Business Law and Regulation Exam Bank
Course Introduction
Business Law and Regulation provides students with a comprehensive understanding of the legal environment in which businesses operate. The course covers foundational concepts of contract law, corporate governance, agency, torts, and intellectual property, as well as the regulatory frameworks that affect commercial transactions. Students will explore the roles of governmental agencies, compliance requirements, and the impact of regulations on business decision-making. Emphasis is placed on real-world case studies, ethical considerations, and the development of practical skills to identify and assess legal risks in business contexts.
Recommended Textbook
Business Law Text Cases An Accelerated Course 14th Edition by Roger LeRoy Miller
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Page 2
Chapter 1: Law and Legal Reasoning
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Sample Questions
Q1) Kevin is a judge hearing the case of Local Dispatch Co. v. National Transport Corp. Applying the relevant rule of law to the facts of the case requires Kevin to find previously decided cases that, in relation to the case under consideration, are A) as different as possible.
B) as similar as possible.
C) at odds.
D) exactly identical.
Answer: B
Q2) A provision in the California state constitution conflicts with a provision in the U.S. Constitution. If challenged
A) neither provision will be enforced.
B) the provisions will be balanced to reach a compromise.
C) the state provision, not the U.S. Constitution, will be enforced.
D) the U.S. Constitution, not the state provision, will be enforced.
Answer: D
Q3) Courts do not depart from precedents.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Business and the Constitution
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Q1) If a tax measure is reasonable, it is generally held to be within the national taxing power.
A)True
B)False
Answer: True
Q2) Savers Mart, Inc., distributes its merchandise to retail outlets on an interstate basis. Under the commerce clause, Congress has the power to regulate
A) any commercial activity in the United States.
B) only activities that are in intrastate commerce.
C) only activities that are in local commerce.
D) only activities that are not in commerce.
Answer: A
Q3) A law that discriminates based on gender must substantially relate to an important government objective to be valid under the equal protection clause.
A)True
B)False
Answer: True
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Chapter 3: Courts and Alternative Dispute Resolution
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Sample Questions
Q1) The Kentucky Supreme Court rules against Luther in a case against Motor Cars, Inc. Luther wants to appeal the case to the United States Supreme Court. Luther must ask the Court to issue a writ of A) appeal.
B) certiorari.
C) jurisdiction.
D) summons.
Answer: B
Q2) In mediation, the mediator proposes a solution and makes a decision resolving the dispute.
A)True
B)False
Answer: False
Q3) The verdict in a summary jury trial is binding.
A)True
B)False
Answer: False
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Chapter 4: Tort Law
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Sample Questions
Q1) Specifically targeting the customers of a competitor is always a legitimate business practice.
A)True
B)False
Q2) Proximate cause exists when the connection between an act and an injury is strong enough to justify imposing liability.
A)True
B)False
Q3) Harm must be foreseeable to be considered the proximate cause of an injury in negligence.
A)True
B)False
Q4) A defamatory statement must be communicated to a third party to be actionable.
A)True
B)False
Q5) The bases of all torts are wrongs and compensation.
A)True
B)False
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Chapter 5: Criminal Law and Cyber Crime
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Sample Questions
Q1) A stolen credit card is more likely to hurt the cardholder than a merchant.
A)True
B)False
Q2) One element that normally must exist for a person to be convicted of a crime is the performance of a prohibited act.
A)True
B)False
Q3) No federal statute specifically addresses cyber crime.
A)True
B)False
Q4) Luce receives from Mim a marimba stolen from Nell. To be criminally liable, Luce must know
A) Mim.
B) Nell.
C) that the marimba is stolen and Luce must intend to keep it.
D) what a marimba is.
Q5) Embezzlement can be committed only by physically taking property from the possession of another.
A)True
B)False
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Chapter 6: Business Ethics
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Sample Questions
Q1) Lucas is a business manager for Micro Manufacturing Company. Ethical dilemmas that Lucas is not likely to encounter include deciding
A) the kind of pizza to order for a company meeting.
B) whether to lay off employees or take a loss in corporate profits.
