Business Ethics and Law Test Bank
Course Introduction
This course explores the principles of ethical decision-making and the legal framework that shapes business practice. Students will examine the interplay between ethical theories, corporate responsibilities, and legal standards across various business contexts. Topics include corporate governance, stakeholder analysis, regulatory compliance, social responsibility, consumer protection, and ethical dilemmas in global business. Through case studies and practical examples, the course aims to equip students with the skills to identify, analyze, and resolve ethical and legal challenges in modern organizations.
Recommended Textbook
Business Law Principles for Todays Commercial Environment 4th Edition by David P. Twomey
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52 Chapters
2754 Verified Questions
2754 Flashcards
Source URL: https://quizplus.com/study-set/2052
Page 2
Chapter 1: The Nature and Sources of Law
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60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/40818
Sample Questions
Q1) Case law consists of the rules and regulations parties agree to as part of their contractual relationship.
A)True
B)False
Answer: False
Q2) Statutory law is created by:
A)Congress.
B)state legislatures.
C)local governments.
D)all of the above.
Answer: D
Q3) Criminal laws:
A)define wrongs against society.
B)define the rights of one person against another.
C)carry damage remedies against the wronged individual.
D)all of the above.
Answer: A
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Chapter 2: The Court System and Dispute Resolution
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57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/40819
Sample Questions
Q1) In a minitrial:
A)only three jurors are used.
B)the trial addresses only portions of the case or certain issues related to the case.
C)the decision is always fully binding on the parties.
D)none of the above.
Answer: B
Q2) The _____ rule(s)on the admissibility of evidence.
A)Judge
B)Jury
C)Attorneys
D)court clerk
Answer: A
Q3) The decision of an association tribunal is binding on both the association member and the consumer.
A)True
B)False
Answer: False
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4
Chapter 3: Business Ethics, social Forces, and the Law
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52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/40820
Sample Questions
Q1) Recognizing that an ethical dilemma exists is usually far more difficult than resolving the dilemma once its existence is recognized.
A)True
B)False
Answer: False
Q2) Ethics is a philosophical concept that deals with values related to the nature of human conduct.
A)True
B)False
Answer: True
Q3) Voluntary improvements in the fairness and ethics of business behavior are:
A)less effective than those brought about by government regulation.
B)less costly and intrusive than those brought about by government regulation.
C)virtually nonexistent in corporate America.
D)more common in third-world countries than in the United States.
Answer: B
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Chapter 4: The Constitution As the Foundation of the Legal Environment
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59 Verified Questions
59 Flashcards
Source URL: https://quizplus.com/quiz/40821
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 United States utilizes a tripartite division of government.
A)True
B)False
Q3) The living Constitution has as a characteristic a strong president.
A)True
B)False
Q4) Which of the following is true about administrative agencies?
A)Administrative agencies exercise powers guaranteed to them in the U.S.Constitution.
B)Administrative agencies exercise powers allocated to them by the president.
C)Administrative agencies make decisions that are rarely reviewed by the courts.
D)Administrative agencies make decisions that are effectively reviewed by voters.
Q5) The states may coin money as long as it is backed by gold.
A)True
B)False
6
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Chapter 5: Government Regulation of Competition and Prices
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47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/40822
Sample Questions
Q1) The Clayton Act prohibits price discrimination between different buyers of like commodities when the effect may be to substantially lessen competition.
A)True
B)False
Q2) A person who attempts to monopolize any part of the trade or commerce among the states:
A)is guilty of a misdemeanor.
B)is guilty of a felony.
C)can be fined up to $500,000.
D)none of the above.
Q3) The attorney general of a state may bring a class action suit to recover damages for those injured by an antitrust violation which raised prices.
A)True
B)False
Q4) An agreement between real estate brokers to never charge a commission less than 6% is not an example of price fixing.
A)True
B)False
Page 7
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Chapter 6: Administrative Agencies
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58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/40823
Sample Questions
Q1) 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?
Q2) The Sunshine Act requires most meetings of major administrative agencies to be open to the public.
A)True
B)False
Q3) Within the area in which the administrative agency is authorized to make decisions,the agency can be regarded as a specialized court or court of limited jurisdiction.
A)True
B)False
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Chapter 7: The Legal Environment of International Trade
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57 Verified Questions
57 Flashcards
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Sample Questions
Q1) Parties to international ventures often agree to arbitrate their disputes in neutral countries.
