Business and Society Exam Review
Course Introduction
Business and Society explores the intricate relationship between commercial enterprises and the broader social environment in which they operate. This course examines the ethical, legal, and economic responsibilities of businesses to various stakeholders, including employees, customers, communities, and the environment. Topics include corporate social responsibility, sustainable business practices, stakeholder theory, and the impact of globalization. Through case studies and critical discussion, students develop an understanding of how businesses influence and are influenced by societal values, public policy, and evolving social expectations.
Recommended Textbook
Andersons Business Law and the Legal Environment 22nd Edition by David P. Twomey
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52 Chapters
2754 Verified Questions
2754 Flashcards
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Page 2
Chapter 1: The Nature and Sources of Law
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60 Verified Questions
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Sample Questions
Q1) Several layers of law are enacted at different levels of government to provide the framework for business and personal rights and duties.At the base of this framework of laws is constitutional law.
A)True
B)False
Answer: True
Q2) A right can exist:
A) by itself.
B) only if created by a court.
C) only if there is a corresponding duty.
D) only under local law.
Answer: C
Q3) The private life of a nonpublic citizen is subject to public scrutiny.
A)True
B)False
Answer: False
Q4) Statutes are the only source of law.
A)True
B)False
Answer: False
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Chapter 2: The Court System and Dispute Resolution
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57 Verified Questions
57 Flashcards
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Sample Questions
Q1) Depositions are usually taken in the courtroom.
A)True
B)False
Answer: False
Q2) Once a lawsuit is commenced,the case must go to the jury.
A)True
B)False Answer: False
Q3) Reversible errors are commonly made by supreme courts.
A)True
B)False
Answer: False
Q4) The federal court system consists of ____ level(s)of courts.
A) one
B) two
C) three
D) four
Answer: C
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Page 4
Chapter 3: Business Ethics, Social Forces, and the Law
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52 Verified Questions
52 Flashcards
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Sample Questions
Q1) Unwillingness of businesses to voluntarily improve the ethics of their practices has little practical effect on the regulatory environment.
A)True
B)False
Answer: False
Q2) Civil disobedience is the remedy natural law proponents use to change positive law.
A)True
B)False
Answer: True
Q3) The theory of justice is based on the concept that if there were no laws or rules reasonable people would develop fair rules and standards.
A)True
B)False
Answer: True
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Page 5
Chapter 4: The Constitution As the Foundation of the Legal Environment
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59 Verified Questions
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Sample Questions
Q1) The "living" Constitution has which of the following characteristics?
A) strong federal government
B) strong president
C) various administrative agencies with significant power
D) all of the above
Q2) A law to declare war:
A) can be enacted by both state and federal governments.
B) can be enacted only by the national government.
C) can be enacted only by state governments.
Ddd)is prohibited by the U.S.Constitution.
Q3) The commerce clause of the Constitution:
A) prohibits the U.S.government from engaging in interstate commerce.
B) prohibits the U.S.government from regulating interstate commerce.
C) has been expanded by Supreme Court interpretations to give the U.S.government the power to regulate the general welfare of the nation.
D) was declared unconstitutional in 1937.
Q4) Some of the powers delegated to the national government still may be exercised by the states.
A)True
B)False
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Chapter 5: Government Regulation of Competition and Prices
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Sample Questions
Q1) Each of the states and the federal government have statutes and regulations that prohibit unfair methods of competition.
A)True
B)False
Q2) Tying:
A) is a violation of the Sherman Act.
B) occurs when sellers require buyers to purchase an unwanted product to get a wanted one.
C) both of the above.
D) none of the above.
Q3) A manufacturer with distributors in New York City may give its newer distributors free advertising and other services to help them compete with the distributors who have been doing business for a number of years and have become firmly established.
A)True
B)False
Q4) Having a large percentage of the market is not necessarily a monopoly.
A)True
B)False
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Chapter 6: Administrative Agencies
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Sample Questions
Q1) A federal agency planning to adopt a new regulation must give public notice of such intent and then hold a hearing at which members of the public may express their views and make suggestions.
A)True
B)False
Q2) Wilma was an employee of the Electric Storage Battery Company.She was fired.She claimed that she was fired because she was a member of a labor union.The employer asserted that she was fired because she was a poor worker.Wilma filed an unfair labor practice complaint with the National Labor Relations Board.Its examiner held a hearing at which evidence was presented showing that Wilma was a poor worker.Other evidence presented showed that the employer was opposed to labor unions.The Board decided to believe Wilma's witnesses and concluded that she had been fired because she belonged to the union.Can the employer appeal this decision?
Q3) A(n)__________ is a negotiated disposition of a matter before an administrative agency,generally without public sanctions.
