Business and Society Test Preparation
Course Introduction
This course explores the dynamic relationship between business and society, examining how organizations influence and are influenced by social, ethical, environmental, and economic factors. Students will analyze the roles and responsibilities of businesses in addressing social challenges, the impact of corporate decision-making on diverse stakeholders, and the frameworks for ethical leadership and sustainable practices. Through case studies and contemporary examples, the course encourages critical thinking about the balance between profit motives and societal well-being, preparing students to navigate complex issues at the intersection of commerce and the broader community.
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
Source URL: https://quizplus.com/study-set/2153
Page 2
Chapter 1: The Nature and Sources of Law
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60 Verified Questions
60 Flashcards
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Sample Questions
Q1) The private life of a nonpublic citizen is subject to public scrutiny.
A)True
B)False
Answer: False
Q2) Rights guaranteed in the United States Constitution:
A) cannot be taken away by statutes or court decisions.
B) can be taken away by statutes.
C) can be taken away by court decisions.
D) can be taken away by local ordinances.
Answer: A
Q3) The right to privacy applies to protect you from unreasonable searches:
A) to you personally.
B) to your home.
C) to your business.
D) all of the above.
Answer: D
Q4) Treaties made by the United States are not deemed part of the 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) Service of process refers to:
A) a demand letter sent by the plaintiff to the defendant.
B) a reply sent to the plaintiff by the defendant.
C) giving the defendant proper notice that a legal action is pending.
D) a record of the court's preliminary hearing.
Answer: C
Q2) Mediation tends to keep discussions between parties proceeding.
A)True
B)False
Answer: True
Q3) The federal court system consists of three levels.
A)True
B)False
Answer: True
Q4) Which is not considered an alternate means of dispute resolution?
A) civil lawsuit
B) arbitration
C) association tribunals
D) minitrial
Answer: A
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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) Companies with 100 years of consistent dividends:
A) use positive laws as a guide for ethical decisions.
B) have a goal of profitability no matter what the cost.
C) have a strong commitment to values.
D) all of the above.
Answer: C
Q2) The importance of trust as a fundamental principle underlying business transactions is illustrated by expectations that:
A) investors will be able to earn a return on their investments.
B) employees may be discharged at any time for any reason without notice.
C) litigation is inevitable because parties to agreements usually break promises.
D) insider trading proves that the economic system underlying business is flawed.
Answer: A
Q3) Differences among businesses preclude the development of any universal categories of ethical behavior.
A)True
B)False
Answer: False
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Chapter 4: The Constitution As the Foundation of the Legal Environment
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59 Verified Questions
59 Flashcards
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Sample Questions
Q1) A constitution is the written document that establishes the structure of the government and its relationship to the people.
A)True
B)False
Q2) The Fifth and Fourteenth Amendments prohibit the national and state governments from depriving any person of property without due process of law.
A)True
B)False
Q3) The equal protection clause:
A) requires all persons to be treated equally even if reasonable grounds for different classifications exist.
B) allows laws that discriminate on the basis of moral standards.
C) requires that a statute be sustained unless it is clearly arbitrary or capricious.
D) allows laws that discriminate on the basis of cultural patterns.
Q4) One of the characteristics of the "living" Constitution is limited government.
A)True
B)False
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Chapter 5: Government Regulation of Competition and Prices
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47 Verified Questions
47 Flashcards
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Sample Questions
Q1) The Sherman Act does not prohibit:
A) a company from engaging in purposeful conduct to exclude competitors.
B) a seller from dominating a market because of superior product or business.
C) competitors from agreeing not to deal with certain buyers.
D) all of the above.
Q2) The government can regulate not just businesses,but also business competition and prices.
A)True
B)False
Q3) A person or enterprise harmed by a Sherman Act violation may bring an action for:
A) punitive damages only.
B) treble damages.
C) quadruple damages.
D) actual damages only.
Q4) Price discrimination is not permitted even when it can be justified on the basis of a difference in grade,quality,or quantity.
A)True
B)False
Page 7
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Chapter 6: Administrative Agencies
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58 Flashcards
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Sample Questions
Q1) An administrative agency has the power to investigate,to require persons to appear as witnesses,to require witnesses to produce relevant papers and records,and to bring proceedings against those who violate the law.
A)True
B)False
Q2) An administrative regulation:
A) is a guideline that may be voluntarily followed.
B) has the force of law.
C) is a suggestion of what will protect the environment.
D) is a standard used to guide an industry at the industry's discretion.
Q3) An administrative agency cannot hold a hearing without a jury.