A)True
B)False
Q2) The International Monetary Fund (IMF)was formed to shorten the duration and lessen the disequilibrium in the international balance of payments of its members.
A)True
B)False
Q3) The use of agency arrangements allows a U.S.firm to avoid taxation on sales made in its agent's country.
A)True
B)False
Q4) A country can borrow money from other International Monetary Fund (IMF)members or from the IMF by means of special drawing rights (SDRs)sufficient to permit that country to maintain the stability of its currency's relationship to other world currencies.
A)True
B)False
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Page 9
Chapter 8: Crimes
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60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/40825
Sample Questions
Q1) James Smith,a health inspector for the state of Missouri,inspected a restaurant owned by Salley Slick.Smith found numerous health violations in the restaurant and fined Slick accordingly.When Smith notified Slick of the infractions,Smith strongly suggested that $5,000 "would sure prove handy in the Spring" when he planned to purchase a new fishing boat.Slick understood Smith's obvious hint and offered Smith $5,000 if he would lose the paperwork concerning the failure of the restaurant to meet proper inspection guidelines.Smith accepted the $5,000 and lost the paperwork.One month later,Smith returned to the restaurant and told Slick that he would reappear every month and find violations unless Slick produced $1,000 each month to go toward the purchase of a fleet for Smith.Slick agreed to make the $1,000 payments.What crimes have been committed by Smith and Slick?
Q2) Because a corporation is not a human being,it cannot be convicted of a crime.
A)True
B)False
Q3) The criminal law of all states is the same because all states have adopted a uniform criminal code.
A)True
B)False
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Chapter 9: Torts
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58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/40826
Sample Questions
Q1) Under the tort of false imprisonment,shopkeepers are prevented from detaining anyone whom they believe has shoplifted.
A)True
B)False
Q2) Truth is not a defense to defamation.
A)True
B)False
Q3) The concept of immunity from liability means that:
A)one who harms another can be held liable only for voluntary acts.
B)certain persons are not subject to tort liability.
C)one who harms another without intending to do so is not subject to tort liability.
D)one who harms a child can never be sued by the parents of the injured child.
Q4) The tort of intentional infliction of emotional distress requires proof of outrageous conduct and resulting emotional distress in the victim.
A)True
B)False
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11
Chapter 10: Intellectual Property Rights
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52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/40827
Sample Questions
Q1) Owners of mask works are entitled to the exclusive right to reproduce and distribute their products under U.S.law for a period of:
A)10 years.
B)20 years.
C)28 years.
D)the life of the creator plus 70 years.
Q2) 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
Q3) Trademarks may be used to protect the exclusive right to identify either products or services.
A)True
B)False
Q4) Copyright of a "work made for hire" runs for the life of the creator of the work plus 50 years.
A)True
B)False
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Page 12
Chapter 11: Cyberlaw
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42 Verified Questions
42 Flashcards
Source URL: https://quizplus.com/quiz/40828
Sample Questions
Q1) Describe the rights of employers to monitor the e-mail of employees who are using their employers' email system.
A)Employers may monitor employees' e-mails,but only if the employees have consented.
B)Employers may monitor employees' e-mails,regardless of whether employees have consented.
C)Employers may monitor employees' e-mails,but only if notice is given.
D)Employers may not monitor employees' e-mails.
Q2) Employers are required to give notice to employees that they will monitor their employees' e-mail.
A)True
B)False
Q3) __________ refers to laws and precedent applicable to Internet transactions and communications.
A)Cyberlaw
B)Cyborglaw
C)Silicalaw
D)Simlaw
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Chapter 12: Nature and Classes of Contracts: Contracting
on the Internet
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53 Verified Questions
53 Flashcards
Source URL: https://quizplus.com/quiz/40829
Sample Questions
Q1) A bilateral contract is essentially an exchange of promises.
A)True
B)False
Q2) 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
Q3) An executory contract is:
A)void if neither party has performed.
B)voidable.
C)entered into but not fully performed.
D)always unilateral in nature.
Q4) When a contract sets a price for services rendered,a plaintiff cannot sue for reasonable value.
A)True
B)False
Q5) A contract for an amount greater than $1 million must be made under seal or it is not binding.
