Business and Society Exam Practice Tests
Course Introduction
Business and Society explores the dynamic relationship between corporations and the broader community, examining the economic, ethical, legal, and social responsibilities of businesses in a global context. The course investigates how business decisions impact society and how social expectations influence business strategies. Topics include corporate social responsibility, stakeholder management, sustainability, ethical decision-making, and the role of government regulation. Through case studies and critical analysis, students develop an understanding of the complex challenges facing businesses as they strive to balance profitability with societal accountability.
Recommended Textbook Business Law and the Legal Environment Standard Edition 6th Edition by Jeffrey F. Beatty
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Page 2
Chapter 1: Introduction To Law
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Sample Questions
Q1) The Occupational Safety and Health Administration promulgated a rule requiring warehouse employees to wear hardhats when in the vicinity of an operating forklift.The purpose of the hardhats is to protect employees from danger of falling objects.This rule is:
A) an executive order.
B) a statute.
C) common law.
D) administrative law.
Answer: D
Q2) Contemporary law's principle of collective responsibility,such as all partners being personally responsible for the debts of the partnership,had its roots in:
A) the Anglo-Saxon method of ensuring public order through tithing.
B) the Anglo-Saxon practice of using "oath helpers."
C) the English use of "shire reeves."
D) the English system of feudalism.
Answer: A
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3
Chapter 2: Business Ethics And Social Responsibility
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Q1) Which of the following is NOT a stakeholder?
A) a business competitor.
B) shareholders.
C) employees.
D) the environment.
Answer: A
Q2) John discovered his company's accountant was "skimming" money from the business.The accountant agreed to pay John a one-time payment of $25,000 not to report the skimming to company officials.The accountant promised she would pay the money back when she could.John accepted the money and never reported what he knew.A year later the accountant was fired when the embezzlement was discovered.She was also prosecuted for theft.The payment to John was never discovered.Which statement is correct?
A) John's act was unethical and illegal.
B) John's act was unethical but not necessarily illegal.
C) John's act was ethical since he believed the accountant would return the money; however, it was illegal.
D) Based on the facts, John's conduct was both ethical and legal given the special circumstances of this case.
Answer: A
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Page 4
Chapter 3: Dispute Resolution
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Sample Questions
Q1) In Jones v.Clinton,the court held:
A) Paula Jones did not demonstrate the essential elements for her claim.
B) Paula Jones was entitled to a summary judgment.
C) public policy required that the case be dismissed because of the President's governmental position.
D) President Clinton failed to comply with a discovery order.
Answer: A
Q2) A jury decision in a civil case:
A) must be unanimous.
B) must be reached in the same day the case is heard.
C) depends on whether or not the parties have agreed to have their case decided by less than a unanimous verdict.
D) is achieved by informal deliberations.
Answer: D
Q3) Federal jurisdiction based upon a "federal question" includes cases based on:
A) the United States Constitution.
B) a federal statute.
C) a federal treaty.
D) All of the above.
Answer: D
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Chapter 4: Common Law,Statutory Law,And Administrative Law
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Q1) Discuss the two federal statutes that give Americans the power to aquire or protect personal information.
Q2) Which law regulates how federal agencies make rules,conduct investigations,hold meetings and hearings,obtain information,and reach decisions?
A) The 1964 Civil Rights Act.
B) The Clean Agency Act.
C) The Administrative Procedure Act.
D) The Freedom of Information Act.
Q3) Assume that in December 2006,the Environmental Protection Agency (EPA)filed an administrative complaint against Marlin Firearms Co.alleging that the company exceeded chromium emissions limits.The EPA proposed a $257,162 fine.Which statement is correct concerning the administrative agency adjudication?
A) A jury decides the matter.
B) The Federal Rules of Criminal Procedure govern the admissibility of evidence.
C) The losing party has a right to appeal.
D) The parties are not represented by attorneys.
Q4) Common law,like statutory law,is prospective.
A)True
B)False
Page 6
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Chapter 5: Constitutional Law
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Sample Questions
Q1) Jackie purchased a condominium.When she bought it,she realized the homeowner's association had a variety of rules and regulations that she would need to follow.One regulation was that no children were allowed to live in the complex.Two years after buying the condominium,Jackie gave birth to a child.She was immediately served with papers notifying her to move out of the complex.Discuss the constitutionality of the homeowner association's action.
Q2) The Fifth Amendment to the Constitution provides Robert,an employee of Mattax Paper Co.,due process protection from being fired without a hearing by a neutral fact finder.
A)True
B)False
Q3) Judicial review can best be described as the power of federal courts to:
A) review state court decisions.
B) review state executive action.
C) review state and federal legislative and executive action.
D) none of the above.
Q4) Judicial review is the power of the federal courts to declare a statute or governmental action void.
