Business Law and Ethics
Exam Materials
Course Introduction
Business Law and Ethics provides students with an understanding of the legal and ethical frameworks that shape decision-making in the business world. The course explores fundamental concepts such as contracts, torts, agency, and property law, as well as key regulations impacting businesses at the local, national, and international levels. In addition, it examines the importance of ethical conduct and corporate social responsibility by analyzing real-world dilemmas and case studies. Students will learn to identify legal risks, apply ethical reasoning, and develop strategies to navigate complex business situations while upholding professional and societal standards.
Recommended Textbook
Business Law and the Legal Environment Standard Edition 8th Edition by Jeffrey F. Beatty
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Page 2
Chapter 1: Introduction to Law
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Q1) The doctrine of precedent is binding on all courts from county courts to the U.S.Supreme Court.
A)True
B)False
Answer: False
Q2) A rule that establishes maximum length of work shifts for air traffic controllers demonstrates an agency imposing a regulation.
A)True
B)False
Answer: True
Q3) President Nixon issued wage-price controls in an effort to stabilize the economy.This use of executive power was
A)an illegal usurption of legislative powers which belong to the Congress.
B)a valid use of power based on Article II of the Constitution.
C)a valid use of judicial power.
D)an illegal usurption of the regulatory powers of administrative agencies.
Answer: B
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Page 3
Chapter 2: Ethics and Corporate Social Responsibility
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Q1) Which person argued that a corporate manager's primary responsibility is to the shareholders of the organization and that managers should make the company as profitable as possible while also complying with the law?
A)John Rawls
B)John Stuart Mill
C)Immanuel Kant
D)Milton Friedman
Answer: D
Q2) What are Life Principles and what should one consider when developing his or her own Life Principles?
Answer: Life Principles are the rules by which people live their lives.People's Life Principles should be based on their own values and should include their rules on lying,stealing,cheating,applying the same or different standards at home and work,and their responsibility as a bystander when they see other people doing wrong.In addition,Life Principles should be specific rather than general.It is also important to keep in mind that no matter what you say,every ethics decision you make illustrates your actual Life Principles.
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4
Chapter 3: International Law
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Q1) The United Nations Security Council,comprised of all its member nations,is the UN's lawmaking body.
A)True
B)False
Answer: False
Q2) An American manufacturer has been asked to provide construction equipment to a foreign government.The contract is for a sizable amount,so the manufacturer wants to protect itself should the foreign government refuse to pay for the equipment once it has been delivered.What should the American manufacturer insist upon having if it wants to protect its right to sue the government in the event it does not pay for the goods?
A)a release of sovereignty
B)a statement of extraterritoriality
C)a waiver of immunity
D)a submission of arbitration to the ICA
Answer: C
Q3) The Foreign Corrupt Practices Act prohibits bribery abroad.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Common Law, Statutory Law, and Administrative Law
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Q1) Common law,like statutory law,is prospective.
A)True
B)False
Q2) Which law imposes controls on federal agencies by requiring basic fairness in areas not regulated by enabling legislation?
A)The 1964 Civil Rights Act.
B)The Clean Agency Act.
C)The Administrative Procedure Act.
D)The Freedom of Information Act.
Q3) The concept of stare decisis is closely related to the concept of A)precedent.
B)the bystander rule.
C)statutory law.
D)enabling legislation.
Q4) Big Corporation is served with a subpoena to turn over business records to an administrative agency.What are three possible legal grounds the company can raise to avoid producing the requested records?
Q5) Discuss the four most important limitations on the power of federal administrative agencies.
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Chapter 5: Constitutional Law
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Q1) The primary source of federal power to regulate business is the
A)Supremacy Clause.
B)Commerce Clause.
C)Contract Clause.
D)Privilege and Immunities Clause.
Q2) The Supreme Court's approach during the period from the 1950s through the 1970s in deciding cases on constitutional grounds is described as
A)judicial restraint.
B)judicial activism.
C)judicial review.
D)the dormant aspect of its judicial power.
Q3) If Oregon passed a statute that prohibited liquor stores from engaging in any kind of advertising,that statute would be
A)valid as an exercise of police power.
B)valid,as alcohol is illegal for minors.
C)invalid as a violation of the Commerce Clause.
D)invalid as an unreasonable restriction of free speech.
Q4) Discuss the Miller test to determine if a creative work is obscene.
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Chapter 6: Dispute Resolution
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Q1) After being served with a summons and a copy of the complaint,a defendant usually files a pleading known as an answer,briefly replying to each allegation in the complaint.
A)True
B)False
Q2) Which of the following is NOT an example of a trial court of limited jurisdiction?
A)A probate court
B)A juvenile court
C)A small claims court
D)A general civil division court
Q3) Generally,mandatory arbitration provisions in a contract are valid.