A)True
B)False
Page 14
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Chapter 13: Formation of Contracts: Offer and Acceptance
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Sample Questions
Q1) Mary offered to sell Mike several pieces of rare Chinese art at a very good price because they were duplicates in her own collection.Mike could not accept the offer at that time,but he did give Mary $500 in return for her promise to keep her offer open for three (3)weeks.Mike returned with the agreed-upon balance two weeks later to find that Mary already had sold the pieces she had offered to sell to him.Mary explained that she had been able to get a better price from another buyer.She offered to return Mike's $500 and insisted that this was all she was obligated to do.Is Mary right?
Q2) If an offeree accepts an offer before it is effectively revoked:
A)a void contract is formed.
B)a voidable contract is formed.
C)an unenforceable contract is formed.
D)a valid contract is formed.
Q3) Under the Uniform Commercial Code (UCC),a firm offer applies to:
A)a written,signed offer by a merchant to buy or sell goods.
B)an unwritten but definite offer to buy or sell goods.
C)a written,signed offer by anyone to buy or sell goods.
D)an unlimited,stipulated period of time.
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Chapter 14: Capacity and Genuine Assent
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44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/40831
Sample Questions
Q1) 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.
Q2) An agreement is not binding when:
A)one party makes a mistake regarding a material fact.
B)both parties make a mistake regarding a material fact.
C)one party makes a mistake of law.
D)all of the above.
Q3) In which of the following cases is a contract between A and B binding?
A)A makes a mistake of material fact,and the mistake is unknown by B.
B)A and B make the same mistake of material fact.
C)A recklessly but honestly misrepresents a material fact.
D)A innocently misrepresents a material fact.
Q4) An incompetent person may ordinarily avoid a contract in the same manner as a minor.
A)True
B)False
Page 16
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Chapter 15: Consideration
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49 Verified Questions
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Sample Questions
Q1) John received a promotion at work and felt new clothes would be necessary in the new position.John went to a local store and charged three ties on his charge account at a cost of $60 each.Bill,a friend of John's,saw a sidewalk vendor selling ties at a cost of three for $10 and bought three at that price.The friends compared purchases that night and found that they had purchased identical ties.John became enraged and said that he would not pay the charge-account bill because the ties were clearly not worth $60 each.Bill indicated that he would testify on John's behalf if litigation ensued.What would be the probable outcome of the lawsuit?
Q2) Ordinarily,doing or promising to do what one is already under a legal obligation to do is not consideration.
A)True
B)False
Q3) The promise of a creditor to refrain from collecting a debt is consideration for a promise by the debtor to modify the terms of the transaction.
A)True
B)False
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Chapter 16: Legality and Public Policy
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Sample Questions
Q1) Art and Mary were good friends who went through high school and college together.Art eventually became a college philosophy professor and Mary went into the business world.Mary became a senior vice-president of a management firm and learned many of the company's trade secrets.Both Art and Mary signed one-year contracts with their respective employers.The contracts contained clauses that provided that they would not compete against their former employers for a period of one year after leaving their jobs.The area covered by the restrictions for both Art and Mary was a radius of 500 miles from the place of employment. Both Art and Mary resigned and within two months took other jobs.Art went to work for another college 50 miles away,teaching philosophy.Mary took a job 75 miles from her former employment.Her new position was similar to her former job.The former employers sued to enforce the anticompetitive covenants in the original contracts.Discuss the probable outcome of the lawsuits.
Q2) Agreements not to compete are always void.
A)True
B)False
Q3) Ordinarily,a court will not consider whether a contract is fair or unfair.
A)True
B)False
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Page 18
Chapter 17: Writing, electronic Forms, and Interpretation of Contracts
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60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/40834
Sample Questions
Q1) A promise to grant a mortgage on real property does not require written proof because it is not a transfer of land.
A)True
B)False
Q2) The defense of noncompliance may be raised:
A)by the parties to the oral contract.
B)by third parties such as an insurance company or the IRS.
C)both a.and b.
D)neither a.nor b.
Q3) Because many oral contracts are legally enforceable,it is a good business practice in the preliminary stages of discussions to stipulate that no binding agreement is intended to be formed until a written contract is prepared and signed by the parties.
A)True
B)False
Q4) The one-year performance requirement for an oral contract begins:
A)on the day of the agreement.
B)on the first day of performance.
C)on the day following the agreement.
D)the day on which the agreement was placed in writing.
Page 19
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Chapter 18: Third Persons and Contracts
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51 Verified Questions
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Sample Questions
Q1) An assignee's rights are the same as those that had been possessed by the assignor.