A)True
B)False
Q4) An agency hearing is generally not subject to the rules of evidence.
A)True
B)False
Q5) The Sunshine Act requires most meetings of major administrative agencies to be open to the public.
A)True
B)False
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Chapter 7: The Legal Environment of International Trade
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57 Verified Questions
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Sample Questions
Q1) The Foreign Corrupt Practices Act prohibits improper payments to influence foreign officials.
A)True
B)False
Q2) The Alexo Corporation has been charged in a United States court with violation of American antitrust laws in its foreign dealings.The firm has raised the defense that its actions were compelled by the government of its host country.Alexo based its defense on the__________ doctrine.
A) act-of-state
B) sovereign compliance
C) sovereign immunity
D) Treaty of Rome
Q3) The Securities and Exchange Commission (SEC)is not limited to litigation when a securities law enforcement investigation runs into secrecy or blocking laws.
A)True
B)False
Q4) Law is the result of the desire of the lawmaker to achieve certain goals.
A)True
B)False
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Chapter 8: Crimes
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Sample Questions
Q1) When a defendant is convicted of a crime,the court may also declare that the defendant's rights in any property used or gained from the crime be confiscated.This is known as __________.
A) forfeiture
B) reversion
C) subversion
D) divestiture
Q2) The unauthorized use of a computer belonging to someone else is:
A) a crime in all states.
B) a crime in some states.
C) not a crime in any state.
D) a crime under federal law only.
Q3) An act that is a felony in one state be a felony in all states.
A)True
B)False
Q4) Criminal penalties for corporations are based on a percentage of sales.
A)True
B)False
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Chapter 9: Torts
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Sample Questions
Q1) Governments are generally immune from tort liability.
A)True
B)False
Q2) Slander of title and trade libel are collectively known as product __________.
A) Divestiture
B) Disparagement
C) Dilution
D) Diversion
Q3) When contributory negligence is proven,damages awarded as reduced based on the plaintiff's degree of fault.
A)True
B)False
Q4) Plaintiffs are typically awarded punitive damages in negligence cases.
A)True
B)False
Q5) The tort of false imprisonment requires the detention of a person without his or her 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) 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
Q2) Trade dress refers to the packaging look and overall image of a product.
A)True
B)False
Q3) The America Invents Act:
A) amended federal patent law.
B) replaced the "first to file system" with a "first to invent" system.
C) speeds up the application process for energy conservation inventions for a $4,800 fee.
D) all of the above.
Q4) Three types of patents available under U.S.law are:
A) utility,product,design.
B) design,packaging,invention.
C) design,plant,utility.
D) utility,regulatory,common law.
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Page 12
Chapter 11: Cyberlaw
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42 Verified Questions
42 Flashcards
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Sample Questions
Q1) Employers have access and control rights to their employees' e-mail.
A)True
B)False
Q2) Roxy is employed as a manager at "com.com," an Internet-based company attempting to compete successfully in the highly competitive software development industry.Roxy is concerned that one of her employees,Randy,is not performing at an acceptable level.While Roxy has noticed that Randy spends considerable time using the computer at his workstation,his productivity is lacking.Roxy suspects Randy is using the company's e-mail system for personal use instead of working on company business.Is Roxy permitted to monitor Randy's email?
Q3) The tort of invasion of privacy has some application to cyberspace communication.
A)True
B)False
Q4) Sales tax on Internet sales:
A) is never collected.
B) is always collected.
C) is collected if the seller has a physical presence in the state of sale.
D) follow the same rules for sales tax collected in brick and mortar stores.
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Page 13
Chapter 12: Nature and Classes of Contracts: Contracting on
the Internet
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53 Flashcards
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Sample Questions
Q1) A contract is essentially an agreement that creates an obligation.
A)True
B)False
Q2) The greatest risk to purchasing online is providing your credit card information to the seller.
A)True
B)False
Q3) A recognizance is an agreement by which one party admits or recognizes that a specified sum of money is owed to another party.
A)True
B)False
Q4) A legally binding agreement that can be rejected at the option of one of the parties is called a(n):
A) void agreement.
B) revoked contract.
C) voidable contract.
D) optional agreement.
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Chapter 13: Formation of Contracts: Offer and Acceptance
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Sample Questions
Q1) Bart owned 100 shares of a stock that was actively traded on a national stock exchange.Bart wanted to sell the shares but felt that his profit would be seriously diminished by selling through a broker and paying the customary brokerage commission.Bart offered the 100 shares to any of a group of six people in a conversation at a party.The offered price was $72.50 per share,the price at which the shares had closed that day.No one really responded to the offer at that time.Ten days later when the shares were trading at $76.25,Marie,one of the offerees at the party,appeared at Bart's office saying that she accepted the offer.Bart claimed the offer no longer was available.Evaluate the legal outcome of this dispute.