A)True
B)False
Q4) Emails and their attachments are not subject to pretrial discovery.
A)True
B)False
Q5) Summary judgment is appropriate when there are no essential facts in dispute.
A)True
B)False
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Chapter 7: Crime
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Q1) Mulcare Corp.started a compliance program to prevent and detect criminal conduct within the company and had specific,high-level officers in charge of overseeing the program.The company effectively communicated the program to its employees and monitored those employees who were in a position to cheat.It promptly disciplined anyone who broke the law.One effect of having this program is
A)federal investigators would no longer investigate the company since Mulcare could take care of any problems internally.
B)federal investigators might be convinced to limit any prosecution to those directly involved rather than attempting to get a conviction against high-ranking officers or against the company itself.
C)the Federal Sentencing Guidelines no longer apply.
D)any cases would be prosecuted in state,rather than federal,court.
Q2) Explain the difference between civil law and criminal law.
Q3) Although RICO was passed to prevent gangsters from taking money they earned illegally and investing it in legitimate businesses,it is now often used against businesspeople who break the law.
A)True
B)False
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Chapter 8: Intentional Torts and Business Torts
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Q1) Wilma's arm is broken when Paula knocks her down during an argument.If Wilma sues Paula for battery,what damages is Wilma likely to receive?
Q2) Punitive damages are intended to punish the defendant for conduct that is extreme and outrageous.
A)True
B)False
Q3) In awarding punitive damages,a court considers all of the following EXCEPT A)the difference between the punitive award and any civil penalties used in similar cases.
B)the ratio between the harm suffered and the award.
C)the financial condition of the plaintiff.
D)the reprehensibility of the defendant's conduct.
Q4) If Gloria threw a rock that hit Merle,she is liable for an intentional tort of battery only if she intended to injure or harm Merle.
A)True B)False
Q5) A witness testifying in a court or legislature may never be sued for defamation. A)True B)False
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Chapter 9: Negligence, Strict Liability, and Product Liability
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Q1) Anders suffered a shock when his electric radio dropped into the bathtub--while Anders was taking a bath.Anders argued that he did not realize it was dangerous to operate an electric radio near his bathtub.If he sues the radio manufacturer for damages,which claim is he most likely to make?
A)res ipsa loquitur
B)negligent manufacture
C)failure to warn
D)negligent design
Q2) List and discuss the elements necessary to establish negligence.
Q3) Which of the following acts resulting in injury would be negligence per se?
A)Joe sold fireworks from his Indiana store (a legal activity)to Steve,an Illinois resident (a state that has made owning fireworks illegal).
B)June,while driving the speed limit,sideswiped the car next to her.
C)A retailer sold glue containing benzene to a 14-year-old boy in violation of state law.
D)Tammy accidentally dropped a heavy carton on Sasha's foot while at work.
Q4) The doctrine of contributory negligence is followed in most states.
A)True
B)False
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Chapter 10: Privacy and Internet Law
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Q1) Which of the following statements regarding the Foreign Intelligence Surveillance Act (FISA)is true?
A)To spy on people located in the United States who are communicating abroad,the government needs a warrant.
B)FISA was enacted in 1978,but its provisions were greatly strengthened in the aftermath of the 9/11 terrorist attacks.
C)Under the FISA,the government does not need to notify defendants if the evidence being used against them in court was gathered in FISA surveillance.
D)To spy on people located in the United States who are communicating abroad,the government must obtain permission from a secret Foreign Intelligence Surveillance Court.
Q2) The Electronic Communications Privacy Act of 1986 is a federal statute that regulates email.
A)True
B)False
Q3) Explain the core principles in the Fair Information Practices.
Q4) What provisions are commercial email subjected to under the CAN-SPAM Act?
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12
Chapter 11: Introduction to Contracts
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Q1) All oral contracts are quasi-contracts until they are completely executed.
A)True
B)False
Q2) Noncompetition agreements are
A)more common today than they were in the past,although policy issues they raised in the 1700s have never gone away.
B)now illegal,as they violate antitrust laws.
C)infrequently litigated.
D)relatively recent developments,first used following the Great Depression in the United States.
Q3) Which of the following types of property would be considered "goods" under the Uniform Commercial Code?
A)a promissory note
B)a stock
C)a patent
D)a computer
Q4) A valid contract can legally be voided by either party.
A)True
B)False
Q5) Discuss the requirements of promissory estoppel.
Page 13
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Chapter 12: Agreement: Offers and Acceptances
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Q1) According to the UCC,one or more open terms will not cause a sales contract to fail for indefiniteness as long as the parties intended to make a contract and there is a reasonably certain basis for the court to determine the open terms.
A)True
B)False
Q2) Jaime offered to buy Kevin's bike.Jamie is the A)offeree.
B)offeror.
C)mortgagor.
D)trustee.
Q3) What is the best definition of the mailbox rule?