A)True
B)False
Q2) Janet Jones sold the assets and liabilities of her coin-operated laundry to Kevin Katz for $10,000.The assets of the business included all of the washers and dryers.The liabilities included the amounts still owing on seven new dryers,which had been purchased recently from Dryer Company under an installment contract.Katz agreed to make the installment payments on the new dryers as they came due.After Katz failed to make an installment payment when it was due,Dryer Company sued Jones.Jones claimed she no longer was liable.How will the court decide?
Q3) If the obligor is notified in any manner that there has been an assignment and that any money due must be paid to the assignee,the obligor's obligation can be discharged only by making payment to the assignee.
A)True
B)False
Q4) An incidental beneficiary is the same thing as a third-party beneficiary.
A)True
B)False
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Page 20
Chapter 19: Discharge of Contracts
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Sample Questions
Q1) If a debtor with multiple debts specifies the debt to which a payment is to be applied and the creditor accepts the money,the creditor is bound to apply the money as specified.
A)True
B)False
Q2) A party who in good faith has provided substandard performance of a contract may sue to recover the payment specified in the contract.
A)True
B)False
Q3) In most bilateral contracts,the performances of the parties are concurrent conditions.
A)True
B)False
Q4) A change of law discharges a contract if the new law:
A)requires a license and none was required before.
B)requires the use of fireproof materials.
C)requires the use of antipollution devices.
D)prohibits the act called for by the contract.
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21
Chapter 20: Breach of Contract and Remedies
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58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/40837
Sample Questions
Q1) Which is not a correct statement concerning rescission of a contract?
A)The breach must be material.
B)The injured party who rescinds may recover money paid under the contract.
C)The contract remains in effect after the rescission.
D)Rescission is the undoing of the contract.
Q2) A provision stipulating the amount of money damages to be paid in the event of default or breach of contract is known as a __________ damages clause.
A)nominal
B)contract
C)liquidated
D)breach
Q3) An action for injunctive relief may be granted:
A)if money is due and payable.
B)if the breach consists of doing a prohibited act.
C)if the breach would cause nominal damages.
D)if the breach would cause consequential damages.
Q4) An anticipatory repudiation must be clear,absolute,and unequivocal.
A)True
B)False
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Chapter 21: Personal Property and Bailments
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53 Verified Questions
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Source URL: https://quizplus.com/quiz/40838
Sample Questions
Q1) Which of the following forms of cotenancy does not have right of survivorship?
A)joint tenancy
B)tenancy by entirety
C)tenancy in common
D)community property
Q2) If a bailment is for the sole benefit of the bailee,the bailor has no obligation to inform the bailee of known defects.
A)True
B)False
Q3) When a person rents space in a locker or building under an agreement that gives the renter the exclusive right to use that space,the placing of goods by the renter in that space creates a bailment.
A)True
B)False
Q4) To establish a gift,the party claiming to be the donee must prove:
A)delivery only.
B)intent only.
C)intent and a promise to deliver.
D)intent and delivery.
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Chapter 22: Legal Aspects of Supply Chain Management
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Sample Questions
Q1) All bailments are created equally.
A)True
B)False
Q2) 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
Q3) Which is not a true statement about a warehouser?
A)A warehouser is a bailee.
B)A warehouser may issue a negotiable or nonnegotiable receipt.
C)A warehouser is an insurer of the goods.
D)A warehouser is liable for damaged goods if damage is caused by the warehouser's negligence.
Q4) A person who attends a banquet given at a hotel is considered a guest for purposes of determining the liability of the hotelkeeper.
A)True
B)False
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Chapter 23: Nature and Form of Sales
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Sample Questions
Q1) The UCC permits a court to refuse to enforce a sales contract that it finds to be unconscionable.
A)True
B)False
Q2) Consumer leases:
A)must always be evidenced by a writing.
B)are always three- party transactions.
C)require the lessor to make all usual warranties made by a seller in a sale of goods..
D)all of the above.
Q3) With regard to transactions between merchants,failure to repudiate a confirming letter within ten (10)days after receipt binds the non-signing merchant,just as if he had signed the letter or a contract.
A)True
B)False
Q4) An output or requirement contract is not enforceable unless the parties include an estimate of prospective amounts.
A)True
B)False
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Chapter 24: Title and Risk of Loss
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Sample Questions
Q1) __________ goods are goods that,when mixed together,are indistinguishable.