A)True
B)False
Page 7
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Chapter 6: Intentional Torts And Business Torts
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Q1) Shortly after Brian started to work at Trevit,Inc.,a co-worker,Ann,began asking him out.Brian said no.Nevertheless,Ann persisted.One day Ann playfully,but intentionally touched Brian "below the belt." Which statement is correct?
A) Ann defamed Brian.
B) Ann committed the tort of trespass.
C) Ann committed the tort of interference with a prospective advantage.
D) Ann committed the tort of battery.
Q2) In order for a plaintiff to win a case involving intentional infliction of emotional distress,she must prove the defendant acted in an extreme and outrageous manner.
A)True
B)False
Q3) The elements in a defamation case are:
A) defamatory statement; falseness; communication; and injury.
B) a contract; knowledge of the contract; improper inducement; injury.
C) false or misleading fact statements; statements in commercial advertising; likelihood of harm.
D) duty; breach of duty; proximate causation; and damages.
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Chapter 7: Negligence And Strict Liability
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Sample Questions
Q1) A customer in a restaurant would be considered ________ to whom the restaurant owner owes a duty ________.
A) a licensee; to warn of known dangers.
B) an invitee; of reasonable care.
C) a social guest; only to avoid intentionally injuring him.
D) none of the above.
Q2) An economic study has concluded that dram shop laws are effective in reducing underage drinking,over-intoxicated drinkers and bar employee drunkeness.
A)True
B)False
Q3) The test of "foreseeability" is generally used to determine the existence of which element of a negligence case?
A) Duty of due care.
B) Breach.
C) Factual cause.
D) Injury.
Q4) List and discuss the elements necessary to establish negligence.
Q5) In negligence cases the courts often refer to the term "reasonable person." What is meant by this term?
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Chapter 8: Crime
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Q1) Which of the following statements is correct?
A) Violent street crime results in a greater monetary loss to society than white-collar crime.
B) White-collar crime results in a greater monetary loss to society than violent street crime.
C) Studies are not able to calculate the estimated value of white-collar crime since most white-collar crime is never publicly disclosed.
D) Studies are not able to accurately calculate the estimated value of either violent street crime or white-collar crime.
Q2) Dan was arrested and taken to an interrogation room for questioning.After signing a statement waiving his Miranda rights,he agreed to answer questions without a lawyer.After about ten minutes,he told the officers he changed his mind and wanted to talk to a lawyer before answering any more questions.The officers left the room and then came back in.They told Dan that his partner was confessing to the crime and that,"If your partner confesses first and makes a deal,you're the one who's going to go down for this." Dan looked at them without saying anything.After a minute,the officer began questioning Dan again and he confessed to the crime after about an hour.Is this confession admissible?
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Chapter 9: International Law
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Sample Questions
Q1) Multinational enterprises are companies doing business in several countries simultaneously.
A)True
B)False
Q2) The primary antitrust law in the United States is the:
A) Wagner Act.
B) Sherman Act.
C) SEC Act of 1933.
D) Robinson-Patman Act.
Q3) The United States and Singapore have signed the Convention on Contracts for the International Sale of Goods (CISG).Notren,Inc.,a U.S.company,and SWT,a Singapore company,have entered into a contract under which SWT is to ship party supplies to Notren.One of the terms of the contract states,"The validity and performance of this contract will be governed by the Uniform Commercial Code (UCC)of the state of New York,not the Convention of the International Sale of Goods (CISG)." The contract will be governed by the:
A) CISG.
B) Uniform Commercial Code of New York.
C) common law.
D) World Trade Law.
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Chapter 10: Introduction To Contracts
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Sample Questions
Q1) One of the factors leading courts away from a laissez-faire approach to contract law was:
A) the movement away from requiring a writing and a seal on contracts.
B) a change in relative bargaining power between parties to contracts.
C) the assumption that promises are not legally significant.
D) the assumption that parties had freedom to contract and would have to live with the consequences.
Q2) When promissory estoppel is used by the courts,it is because there is NOT an enforceable contract present.
A)True B)False
Q3) Upon the recommendation of a friend,Hope hires Joey to rewire her kitchen and he completes the work within the time agreed.Then Hope finds out that Joey is not a licensed electrician,and she refuses to pay him for the work.A court will enforce the agreement because otherwise Hope would be unjustly enriched.
A)True B)False
Q4) Discuss the requirements of promissory estoppel.
Q5) List and briefly describe the basic elements of a contract.
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Chapter 11: Agreement
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Sample Questions
Q1) Candy,Inc.signed an agreement with Sweet Plantation.Under the contract,Candy,Inc.agreed to purchase all the sugar cane Sweet Plantation grew during the coming season.This contract will be unenforceable due to its vagueness.
A)True
B)False
Q2) If Morales and Rolfes Supply negotiate for the purchase and sale of a supply of fuel for a three-year period for Morales' business:
A) the contract may indicate a method for determining the price, without stating a definite price.
B) Morales and Rolfes must depend on the UCC's gap-filler provisions to determine a price since the fuel is a "good" covered by Article 2 of the UCC.