A)Acceptance of an offer must be on precisely the same terms as the offer.
B)Users must agree to certain terms and conditions prior to using the product or service.
C)Acceptance of an offer is generally effective upon dispatch;terminations are effective when received.
D)Courts follow certain practices when parties to an agreement fail to make provisions for a particular matter.
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Chapter 13: Consideration
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Q1) Mid-American Oil had a contract with NSB Company to supply 1,000 gallons of oil by September 1.The contract contained a provision that required all modifications to be written and signed by the company presidents.In early August,an executive of Mid-American talked with the purchasing agent of NSB who orally agreed to two shipments of oil;one in September and the second one in December.By September 30,when only 500 gallons had been delivered,NSB sued.The likely outcome of this lawsuit is:
A)NSB wins because the modification was not supported by new consideration.
B)NSB wins because the modification has to be in writing.
C)Mid-American Oil wins because the UCC governs this case and no new consideration is required.
D)Mid-American Oil wins because new consideration was present.
Q2) A forbearance is,in essence,the opposite of an act.
A)True
B)False
Q3) As it pertains to consideration,which of the following constitutes value?
A)an illusory promise
B)a preexisting duty
C)a forbearance
D)All of these are correct.
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Chapter 14: Legality
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Q1) John was a licensed physician in Michigan.When he retired to Florida,he started providing medical services to the people in his condo,relying on his Michigan license since he did not have a Florida license and there is no reciprocity between the two states.Isaac,John's next-door neighbor,owed John $2,000 for medical services.John will be able to enforce the contract he made with Isaac.
A)True
B)False
Q2) Cherise contacted her insurance agent and said she was interested in purchasing several life insurance policies: (a)a policy on her own life for $100,000,naming her son and daughter as beneficiaries;(b)a policy on her neighbor's life for $100,000,since she had observed him engaging in reckless behavior,naming herself as beneficiary;(c)a $5,000 policy on another neighbor to cover a loan Cherise made to him,naming herself as beneficiary;and (d)a $250,000 policy on her business partner,naming herself as beneficiary.Discuss the legality of each of these potential contracts.
Q3) Discuss exculpatory clauses,and designate when an exculpatory clause is unenforceable.
Q4) Differentiate between licensing requirements designed to protect the public and those designed to generate revenue.
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Page 16
Chapter 15: Voidable Contracts: Capacity and Consent
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Q1) When fraud is committed during the sale of goods,all states allow the remedy of rescinding a contract while still allowing the remedy of suing for damages.
A)True
B)False
Q2) Larson entered Forrester's Auto Mart to purchase a used car.Larson found a vehicle with a sales price of $11,000.After Forrester answered all of Larson's questions,Forrester and Larson agreed to a sale.As Larson was leaving to get the money to pay for the car,Forrester told Larson that he thought Robert Redford formerly owned the car.Larson later learned that Robert Redford had never owned the car.If Larson seeks to rescind the deal based on Forrester's statement,Larson will
A)win because he relied on the misrepresentation.
B)win because there was a misrepresentation of a material fact.
C)lose because he will not be able to prove reliance on the misrepresentation.
D)lose because Forrester made a unilateral mistake.
Q3) Fraudulent but innocent misrepresentation permits the injured party to rescind a contract.
A)True
B)False
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Chapter 16: Written Contracts
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Q1) List the types of agreements that are within the Statute of Frauds and explain the consequences if the parties do not comply with the requirements of the Statute of Frauds.
Q2) Which of the following oral contracts may be enforceable?
A)Nathan owes $1,000 in back rent to his landlord.Miranda tells Nathan not to worry about it,she'll pay his debt for him.
B)Kenny orally agrees to purchase 5,000 pencils that the ABC Pencil Company stamps with the words "Kenny is the Greatest!"
C)Mrs.Washington calls the corner grocery and places an order for a loaf of bread,a gallon of milk,and a pound of hamburger to be delivered to her.Ten minutes later,before the store has a chance to put together her items,she calls to cancel the order.
D)All of these are correct.
Q3) Hannah orally agrees to sell her house to Brett for $175,000.If she delivers the deed to Brett with the expectation of payment in two weeks and he fails to pay,most courts will not enforce the contract since it was not in writing.
A)True
B)False
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Page 18
Chapter 17: Third Parties
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Q1) Claims for personal injury are generally assignable.
A)True
B)False
Q2) Linda assigns to Ben a right to receive rent payments.In terms of Linda's warranty as the assignor,the law implies which of the following?
A)that the tenant is solvent
B)that Linda actually has a right to the rental payments
C)that the tenant will actually pay
D)No warranties are implied by law in an assignment.
Q3) If Velma,as a birthday present,assigns to Jim her contractual right to collect $50 from Wood Co. ,this would be a gratuitous assignment.