A)Tangible
B)Intangible
C)Heterogeneous
D)Fungible
Q2) "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
Q3) A bailee can pass good title to a good-faith purchaser,even when the sale was not authorized by the owner and the bailee has no title to the goods but is in the business of selling those particular types of goods.
A)True
B)False
Q4) The expense and the risk of return in a sale or return situation is on the:
A)seller.
B)buyer.
C)lienholder.
D)secured creditor.
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Chapter 25: Product Liability: Warranties and Torts
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Sample Questions
Q1) How do the warranty provisions under the CISG compare to the provisions of the UCC?
A)In most instances,the standards are the same.
B)In all instances,the standards are the same.
C)The CISG standards are stricter when compared to the UCC standards.
D)The standards are completely different.
Q2) An express warranty can be made orally or in writing.
A)True
B)False
Q3) Whenever a sale of goods is made,certain warranties are implied unless they are expressly excluded.
A)True
B)False
Q4) A seller who makes a written express warranty for consumer goods costing more than $50 must conform to FTC regulations.
A)True
B)False
Q5) The theories of product liability are mutually exclusive. A)True
B)False
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Chapter 26: Obligations and Performance
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Sample Questions
Q1) A seller's duty to deliver goods requires the seller to transport the goods to the place designated by the buyer.
A)True
B)False
Q2) The standard for determining commercial impracticability is objective,not subjective.
A)True
B)False
Q3) A party to a sales contract may demand at any time that the other party provide adequate assurance of performance.
A)True
B)False
Q4) When a buyer demonstrates in some way that the goods conform to the contract,the buyer has made a(n):
A)acceptance of the goods.
B)assignment of the goods.
C)substitution of the goods.
D)avoidance of the contract.
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Chapter 27: Remedies for Breach of Sales Contracts
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Sample Questions
Q1) A buyer can be barred from claiming a breach if the sales contract expressly states that the buyer will not assert any defenses against the seller.
A)True
B)False
Q2) Consumer defenses:
A)are preserved by a FTC regulation.
B)are provided for by the CISG.
C)are contained in UCC Article 2.
D)none of the above.
Q3) If a buyer refuses to pay for goods after an acceptance that was not revoked,the seller may bring action to recover the purchase price and any incidental damages.
A)True
B)False
Q4) A liquidation of damages clause in a consumer contract is enforceable if it:
A)is not in excess of twice the provable damages.
B)is agreed to by both parties to the contract.
C)reasonably attempts to estimate the actual harm caused by a breach.
D)is a reasonable amount designed to punish the breaching party.
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Chapter 28: Kinds of Instruments, parties, and Negotiability
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Sample Questions
Q1) The requirement of a sum certain in money is fulfilled even though the interest rate changes at maturity.
A)True
B)False
Q2) When the drawee of a draft has indicated by writing or record a willingness to pay the amount specified in the draft the drawee is called a(n):
A)acceptor.
B)accommodation party.
C)payee.
D)secondary obligator.
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 negotiable instrument may be partly printed and partly typewritten.
A)True
B)False
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Chapter 29: Transfers of Negotiable Instruments and
Warranties of Parties
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Q1) If an instrument is payable to alternative payees or if it has been negotiated to alternative indorsees,it may be indorsed and delivered by either of them.
A)True
B)False
Q2) A qualified indorsement is given by using the phrase __________.
A)"as is"
B)"without recourse"
C)"with all faults"
D)"buyer beware"
Q3) The warranties made by an unqualified indorser guarantee that payment of the instrument will be made.
A)True
B)False
Q4) The order or bearer character of the paper determines how it may be:
A)assigned.
B)sold.
C)negotiated.
D)all of the above.
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Chapter 30: Liability of the Parties Under Negotiable Instruments
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Q1) Bill decided that it was time to remodel his home.Among the features that Bill had included in his remodeling plan was the addition of several very large picture windows.Because of the great expense of the windows,Bill financed the cost through the issuance of a promissory note.The manufacturer of the windows sold the promissory note to a bank.Just after the promissory note matured,the windows began to leak badly.Bill refused to pay on his promissory note and brought action against the manufacturer for breach of contract.Will the bank recover on the promissory note?
Q2) In 1976 the Federal Trade Commission adopted a rule that expands the rights of a holder in due course in a consumer credit transaction.