A) formal settlement
B) informal settlement
C) judicial verdict
D) quasi-judicial verdict
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Page 8
Chapter 7: The Legal Environment of International Trade
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57 Verified Questions
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Sample Questions
Q1) Legal restrictions of U.S.firms doing business abroad in regard to payments made to foreign officials for obtaining business are set forth in the:
A) International Corruption Prohibition Act.
B) Global Anti-bribery Control Act.
C) Foreign Corrupt Practices Act.
D) International Graft Prohibition Act.
Q2) The SEC has accused the Acme Company of fraud in connection with the sale of its securities to American citizens.Although the firm is American-owned,it is located in Switzerland.All of the accounts and business records of the firm are in several Swiss banks.The SEC has been actively pursuing the case,although it has not been able to provide a great deal of hope for those victimized by the fraud.What factors are probably hindering the SEC,and how might this be handled?
Q3) A societé anonyme is the European counterpart of a U.S.corporation.
A)True
B)False
Q4) The use of import quotas represents the most common form of tariff barrier.
A)True
B)False
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Page 9
Chapter 8: Crimes
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Sample Questions
Q1) Bribery is defined as:
A) giving money,property,or any benefit to a person to influence that person's judgment.
B) using one's position as a public official to make an illegal demand.
C) using one's position as a nonpublic official to make an illegal demand.
D) exerting improper political influence.
Q2) A person who did not necessarily commit the crime can still be held criminally responsible for acts committed by others __________.
A) only for non-business crimes
B) only for business crimes
C) both a.and b.
D) neither a.nor b.
Q3) Racketeering is defined as:
A) using money to influence public officials.
B) using money to influence employees of competitors.
C) using money derived from illegal activities to invest in legitimate businesses.
D) using money to influence foreign officials.
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10
Chapter 9: Torts
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Sample Questions
Q1) A trespass to personal property is any unpermitted entry below,on,across,or above the land of another.
A)True
B)False
Q2) Maria intentionally attempts to have Patty break a contract with Alfred.Maria will be liable under which theory of tort?
A) Libel
B) product disparagement
C) contract interference
D) intentional infliction of emotional distress
Q3) Trespass applies to:
A) personal property only.
B) land only.
C) both personal property and land.
D) only government-owned property.
Q4) Assault is the intentional,wrongful touching of another person without that person's consent.
A)True
B)False
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Chapter 10: Intellectual Property Rights
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52 Verified Questions
52 Flashcards
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Sample Questions
Q1) It is important to protect trade dress against adoption by a competitor because such adoption can:
A) deceive purchasers into believing they have obtained a comparable product.
B) dilute the originator's resource investment in its product appearance.
C) usurp the business goodwill of the developer of the trade dress.
D) all of the above.
Q2) A copyright prevents the copying of an idea.
A)True
B)False
Q3) A copyright owner may prohibit even limited use of copyrighted material if it is used for parody or criticism.
A)True
B)False
Q4) Computer software licensing agreements include restrictions on the use of software and give the licensor greater protection than that provided by copyright law.
A)True
B)False
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Chapter 11: Cyberlaw
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42 Verified Questions
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Sample Questions
Q1) It is a crime to post nasty opinions about someone in an Internet chat room.
A)True
B)False
Q2) Web site operators are free to plant "cookies" on computers with no fear of action for breach of unauthorized access or privacy.
A)True
B)False
Q3) The Internet Tax Freedom Act (ITFA)prohibits companies from charging sales tax on Internet transactions.
A)True
B)False
Q4) Misrepresentation and fraud on the Internet raises a variety of new legal issues.
A)True
B)False
Q5) Employee e-mail is:
A) spontaneous.
B) candid.
C) discoverable.
D) all of the above.
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Chapter 12: Nature and Classes of Contracts: Contracting on
the Internet
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53 Verified Questions
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Sample Questions
Q1) A contract is essentially an agreement that creates an obligation.
A)True
B)False
Q2) An implied contract is one in which the agreement is shown not by words,written or spoken,but by the acts and conduct of the parties.
A)True
B)False
Q3) The plaintiff in a quasi-contractual action can recover:
A) lost profits.
B) damages for mental distress.
C) the reasonable value of the benefit conferred upon the defendant.
D) for all the damages sustained.
Q4) When purchasing from a website,the website terms generally become the contract of the parties and are legally enforceable.
A)True
B)False
Q5) The principle behind the quasi contract is to prevent unjust enrichment.
A)True
B)False
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Chapter 13: Formation of Contracts: Offer and Acceptance
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Sample Questions
Q1) An offer that is indefinite may be clarified by reference to another writing through:
A) incorporation.