C) the contract price must remain the same for the entire three-year contractual period.
D) their contractual requirements regarding definiteness would be the same under the UCC and the common law.
Q3) Discuss the effect of the Uniform Commercial Code on the law of sales contracts in the area of open terms.
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Chapter 12: Consideration
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Sample Questions
Q1) Billy owes a liquidated debt of $3000 to Rayna,his personal weight trainer.Billy sends Rayna a check for $300 on which he has marked,"Payment in Full." If Rayna cashes the check she will not be able to successfully sue Billy for the remainder of the debt.
A)True
B)False
Q2) Hilda owes Lex $3,000,which is an undisputed amount.If she offers him her car in full settlement of the debt and he accepts,the agreement is binding and he can no longer claim she owes him anything on the original debt.
A)True
B)False
Q3) If Crosby and Dash are in disagreement as to the exact amount of money that Crosby owes Dash,then they may choose to form a new agreement at a set amount.If they both perform the new agreement,their conduct would be an example of:
A) a rescission.
B) a contract modification.
C) a preexisting duty.
D) an accord and satisfaction.
Q4) What two exceptions did the UCC create for accord and satisfaction check cases?
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Page 14
Chapter 13: Legality
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Sample Questions
Q1) Mike owns a house in a poor area of a large city.Mike is on disability and his total monthly income is $700.A sales representative visits his home,selling a water purification system.Mike signs a contract that calls for monthly payments of $500 for the next 10 years.The water system is worth no more than $1000.Mike thought he was signing a permission slip allowing the salesman to conduct a free water test to determine the toxins in the water.How would a court most likely describe this contract?
A) The contract is fully enforceable as written.
B) The contract is unenforceable because it is unconscionable.
C) The contract is enforceable, but only up to the value of the water system.
D) The contract is unenforceable because it is exculpatory.
Q2) E-mation,Inc hires Marvin to steal trade secrets from one of its competitors for $10,000.Marvin demands half of the money up front.E-mation pays Marvin $5000 but Marvin decides not to pursue theft of the trade secrets.E-mation sues Marvin for the return of the $5000.What will the court do with this contract?
A) The court will order Marvin to return the $5000.
B) The court will order Marvin to return the $5000 with interest.
C) The court will order Marvin to obtain the trade secrets.
D) The court will not do anything to help E-mation get its money back.
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15
Chapter 14: Capacity And Consent
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Sample Questions
Q1) Marty,a 16-year-old,contracts with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle.Marty agrees to make monthly payments until the purchase price plus interest are paid in full.Which of the following is correct?
A) The contract is voidable by Marty.
B) The contract is void as soon as it is made.
C) The contract is voidable by Cream-of-the-Crop Cycles.
D) The contract is voidable by either Marty or Cream-of-the-Crop Cycles.
Q2) Fraudulent,but not innocent,misrepresentation permits the injured party to rescind a contract.
A)True
B)False
Q3) Discuss the concept of a "material fact" in fraud situations.
Q4) A party to a contract has a duty to investigate the other party's factual statements.
A)True
B)False
Q5) Contract rescission can sometimes be based upon a unilateral mistake.
A)True
B)False
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Chapter 15: Written Contracts
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Sample Questions
Q1) The Uniform Electronic Transmission Act (UETA):
A) declares that a contract or signature may not be denied enforceability just because it is in electronic form.
B) was passed by Congress in 2002.
C) creates a safe cyberspace environment in which business communications cannot be intercepted or fraudulently altered.
D) All of the above.
Q2) Vicki entered into a written contract to buy a car from Valley Motors.The written contract included a provision that stated,"This writing is the full and final expression of the parties' agreement; anything said before signing or while signing is irrelevant." This is: A) an integration clause.
B) a statute of frauds clause.
C) parol evidence.
D) an exculpatory clause.
Q3) List the types of agreements that are within the statute of frauds and explain the consequences if the parties do not comply with the requirements of the statute of frauds.
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17
Chapter 16: Third Parties
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Q1) Norm and Frank have a legal contract that is silent with regard to an assignment of the contract.In order for Norm to assign all or part of his rights under a contract,Frank must grant such permission to Norm.
A)True
B)False
Q2) An assignment is effective from the moment it is made,regardless of whether the assignor notifies the obligor.
A)True
B)False
Q3) Molly and Craig are the original parties to a contract.Craig is obligated to design a Website for Molly.They subsequently make an agreement with Eric that Eric should take the place of Craig and assume all of Craig's rights and duties under the contract.The agreement releases Craig from his obligations under the contract.This agreement is:
A) a novation.
B) an accord and satisfaction.
C) an assignment.
D) a nullification.
Q4) Briefly discuss the enforceability of contracts by third parties.
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18
Chapter 17: Performance And Discharge
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Q1) Mary contracted to buy 100 table lamps.Under the terms of the agreement,Mary is to pay for the lamps upon delivery.This is an example of:
A) a condition precedent.