A)True
B)False
Q4) Kirk purchases a sailboat on credit from Lakefront Sales,and Lakefront keeps a security interest in the boat.Lakefront then assigns the security interest to First Finance Co.Explain what having a security interest means.Under the UCC,what defenses can Kirk assert against First Finance?
Q5) Briefly discuss the enforceability of contracts by third parties.
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Chapter 18: Contract Termination
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Q1) Identify the factors courts consider in deciding the validity of commercial impracticability and frustration of purpose claims.
Q2) Sea Rovers,Inc.contracted to sell 1,000 pounds of shrimp to the Seafood Shack with delivery on June 1.On May 1,Sea Rovers advised the Seafood Shack that it would not be able to deliver the shrimp.The Seafood Shack
A)can sue Sea Rovers immediately for breach of contract.
B)must wait until June 1 to see if Sea Rovers will perform before suing for breach of contract.
C)cannot sue Sea Rovers because Sea Rovers gave adequate notice.
D)must wait until actual damages are determined before it can sue.
Q3) Monumental,Inc.contracts with Champion Builders to erect a three-story office building on a parcel of land it has purchased.Before construction begins,the local zoning board changes the zoning of the parcel and those adjoining it to residential use only.Monumental's contract with Champion is discharged.
A)True
B)False
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Page 20
Chapter 19: Remedies
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Q1) Ernest operates an ice cream stand during the months of May,June,July,and August.Ernest's ice cream machine is broken and needs a new part to run.He contracts to have the part shipped to him by special carrier.Ernest emphasizes that the part needs to be delivered by April 25 and the carrier agrees,knowing that Ernest intends to open his stand May 1.If the shipper fails to deliver the part on April 25,Ernest will be able to recover consequential damages caused by the delay.
A)True
B)False
Q2) Identify and describe the principal contract interests a court may seek to protect.
Q3) Dr.Gonzalez ordered specialized surgical equipment from Physician's Supply Co. ,but the company informed Dr.Gonzalez that it would not be able to meet his order by the agreed date.Even if Dr.Gonzalez does nothing to secure equipment from another source,he will be able to recover damages since the contract was breached by Physician's Supply,not Gonzalez.
A)True
B)False
Q4) Discuss the purpose of an injunction and how the two types of injunctions covered in the textbook are used.
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Chapter 20: Practical Contracts
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Questions
Q1) Rich and Archie sign an agreement in which Archie agrees to deliver ten cases of champagne in 5 days.The parties negotiated and meant to say in the written agreement,delivery in 50 days.If the evidence is clear that the two parties intended to agree to 50 days,the courts will probably
A)reform the contract.
B)rescind the contract.
C)issue a warranty.
D)issue a covenant.
Q2) Which of the following is a standard provision frequently found in contracts?
A)choice of forum
B)understanding
C)choice of compensation
D)mediation
Q3) In business law,a lawyer's primary job is to represent the client in contract litigation.
A)True
B)False
Q4) Compare and contrast the perspectives of a lawyer and a business client when approaching the negotiation of a contract.
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Chapter 21: Introduction to Sales
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Q1) Jones contracts to buy a computer from Martin for $1,500.The contract calls for Martin to service the computer quarterly for the first year and to tutor Jones on how to use the software.Is this contract covered by the UCC or common law?
Q2) Sean of Sean's Shrimp House was enjoying a cup of cappuccino while visiting with Ollie at Ollie's Ocean Front Bar & Grill.During the course of their conversation,Sean agreed to supply 100 pounds of shrimp per month for the next year to Ollie's restaurant at the price of $2.50 per pound.When Sean got back to his office,he sent a written confirmation of the agreement to Ollie.Six weeks after receiving the confirmation Ollie wrote back,stating that he had not agreed to the price of $2.50 per pound.Is Ollie bound to the confirmation?
Q3) Pizazz,Inc.sold a condo on the 34th floor in a building in downtown Chicago.This contract is governed by Article 2A of the UCC.
A)True
B)False
Q4) In a mixed contract involving both goods and services,Article 2 of the UCC will govern if the predominant purpose is the sale of goods.
A)True
B)False
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Page 23
Chapter 22: Ownership, Risk and Warranties
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Q1) If a seller includes an express warranty in the written sales contract,any disclaimer is invalid.
A)True B)False
Q2) Regardless of the language of the contract,title to goods passes to the buyer at the time and place at which the seller physically delivers the goods.
A)True B)False
Q3) The UCC looks solely upon "title" to determine ownership in goods.
A)True
B)False
Q4) Bill is injured when his new motorcycle speeds out of control because of a defective part.In most jurisdictions,Bill
A)can sue the motorcycle manufacturer even though he does not have privity.
B)cannot sue the motorcycle manufacturer because his injuries are personal injuries as opposed to economic loss.
C)cannot sue the motorcycle manufacturer because the law requires arbitration.