B) reference.
C) annotation.
D) indexing.
Q2) When it is claimed that a contract is too indefinite to be enforced,a court will do its best to find the intent of the parties and thereby reach the conclusion that the contract is not too indefinite.
A)True
B)False
Q3) If an offer does not state how long it shall remain open,it remains open for ten days.
A)True
B)False
Q4) A "best efforts" clause is always deemed too indefinite to be enforceable.
A)True
B)False
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Chapter 14: Capacity and Genuine Assent
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Sample Questions
Q1) Fraud requires intent that the listener rely on the false statement of fact.
A)True
B)False
Q2) Ordinarily,a party to a contract has no duty to volunteer information to the other party.
A)True
B)False
Q3) A person lacks contractual capacity if:
A) the person is a chronic alcoholic.
B) the person is a drug addict.
C) because of mental impairment,the person does not comprehend that a contract is being made or understand its consequences.
D) all of the above.
Q4) 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.
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Chapter 15: Consideration
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Sample Questions
Q1) Which of the following is not consideration for a present promise?
A) a good faith adjustment
B) compromise and release of claims
C) the promise to pay one's child support obligation,consistent with a pre-existing court order.
D) the performance of a requested act
Q2) A binding contract cannot contain a cancellation provision.
A)True
B)False
Q3) Which of the following can be consideration for a promise?
A) Refraining from beating one's spouse.
B) Promising to refrain from beating one's spouse.
C) Refraining from smoking cigarettes.
D) Refraining from using cocaine.
Q4) Courts will consider the adequacy of the consideration when:
A) one party clearly has the better of the deal.
B) one party has more business experience than the other.
C) one party claims to have been defrauded.
D) one party shows a much lower price nationally-advertised on television.
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Chapter 16: Legality and Public Policy
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Sample Questions
Q1) Courts are quick to invalidate contracts on the ground that they are contrary to public policy because such contracts are so offensive to society.
A)True
B)False
Q2) If a contract appears to be legal on its face,it will be enforceable even if it was entered into for an illegal purpose.
A)True B)False
Q3) The failure to have a license will not render agreements void if the license:
A) is based on formal education
B) is required for engaging in a particular business or trade
C) is a regulatory license
D) is readily obtainable by anyone who offers payment of a required fee
Q4) An agreement between Jim and his 18-year-old daughter,Betty,provides that he will give her $25,000 if she does not marry until after her 22nd birthday.One month after reaching the age of 22,Betty,still unmarried,claims the $25,000. Jim refuses to pay,claiming that the agreement was illegal.Is Jim correct?
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Chapter 17: Writing, Electronic Forms, and Interpretation of Contracts
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Sample Questions
Q1) Parol evidence is not admissible to show fraud,duress or mistake.
A)True
B)False
Q2) Details of performance of a contract not expressly stated in a contract will often be implied by the court.
A)True
B)False
Q3) When an insurance policy is ambiguous,the policy is interpreted:
A) against the insurer.
B) in favor of the insurer.
C) according to the dictionary meaning of the words.
D) according to the meaning of the words in the insurance industry.
Q4) Through incorporation by deference,a contract can consist of both the original document and the detailed statement that is incorporated in it.
A)True
B)False
Q5) Provisions of a contract will be considered separately and not as a whole.
A)True
B)False
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Chapter 18: Third Persons and Contracts
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Sample Questions
Q1) An assignment is valid only if:
A) it is in a particular form.
B) it is written.
C) there is a manifestation of the intent to assign.
D) the assignment is paid for by the assignee.
Q2) When a lease is assigned,the assignee becomes the sole obligor for rent payments,and the original lessee is discharged from the lease.
A)True
B)False
Q3) When a municipality contracts with a contractor to pave a street,homeowners on that block are third-party beneficiaries of the contract.
A)True
B)False
Q4) A person entitled to receive money may generally assign that right to another person.
A)True
B)False
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Chapter 19: Discharge of Contracts
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Sample Questions
Q1) For the parties to enter into an accord and satisfaction that discharges the original obligation,there must be a bona fide dispute.
A)True
B)False
Q2) To avoid litigation over impossibility and impracticability issues,modern contracting parties often contract around the doctrine of impossibility,specifying the failures that will excuse performance in their contracts.The clauses in which they do this are called __________ clauses,and they are generally enforced by courts as written.
A) delta force
B) force majeure
C) magnum force
D) force corporeal
Q3) The death or disability of a party to a contract discharges the contract when:
A) personal services requiring peculiar skill are involved.
B) the payment of money is involved.
C) a house is to be painted.
D) all of the above.