B) a concurrent condition.
C) a condition subsequent.
D) a service condition.
Q2) Identify four factors courts consider in deciding the validity of commercial impracticability and frustration of purpose claims.
Q3) Monumental,Inc.contracts with Champion Builders to erect a three-story office building on a parcel of land it has purchased.Before construction begins,the local zoning board changes the zoning of the parcel and those adjoining it to residential use only.Monumental's contract with Champion is discharged.
A)True
B)False
Q4) Concurrent conditions arise when there is both a condition precedent and a condition subsequent.
A)True
B)False
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Chapter 18: Remedies
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Q1) Which of the following is an example of incidental damages you might be awarded if you are wrongfully terminated from your job?
A) The costs of psychological counseling.
B) The costs of mailing resumes to prospective employers.
C) The costs of a new wardrobe for future interviews.
D) The costs of cosmetic surgery.
Q2) A contract clause which specifies the amount of damages to be paid in the event of a breach is called:
A) a covenant of damages clause.
B) a reliance interest of damages clause.
C) a liquidated damages clause.
D) an incidental damages clause.
Q3) Costs to store a vehicle for a short period of time after an auto dealer fails to complete the contract to purchase the vehicle would be:
A) compensatory damages.
B) incidental damages.
C) consequential damages.
D) punitive damages.
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20
Chapter 19: Practical Contracts
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Q1) If the subject of the contract includes issues that may be controversial,it is best to:
A) keep lawyers out of the negotiation, so relationships are not strained.
B) deal with them up front before the relationship is strained.
C) deal with them one at a time, as the problems arise.
D) state your position up front and stand firm when the other party objects.
Q2) Farmer's Fortune Insurance has a contract with Farmer Fran to insure her crops against insect damage.The contract does not specify which insects are covered or how much damage is necessary to make a claim.The contract will probably be enforced in favor of:
A) Farmer Fran.
B) Farmer's Fortune Insurance.
C) Neither side, as it is ridiculous to try to insure against insects.
D) Cannot determine... would have to go through litigation to decide.
Q3) Ricardo has agreed to sell his family farm to Walter for a price of $450,000.Even though both sides agree on the terms,it is still worth the money for Ricardo to hire a lawyer to write the contract.
A)True
B)False
Q4) Outline the parts of a typical contract.
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Chapter 20: Introduction To Sales
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Q1) Patsy is shopping for a used car.She finds a car she likes at Morley Motors.Discuss the standard of conduct the UCC imposes on the parties in performing the sales transaction.
Q2) ABC Siding,Inc.manufactures aluminum siding.ABC enters into a contract to deliver siding to Slippery Siding,Ltd.,a retailer of aluminum siding.The written agreement insists that all modifications to the agreement be in writing and signed by both parties.This prohibition against oral modifications is:
A) valid regardless of whether the clause is signed separately.
B) invalid unless the clause is signed separately by Slippery Siding, Ltd.
C) invalid unless the clause is signed separately by ABC Siding, Inc.
D) invalid unless new consideration is supplied by the parties when the modification agreement is made.
Q3) The stated purpose(s)of Article 2 of the UCC is/are:
A) to simplify the law governing sales.
B) to permit the continued development of business practices through custom and usage.
C) to make the laws governing sales uniform among the various states.
D) All of the above are correct.
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Page 22
Chapter 21: Ownership And Risk
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Q1) A contract that requires a seller to deliver goods to the carrier is:
A) a destination contract.
B) a shipment contract.
C) a C.I.F. contract.
D) a C.O.D. contract.
Q2) Oceanside entered into a contract with the seller Old Tennessee,for the purchase of $6,431 worth of plants.The terms were sale and delivery C.O.D.with the express provision of "No Risk to Supplier," and a large logo at the top of papers stating:
"NOTICE: ALL SHIPMENTS TRAVEL AT RISK AND COST OF PURCHASER."
The plants were shipped by an experienced truck common carrier.Upon arrival in New York,it appeared as though some plants were in a poor state because of excessive heat.Although the carrier on its own marked the bill of lading to indicate that the temperature in the truck should be 50 degrees,this was not done for at least a portion of the journey.Oceanside rejected the shipment by writing "rejected" on the back of the trucker's bill of lading.However,the plants were retained "on consignment" at Oceanside's premises.There were no other formal written rejections or official notices of breach or defects given by the buyer to seller at any point prior to trial.Discuss who has the risk of loss.
Q3) Discuss the concept of insurable interests.
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Page 23
Chapter 22: Warranties And Product Liability
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Q1) Lemon laws,which assist consumers who have purchased automobiles that turn out to be "lemons,":
A) are enacted by state legislatures.
B) are enacted by Congress.
C) are included in the warranty provisions of the UCC.
D) come from common law equitable remedies.
Q2) Which one of the following warranties arises in a sale of goods?
A) Implied warranty of title.
B) Warranty against adverse possession.
C) Implied warranty of quiet enjoyment.