D)cannot sue the motorcycle manufacturer because there is no privity of contract.
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24
Chapter 23: Performance and Remedies
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Q1) Leonna orders five table settings of china from Elite China.Each set includes a dinner plate,cup & saucer,bowl,and dessert plate.The china is sold only in sets.When the delivery arrives,Leonna discovers that Elite China sent the wrong pattern.Leonna immediately calls Elite China and is instructed to send the shipment back.While repacking the shipment,Leonna changes her mind and decides to keep the cups and saucers.She returns everything else.Can she do this?
Q2) Identify the possible remedies for a buyer when the seller breaches a contract.
Q3) Buyer Bob breaches his contract for the sale of goods with Seller Suzie.Suzie still has possession of the goods at the time of the breach.Suzie can refuse to deliver the goods and
A)resell the goods and sue Bob for the total contract price.
B)either resell the goods or sue,but not both.
C)resell the goods and sue for any loss on the sale plus incidental damages less expenses saved.
D)resell the goods and sue only for incidental damages.
Q4) Define these terms: usage of trade,course of dealing,and course of performance and identify how they are used according to the UCC.
Q5) Identify the possible remedies for a seller when the buyer breaches a contract.
Q6) What is the difference between incidental damages and consequential damages?
Page 25
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Chapter 24: Secured Transactions
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Q1) Country Bank,located in Indiana,loaned Chmelik $5,000 and obtained a security interest in a copyright Chmelik owns.Chmelik lives in Illinois,but works in Indiana.In order to perfect its interest,Country Bank files a financing statement in Indiana.The financing statement provides Chmelik's correct name,his business address,and a reasonable description of the copyright used as collateral.Is the financing statement sufficient?
A)Yes,it meets the UCC requirements for contents and filing.
B)No,if the debtor is an individual,the secured party must file in the state of the debtor's principal residence,which in this case would be Illinois.
C)No,the secured party needed to file a financing statement in both Indiana and Illinois.
D)No,a security interest cannot be attached to a copyright.
Q2) The property subject to a security interest is called
A)a fixture.
B)collateral.
C)consideration.
D)an account.
Q3) Explain the difference between attachment and perfection.
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Chapter 25: Creating a Negotiable Instrument
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Q1) Matt wrote a $500 check to Alistar for some yard work that Alistar had done.What will Alistar have to do negotiate this instrument to Totally Tough,Inc.in payment for some yard equipment Alistar had bought?
Q2) Generally,Rita signs her name using an infinity symbol rather than her legal name.Rita signed an instrument using this symbol.Which statement is correct?
A)The instrument cannot be negotiable.To be negotiable,the instrument must be signed in Rita's legal name.
B)The instrument cannot be negotiable.To be negotiable,the instrument must be signed in Rita's given name.
C)The instrument cannot be negotiable.To be negotiable,the instrument must be signed using letters from the alphabet.
D)The instrument can be negotiable.Rita intended to indicate her signature.
Q3) Trisha loaned Brian $600 evidenced by a promissory note.When Brian paid off the loan,he did not ask Trisha for the note.She sold it to Carin,a holder in due course.Brian does not have to pay Carin since he already paid Trisha the full $600.
A)True B)False
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Chapter 26: Liability for Negotiable Instruments
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Q1) Warranty liability is the liability of someone who gives payment on a negotiable instrument.
A)True
B)False
Q2) Paula is a sales agent for The Rock Insurance Company.Paula accepts a check from a customer made payable to her in payment for the premium on an insurance policy.Prior to depositing the check in The Rock's bank account,Paula indorses the check as follows: "The Rock Insurance Company,by Paula Beck,agent." Assuming that Paula has authority to indorse company checks,if the check is dishonored,then between Paula,The Rock,and the bank
A)Paula only will be liable.
B)Paula and The Rock will be liable.
C)The Rock only will be liable.
D)The bank will be stuck with the dishonored check.
Q3) Drawers and indorsers are secondarily liable on negotiable instruments.
A)True B)False
Q4) A drawee has primary liability on a draft.
A)True B)False
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Chapter 27: Accountants Liability
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Q1) The Big Four accounting firms spend about what percentage of their revenue on litigation,including settlements and insurance?
A)less than five percent
B)between 10 and 20 percent
C)between 25 and 35 percent
D)over 50 percent
Q2) John is auditing MegaCorp.He finds an accounts payable for 10,000 cases of ball bearings.He checks to make sure the paper actually arrived and that the receiving department signed and dated the invoice.He also checks the original purchase order to make sure the purchase was properly authorized.This illustrates A)tracing.
B)vouching.
C)following.
D)monitoring.
Q3) One of the accountant's most important roles is to serve as an independent evaluator of the financial statements issued by management to investors and creditors. A)True
B)False
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Chapter 28: Agency Law
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Q1) Someone who is not paid for performing duties is a(n)
A)fiduciary agent.