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Chapter 20: Breach of Contract and Remedies
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Sample Questions
Q1) Contract provisions that limit the remedies of the parties are generally unenforceable.
A)True
B)False
Q2) Consequential damages may be recovered if:
A) the damages were not a foreseeable consequence of the breach.
B) the damages reasonably flow from the breach as a result of the injured party's particular circumstances.
C) the breach did not cause the damages.
D) the loss exceeds $500.
Q3) When an anticipatory repudiation of a contract occurs,the aggrieved person's option(s)include:
A) doing nothing and waiting for performance per the contract.
B) immediately declaring a breach of contract.
C) considering the contract cancelled.
D) all of the above.
Q4) An antimodification clause specifies that a waiver to any breach automatically modifies the contract .
A)True
B)False
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Chapter 21: Personal Property and Bailments
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Sample Questions
Q1) An ordinary bailment can arise without an agreement between the parties.
A)True
B)False
Q2) In order for delivery to occur,a gift must actually be handed over to the recipient.
A)True
B)False
Q3) Joint tenancy and tenancy in common both feature the right of survivorship.
A)True
B)False
Q4) The intent to make a gift requires an intent to transfer title at that time.
A)True
B)False
Q5) Personal property includes all things of value including real estate.
A)True
B)False
Q6) Most courts consider an engagement ring to be a conditional gift.
A)True
B)False
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Chapter 22: Legal Aspects of Supply Chain Management
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Sample Questions
Q1) The rights and duties of warehousers are regulated by the UCC.
A)True
B)False
Q2) A warehouse receipt may be either negotiable or nonnegotiable.
A)True
B)False
Q3) When goods are delivered to a common carrier for immediate shipment and while they are in transit,who is normally liable for any loss or damage to the goods?
A) the shipper
B) the consignee
C) the carrier
D) the individual designated as responsible in the bill of lading
Q4) 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.
Q5) A common carrier is liable for all delays in the delivery of goods.
A)True
B)False
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Chapter 23: Nature and Form of Sales
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Sample Questions
Q1) __________ represents a pattern of performance between the parties to a contract.
A) Course of dealing
B) Usage of trade
C) Course of trade
D) Usage of dealing
Q2) Sales law includes special rules that apply to merchants.
A)True
B)False
Q3) A contract of indefinite duration may be terminated by notice from either party to the other party.
A)True
B)False
Q4) The CISG:
A) governs all contracts between parties in countries that have ratified it.
B) applies only to goods bought for personal,family or household uses.
C) applies to contracts in which the predominant part of the obligation is the supply of labor or other services.
D) none of the above.
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Chapter 24: Title and Risk of Loss
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Sample
Questions
Q1) Anderson Clock Company is in the business of selling and repairing clocks.Jay purchased a grandfather clock from them.Laurie had left the clock at Anderson's for a cleaning and calibration.When Laurie found out the clock had been sold,she contacted Jay and demanded he return it.Must Jay comply with Laurie's demand? What other options does she have?
Q2) If a contract contains a delivery term of FOB place of shipment,the seller's obligation under the contract is to deliver the goods to a carrier for shipment.
A)True
B)False
Q3) COD is a shipping term that requires the buyer to pay in order to gain physical possession of the goods.
A)True
B)False
Q4) A sale or return is a completed sale with an option for the buyer to return the goods.
A)True
B)False
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Chapter 25: Product Liability: Warranties and Torts
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Sample Questions
Q1) Only the parties to a sales contract could sue each other under the traditional concept of:
A) exclusivity of contract.
B) privity of contract.
C) privacy of contract.
D) priority of contract.
Q2) A seller who makes a written express warranty for consumer goods costing more than $50 must conform to FTC regulations.
A)True
B)False
Q3) If there is a written contract,a disclaimer of the implied warranty of merchantability must be conspicuous.
A)True
B)False
Q4) An express warranty can be disclaimed even if it was a critical part of the bargain to the buyer.
A)True
B)False
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Chapter 26: Obligations and Performance
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Q1) The UCC does not specify the form that the assurance of performance is to take.
A)True
B)False
Q2) When a party refuses to perform a contract at the time of performance,a repudiation has occurred.
A)True
B)False
Q3) Substantial impairment requires proof that goods are worthless.
A)True
B)False
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.
Q5) Unless otherwise specified,the place of delivery is the seller's place of business.
A)True
B)False
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Chapter 27: Remedies for Breach of Sales Contracts
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Q1) The UCC statute of limitations applies when a party is seeking recovery on strict tort liability,fraud or negligence.
A)True
B)False
Q2) When a buyer has broken a sales contract,the seller may resell the goods or the balance of them in the seller's possession.
