered an assignee of Smith's rights.
C) is a holder through a holder in due course.
D) is a holder in due course.
Q4) To have the status of a holder in due course, a person must first be a holder.
A)True
B)False
Q5) Instruments may be negotiated even if it is overdue.
A)True
B)False
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Chapter 30: Checks and Funds Transfers
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Q1) The Electronic Fund Transfers Act (EFTA) covers all transactions, including those that originated by commercial paper.
A)True
B)False
Q2) A written stop payment order is binding on the bank for 90 days.
A)True
B)False
Q3) The "preclusion rule" prevents or precludes the customer from forging a signature and then making a claim against the bank.
A)True
B)False
Q4) In theory, a valid check can be written on a cocktail napkin.
A)True
B)False
Q5) If a consumer reports the loss before the card is used, the consumer: ______.
A) is not liable for any charges.
B) is only liable for losses up to $50.
C) is not liable for losses over $500.
D) is liable if they failed to examine periodic banking statements.
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Chapter 31: Nature of the Debtor Creditor Relationship
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Q1) Bud is unable to obtain a loan without some form of additional reassurances. Bud comes to you for assistance. You are willing to help Bud, but you wish to protect yourself from liability as much as possible. Would you prefer a surety or a guaranty? The bank issuing the loan also wishes to protect itself as much as possible. Would the bank prefer a surety or guaranty? If your oral assurances are enough to solidify the loan, has a surety or guaranty been formed?
Q2) If there are two or more sureties and one pays more than its proportionate share of the debt, such surety has the right against the co-sureties known as: ______.
A) indemnity.
B) exoneration.
C) subrogation.
D) contribution.
Q3) A guaranty of collection allows the creditor to firstproceed against the debtor before suing the guarantor.
A)True
B)False
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Chapter 32: Consumer Protection
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Q1) An auto dealer who does not actually know of a roll-back can use lack of knowledge as a defense against odometer fraud, regardless of the condition of the car.
A)True
B)False
Q2) Antitrust statutes that prohibit anticompetitive behavior give consumers the right to collect treble punitive damages for a violation.
A)True
B)False
Q3) The CARD Act substantially restricts the solicitation of credit card accounts for those under the age of 18.
A)True
B)False
Q4) One of the protections for consumers against subprime loans includes credit counseling before consumers may sign for certain types of subprime loans.
A)True
B)False
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Page 34
Chapter 33: Secured Transactions in Personal Property
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Q1) In a secured transaction, the person to whom the money is owed is secured party and the buyer is the debtor.
A)True
B)False
Q2) The concept of perfection: ______.:
A) creates a security interest.
B) protects against the claims of others to the collateral.
C) secures the rights of the creditor against the debtor.
D) Converts unsecured creditors into secured creditors.
Q3) Claim in a changing or shifting stock of the buyer's goods is known as after-acquired goods.
A)True
B)False
Q4) Under Revised UCC Article 9, a debtor may authorize a financing statement by acquiring the collateral that is subject to the security agreement.
A)True
B)False
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35
Chapter 34: Bankruptcy
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Q1) A voluntary petition in bankruptcy may not be filed by any of the following except a(n): ______.
A) husband and wife.
B) railroad company.
C) insurance company.
D) municipality
Q2) A creditor must only file a proof of claim if the bankruptcy trustee does not know of the existence of the claim.
A)True
B)False
Q3) Peter is employed as a shop electrician for ABC, Inc. Peter has a car being repaired and a home on which he is paying mortgage payments. Peter is contemplating filing for bankruptcy, but he is not sure which type of petition to file. Peter also wonders whether the auto repair costs and the mortgage payments are dischargeable. Which bankruptcy filing is most appropriate for Peter? Are Peter's debts dischargeable?
Q4) Nonprofit corporations are exempt from involuntary bankruptcy proceedings.