B)charitable agent.
C)implied agent.
D)gratuitous agent.
Q2) When a principal is partially disclosed
A)the agent and principal will be jointly and severally liable on the contract.
B)the agent and principal will be only jointly liable on the contract.
C)only the principal can be liable.
D)only the agent is liable.
Q3) An agency will be terminated in all but which one of the following situations?
A)The principal and agent agree on an agency relationship to sell a boat,and the boat is sold.
B)A travel agent files for individual bankruptcy under Chapter 13.
C)The agent violates his duty of loyalty.
D)An electrician,an agent of a contractor,has her license revoked.
Q4) The bankruptcy of an agent automatically terminates an agency relationship.
A)True
B)False
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Chapter 29: Employment and Labor Law
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Q1) Orson was fired from his job behind the ticket counter at the airport.He was loudly told to put his personal belongings into a plastic bag and was led out by security guards in front of his coworkers and customers.His supervisor told him not to return.Orson's employer faces potential liability for
A)intentional infliction of emotional distress.
B)whistleblowing.
C)defamation.
D)violation of the FLSA.
Q2) The duty of fair representation created by the NLRA requires that A)a union treat all members fairly,impartially,and in good faith.
B)a union must pursue any member's grievance against the employer.
C)an employer,in communications with employees during a union organizing effort,must fairly represent the effects it believes a union will have on the company.
D)the NLRB certify only proposed bargaining units that it thinks the union can properly represent.
Q3) Some courts have held that employee handbooks create binding contract terms.
A)True
B)False
Q4) Discuss the requirements of the Family and Medical Leave Act.
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Chapter 30: Employment Discrimination
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Q1) Which of the following statements is TRUE regarding immigration under Title VII?
A)An interviewer cannot ask an applicant if he or she is authorized to work in the United States.
B)Once hired,a person must show three forms of evidence proving he or she is authorized to work in the United States.
C)It is illegal for employers to discriminate against non-citizens because "national origin" is a protected category.
D)Once hired,employers must turn I-9 records over to the immigration office.
Q2) The Age Discrimination in Employment Act protects persons
A)between 30 and 65 years of age.
B)age 70 and older.
C)between 45 and 70 years of age.
D)age 40 and older.
Q3) Title VII of the Civil Rights Act of 1964 applies to employers with any number of employees,making it illegal to discriminate on the basis of race,color,religion,sex,or national origin.
A)True
B)False
Q4) Discuss the two categories of sexual harassment.
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Chapter 31: Starting a Business: Llcs and Other Options
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Q1) The term "S Corporation" comes from
A)the Internal Revenue Code.
B)the FTC rules.
C)the Securities and Exchange Commission.
D)state corporation law.
Q2) Which of the following statements regarding social enterprises is TRUE?
A)Social enterprises are essentially nonprofit organizations.
B)To become a socially conscious organization,one-half of the shareholders must approve.
C)The focus of social enterprises is the motto "reduce,reuse,recycle."
D)Unlike charities,social enterprises can sell stock to investors.
Q3) Charles and Ellen,an unmarried couple,run an ice cream store.The business is not incorporated,and they have filed no formation papers with the state.Their business is a A)sole proprietorship.
B)partnership.
C)franchise.
D)limited liability company.
Q4) What is a joint venture? Briefly explain the tax and liability implications of a joint venture.
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Chapter 32: Partnerships
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Q1) In Banker v.Estate of Banker the court held that
A)it could not intervene in the affairs of a partnership.
B)when proof of an agreement is lacking,a partner cannot receive compensation for work done.
C)regardless of a written agreement to the contrary,a partner can receive compensation for work done.
D)all parties doing work for a partnership are entitled to compensation for work done to further the partnership business.
Q2) Anne and Mike were winding up their partnership.Mike was approached by a person who wanted the partnership to do some work for him.Mike agreed that the partnership would do the work.Generally speaking,in such a situation
A)Anne is not liable since the partnership was in the winding-up phase.
B)Anne is not liable since she did not consent to the work.
C)Anne is not liable since Mike's conduct was wrongful.
D)Anne is liable unless she filed a statement of dissolution with the secretary of state within 90 days of when Mike entered the contract.
Q3) Identify and briefly discuss the management rights and duties of a partner.
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Chapter 33: Life and Death of a Corporation
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Q1) Denise is a promoter for a proposed corporation,EVR-Young Corp.As promoter,she signed a three-year lease to rent office space in an office park.She signed her name and indicated below her signature that she was signing as "promoter for EVR-Young Corp. ,a company yet to be incorporated."
EVR-Young is never incorporated.The lessor believes that Denise is personally liable for any damages it will sustain as a result of the three-year lease having to be breached.Is Denise personally liable?