A)True B)False
Q3) A buyer returning to the seller a raincoat that shrank in the rain is revoking acceptance.
A)True
B)False
Q4) On January 15,2012,Anders brought an action against Barnes for breach of a contract for the sale of electronic parts.The breach occurred on January 10,2008,and Anders discovered the breach on January 20,2008.The state statute of limitations for contract actions is five years.Barnes raised the UCC statute of limitations as a defense to the action.Is this defense valid?
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29
Chapter 28: Kinds of Instruments, parties, and Negotiability
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Q1) If an order or promise is not for money,the instrument is not negotiable.
A)True
B)False
Q2) Antedating an instrument affects an instrument's negotiability.
A)True
B)False
Q3) A payee has no rights in an instrument until:
A) the drawer or the maker has delivered the instrument to the payee.
B) an acceptor has been established.
C) an accommodation party has signed the instrument.
D) a guarantor has signed the instrument.
Q4) The person on whom the order to pay a draft is made is called a drawer.
A)True
B)False
Q5) Negotiation of commercial paper results in lesser rights to transferees than those rights afforded assignees of contracts under contract law.
A)True
B)False
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Chapter 29: Transfers of Negotiable Instruments and
Warranties of Parties
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Sample Questions
Q1) When the indorser merely signs a negotiable instrument,the indorsement is called a __________ indorsement.
A) special
B) qualified C) blank
D) restrictive
Q2) An instrument may be transferred by negotiation or by assignment.
A)True
B)False
Q3) Order paper is negotiated by the indorsement of the holder and delivery.
A)True
B)False
Q4) A transferor may be able to set aside a negotiation obtained by fraud or duress unless:
A) a minor is involved.
B) the negotiation was part of an illegal transaction.
C) the negotiation was beyond the powers of the corporation.
D) the instrument has been acquired in the meantime by a holder in due course who did not know of the misconduct.
31
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Chapter 30: Liability of the Parties Under Negotiable Instruments
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Q1) Manuel sued Patricia on a promissory note.Patricia admitted signing the note,but raised the defense that Manuel was not a holder in due course.Can Manuel recover without proving that he is a holder in due course?
Q2) To have the status of a holder in due course,a person must first be a holder.
A)True
B)False
Q3) A universal defense will defeat a holder in due course and a holder through a holder in due course.
A)True
B)False
Q4) Generally defenses that could be raised in a breach of contact claim cannot be raised against a holder in due course.
A)True
B)False
Q5) Instruments may not be negotiated if they have been dishonored by non-acceptance.
A)True
B)False
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Chapter 31: Checks and Funds Transfers
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Q1) In a complex funds transfer,an intermediary bank may receive and transmit the payment order.
A)True
B)False
Q2) A consumer who notifies the issuer of an EFT card within two (2)days after learning of a loss or theft of the card can be held to a maximum liability of $500 for unauthorized use of the card;failure to notify within this time will increase the consumer's liability for losses to a maximum of $5,000.
A)True
B)False
Q3) If a bank improperly refuses to make payment of checks for which its customer has sufficient funds on deposit,it is liable to the drawer for damages sustained by the drawer in consequence of such dishonor.
A)True
B)False
Q4) A bank always is liable for making payments on a postdated check.
A)True
B)False
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Chapter 32: Nature of the Debtor-Creditor Relationship
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Q1) Which of the following is correct concerning suretyship and guaranty?
A) A surety is always liable from the moment the principal is in default.
B) A guarantor is always liable from the moment the principal is in default
C) Both a.and b.
D) None of the above.
Q2) An agreement under which one party agrees to pay drafts drawn by a creditor is called a:
A) contract of surety.
B) guaranty contract.
C) letter of credit.
D) debtor's agreement.
Q3) Under an indemnity contract,one person pays another consideration in return for a promise to pay a specified sum of money in the event that a specified loss is suffered.
A)True
B)False
Q4) A surety may not raise the defense of mistake.
A)True
B)False
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34
Chapter 33: Consumer Protection
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Q1) Those who are liable for violations of consumer protection situations are persons or enterprises that regularly enter into the type of transaction in which the injured consumer was involved.
A)True
B)False
Q2) Sue Thompson received a home "cold-canvas" sales call from a representative of the Enlightened Encyclopedia Company.The salesperson,after a rather aggressive presentation,convinced Sue to order a $1,200 Deluxe Encyclopedia set for her two children.Sue was impressed with the quality of the books,but shortly after signing the contract,she realized that she could not really afford to make the required monthly payments.What rights,if any,does Sue have in this situation?
Q3) A sale of goods or services for $25 or more made to a buyer at home may be set aside without cause within five (5)business days.