A)True
B)False
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Chapter 35: Insurance
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Q1) A person who obtains life insurance generally can only name a beneficiary that has an insurable interest in the life of the insured.
A)True
B)False
Q2) If a provision in an insurance policy is ambiguous:
A) it is interpreted in favor of the insurer because the insured could have rejected the policy.
B) it is interpreted against the insurer.
C) parol evidence is admitted to show what was intended.
D) the policy is declared void and the insurer is required to return all premiums to the insured.
Q3) An incontestability clause ordinarily bars contest of the validity of a life insurance policy by the insurer after the lapse of:
A) sixty (60) days.
B) one (1) year.
C) two (2) years.
D) ninety (90) days.
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Page 37
Chapter 36: Agency
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Q1) The principal has a duty to perform all of the following except: ______.
A) a duty to perform the contract according to its terms.
B) a duty to compensate the agent for services.
C) a duty to indemnify the agent for loss in some circumstances.
D) a duty of loyalty to the agent.
Q2) An agency coupled with an interest is not terminated by the death of the principal.
A)True
B)False
Q3) The term apparent authority is used when there is: ______.
A) no interaction between the principal and third persons.
B) actual authority.
C) only the appearance of authority and that appearance of authority was created by the principal.
D) only the appearance of authority and that appearance of authority was created by the agent.
Q4) A written authorization of agency is called a power of attorney.
A)True
B)False
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Chapter 37: Third Persons in Agency
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Q1) An agent's liability to a third person is not affected by the degree of the principal's disclosure.
A)True B)False
Q2) An implied warranty arises when a person purports to act as an agent for a principal.
A)True B)False
Q3) Statements by an agent ______ bind the principal unless ________.
A) will not, the principal is disclosed.
B) will, they were made at the time of performance.
C) will not, they were made at the time of performance.,
D) will not, the principal is disclosed.,
Q4) In a simple contract made by an authorized agent on behalf of a disclosed principal, the third person may sue either the agent or the principal in the event of a breach.
A)True B)False
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Chapter 38: Regulation of Employment
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Q1) Grievance procedures established in most collective bargaining agreements provide a means by which persons claiming the contract has been violated may have their cases decided by impartial third parties.
A)True
B)False
Q2) Employers are required to maintain records of certain occupational illnesses and injuries by: ______.
A) ECHO.
B) ESCHA.
C) OSHA.
D) ECOT.
Q3) The right of an employee to pension benefits paid into a pension plan in the employee's name by the employer is referred to by the term: ______.
A) venue.
B) accrual.
C) vesting.
D) investing.
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Page 40
Chapter 39: Equal Employment Opportunity Law
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Q1) Title VII requires equal pay for men and women.
A)True
B)False
Q2) Under Title VII, whites cannot be discriminated against because they are the majority race in this country.
A)True
B)False
Q3) The Equal Pay Act prohibits variation in wage rates paid to men and women based solely on gender.
A)True
B)False
Q4) The Equal Pay Act:
A) does not allow variances in wages pursuant to a seniority system.
B) generally requires that members of both sexes be paid equally for equal work.
C) prohibits all variations in wage rates paid to men and women.
D) makes payment variances a BFOQ.
Q5) The ADA does not require employers to make any accommodations for individuals with disabilities.
A)True
B)False
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Chapter 40: Types of Business Organizations
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Q1) Most courts hold that joint ventures are subject to the same principles of law as corporations.
A)True
B)False
Q2) A corporation must have at least two shareholders.
A)True
B)False
Q3) A(n) _______ allows the owners to be taxed like a partnership but with limited liability.
A) corporation.
B) franchise.
C) limited liability company.
D) joint venture.
Q4) A partnership is not dissolved by the death of a partner.
A)True
B)False
Q5) Business corporations exist to make a profit.
A)True
B)False
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Chapter 41: Partnerships
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Q1) If the partnership agreement is silent on a matter, UPA or RUPA may govern the transaction.