Q2) A customer went into a store and saw a beautiful leather jacket bearing a price tag of $29.The customer handed the cashier a $50 bill and said,"I accept.We have a deal." The cashier then noticed the price tag and told the customer an error had been made and that the price was $229.In this case:
A) the customer validly accepted the store's offer.
B) the price tag was a firm offer.
C) no contract was formed because the customer's offer was refused.
D) the customer is the offeree.
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Page 15
Chapter 14: Capacity and Genuine Assent
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44 Verified Questions
44 Flashcards
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Sample Questions
Q1) A contract made by an incompetent person after a guardian has been appointed is voidable.
A)True
B)False
Q2) The maximum amount of time that a minor has to disaffirm a contract is:
A) one year from the date of the agreement.
B) 30 days from learning of his or her right to disaffirm.
C) the age of majority.
D) a reasonable period of time after reaching the age of majority.
Q3) A finding of undue influence would most likely not occur in a contract between:
A) parent and child.
B) attorney and client.
C) neighbor and neighbor.
D) guardian and ward.
Q4) A minor cannot avoid a contract to purchase a car if the:
A) car has been destroyed.
B) car has been damaged.
C) car is used for non-commercial purposes.
D) minor is able to return the car but does not do so.
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Chapter 15: Consideration
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Sample Questions
Q1) The doctrine of promissory estoppel is also known as the doctrine of beneficial reliance.
A)True
B)False
Q2) An agreement to pay reasonable additional compensation to a contractor for the performance of a pre-existing contract when the contractor faces extraordinary circumstances caused by unforeseen difficulties is called a:
A) good-faith adjustment.
B) bribe.
C) compensatory allowance.
D) relief payment.
Q3) When a debtor tender a check stating "paid in full" and the creditor cashes the check,the debt:
A) is always discharged.
B) may be discharged if it is a liquidated debt.
C) may be discharged if it is a unliquidated debt.
D) is never discharged.
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Chapter 16: Legality and Public Policy
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Sample Questions
Q1) In most states the usury laws apply to loans made to both individuals and corporations.
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) Fees charged by a lender for the reasonable expense of making a loan,such as the cost of appraising property,are treated as interest for purposes of the usury law.
A)True
B)False
Q4) An unlicensed insurance broker who cannot personally recover a fee because of the absence of a license can effectively circumvent the statutory requirements by having a friend who is a licensed broker bill for the services and collect the payment for him. A)True B)False
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Chapter 17: Writing, Electronic Forms, and Interpretation of Contracts
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Sample Questions
Q1) The parol evidence rule generally precludes testimony that would contradict a complete written contract.
A)True
B)False
Q2) The parol evidence rule may not apply if:
A) the contract is materially incomplete.
B) the parties disagree on the meaning of the contract.
C) there is no ambiguity regarding the terms of the contract.
D) one party is unable to perform the contractual obligations.
Q3) Parol evidence may be admissible to:
A) contradict a complete written contract.
B) prove the modification or termination of a contract.
C) replace the statute of frauds.
D) create a contract.
Q4) Parol evidence is not admissible to show fraud,duress or mistake.
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) A person entitled to receive money may generally assign that right to another person.
A)True
B)False
Q2) A professor owned a home next door to a very dilapidated,neglected home.John Cataldo purchased the home next door and made a contract with Wizard Home Improvements for a complete renovation of the property.The professor was delighted because the improvement of the Cataldo home was upgrading the neighborhood and raising the value of the professor's home.
After making the last required payment on the contract,John Cataldo became seriously ill and ultimately was taken to a nursing home for care. When Wizard learned of Cataldo's illness and confinement,Wizard ceased work on the Cataldo home.Because the outside renovation work had not been completed,the premises began to return to its former rundown condition.The professor ultimately sued Wizard as a third-party beneficiary of the contract between Cataldo and Wizard.What is the probable outcome of the lawsuit?
Q3) An employer can assign to another employer the right to have an employee work.
A)True
B)False
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Page 20
Chapter 19: Discharge of Contracts
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Sample Questions
Q1) An offer to perform is known as a(n)__________.
A) rendering
B) offering
C) tinder
D) tender
Q2) A seller's inability to obtain from any supplier the goods called for by the contract generally discharges the contract for impossibility of performance.