A)True
B)False
Q4) A consumer may waive all defenses otherwise provided for by law.
A)True
B)False
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Chapter 34: Secured Transactions in Personal Property
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Q1) If the collateral is in the possession of the creditor:
A) a financing statement must be filed to perfect the interest.
B) the security interest is perfected.
C) only a security interest has been obtained.
D) the type of goods will determine the method of perfection.
Q2) Creditors cannot legally request collateral on a previously unsecured loan.
A)True
B)False
Q3) A debtor must have rights in the collateral for a security interest to attach.
A)True
B)False
Q4) When a security interest in property is inferior to other interests and claims to the property,it is said to be perfected.
A)True
B)False
Q5) A buyer who buys goods from a debtor in the ordinary course of business is subject to a creditor's security interest but only if the interest was perfected and the buyer had notice of it.
A)True
B)False
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Chapter 35: Bankruptcy
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Q1) With regard to priority of claims in the payment of unsecured debts,which of the following has priority over alimony and child support obligations?
A) costs and expenses of the administration of the bankruptcy case.
B) claims arising in the ordinary course of the debtor's business after commencement of the case
C) claims for wages,salaries or commissions earned within 180 days before the filing of the petition
D) none of the above
Q2) The filing of an involuntary bankruptcy case petition results in an order of relief.
A)True
B)False
Q3) In order to be eligible for Chapter 13 bankruptcy an individual must have less than $1,081,400 in unsecured debt.
A)True
B)False
Q4) All debts are discharged in bankruptcy,whether disclosed by the debtor or not.
A)True
B)False
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Chapter 36: Insurance
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Q1) Paul purchased a house and also purchased fire insurance coverage on the house.The policy contained an 80 percent coinsurance clause.Paul maintained coverage in the amount of $150,000 and the value of the house was $250,000.A fire caused a loss of $100,000.Paul will collect:
A) the full $100,000,because he had coverage for $150,000.
B) only part of the $100,000 loss,because he failed to maintain coverage at 80 percent of the value of the house.
C) nothing,because he failed to maintain coverage at 80 percent of the value of the house.
D) 80 percent of $250,000,or $200,000.
Q2) A person who would suffer a direct pecuniary loss if a particular piece of property were destroyed has a(n):
A) contractual risk.
B) hazard.
C) underwriting.
D) insurable interest.
Q3) Exceptions to coverage are generally strictly interpreted against the insurer.
A)True
B)False
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Page 38
Chapter 37: Agency
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Q1) For an agency to be terminated by operation of law because of the principal's death,the agent must be notified of the death.
A)True B)False
Q2) A principal may ratify an action taken by an agent that the principal would not have been capable of authorizing at the time that the action was taken.
A)True B)False
Q3) The scope of an agent's authority may be determined from the:
A) express words of the principal.
B) words or deeds of the principal.
C) customs of the trade or business.
D) all of the above.
Q4) A written authorization of agency is called a power of attorney.
A)True B)False
Q5) The scope of an agent's authority is always known by the third party. A)True B)False
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Chapter 38: Third Persons in Agency
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Q1) Payment to an authorized agent is:
A) payment to the principal only if the agent remits the payment.
B) payment to the principal if the third person informs the principal.
C) payment to the principal,provided the agent does not misappropriate the payment.
D) payment to the principal.
Q2) When a fact is known to the agent of a seller,the sale is deemed made by the seller with knowledge of that fact.
A)True
B)False
Q3) The fact that a tort or crime is committed by an employee imposes vicarious liability on an employer.
A)True
B)False
Q4) Agent's may intentionally make themselves liable on contracts with third persons.
A)True
B)False
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Chapter 39: Regulation of Employment
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Q1) The NLRA prohibits discrimination against employees for engaging in union activities even if they are warned of the possible consequences of their union activities.
A)True
B)False
Q2) An employer may be justified in discharging an employee because of the employee's:
A) nonperformance of duties.
B) incompetency.
C) serious misconduct.
D) all of the above.
Q3) In older cases,the employer-employee relationship was referred to as the master-servant relationship.
A)True
B)False
Q4) Under the employment-at-will doctrine,the employer has historically been allowed to terminate the employment contract at any time for any reason or for no reason.
A)True
B)False
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Chapter 40: Equal Employment Opportunity Law
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Q1) Hostile work environment sexual harassment:
A) cannot be created by unwelcome sexual flirtation and propositions.
B) cannot result in an injunction being granted against offensive conduct.
C) occurs when a supervisor's conduct does not affect an employee's economic benefits,but causes anxiety and "poisons" the work environment for the employee.