D) All of the above arise in a sale of goods.
Q3) A merchant seller who would like to exclude the warranty of merchantability can do so by doing which of the following?
A) The merchant can sell the goods "As Is."
B) The merchant can sell the goods "With All Faults."
C) The merchant can write conspicuously that the warranty of MERCHANTABILITY is excluded.
D) All of the above.
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Chapter 23: Performance And Remedies
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Q1) If a buyer does not receive goods by the contract deadline,remedies available include:
A) incidental and consequential damages.
B) cover.
C) damages for non-delivery.
D) All of the above.
Q2) A seller may not make repairs or adjustments after the goods have been tendered,even if that action will bring the goods into conformity in order to "cure" nonconforming goods.
A)True
B)False
Q3) "Course of dealing" refers to prior commercial transactions between the same parties.
A)True
B)False
Q4) A buyer who is unable to obtain cover:
A) will be limited to the remedy of incidental damages.
B) will be limited to the remedy of consequential damages.
C) will lose the money or goods invested in the breached contract.
D) may be allowed the remedy of specific performance.
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Chapter 24: Secured Transactions
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Q1) If repossessed collateral is sold or otherwise disposed of by the creditor,the time,place,manner,and method of disposal must be:
A) commercially reasonable.
B) scheduled with the debtor so that the debtor is able to attend.
C) court ordered.
D) perfected.
Q2) Which of the following parties can defeat a perfected security interest?
A) A "buyer in ordinary course of business."
B) A buyer of consumer goods if the buyer is not aware of the security interest, gives value for the goods, will continue to use the goods as consumer goods, and the secured party has not filed a financing statement.
C) A buyer who purchases chattel paper or an instrument in the ordinary course of business, and then takes possession.
D) All of the above are correct.
Q3) Article 9 applies to any transaction intended to create a security interest in real property.
A)True
B)False
Q4) Explain the difference between attachment and perfection.
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Chapter 25: Creating A Negotiable Instrument
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Q1) With non-negotiable commercial paper,a transferee's rights are conditional.
A)True
B)False
Q2) George's Wholesaling agrees to purchase 1000 pounds of bananas from Chickadee Exports at 39 cents per pound.George's does not have the money for the bananas now,but promises to pay in two months.Chickadee Exports wants George's business but needs the money now.Chickadee (as drawer)prepares an instrument ordering George's (as drawee)to pay $390 to Primary Bank (the payee).This is an example of a: A) check.
B) trade acceptance.
C) promissory note.
D) None of the above.
Q3) On March 1 Donna wrote a check for $296 to Sun Services.When will the check be overdue? What is the effect of the check's being overdue? What is the effect if the check is stamped "Insufficient Funds" by Donna's bank?
Q4) Commercial paper is a contract to pay money.
A)True
B)False
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Page 27
Chapter 26: Liability For Negotiable Instruments
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Q1) List the warranties a transferor of a negotiable instrument makes.
Q2) An indorser who writes "without recourse" above her signature on a negotiable instrument is not liable for payment.
A)True
B)False
Q3) When a negotiable instrument is transferred,the transferor warrants all EXCEPT:
A) that the transferor is a holder in due course of the instrument.
B) all signatures are authentic.
C) as far as she knows the issuer is solvent.
D) the instrument has not been altered.
Q4) When a person indorses a check,the indorser assumes contractual liability based on the indorsement.This liability expires unless presentment is made:
A) within 3 days of indorsement.
B) within 7 days of indorsement.
C) within 30 days of indorsement.
D) within a reasonable time after the indorsement.
Q5) Drawers and indorsers are secondarily liable on negotiable instruments.
A)True
B)False
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Chapter 27: Accountants' Liability
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Q1) An auditor who determines a company is materially misstating certain items on its financial statements should issue:
A) an unqualified opinion.
B) a qualified opinion.
C) an adverse opinion.
D) a disclaimer of opinion.
Q2) Discuss the advantages and disadvantages of using IFRS.
Q3) Criminal liability for accountants:
A) is not an option under securities law; there is only civil liability.
B) is possible under the Securities Act of 1933, the 1934 Act, state securities laws, and the Internal Revenue Code.
C) may result in fines but not imprisonment from violation of the federal securities laws.
D) will result from violation of the accountant-client privilege under federal law.
Q4) Teresa is suing her accountant for fraud.To win,Teresa must show that she justifiably relied on the accountant's fraudulent statement.
A)True
B)False
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Chapter 28: Agency Law
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Q1) Which of the following persons is an agent?
A) Diane, a shoe salesperson for a retail store.
B) Tim, a real estate broker for a large real estate company.
C) Craig, a telephone marketing employee.
D) All the above.
Q2) If the agent is disloyal to the principal:
A) the agency agreement automatically terminates and the principal may rescind the transaction.
B) the principal has the right to collect any actual damages sustained as a result of the agent's disloyalty.
C) the principal has a right to recover any profits earned as a result of his agent's disloyal conduct.