A)True
B)False
Q3) The phrase "time is of the essence" means that:
A) the court is in a hurry to dispose of the case.
B) performance under the contract at the times specified in the contract is vital or essential.
C) the contract expressly states that time is of the essence.
D) the price stated in the contract is subject to change without notice.
Q4) There is no exact standard or test by which to determine whether contractual performance is substantial.
A)True
B)False
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Chapter 20: Breach of Contract and Remedies
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Sample Questions
Q1) When one party commits a non-material breach of contract,the other party may rescind the contract.
A)True
B)False
Q2) When one party has broken a contract,there are several remedies available to the non-breaching party,including:
A) bringing an action for money damages.
B) rescinding the contract.
C) seeking specific performance.
D) all of the above.
Q3) The party that breaks a contract may be required to pay damages to the other party to compensate for:
A) losses that could have been avoided by hiring someone else to perform the contract.
B) emotional disturbance caused by the breach of contract.
C) a heart attack induced by the emotional disturbance caused by the breach of contract.
D) damages resulting necessarily and directly from the breach of contract.
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Chapter 21: Personal Property and Bailments
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Sample Questions
Q1) In common usage today,there is no distinction between real and personal property.
A)True
B)False
Q2) Nelson took her computer to ABC Computer for repairs.ABC repaired the computer at a cost of $350 and informed Nelson that her computer was ready.Before Nelson came to pick up her computer,ABC was burglarized and Nelson's computer was taken.ABC had a commonly-used alarm system that was operating properly on the night of the burglary,and all the doors and windows were properly secured.Nelson sued ABC for the cost of the computer.ABC denied any liability and counterclaimed for the $350 in repairs.Who will win?
Q3) After fully complying with the procedures of the Uniform Gifts to Minors Act,a donor is entitled to take back the donated property at any time before the minor donee reaches the age of 18.
A)True
B)False
Q4) The intent to make a gift requires an intent to transfer title at that time.
A)True
B)False
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Page 23
Chapter 22: Legal Aspects of Supply Chain Management
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Sample Questions
Q1) A bill of lading will be negotiable if its terms are that the goods are to be delivered to "bearer" or to "the order of" a named person.
A)True
B)False
Q2) A common carrier must:
A) receive and carry proper and lawful goods of all persons who offer them for shipment.
B) furnish adequate facilities.
C) follow the instructions of the shipper.
D) all of the above.
Q3) A public warehouser has a specific lien against the goods stored for reasonable costs incurred from the storage.
A)True
B)False
Q4) A common carrier transporting goods under a COD shipment is liable if it takes a check in payment and the check bounces.
A)True
B)False
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Chapter 23: Nature and Form of Sales
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Sample Questions
Q1) The term "course of dealing" refers to the language and customs of an industry.
A)True
B)False
Q2) A bailment is a special form of sale in which possession is transferred to a bailee.
A)True
B)False
Q3) An oral contract to sell custom-made goods to a buyer is binding if the goods are not suitable for sale to anyone else in the ordinary course of the seller's business,and the seller has made a substantial beginning in manufacturing or procuring the goods.
A)True
B)False
Q4) A merchant is about to transfer his entire inventory as part of an annual clearance action.This transfer is called a bulk transfer.
A)True
B)False
Q5) The parol evidence rule does not apply to the sale of goods.
A)True
B)False
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Chapter 24: Title and Risk of Loss
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Sample Questions
Q1) Under a CF contract,the seller must get the goods to a carrier and buy an insurance policy in the buyer's name to cover the goods while in transit.
A)True
B)False
Q2) In a __________,no sale takes place (meaning there is no transfer of title)until the buyer accepts the goods.
A) conditional sale
B) contingency sale
C) sale or return
D) sale on approval
Q3) A buyer with a voidable title cannot pass on valid title to a subsequent good faith purchaser.
A)True
B)False
Q4) "Without reserve" auctions give the auctioneer the right to withdraw the goods from the sale process if the bids are not high enough.
A)True
B)False
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Chapter 25: Product Liability: Warranties and Torts
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Sample Questions
Q1) A disclaimer or exclusion of the warranty of merchantability will be invalid if:
A) the goods cost $500 or more.
B) the defects in the goods are obvious to all buyers.
C) it is made at the time of the sale.
D) it is not conspicuously set forth in a writing.
Q2) If there is a written contract,a disclaimer of the implied warranty of merchantability must be conspicuous.
A)True
B)False
Q3) An express warranty arises when goods are purchased based on a catalog illustration.
A)True
B)False
Q4) Negligence and fraud are easy to prove in a mass production world.