D) can result in the court ordering the business to be sold,upon proper notice,at a publicly-held auction.
Q2) Title VII requires that employers make reasonable efforts to accommodate their employees' religious beliefs.
A)True
B)False
Q3) The Americans With Disabilities Act prohibits employers from discriminating against disabled individuals,but does not require that any accommodations be made for such individuals.
A)True
B)False
Q4) To be lawful,affirmative action must be time-limited .
A)True
B)False
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Chapter 41: Types of Business Organizations
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Q1) Louise Feldspar obtained the exclusive right to sell TastyCrunchy Chicken in a specified area.Under the agreement,Feldspar was permitted to use the TastyCrunchy name and logo for her restaurant and she agreed to comply with TastyCrunchy's restaurant requirements.She purchased her equipment,as well as the chicken she served,from the firm.She agreed to devote a certain percentage of her revenues to promoting the TastyCrunchy operation in local media.The operation was successful from the start,and Feldspar has had no problem meeting the sales quotas imposed by TastyCrunchy.The past year TastyCrunchy informed Feldspar that it intended to open a new restaurant on an interstate highway that had just been completed in her exclusive area of trade.Because her operation would be competition for the new store,Feldspar's right to sell TastyCrunchy products and use the name TastyCrunchy was revoked.What can Louise do?
Q2) A franchisor or franchisee could be a sole proprietor,a partnership,a limited liability company,or a corporation.
A)True
B)False
Q3) A partnership is not dissolved by the death of a partner.
A)True
B)False
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Chapter 42: Partnerships
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Q1) When a partner executes an agreement outside the limitations of that partner's agreed scope of power,the other partners are always able to set aside the contract.
A)True
B)False
Q2) A partnership involves partners' contributions of capital,services,or a combination of these.
A)True
B)False
Q3) A partnership may occur even though the parties did not label their relationship a partnership.
A)True
B)False
Q4) Each partner is an agent of the partnership.
A)True
B)False
Q5) Sharing of gross returns,as compared to the sharing of profits,is strong evidence of a partnership.
A)True
B)False
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Chapter 43: LPs, LLCs, and LLPs
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Q1) In a limited partnership,general partners are not responsible for the debts of the firm.
A)True
B)False
Q2) A limited liability company:
A) must have at least one member that is subject to unlimited liability.
B) member may actively participate in control of the business without losing limited liability status.
C) both a.and b.
D) neither a.nor b.
Q3) The spread of limited liability corporation statutes resulted from:
A) a United States Supreme Court decision.
B) an Internal Revenue Service ruling.
C) a Wyoming Supreme Court decision.
D) a Securities and Exchange Commission ruling.
Q4) Most limited liability company statutes provide that a LLC will dissolve:
A) by the consent of the members.
B) upon the death of a member.
C) upon the expulsion of a member.
D) all of the above.
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Chapter 44: Corporate Formation
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Q1) A quasi-public corporation is one that is organized for charitable or benevolent purposes.
A)True
B)False
Q2) The shares of a close corporation are always held by a single individual.
A)True
B)False
Q3) When a corporation acts in excess of or beyond the scope of its powers,the corporation's act is described as "ultra vires."
A)True
B)False
Q4) _________ of a corporation may occur when management is deadlocked and the deadlock cannot be broken by the shareholders.
A) Bankruptcy
B) Consolidation
C) Reinstatement
D) Judicial dissolution
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Chapter 45: Shareholder Rights in Corporations
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Q1) A bona fide purchaser of stock is shielded from the claim that the transfer was made in violation of a transfer restriction that was unknown to the purchaser and that was not noted conspicuously on the certificate.
A)True
B)False
Q2) The Toy Corporation issued 200 shares of stock with no par value.The articles of incorporation provided that the board of directors had the right to fix the value of the stock.Through subscription agreements between the directors and two subscribers,101 shares were issued to Maria Perez for $5,000,and 99 shares were issued to Ken Pilar for $15,000.Toy is now insolvent and is unable to pay the $6,000 it owes to Pine,its major supplier.Pine has brought suit against Perez,claiming that the subscription agreement was invalid.How will the case be decided?
Q3) Another term for par value is book value.
A)True
B)False
Q4) If a share certificate is lost,destroyed,or stolen,the ownership of the shareholder is destroyed.
A)True
B)False
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Chapter 46: Securities Regulation
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Q1) The SEC requires that annual shareholder reports be submitted to shareholders in any proxy solicitation on behalf of management.
A)True
B)False
Q2) SEC Rule 10b-5:
A) is the principal antifraud rule relating to the secondary distribution of securities.
B) provides that a civil action for damages may be brought by any private investor who purchased or sold a security and was injured because of false,misleading,or undisclosed information.