D) All the above are correct.
Q3) Andrew has been hired to do some work for Rossi Enterprises.What factors would a court consider in determining if Andrew is an employee or an independent contractor? Why does the designation matter?
Q4) The bankruptcy of an agent automatically terminates an agency relationship. A)True B)False
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Chapter 29: Employment Law
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Q1) Under the Equal Pay Act of 1963 an employee may not be paid at a lesser rate than employees of the opposite sex for tasks requiring equal skill,effort,and responsibility under similar working conditions.
A)True
B)False
Q2) Under the Family and Medical Leave Act,an employee can take up to 12 weeks of paid leave each year for certain personal and family illness situations.
A)True
B)False
Q3) The Family and Medical Leave Act applies to:
A) companies with 15 or more full-time workers.
B) companies with 50 or more employees.
C) companies with 100 or more employees.
D) any company engaged in interstate commerce.
Q4) Explain the Title VII requirements on affirmative action,and identify three sources of affirmative action programs.
Q5) What are three general defenses an employer can raise if sued for violating Title VII of the Civil Rights Act?
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Chapter 30: Labor Law
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Q1) Employees of Mega Corp.have gone out on strike seeking better pay.Mega Corp.announces that if the union does not end the strike it will begin hiring replacement workers.Which statement is correct?
A) Hiring replacement workers during a strike is an unfair labor practice.
B) Mega Corp can only hire replacement workers if the collective bargaining agreement expressly gives the company the right to do so.
C) Mega Corp can only hire replacement workers if it gives the union 14 days' notice prior to actually bringing in the replacement employees.
D) Mega Corp can hire replacement workers at any time during a strike.
Q2) The workers at Thom Trucking went on strike over wages.Thom Trucking may hire permanent replacement workers.
A)True
B)False
Q3) The National Labor Relations Act guarantees employees the right to join unions. A)True
B)False
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Chapter 31: Starting A Business
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Q1) The form of business ownership that is the most easily transferable is the:
A) general partnership.
B) corporation.
C) limited liability company.
D) limited partnership.
Q2) What federal agency requires that the seller of a franchise give the potential buyer an offering circular and audited financial statements?
A) The Securities and Exchange Commission (SEC).
B) The Interstate Commerce Commission (ICC).
C) The Federal Trade Commission (FTC).
D) The Franchise Sales Commission (FSC).
Q3) The Federal Trade Commission will not allow the sale of franchises that are unfair to the franchisee.
A)True
B)False
Q4) To form an LLC,a charter and an operating agreement must be filed with the Secretary of State in the jurisdiction where the business will operate.
A)True B)False
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Chapter 32: Partnerships
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Q1) Dusty dissociated from a partnership.To protect himself from debts of the partnership after he leaves,Dusty should:
A) secure an indemnity bond.
B) file a statement of dissociation with the Secretary of State.
C) execute a formal written agreement with the remaining partners.
D) demand that the partnership terminate.
Q2) Nicholas and Holly are partners in a toymaking shop.If Rudolph obtains a judgment against Nicholas for injuring Rudolph while Nicholas was on partnership business,Rudolph must try to collect from the partnership before going after Nicholas' personal assets.
A)True
B)False
Q3) Doyle contributed $10,000 when he became a general partner in the existing partnership of R & Z Heating.If Albert wins a judgment for $25,000 against R & Z on a claim that was incurred before Doyle became a partner,Doyle shares joint and several liability with his new partners for the whole obligation.
A)True
B)False
Q4) Identify and briefly discuss the management rights and duties of a partner.
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Chapter 33: Life And Death Of A Corporation
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Q1) In incorporating E-prise,the promoter gave an incorrect ZIP Code for the registered agent.All of the other requirements for incorporation were met.E-prise is a(n):
A) de jure corporation.
B) de facto corporation.
C) corporation by estoppel.
D) indemnified corporation.
Q2) The executives of Jornaginn Corporation have decided they need to sell 50,000 additional shares of stock to finance their expansion plans.The executives:
A) cannot sell that many shares unless they were authorized initially in the corporate charter.
B) can sell as many shares as the market will bear.
C) are limited by the number of shares authorized in the corporate charter, but this number can be increased by amending the charter and paying a fee.
D) can sell the shares only if the shares have a par value which is close to the current market price.
Q3) Discuss how a corporation is terminated.
Q4) What are some of the advantages for a business to incorporate in Delaware?
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Chapter 34: Corporate Management
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Q1) One of the directors of Independent Pallet Mill purchases 100 acres of timberland.In order for him to sell the timber from this land to Independent,what must he do? If he does not act properly in this situation,what duty would he violate,and what would be the result?
Q2) Which of the following must be approved by the shareholders if a company is attempting to avoid a hostile takeover bid?
A) White knights.
B) Staggered board of directors.
C) Supermajority voting.
D) All the above.
Q3) Which of the following is correct concerning anti-takeover efforts?