A)True
B)False
Q5) The requirement of privity of contract to allow recovery in a sales contract has been widely rejected.
A)True
B)False
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Chapter 26: Obligations and Performance
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Sample Questions
Q1) If adequate assurance of performance is not given within five (5)business days from the time of the demand for assurance,the demanding party may treat the contract as repudiated.
A)True
B)False
Q2) Substantial impairment:
A) only requires proof that goods do not conform to the contract.
B) requires that the goods are shown to be worthless.
C) requires proof that the use to the buyer is materially different than the contract promised.
D) none of the above.
Q3) When a party refuses to perform a contract when the time for performance arises,an anticipatory repudiation has occurred.
A)True
B)False
Q4) The UCC imposes a higher degree of good faith on a merchant seller or buyer of goods than on a nonmerchant seller or buyer of goods.
A)True
B)False
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Chapter 27: Remedies for Breach of Sales Contracts
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Sample Questions
Q1) When a buyer has possession of goods after rightfully rejecting them,the buyer is treated:
A) the same as a seller in the possession of goods after default by a buyer.
B) as being strictly liable for the safety of the goods.
C) the same as if an entrustment had been created.
D) as an insurer of the goods until the seller retakes possession.
Q2) If goods are specially manufactured and the buyer refuses to take them,it is possible for the seller to recover as damages the full purchase price and keep the goods.
A)True
B)False
Q3) A seller's right to retain possession of goods until the seller has been paid is called a: A) seller's lien.
B) buyer's lien.
C) merchandise estoppel.
D) nonpayment tort.
Q4) Consumer protection law prohibits the waiver of defenses in consumer contracts. A)True B)False
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Chapter 28: Kinds of Instruments, parties, and Negotiability
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Sample Questions
Q1) To be negotiable,an instrument must:
A) be in writing.
B) be signed by the maker or the drawer.
C) contain a promise or order to pay.
D) all of the above.
Q2) Negotiation of commercial paper results in lesser rights to transferees than those rights afforded assignees of contracts under contract law.
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) A payee is not liable on an instrument until the payee transfers the instrument to someone else.
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) In the case of a check,when the impostor rule applies: A) the drawer of the check can successfully raise the defense of the forged indorsement. B) the forged indorsement is effective to negotiate the instrument. C) the forged indorsement is ineffective to negotiate the instrument. D) the instrument becomes nonnegotiable.
Q2) Sue is an employee at an ABC store.One of Sue's duties is to prepare the bank deposit at the end of the business day.Sue had a very busy day and made a few mistakes.All of the checks,except two,were indorsed with the stamp "ABC,Inc." that ABC had provided.The bank received the deposit and noticed the lack of indorsement on the two checks.In addition,three of the checks that Sue was to include with the deposit were lost in the parking lot after closing.Phil found the checks and deposited them into his personal account.What is the effect of ABC's indorsement on the lost checks and the lack of indorsement on the two deposited checks?
Q3) A holder is also known as an assignee of the paper
A)True
B)False
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Chapter 30: Liability of the Parties Under Negotiable Instruments
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Q1) The fact that a person signs a negotiable instrument because he or she is fraudulently deceived regarding its nature or essential terms is a defense available against all holders.
A)True
B)False
Q2) 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?
Q3) A taker of an instrument who is a holder in due course at the time of the transfer but who thereafter learns of a defense:
A) becomes a holder through a holder in due course.
B) becomes an ordinary holder.
C) remains a holder in due course.
D) becomes an assignee.
Q4) A holder who is neither a holder in due course nor a holder through a holder in due course is subject to every defense,just as though the instrument were not negotiable.
A)True
B)False
Page 32
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Chapter 31: Checks and Funds Transfers
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Q1) A bank that fails to carry out a payment order is usually liable for:
A) interest loss and expenses.
B) loss sustained by the originator.
C) consequential damages because the payment was not made.
D) all of the above.
Q2) A check is drawn on the assumption that the bank has sufficient funds in the drawer's account for payment.
A)True
B)False
Q3) Certification of a check at the request of a holder:
A) releases all prior secondary parties.
B) releases the drawer but not prior indorsers.
C) releases prior indorsers,but not the drawer.
D) does not release all prior secondary parties.
Q4) Most states provide that if a dishonored check is not made good within a stated period of time,it will be presumed that the check was originally issued with the intent to defraud.
A)True B)False
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Chapter 32: Nature of the Debtor-Creditor Relationship
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Q1) Standby letters of credit are used only in international trade situations.