Q2) MegaCorp has five directors.The company has 1,050 shares of voting stock.Jessica would like to purchase enough stock to elect herself to the board of directors.The company allows for cumulative voting.Explain the concept of cumulative voting and also state how many shares of MegaCorp stock Jessica will need to own to assure herself a place on the board of directors.
Q3) The Levitt Corporation charter authorizes 500,000 shares of stock.This stock is referred to as
A)treasury stock.
B)preferred stock.
C)authorized stock.
D)common stock.
Q4) What are some of the advantages for a business to incorporate in Delaware?
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Chapter 34: Management Duties
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Q1) Generally,managers that make informed decisions will not be liable even if their decision turned out badly.
A)True
B)False
Q2) Amy is on the board of directors of Computers Plus.Computers Plus is looking for a warehouse to purchase.Amy owns a warehouse.In order for Amy to sell her warehouse to Computers Plus,
A)the transaction must be fair to both Amy and Computers Plus.
B)the disinterested members of the board of directors must approve the transaction.
C)she must resign her position on the board of directors of Computers Plus before any negotiations for the warehouse begin.
D)a court must review the opportunity to determine its favorability.
Q3) The business judgement rule is designed to protect
A)only the manager.
B)only the manager's decision.
C)both the manager and the manager's decision.
D)a business from a conflict of interest.
Q4) List and discuss the three ways to acquire control of a corporation.
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Chapter 35: Shareholder Rights
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Q1) Lucy owns 10 shares of stock in Quamba,Inc.Lucy wishes to place a proposal in a company's proxy statement to be voted on at the shareholders' meeting.Pursuant to the SEC rules,before Lucy is allowed to place her proposal on the proxy statement,she must A)have owned continuously for one year at least 1 percent of the company and $2,000 or more of the stock.
B)have owned continuously for one year at least 1 percent of the company or $2,000 or more of the stock.
C)have the permission of the board of directors.
D)have been a stockholder for at least two years.
Q2) The percentage increase in stock price appreciation and dividends is referred to as A)net returns on invested capital.
B)price/earnings ratio.
C)total shareholder return.
D)financial leverage ratio.
Q3) Vernon and David are the controlling shareholders in E-treme,Inc.Discuss the obligations that Vernon and David owe to the minority shareholders.
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Chapter 36: Bankruptcy
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Q1) Kathleen filed for voluntary bankruptcy,and the automatic stay went into effect.The automatic stay
A)acts to automatically discharge Kathleen's debts.
B)prohibits creditors from collecting debts against Kathleen that arose before she filed bankruptcy.
C)stops only secured creditors from taking any act to collect,assess,or recover a claim against Kathleen that arose before she filed bankruptcy.
D)stops creditors from trying to collect from Kathleen,but it does not stop them from filing lawsuits against her.
Q2) Which of the following is a primary goal of the Bankruptcy Code?
A)to preserve as much of the debtor's property as possible
B)to pay off the debtor's creditors as quickly as possible
C)to secure debt counseling for the debtor
D)to keep the debtor from falling behind in payments
Q3) Chapter 7 bankruptcy is also known as
A)reorganization.
B)reaffirmation.
C)voluntary bankruptcy.
D)straight bankruptcy.
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Chapter 37: Securities Regulation
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Q1) Officials from Vital Corporation are traveling around the country making presentations to prospective investors.The officials are conducting a A)prospectus.
B)secondary offering.
C)road show.
D)private offering.
Q2) In determining liability for errors in a registration statement,the plaintiff must prove that there was a misstatement or omission that was important enough to affect the plaintiff's investing decision.In other words,the misstatement or omission needs to be
A)material.
B)unrefutable.
C)accredited.
D)firm.
Q3) Regulation Crowdfunding permits privately held companies to sell up to $1 million in securities in any 12-month period provided they meet a number of criteria.
A)True
B)False
Q4) Discuss the process an issuer follows for either an IPO or a secondary offering.
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Chapter 38: Antitrust
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Q1) Explain horizontal price-fixing and vertical minimum and maximum price-fixing.Discuss their status under antitrust laws.
Q2) What is the Justice Department's current position relative to reciprocal dealing agreements?
A)The Justice Department actively enforces this illegal activity.
B)The Justice Department is only concerned about these agreements if a large,national company is involved.
C)The Justice Department only gets involved if such an agreement will foreclose a significant share of the market and if the participants agreed not to buy from other competitors.
D)The Justice Department only gets involved if such an agreement is "decidedly uneven," meaning that one company benefits significantly more than the other.
Q3) An automatic breach of antitrust laws is called a A)refusal to deal.
B)per se violation.
C)conscious parallel.
D)rule of reason violation.
Q4) Discuss when monopoly power is not a violation of Section 2 of the Sherman Act.
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Chapter 39: Consumer Protection
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Q1) The issue in the POM Wonderful,LLC v.FTC case involved
A)the type of evidence necessary to support health claims in advertisements.