A)True B)False
Q2) Partners have the implied authority to bind the partnership by contracts of surety for any and all purposes.
A)True B)False
Q3) Theo, a member of TGI partnership, withdrew from the partnership and duly notified the other members. The firm was an at-will partnership and the parties parted amicably, posting a notice in the local newspaper of the dissolution of their firm. Cosmo, a customer who had conducted business with Theo several times, did not see the newspaper notice and was not informed of the dissolution. Later, Theo approached Cosmo concerning a transaction similar to those Cosmo had engaged in before with Theo acting on behalf of TGI. Cosmo placed an order, gave a substantial down payment to Theo, and received a receipt on TGI stationery from him. Theo thereafter absconded with the down payment, and TGI failed to honor the contract. Cosmo sued the other members of TGI partnership. Discuss their potential liability.
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Page 43
Chapter 42: LPs, LLCs, and LLPs
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Q1) Under the RULPA, a limited partner may contribute: ______.
A) cash only.
B) property only.
C) services only.
D) cash, property, and services.
Q2) LLC promoters can 'shake hands' and form an LLC.
A)True
B)False
Q3) Courts tend to resolve ambiguities in limited partnership agreements against the general partners.
A)True
B)False
Q4) It is impossible to form a business in a manner that allows for single taxation and limited liability.
A)True B)False
Q5) A limited partner can never lose money.
A)True
B)False
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Chapter 43: Corporate Formation
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Q1) An enterprise that conducts business following a merger or consolidation succeeds to all of the following except: ______.
A) all of the rights of the predecessor.
B) all of the property of the predecessor.
C) all of the debts and liabilities of the predecessor.
D) all of the management team of the predecessor.
Q2) Because nonprofit corporations have a more restricted range of powers than business corporations, actions not authorized by the charters of nonprofit corporations are more likely to be found ultra vires.
A)True
B)False
Q3) A merger is subject to antitrust law, while a corporate consolidation is not.
A)True
B)False
Q4) "Conglomerate" describes the relationship of equal companies engaged in similar fields of business activity.
A)True
B)False
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Chapter 44: Shareholder Rights in Corporations
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Q1) Each shareholder has an absolute right to annual dividends.
A)True
B)False
Q2) A shareholder has a right to inspect the books of the shareholder's corporation in any of the following situations, except: ______.
A) when she owns 10% of the stock for one year and wants to determine its value.
B) when she owns 5% of the stock for six months and wants to determine the quality of corporate management.
C) when he owns 10% of the stock for three months and wants to determine the financial condition of the corporation.
D) when he owns 1 share of stock for 30 days and wants to determine the stock value.
Q3) Restrictions on the transfer of stock are always valid.
A)True B)False
Q4) Corporate securities evidenced by a certificate are negotiable.
A)True
B)False
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Chapter 45: Securities Regulation
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Q1) The JOBS Act requires the SEC to create a "crowdfunding exemption" that would allow companies to raise $1 million in any 12-month period.
A)True
B)False
Q2) In a 10b-5 situation, the plaintiff must show "reliance" on the misrepresentation and a resulting injury.
A)True
B)False
Q3) The Securities Act of 1933 was created to deal with 'penny stocks' and 'pump and dump schemes'.
A)True
B)False
Q4) A "short-swing" profit is realized by a corporate insider from selling corporate securities less than one (1) year after purchase.
A)True
B)False
Q5) The Securities Act of 1933 prohibits "bad investment" offerings to the public. A)True
B)False
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Chapter 46: Accountants Liability and Malpractice
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Q1) A disclaimer based on lack of knowledge protects an accountant from malpractice liability.
A)True B)False
Q2) An exculpatory clause most likely would be held to limit or disclaim liability for malpractice: ______.
A) in an action based on fraud.
B) in a suit brought by a third person.
C) when the accountant can reasonably be expected to stand behind the information in question.