A) Most states have passed laws to deter hostile takeovers, but these statutes have not totally eliminated hostile takeovers.
B) Federal statutes have been more effective than state statutes in eliminating hostile corporate takeovers.
C) The most effective federal statute has been the Poison Pill Act.
D) Both b and c are correct.
Q4) List and discuss the three ways to acquire control of a corporation.
Q5) What is the definition of the business judgment rule?
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Chapter 35: Shareholders
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Q1) Frank is a controlling shareholder in E-prise,Inc.Frank:
A) may not enter into unfair business transactions with the corporation.
B) has a fiduciary duty to minority shareholders.
C) may not exclude minority shareholders from beneficial arrangements involving stock.
D) All of the above are correct.
Q2) Quick Supply House breached a contract with MegaCorp.The breach resulted in the loss of a great deal of money to MegaCorp.The board of directors for MegaCorp vote not to sue the supply house since it believes the legal costs would be more than it would probably recover.If a group of shareholders wish to sue the supply house,this would:
A) be a type of direct lawsuit.
B) have to be a derivative lawsuit.
C) be a settlement lawsuit.
D) be an SEC lawsuit.
Q3) Who establishes executive compensation?
A) The board of directors.
B) The shareholders.
C) The officers themselves.
D) An independent CPA firm.
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Chapter 36: Securities Regulation
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Questions
Q1) The SEC has enforcement powers,including the power to issue cease and desist orders,to levy fines,and to confiscate profits from illegal transactions.
A)True B)False
Q2) The Securities Act of 1933 established the Securities and Exchange Commission. A)True B)False
Q3) Any securities offerings covered by the NSMIA must comply with state securities laws.
A)True B)False
Q4) Premier Enterprises sold Watson unregistered stock which was not exempt.The 1933 Act imposes liability on Premier,and Watson can demand rescission if he still owns the stock.
A)True B)False
Q5) What are the three primary ways the SEC creates law?
Q6) What information must be contained in a registration statement?
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Chapter 37: Bankruptcy
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Q1) When Dudley files his Chapter 7 petition,he lists the following debts:
a.
$25,000 in back child support and alimony.
b.
$15,000 for liabilities incurred after drinking and driving.
c.
$10,000 for past-due student loans.
d.
$5,000 for past-due rent to his landlord.
e.
$550 for a past-due phone bill.
How will each of these debts be treated by the bankruptcy court.
Q2) Grand Lighting Co.has filed a petition for voluntary bankruptcy under Chapter 7 of the Code.The following property will be exempt from the bankruptcy process:
A) work tools.
B) up to three company cars.
C) up to $20,200 in the value of the company's real property.
D) All of the above.
E) None of the above.
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Chapter 38: Antitrust
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Q1) A refusal to deal:
A) is a right to decide with whom to do or not to do business and cannot be legally limited.
B) is a rule of reason violation of the Sherman Act and is illegal if it harms competition.
C) is an agreement in which a buyer refuses to purchase goods from a supplier unless the supplier also purchases items from the buyer.
D) occurs when a manager refuses to recognize that price-fixing is a problem.
Q2) Gorhan Construction,Brighton Bros.,and Tirenn Construction agreed that on three upcoming projects,Gorhan would bid lowest on one,Brighton would submit the lowest bid on the second project,and Tirenn would submit the lowest bid on the third project.In this way,they would each be assured of work for the upcoming season.This behavior:
A) is legal and acceptable practice in the construction industry to spread work more evenly.
B) is a per se violation of the Sherman Act.
C) is a rule of reason violation of the Sherman Act.
D) violates ethical, but not legal, standards.
Q3) Discuss when monopoly power is not a violation of Section 2 of the Sherman Act.
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Chapter 39: Consumer Law
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Q1) Which of the following statements express the purpose of the Truth-in-Lending Act?
A) To require lenders to charge a "reasonable" rate of interest.
B) To help small business.
C) To provide consumers with information necessary to make the best credit decision.
D) To help lenders limit state laws.
Q2) Prime Products,Inc.was going to be able to ship the comforter Margaret ordered within three weeks instead of the seven days it had originally promised.Prime must cancel Margaret's order and notify her that it can deliver within three weeks if she wants to reorder.
A)True
B)False
Q3) What are the three tests or elements used by the FTC to determine whether a particular act is an unfair trade practice?
Q4) The Consumer Leasing Act requires a lessor to disclose in writing all EXCEPT:
A) number of payments.
B) penalties for late payments.
C) lease rates of the competition.
D) penalties for early termination.
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Chapter 40: Environmental Law
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Q1) James purchased an abandoned lot.When he started to develop the land,he discovered several underground storage tanks containing hazardous waste buried on the site.He claims the seller,Richards,is liable to him for the cost of removing the tanks.Richards claims he owned the lot for 20 years and never knew of the underground tanks.Richards argues he purchased the land from Thomas and that Thomas or his heirs are liable for the cost of removing the underground tanks.Explain whether Richards is liable to James.Does Thomas or do his heirs have any liability to James or Richards?