A)True
B)False
Q2) The creditor first must proceed against the debtor before suing the surety.
A)True
B)False
Q3) The issuer of a letter of credit is in effect the obligor on a third-party beneficiary contract made for the benefit of the beneficiary of the letter.
A)True
B)False
Q4) A letter of credit cannot extend for a period of more than five (5)years.
A)True
B)False
Q5) The issuer of a letter of credit can revoke or modify the letter at any time without the consent of the beneficiary,even if that right is not expressly reserved in the letter.
A)True
B)False
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Page 34
Chapter 33: Consumer Protection
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Q1) Samuel signed a contract to purchase furniture on credit.The contract clearly set forth in bold print all charges included in the cost of the credit,including the interest rate and annual percentage rate.The seller informed Samuel that the seller regularly sold these contracts to a finance company that paid it immediate cash and then collected from the debtors.The seller further advised that the finance company did not want "the headache" of determining the validity of consumer complaints and that therefore the contract provided that the consumer waived all defenses concerning the furniture against the finance company.The contract expressly provided that the seller would remain responsible for any non-conformities in the furniture or breaches of contract on its part.The furniture was defective,but the finance company is demanding that Samuel make the payments to it required by the contract and resolve its disputes with the seller of the furniture.Samuel consults you regarding his rights.What is your response?
Q2) A consumer claiming that there has been a violation of a consumer protection statute has the burden of proving that the statutory definition of "consumer" has been satisfied.
A)True
B)False
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Page 35
Chapter 34: Secured Transactions in Personal Property
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Q1) The perfection obtained by filing a financing statement lasts for __________.
A) five (5)years,and is renewable.
B) five (5)years,and is non-renewable.
C) ten (10)years,and is renewable.
D) ten (10)years,and is non-renewable.
Q2) A security agreement need not describe the collateral involved.
A)True
B)False
Q3) Upon the debtor's default,the creditor may sell the collateral at a public or private sale,or lease it to a third party.
A)True
B)False
Q4) When a seller sells on credit and is given a security interest in the goods,that interest is called:
A) a purchase money security interest.
B) a future transaction.
C) a floating lien.
D) none of the above.
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36
Chapter 35: Bankruptcy
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Q1) Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,a discharge is available only once every ten (10)years.
A)True
B)False
Q2) Under the Bankruptcy Reform Act,the allowable homestead exemption for debtors was significantly reduced.
A)True
B)False
Q3) In a Chapter 11 rehabilitation plan,the debtor:
A) keeps all of the assets (both exempt and nonexempt).
B) remains in business.
C) makes a settlement that is acceptable to the majority of the creditors.
D) all of the above.
Q4) An involuntary bankruptcy case is commenced by creditors filing a petition with a bankruptcy court.
A)True
B)False
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Chapter 36: Insurance
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Q1) An insured person is generally allowed,by policy provision or statute,a grace period of what length of time in which to make the payment of a premium due on a life insurance policy?
A) 14 to 15 days
B) 30 to 31 days
C) 60 to 61 days
D) 90 days
Q2) Part of every whole life insurance premium covers the cost of insurance.The remainder of the premium is devoted to the investment component of the policy,which builds up over time to its:
A) reimbursement point.
B) cash surrender value.
C) culmination value.
D) return point.
Q3) Subornation is the right of a party secondarily liable to stand in the place of the creditor after making payment to the creditor and to enforce the creditor's right against the party primarily liable in order to obtain indemnity from such primary party.
A)True
B)False
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Page 38
Chapter 37: Agency
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Q1) The intention to ratify an unauthorized act may be expressed by words or conduct.
A)True
B)False
Q2) A special agent is authorized by the principal to handle a definite business transaction or do a specific act.
A)True
B)False
Q3) A "right to control" test determines whether an individual is an agent,an employee,or an independent contractor.
A)True
B)False
Q4) A __________ agent is authorized by the principal to do all acts that can be delegated lawfully to a representative.
A) special
B) general
C) secret
D) universal
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Chapter 38: Third Persons in Agency
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Q1) Which of the following is a defense to an action against an agent for breach of the implied warranty of authority?
A) The agent acted in good faith.
B) The agent misunderstood the scope of authority.
C) The third person knew that the agent was acting beyond the authority given by the principal.
D) All of the above are defenses.
Q2) When a third person makes payment to an authorized agent,such payment is deemed made to the principal at the time the agent remits the payment to the principal.
A)True
B)False
Q3) An agent should never sign a contract using "by" or "per" and then his or her name.