D) when the clause is conspicuous, unambiguous, and clear.
Q3) Disclaimers are not enforceable unless they are clear and unambiguous.
A)True B)False
Q4) Breach of contract remedies are available to third parties against accountants because they are ordinarily considered third-party beneficiaries of contracts with accountants.
A)True B)False
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Chapter 47: Management of Corporations
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Q1) The notice of a special meeting of shareholders must include a statement of the nature of the business to be transacted and no other business may be transacted at such a meeting.
A)True
B)False
Q2) Absent a showing of fraud, generally courts will not 'second guess' directors' right to manage the company.
A)True
B)False
Q3) A director is disqualified from taking part in corporate action with respect to a matter in which the director has a disclosed conflicting interest.
A)True
B)False
Q4) Action taken by shareholders without holding a meeting is valid under the RMBCA if it is evidenced by a written consent signed by all the shareholders entitled to vote on the action.
A)True
B)False
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Chapter 48: Real Property
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Q1) A landowner owes which of the following duties to a trespasser?
A) The duty to refrain from causing intentional harm once the presence of the trespasser is known.
B) The duty to warn the trespasser of known dangers existing on the premises.
C) The duty to make the premises safe to protect the trespasser from harm.
D) The duty to warn the trespasser of unknown dangers existing on the premises.
Q2) Characteristics of the fee simple estate include all of the following except the estate ______.
A) is alienable during life.
B) is not subject to rights of the owner's surviving spouse.
C) is alienable by will.
D) can be attached or used to satisfy the owner's debts before or after the owner's death.
Q3) A fee simple defeasible is an interest that gives the grantee all the rights of a fee simple subject to compliance with certain restrictions.
A)True
B)False
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Page 50
Chapter 49: Environmental Law and Land Use Controls
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Q1) A nuisance: ________.
A) is created by every interference that has an effect on others.
B) is established when the plaintiff shows harm as the result of the defendant's conduct.
C) arises only by an interference that is great enough to be condemned as unreasonable.
D) cannot arise from a lawful activity or business that is conducted in a lawful manner.
Q2) A(n) __________ may prevent the landowner from use of the land.
A) eminent domain restriction
B) nonconforming use
C) variance restriction
D) zoning restriction
Q3) States that do not meet federal standards under The Clean Air Act are classified as nonattainment areas.
A)True
B)False
Q4) A right to a nonconforming use of land cannot be lost through abandonment.
A)True
B)False
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Chapter 50: Leases
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Q1) The lessor has the right to the exclusive possession of the premises during the term of the lease.
A)True
B)False
Q2) In a lease agreement, the person who owns the real property and permits the occupation of the premises is known as the __________, and the person who occupies the property is known as the __________.
A) lessor; lessee
B) lessee; lessor
C) grantor; grantee
D) grantee; grantor
Q3) Rent is automatically increased:
A) if the lessor makes expensive improvements to the property.
B) when the cost of living increases.
C) if the lease contains an escalation clause.
D) if the lessor's taxes on the rented property are increased.
Q4) For a tenant to claim constructive eviction she must also physically vacate the premises.
A)True
B)False
Page 52
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Chapter 51: Decedents Estates and Trusts
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Q1) When a testator provides for a bequest of his gold watch to his nephew, but the gold watch is not owned by the testator at the time of death: __________.
A) the nephew is entitled to an equivalent amount of cash.
B) the executor must purchase a similar gold watch for the nephew if funds are available.
C) the bequest to the nephew fails by ademption.
D) all legacies in the estate abate to provide funds to purchase a gold watch for the nephew.
Q2) In certain instances statutes provide that a change of circumstances, such as the marriage of a testator, has the effect of a revocation.
A)True
B)False
Q3) A trustee cannot make decisions on matters that could not be foreseen by the settlor.
A)True
B)False
Q4) A trustee may keep all matters associated with the trust secret.
A)True
B)False
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