B)violation of the Fair Debt Collection Act.
C)the legality of the Consumer Product Safety Act of 1972.
D)violation of the Magnuson-Moss Warranty Act.
Q2) Which of the following statements expresses the purpose of the Truth-in-Lending Act?
A)to require lenders to charge a "reasonable" rate of interest
B)to regulate interest rates and terms of loans
C)to provide consumers with information necessary to make the best credit decision
D)to help lenders limit state laws
Q3) The Trimbles apply to Community Bank for an installment loan of $20,000 to remodel their bathroom.Discuss the disclosures Community Bank is required to make.
Q4) In 30-year mortgages,the finance charge typically exceeds the amount of the principal.
A)True
B)False
Q5) What must a seller disclose under the Magnuson-Moss Warranty Act?
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Chapter 40: Environmental Law
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Q1) The prevention of significant deterioration (PSD)program was developed to prevent deterioration in air quality that would create health problems for those affected.
A)True
B)False
Q2) Which of the following would be considered a stationary source?
A)a locomotive
B)an automobile
C)a factory
D)All of these are correct.
Q3) The disposal of nonhazardous solid waste is
A)generally regulated by state law,but the federal government sets guidelines that must be followed.
B)the only area of environmental concern that has yet to be regulated by federal action. C)completely governed by federal administrative law.
D)currently the subject of great debate since the federal government has declared such activity falls under the Endangered Species Act and,therefore,a small annoying fly known to frequent landfills must be protected.
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Chapter 41: Intellectual Property
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Q1) The Supreme Court has held that parody of copyrighted material is a violation of copyright law.
A)True
B)False
Q2) In order for a copyright holder to collect money damages from a person who used copyrighted material,it must be proven that
A)the infringement was intentional.
B)the copyright holder sustained more than $500 in actual damages.
C)the copyrighted material contained the copyright symbol,name of the copyright holder,and the year of copyright.
D)the infringer actually copied the work.
Q3) A company's trade secret lasts for
A)20 years after the application is filed.
B)70 years after the death of the creator.
C)10 years,but it can be renewed for an unlimited number of terms as long as it is used.
D)as long as it is kept confidential.
Q4) Identify the main provisions of the Digital Millennium Copyright Act.
Q5) Briefly define patent,copyright,and trademark,and explain how long they last.
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Chapter 42: Real Property and Landlord Tenant Law
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Q1) If the court awards a partition to co-tenants,the court will normally attempt a partition by kind.If partition by kind is impossible because there is no fair way to divide the property,the court will order the real estate sold and the proceeds equally divided.
A)True
B)False
Q2) Discuss the tenant's and the landlord's basic duties under a landlord-tenant relationship.
Q3) Ali and Latosha bought a house through a mortgage they secured from their local bank.When they failed to make their mortgage payments,the bank used ________ to foreclose on the property and sell it.
A)a lien
B)adverse possession
C)easement by prescription
D)reversion
Q4) Owners in a joint tenancy with the right of survivorship cannot transfer their interest during their lifetime.
A)True
B)False
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Chapter 43: Personal Property and Bailment
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Q1) Bruce tells his son,"You can have my 1990 truck,but if your grades fall,I'm taking it back." Bruce
A)has made no gift.
B)has made a "revocable gift," which is effective as a gift as long as the stated condition is met.
C)intended to transfer ownership.
D)has made a constructive gift.
Q2) George gave his great-grandfather's pocket watch to Nurse Nadene because he expected to die soon.This is a(n)
A)testamentary gift.
B)inter vivos gift.
C)executed gift.
D)gift causa mortis.
Q3) Ali took a seat at a booth at Midway Diner.Between the salt and pepper shakers,Ali noticed something glittering.It was a diamond ring.The ring is
A)abandoned property.
B)an accession.
C)mislaid property.
D)treasure trove.
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Chapter 44: Planning for the Future: Wills, Trusts and Insurance
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Q1) The percentage of a decedent's estate that a spouse can claim is called a forced share.
A)True
B)False
Q2) Pamela applies for a life insurance policy with Forever Young Insurance Company.When completing the application form about past surgeries,Pamela forgot about a past outpatient surgery when she had an infected hang-nail removed and her toe treated.One year after issuing the policy,Pamela died suddenly from a brain aneurysm.Forever Young denies payment under the policy based on misrepresentation.If Pamela's sister,Paula,sues Forever Young,she will most likely
A)win,because once an application has been accepted,an insurer may not use a misrepresentation on the application to avoid liability.
B)win,because Pamela's misrepresentation was not a material fact and did not increase Forever Young's risk in insuring Pamela's life.
C)lose,because Pamela's application contained a misrepresentation of material fact.
D)lose,because an insurer can always use any misrepresentation on an application to avoid paying.
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