A)True
B)False
Q4) If an agent commits a crime,the agent's liability will depend on the agency relationship.
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) In some states,a "service-letter" statute requires an employer on request to furnish a discharged employee with a letter stating the reason for the discharge.
A)True
B)False
Q3) An employee is hired to work under the control of the employer and the employer-employee relationship requires the consent of both parties.
A)True
B)False
Q4) Public policy exceptions to the employment-at-will doctrine apply only to "whistleblowing" situations.
A)True B)False
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Chapter 40: Equal Employment Opportunity Law
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Q1) Title VII protects members of which racial grouping(s)?
A) black only
B) black,Native American,and Asian-Pacific
C) white only
D) all racial groupings
Q2) When supervisors seek sexual favors in return for job benefits,the practice is called:
A) tangible employment action sexual harassment.
B) hostile work environment sexual harassment.
C) res ipsa loquitur sexual harassment.
D) none of the above.
Q3) Employers may avoid liability for "hostile work environment" sexual harassment by following a program that includes expressing strong disapproval of such conduct,advising employees how to inform the employer of complaints,and disciplining wrongdoers.
A)True
B)False
Q4) Pay raises based on seniority generally are considered lawful.
A)True
B)False
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Chapter 41: Types of Business Organizations
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Q1) A corporation must have at least two shareholders.
A)True
B)False
Q2) A corporation is a separate legal entity capable of owning property,contracting,and being sued in its own name.
A)True
B)False
Q3) The Petroleum Marketing Practices Act gives gas station __________ the opportunity to continue in business by purchasing the entire premises used in selling motor fuel when the franchisor decides to sell the property and not renew a lease.
A) franchisees
B) licensors
C) joint venturers
D) partners
Q4) Most courts hold that joint ventures are not subject to the same principles of law as partnerships.
A)True
B)False
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Page 43
Chapter 42: Partnerships
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Q1) A partnership involves partners' contributions of capital,services,or a combination of these.
A)True
B)False
Q2) When a person who performs continuing services for another receives a fixed payment that does not depend on the existence of profit and is not affected by losses,that person is a partner.
A)True
B)False
Q3) In determining the rights of partner Dewey in the firm of Dewey,Cheatham and Howe,the most important reference point is:
A) the Uniform Partnership Act.
B) the partnership agreement.
C) the sworn testimony of Cheatham and Howe.
D) the customs and traditions of similar partnerships.
Q4) After the dissolution of a partnership,partners retain the authority to perform any acts necessary to wind up the business.
A)True
B)False
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Chapter 43: LPs, LLCs, and LLPs
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Q1) While most states have adopted limited liability company statutes,few states have created statutes allowing the formation of limited liability partnerships.
A)True
B)False
Q2) In a limited partnership,general partners are not responsible for the debts of the firm.
A)True
B)False
Q3) 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.
Q4) Limited liability companies may be formed without filing formal articles of organization with the secretary of state.
A)True
B)False
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Chapter 44: Corporate Formation
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Q1) In a merger situation,what is the right of a dissenting shareholder?
A) to block the merger until satisfied regarding its terms.
B) to have their shares appraised and purchased by the corporation.
C) to enforce a consolidation instead of a merger.
D) dissenting shareholders have no rights with respect to a merger.
Q2) Stock that is reacquired by the corporation that issued it is commonly called "boomerang" stock.
A)True
B)False
Q3) A corporate seal is required in order for the corporation to enter into a binding contract.
A)True
B)False
Q4) A corporation is an artificial person that is created by governmental action.
A)True
B)False
Q5) A holder of a single share of stock who objects to a merger has the power to stop the merger.
A)True
B)False
46
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Chapter 45: Shareholder Rights in Corporations
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Q1) Straight voting:
A) increases the voting power of minority shareholders.
B) is the normal method for shareholder voting on corporate matters.
C) restricts each shareholder to one vote,regardless of the number of shares owned.
D) all of the above.
Q2) When an individual owns a share of stock in a corporation,that individual:
A) has an ownership interest in the corporation.
B) is a creditor of the corporation.
C) generally has no voting rights.
D) is in possession of a debt security.
Q3) No writing is required for a contract by which a broker agrees with a customer to buy or sell securities for the customer.
A)True B)False
Q4) A provision giving a corporation the right to purchase a shareholder's shares on the death of the shareholder is invalid.
A)True
B)False
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Chapter 46: Securities Regulation
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Q1) Individuals who steal valuable nonpublic information in breach of a fiduciary duty to their employers and trade in securities on that information are guilty of insider trading as "misappropriators."