Q2) Foiler Manufacturing,a new corporation,estimates it may generate approximately 200 kilograms of hazardous waste each month.Discuss the EPA requirements it faces in relation to this waste.
Q3) Congress established a trust fund for the EPA to use in Superfund cleanup.This trust fund was initially financed by a tax on what?
A) The general public through federal income taxes.
B) Waste management and landfill operators.
C) The construction industry.
D) The oil and chemical industries.
Q4) Discuss the purpose of and problems with the Kyoto Protocol from the perspective of the United States.
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Chapter 41: Cyberlaw
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Q1) The European Union prohibits the transfer of personal customer information to countries that lack adequate privacy protection.
A)True
B)False
Q2) Bidding on one's own goods at an online auction may subject the bidder to liability under anti-fraud statutes as well as liability under state statutes explicitly prohibiting shilling.
A)True
B)False
Q3) Which of the following protects e-mail messages from unauthorized interception?
A) The Fourth Amendment.
B) The GLB Privacy Act of 1999.
C) The Electronic Communications Privacy Act.
D) COPPA.
Q4) Discuss common abuses that occur with auctions on the Internet and how these abuses are being addressed.
Q5) It is legal for websites to sell source code for viruses.
A)True
B)False
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Chapter 42: Intellectual Property
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Q1) Victoria registered a trademark under the Lanham Act.Six years later Don noticed Victoria's trademark and filed a lawsuit to enjoin her from using it.He proved he had registered the mark in several states more than ten years before Victoria obtained her trademark.Will Don prevail?
A) Yes. Victoria should have conducted a better search of trademarks registered under state laws.
B) Yes. Federal law specifically states a federal trademark is not valid for any lawful owner of the same mark under state law.
C) No. Don will not prevail and Victoria can continue to use the mark because of the time involved.
D) None of the above.
Q2) Southern Bar-B-Q owns a special,secret recipe for sauce which it guards because it gives the restaurant a competitive advantage.If Mort willfully misappropriates the recipe,a court may hold him liable to Southern for double damages.
A)True
B)False
Q3) Identify the main provisions of the Digital Millennium Copyright Act and two arguments opponents of the Act raise.
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Chapter 43: Real Property And Tenant-landlord Law
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Q1) The right of the tenant to the undisturbed possession of the leased property is known as:
A) quiet enjoyment.
B) habitability.
C) lawful possession.
D) peaceful possession.
Q2) Nancy is a life tenant on a 78-acre farm.The person who owns the future interest in the farm is entitled to enter upon the farm to make sure Nancy is not damaging the property.
A)True
B)False
Q3) Carlos conveys his property "to Noah for life,then to Maxie." Noah has a life estate and Maxie has a remainder interest.
A)True
B)False
Q4) Discuss the tenant's and the landlord's basic duties under a landlord-tenant relationship.
Q5) Tim is buying a farm.A general warranty deed is the best type of deed for Tim. A)True
B)False
45
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Chapter 44: Personal Property And Bailment
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Q1) If property is mislaid,the finder of the property will have a superior claim to possession of the property against everyone except the true owner.
A)True
B)False
Q2) Discuss a bailor's liability for defects in the bailed property.
Q3) Bertha,from Chicago,traveled to San Francisco to attend a conference.Her sister,Martha,lives in San Francisco and consequently,Bertha made arrangements to spend a couple of days with her sister.The next morning sitting at the breakfast table,Bertha realizes that she packed a mismatched pair of shoes (one is black and the other is blue).Luckily,Martha wears the same size of shoes and lends Bertha a pair of black leather pumps.During the day,the shoes are damaged while Bertha is wearing the shoes.Bertha's duty of care would be a duty of:
A) extraordinary care, because this is a bailment for the sole benefit of the bailee. B) ordinary care, because this is a bailment with both parties receiving mutual benefits. C) only slight care, because this is a bailment for the sole benefit of the bailor.
D) none, as the sisters would share without condition.
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Chapter 45: Planning For The Future: Wills,Trusts,And
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Q1) Myron had two children,Cheryl and Pete,who predeceased him.Cheryl had three children and Pete had one child.Myron died testate.Which of the following is true?
A) If Myron's will indicates that the issue are to inherit per stirpes, Pete's child will receive one half of Myron's estate.
B) If Myron's will indicates that the issue are to inherit per stirpes, Pete's child will receive one fourth of Myron's estate.
C) If Myron's will indicates that the issue are to inherit per capita, Pete's child will receive one half of Myron's estate.
D) If Myron's will indicates the issue are to inherit per capita, each of Cheryl's children will receive one sixth of Myron's estate.
Q2) The only function of a will is to dispose of a person's property upon death.
A)True
B)False
Q3) Parents may not disinherit their minor children without good reason.
A)True
B)False
Q4) Discuss the differences between a will and a trust.
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