A)True
B)False
Q3) A holder of a negotiable instrument cannot be a holder in due course when the holder learns of a defense to payment after the acquisition of the instrument.
A)True
B)False
Q4) Drawers are secondary parties on a note.
A)True
B)False
Page 32
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Chapter 31: Checks and Funds Transfers
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Q1) The EFTA is concerned with the:
A)elimination of foreign terrorists
B)eradication of foreign tribunals
C)electronic transfers of funds
D)eleemosynary,or charitable,transfers of funds
Q2) If oral,a stop payment order is binding on the bank for __________ days unless confirmed in writing within that time.
A)five (5)
B)seven (7)
C)fourteen (14)
D)thirty (30)
Q3) A bank's customer whose signature has been forged may be barred from holding the bank liable if the customer's negligence substantially contributed to the making of the forgery.
A)True
B)False
Q4) A check is a particular kind of draft.
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) Bud is unable to obtain a loan without some form of additional reassurances.Bud comes to you for assistance.You are willing to help Bud,but you wish to protect yourself from liability as much as possible.Would you prefer a surety or a guaranty? The bank issuing the loan also wishes to protect itself as much as possible.Would the bank prefer a surety or guaranty? If your oral assurances are enough to solidify the loan,has a surety or guaranty been formed?
Q3) In most states contracts of guaranty do not have to be in writing to be enforceable.
A)True
B)False
Q4) 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.
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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 finance company may reject an applicant for a loan on the grounds that the applicant is:
A)married.
B)sixty-five or older.
C)divorced.
D)none of the above.
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Page 35
Chapter 34: Secured Transactions in Personal Property
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Q1) The concept of perfection concerns:
A)the creation of the security interest.
B)protection against the claims of others to the collateral.
C)the rights of the creditor against the debtor.
D)converting unsecured creditors into secured creditors.
Q2) A debtor must have rights in the collateral for a security interest to attach.
A)True
B)False
Q3) Self-help repossession of collateral upon a buyer's default is contrary to public policy and never is allowed.
A)True
B)False
Q4) Claim in a changing or shifting stock of the buyer's goods is known as a floating lien.
A)True
B)False
Q5) The property that is subject to the security interest is called collateral.
A)True
B)False
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Chapter 35: Bankruptcy
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Q1) A court can dismiss an individual debtor's petition if the debtor does not satisfy the means test.
A)True B)False
Q2) A payment by a debtor in the ordinary course of business,such as the payment of a utility bill,will not be set aside by the bankruptcy trustee.
A)True B)False
Q3) In a bankruptcy case,after all creditors have been paid,any balance is turned over to the debtor.
A)True
B)False
Q4) A debtor is presumed to be insolvent on and during what number of days immediately preceding the date of the filing of a bankruptcy petition?
A)30
B)60
C)90
D)120
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Chapter 36: Insurance
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Q1) An insurer who wrongfully refuses to defend the insured is liable for:
A)breach of contract.
B)insurance fraud.
C)the tort of wrongful interference with contractual relations.
D)the tort of malicious prosecution.
Q2) 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
Q3) If an insurer denies liability for a loss,the insured or the beneficiary of the policy has the burden of proving that there was a loss that came within the coverage of the policy.
A)True
B)False
Q4) An ambiguity in an insurance policy is generally interpreted in favor of the insured. A)True
B)False
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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 party working for and under the control of another and authorized to enter into contracts for that other person or entity is called an:
A)employee.
B)agent.
C)independent contractor.
D)attorney.
Q3) A person who has knowledge of a limitation on an agent's authority cannot disregard that limitation.
A)True
B)False
Q4) A person has apparent authority as an agent when the principal's words or conduct leads a third person to reasonably believe that the person has that authority and the third person relies on that appearance.
A)True
B)False
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Chapter 38: Third Persons in Agency
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Q1) Agents are liable for harm caused third persons by the agents' fraudulent,intentional,or negligent acts.
A)True
B)False
Q2) Pamela was the agent in charge of distribution and collections for the Coble Dairy Products Cooperative.Thrower operated a grocery store and purchased dairy products from Coble.Pamela made false invoice sheets,showing delivery to Thrower of greater quantities than Thrower actually had ordered or received.Pamela collected from Thrower on the basis of these increased amounts,and then kept for herself the difference between the increased amounts and the amounts that should have been charged.When Thrower learned of this,he sued Coble for the excess payments he had made.Coble denied that Pamela was its agent in making excess collections.Will Thrower win?