A)True
B)False
Q2) Investors who lack inside information and have sold their stock during the relevant time period may recover damages from insiders who have made use of the undisclosed information.
A)True
B)False
Q3) Which of the following powers is not available to the SEC pursuant to the Remedies Act?
A) The SEC may start administrative proceedings against any person or entity regulated by the SEC.
B) The SEC may start administrative proceedings against any person or entity not regulated by the SEC.
C) The SEC may order an accounting and disgorgement of ill-gotten gains.
D) All of the above powers are available to the SEC under the Remedies Act.
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Chapter 47: Accountants Liability and Malpractice
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Q1) An entity not in privity with an accountant is prohibited from recovering against the accountant for malpractice when the accountant had no knowledge of any use that could affect the party.
A)True
B)False
Q2) Herman hires Juanita as his accountant.Juanita commits negligence in preparing financial statements for a business Herman owns.Several investors rely on the financial statements and purchase shares of stock in the business.In a state that has adopted the privity rule,what result?
Q3) To bring a tort action for malpractice,a plaintiff must show that the defendant's breach was at least:
A) intentional.
B) negligent.
C) reckless.
D) fraudulent.
Q4) What constitutes negligence is the same for an accountant who is a full-time employee as it is for an independent outside auditor.
A)True
B)False
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Chapter 48: Management of Corporations
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Q1) The __________ rule allows management immunity from liability for corporate acts where there is a reasonable indication that the acts were made in good faith and with due care.
A) sovereign immunity
B) business judgment
C) reasonable director
D) good faith
Q2) The president of a business corporation does not have implied authority to execute commercial paper in the name of the corporation.
A)True
B)False
Q3) Which of the following is an incorrect statement about directors?
A) Their eligibility requirements may be found in the bylaws.
B) Bylaws may require that directors be shareholders in the corporation.
C) The board of directors has authority to manage the corporation.
D) Courts will interfere with the board's discretion when they disagree with its actions.
Q4) Directors are usually allowed to vote by proxy.
A)True
B)False
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Chapter 49: Real Property
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Q1) An easement may be created only by deed.
A)True
B)False
Q2) Which of the following represents a duty owed by a landowner to a trespasser?
A) the duty to refrain from causing intentional harm once the presence of the trespasser is known
B) the duty to warn the trespasser of dangers existing on the premises
C) the duty to make the premises safe to protect the trespasser from harm
D) none of the above,since a landowner has no legal duty to a trespasser
Q3) Personal property that has become a fixture is still classified as personal property.
A)True
B)False
Q4) Personal property generally becomes a fixture if it is so attached to the realty that it cannot be removed without materially damaging the realty.
A)True
B)False
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Chapter 50: Environmental Law and Land Use Controls
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Q1) The Jarvis family owned its land for more than 150 years.The Jarvis family traditionally farmed the land and for that purpose maintained farm animals.As years passed,most of the surrounding farms were sold by the owners and the area turned out to be a close-in suburb of a major city.A zoning ordinance was passed that prohibited maintaining a barn or farmyard animals on the land.The Jarvis family was advised that they were unaffected by this ordinance because theirs would be considered a nonconforming use.The members of the Jarvis family lost interest in farming and sold off all their animals.Seven (7)years later,a family member desired to raise a few pigs on the property.Angry neighbors asserted that the family has lost the right to do so.What is your opinion?
Q2) The process by which the buyer conducts a thorough investigation of the property and its current and former uses to determine whether there are any problems with respect to environmental law or nuisance is called:
A) continuing the nuisance.
B) due diligence.
C) nuisance per se.
D) nuisance per fact.
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Page 52
Chapter 51: Leases
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Q1) A lease provision requiring a tenant to obey regulations that may be subsequently adopted by the landlord is void because it is unconscionable.
A)True
B)False
Q2) A tenant in possession has control of the property and is liable when his or her failure to use due care under the circumstances causes harm to:
A) invitees.
B) licensees.
C) trespassers.
D) both a.and b.
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) A beneficiary of personal property by will may be called a devisee.
A)True
B)False
Q2) Unless statutory requirements are met,a will is invalid and the testator:
A) is considered to have died testate.
B) is considered to have died intestate.
C) is subject to federal law.
D) has provided guidelines of distribution.
Q3) A trustee is not permitted to profit personally from the position of trustee,other than to receive the compensation allowed by contract or law.
A)True
B)False
Q4) Testate distribution describes the distribution that is made when the decedent leaves an invalid will.
A)True
B)False
Q5) To make a valid will,the testator must have testamentary capacity.
A)True
B)False
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