C) applies to all securities,whether registered or not,as long as use is made of the mail,interstate commerce,or a national stock exchange.
D) all of the above.
Q3) The Securities Act of 1933 requires a seller to provide a prospectus to each potential purchaser of an original issue of securities.
A)True
B)False
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Chapter 47: Accountants Liability and Malpractice
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Q1) To help eliminate conflicts of interest,Sarbanes-Oxley prohibits certain activities by audit firms for their audit clients,including:
A) the design and implementation of financial information systems.
B) actuarial services.
C) management functions and human resources.
D) all of the above.
Q2) Some courts have rejected the requirement of privity for malpractice and instead approach each situation on a case-by-case basis.
A)True
B)False
Q3) Sarbanes-Oxley would prohibit which of the following individuals from serving on an audit committee of the company's board?
A)a director who accepts consulting fees from the company
B)a director who is affiliated with the company
C)a director who is affiliated with a subsidiary of the company.
D)all of the above.
Q4) Accountants are equally liable to interlopers and rightful third parties.
A)True
B)False
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Chapter 48: Management of Corporations
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Q1) The Sarbanes-Oxley Act prohibits all corporate loans to directors and executive officers unless:
A) the company is in the consumer credit business.
B) the loan is to relocate as part of an employment contract.
C) the loan is made to purchase securities.
D) none of the above as all loans are prohibited.
Q2) Corporations may ________ officers,directors,employees,and agents when they act in good faith,in a manner not opposed to corporate interests and with no reason to believe their conduct was unlawful.
A) ratify
B) breach
C) indemnify
D) authorize
Q3) 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
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Chapter 49: Real Property
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Q1) What type of deed merely transfers whatever interest,if any,the grantor may have in the property,without specifying that interest in any way?
A) common law
B) statutory
C) quitclaim
D) warranty
Q2) Personal property that is attached to the earth or placed in a building in such a way or under such circumstances that it is deemed part of the real property is called a(n):
A) asset.
B) estate.
C) easement.
D) fixture.
Q3) Which is not a correct statement about deeds?
A) The grantor must sign the deed.
B) A deed must be recorded to effectively pass title.
C) The fact that a deed is recorded provides notice to the world about who holds title.
D) A deed must be delivered to be effective.
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Chapter 50: Environmental Law and Land Use Controls
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Q1) The EPA is the primary federal agency responsible for the enforcement of environmental laws.
A)True
B)False
Q2) A variance permits an owner of land to use it in a specified manner that is inconsistent with zoning ordinances.
A)True
B)False
Q3) When a zoning ordinance is adopted,any existing property used for a purpose that does not conform to the zoning ordinance:
A) must be demolished.
B) must no longer be used for a nonconforming use or purpose.
C) may be used for any use that does not conform to the zoning regulation.
D) may continue to be used for the same nonconforming use.
Q4) Megan owns a manufacturing business in a nonattainment area under federal air pollution law.She wishes to triple the size of the manufacturing operation using land she just purchased next to her current location.What must Megan demonstrate in order to secure a permit to operate in the nonattainment area?
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Chapter 51: Leases
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Q1) Which of the following is an example of a legal restriction that may be imposed on a tenant's deposit?
A) A statutory limitation on the amount of the deposit.
B) A requirement that the landlord hold the deposit in a trust fund.
C) A requirement that the landlord pay interest for the period the deposit is held.
D) All of the above.
Q2) A tenancy by sufferance describes a tenancy that can be terminated at any time upon proper notice.
A)True
B)False
Q3) When a tenant remains in possession after the termination of the lease without permission of the landlord,the landlord may treat the tenant as either a trespasser or a tenant.Until the landlord elects to do one or the other,a tenancy __________ exists.
A) at sufferance
B) at will
C) for years
D) from year to year
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Chapter 52: Decedents Estates and Trusts
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Q1) Every trust must have a beneficiary.
A)True
B)False
Q2) Which of the following is not a duty of a trustee?
A) to use reasonable skill
B) to keep accurate records
C) to invest trust assets
D) to deliver possession of trust assets to the settlor for the trust period
Q3) Tuttle died at age 96,leaving a will that she made at age 40 that provided that her three children would share her estate equally.At the time of her death,only one child,Anna,was living.Tuttle's two deceased children,Bill and Caroline,each had two children who were living at the time of Tuttle's death.Anna is claiming that she is entitled to the entire estate because the bequests to Bill and Caroline lapsed upon their deaths prior to Tuttle's death.How will the estate be settled?
Q4) A written will must be signed by the testator at the bottom or end of the will.
A)True
B)False
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