Q3) 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
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Chapter 39: Regulation of Employment
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Q1) In older cases,the employer-employee relationship was referred to as the master-servant relationship.
A)True
B)False
Q2) An employment contract always will state a time or duration for the contract's applicability.
A)True
B)False
Q3) Employment law is based on a combination of contract law and the law established by courts,lawmakers,and administrative agencies.
A)True
B)False
Q4) Employers are required to maintain records of certain occupational illnesses and injuries by:
A)ECHO.
B)ESCHA.
C)OSHA.
D)ECOT.
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Chapter 40: Equal Employment Opportunity Law
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Q1) Criteria used to make employment decisions that have a disparate impact on women,such as height requirements,must be job-related.
A)True
B)False
Q2) Equal employment opportunity laws provide protection for minorities and women,but the disabled are not within the protection of the laws.
A)True B)False
Q3) Religious societies may not grant hiring preferences to members of their religion. A)True B)False
Q4) Pay raises based on seniority generally are considered lawful. A)True B)False
Q5) Title VII of the Civil Rights Act of 1964,as amended,is the principal law regulating equal employment opportunities.
A)True B)False
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Chapter 41: Types of Business Organizations
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Q1) The process of incorporation involves the expenditure of funds for organizational expenses.
A)True
B)False
Q2) In a joint venture,the parties:
A)combine their labor or property for a single undertaking and share profits and losses equally.
B)combine their labor or property for a continuing business and share profits and losses equally.
C)assume no personal liability beyond the risk of losing their initial investment.
D)none of the above.
Q3) The FTC franchise disclosure statement must contain:
A)the business experience of the franchisor and its brokers.
B)any current and past litigation against the franchisor.
C)the grounds for termination of the franchise.
D)all of the above.
Q4) Franchise disclosures are not required under federal law.
A)True
B)False
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Chapter 42: Partnerships
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Q1) A creditor of an individual partner cannot proceed against any specific items of partnership property,but can obtain a charging order against that partner's interest in the partnership.
A)True
B)False
Q2) Prohibited transactions by a partner without the consent of other partners include:
A)a contract that makes it impossible for the firm to conduct its usual business.
B)submitting controversies of the firm to arbitration.
C)making a general assignment of firm property for the benefit of creditors
D)all of the above.
Q3) Partnership property may consist of:
A)real property only.
B)personal property only.
C)any and all property acquired by the partnership.
D)all property contributed by the partners or acquired for the firm or with its funds.
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44
Chapter 43: LPs, LLCs, and LLPs
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Q1) Which of the following statements regarding limited partnerships is true?
A)The words limited partnership or simply LP must appear in the firm's name.
B)General partners cannot avoid personal liability by incorporating.
C)Limited partners can lose their liability limitation if they participate in the control of the business.
D)All of the statements are true.
Q2) The names of limited partners and investors must be included on the certificate of limited partnership.
A)True
B)False
Q3) Limited liability companies may be formed without filing formal articles of organization with the secretary of state.
A)True
B)False
Q4) A limited liability company pays federal income tax.
A)True
B)False
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Chapter 44: Corporate Formation
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Q1) Under the Revised Model Business Corporation Act (RMBCA),corporate existence begins when the articles of incorporation are filed with the secretary of state.
A)True
B)False
Q2) The corporate form of business continues regardless of changes in stock ownership. A)True
B)False
Q3) Osvaldo was attempting to promote a corporation to be named Xavier,Inc.In that capacity,Osvaldo signed a lease in the name of Xavier and ordered furniture in the company's name.The corporation was in fact formed and the board of directors,knowing of the actions of Osvaldo,moved into the space Osvaldo had leased.Upon delivery and inspection of the furniture Osvaldo ordered,numerous defects were discovered,and the furniture was accordingly rejected and returned to the seller.The corporation was not successful,and as a result,the rent was not paid.Osvaldo was sued for the unpaid rent and for breach of contract concerning the furniture.The corporation was sued on the same grounds.Decide the cases against Osvaldo and Xavier,Inc.
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Chapter 45: Shareholder Rights in Corporations
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Q1) All shares must have a par value of at least one dollar per share.
A)True
B)False
Q2) 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.
Q3) Shareholders exercise direct control over their corporation.
A)True
B)False
Q4) An interest in a corporation is based on the ownership of one or more shares of stock of the corporation.
A)True
B)False
Q5) Shares of stock that have been issued to stockholders in a corporation are said to be outstanding.
A)True
B)False
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Chapter 46: Securities Regulation
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Q1) Which of the following acts was passed to ensure that public shareholders faced with a cash tender offer would not be required to respond without sufficient information?
A)the Mann Act
B)the Robinson-Patman Act
C)the Williams Act
D)the SEC Act
Q2) Unlisted companies that have assets less than $10 million and fewer than 500 shareholders are subject to the reporting requirements of the Securities Exchange Act of 1934.
A)True
B)False
Q3) Under the Litigation Reform Act of 1995,issuers of forward-looking statements that were not knowingly false when made have a safe harbor from related lawsuits if appropriate cautionary language was included.
A)True
B)False
Q4) Rule 10b-5 only applies to registered securities.
A)True
B)False
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Chapter 47: Accountants Liability and Malpractice
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Q1) A client may recover tort damages from an accountant for fraud and gross negligence,but not for ordinary negligence.
A)True
B)False
Q2) When an accountant fails to complete a contract,the accountant is still entitled to the accountant's fee.
A)True
B)False
Q3) When the privity rule is applied,a bank lending money to the client of an accountant cannot sue the accountant for malpractice.
A)True
B)False
Q4) The contact rule applies in which of the following states?
A)Alabama
B)Indiana
C)New York
D)All of the above
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Chapter 48: Management of Corporations
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Q1) The sale of corporate assets outside the regular course of a corporation's business is an example of an extraordinary matter.
A)True B)False
Q2) Officers that cause a corporation to break a contract with third party are liable to the third party even if they acted in good faith to advance the interests 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) Officers and directors may be criminally liable for failure to prevent the commission of a crime if they are found to be the "responsible corporate officers."
A)True
B)False
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Chapter 49: Real Property
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Q1) In general,a mortgagor is under a duty to:
A)make improvements to the mortgaged property.
B)insure the property.
C)pay taxes and assessments on the property.
D)reimburse the mortgagee for expenditures made by the mortgagee for valuable and lasting improvements.
Q2) The right to cut firewood from another's property would constitute a profit.
A)True
B)False
Q3) 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
Q4) An easement is a right to use another's property that belongs to the land that is benefited.
A)True
B)False
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Chapter 50: Environmental Law and Land Use Controls
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Q1) A zoning restriction:
A)constitutes an eminent domain "taking."
B)always entitles the landowner to compensation.
C)never lowers the value of the land it concerns.
D)may prevent the landowner from use of the land.
Q2) __________ of the federal environmental laws carry criminal penalties for violations.
A)All
B)Most
C)Very few
D)None
Q3) It is probable that a zoning variance would be granted:
A)even though many of the neighboring property owners object.
B)on the grounds of hardship,regardless of who created the hardship.
C)to an outside advertiser to build a billboard.
D)when the desired use of the land is in harmony with the general nature of the surrounding areas.
Q4) Conduct that unreasonably interferes with the enjoyment of land is a nuisance.
A)True
B)False
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Chapter 51: Leases
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Q1) A landlord has the right to enter a leased property to make repairs without notifying the tenant.
A)True
B)False
Q2) If taxes or assessments on leased premises are increased because of improvements made by the tenant the:
A)landlord is only liable for such increases if the improvements stay with the property.
B)landlord is liable for such increases whether or not the improvements stay with the property.
C)landlord is liable for such increases only to the extent that the improvements actually increase the fair market value of the property.
D)tenant is always liable for such increases.
Q3) In a residential lease,it is commonly held that there is an implied warranty of habitability.
A)True
B)False
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Chapter 52: Decedents Estates and Trusts
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Q1) When distributees stand in different degrees of relationship:
A)distribution is made per stirpes.
B)distribution is made per capita.
C)a distribution cannot be made without the consent of the state.
D)the right of escheat applies.
Q2) An individual who desires to make provisions that will be effective only on his or her death is said to have:
A)probationary intent.
B)a prejudicial interest.
C)testamentary intent.
D)attestation intent.
Q3) A living will,now legal in most states,provides that if the testator becomes unable to express his or her wishes and is in an irreversible,incurable medical condition,he or she does not want life-sustaining medical treatments.
A)True
B)False
Q4) Generally,the right to make a will is limited to persons 18 or older.
A)True
B)False
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