C) whether to admonish an employee making rude jokes in the workplace.
D) what to tell a reporter about the recent drop in corporate stock prices.
Q2) Invested Capital Corporation provides other firms with funds to expand operations. If Invested Capital strictly complies with existing laws, the firm's business ethics obligations will
A) be entirely met.
B) not be met.
C) be partially met.
D) not need to be met.
Q3) The study of ethics goes beyond legal requirements to evaluate what is right for society.
A)True
B)False
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Page 8
Chapter 7: Nature and Terminology
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Q1) One of the requirements of a valid contract is an adequate price.
A)True
B)False
Q2) An unenforceable contract is one that cannot be enforced because of certain legal defenses against it.
A)True
B)False
Q3) The only requirement of a valid contract is that it be voluntarily entered into.
A)True
B)False
Q4) A promise is a declaration that something will or will not happen in the future.
A)True
B)False
Q5) A court will normally interpret the language of a contract according to what the parties claim their intent was when they made it.
A)True
B)False
Q6) All contracts must be in writing to be enforceable.
A)True
B)False
Page 9
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Chapter 8: Agreement in Traditional and E-Contracts
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Sample Questions
Q1) Gayla tells Franco that she will pay him $50 to haul the trimmed tree limbs and other lawn debris from her property. Franco's acceptance is complete
A) as soon as he says he will do the job.
B) once he starts to work.
C) only after he hauls away the debris.
D) when he hears the offer.
Q2) An acceptance must be unequivocal.
A)True
B)False
Q3) Fresh Service, Inc., offers to deliver produce to Growers' Market's customers for a certain price. Fresh's intent to extend a serious offer to Growers' Market is determined by reference to Fresh's
A) assumptions.
B) beliefs.
C) intentions.
D) words and conduct.
Q4) An expression of opinion-"this is excellent"-is an offer.
A)True
B)False
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Chapter 9: Consideration, Capacity, and Legality
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Sample Questions
Q1) If an illegal contract is executory, either party can always enforce it.
A)True
B)False
Q2) Refer to Fact Pattern 9-2. Sal and Tasty
A) may rescind their entire contract.
B) may rescind their contract to the extent that it is executory.
C) must perform their entire contract.
D) must perform the part of their contract that is executory.
Q3) The courts are usually not concerned if one of the wrongdoers in an illegal contract is unjustly enriched at the expense of the other.
A)True
B)False
Q4) A person who is intoxicated can avoid liability on any contract due to the intoxication.
A)True
B)False
Q5) A bargain is unconscionable if it is grossly unfair.
A)True
B)False
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Chapter 10: Defenses to Contract Enforceability
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Q1) A contract involving interests in property of any kind must be in writing to be enforceable.
A)True
B)False
Q2) Don enters into a contract with Eve, who claims to have access to a stock-trading algorithm that will multiply an investment many times over. When the results do not match this promise, Don learns that Eve does not have access to any unique software and files a suit, alleging fraud. Proof of an injury is required to A) recover damages.
B) rescind the contract.
C) undo Eve's influence.
D) punish the defendant.
Q3) An oral contract may be enforceable if the person making the promise could foresee that the promisee would rely on the promise.
A)True
B)False
Q4) A written contract for a transfer of land is usually enforceable.
A)True
B)False
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Chapter 11: Third Party Rights and Discharge
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Sample Questions
Q1) Carol and Bob enter into a contract for Bob to perform waste management services for Carol's commercial properties. Later, Bob alters a material term-increases the price-without Carol's knowledge or consent. She
A) can alter a material term, such as the payment date, without Bob's consent.
B) can treat the contract as discharged.
C) must adapt her performance accordingly.
D) must determine whether Bob's alteration constitutes substantial performance.
Q2) No contract can prohibit delegation of the duties of the contract.
A)True
B)False
Q3) Rights to receive funds can be assigned.
A)True
B)False
Q4) A material breach occurs when performance is substantial, but not complete.
A)True
B)False
Q5) A delegation relieves the party making it of the obligation to perform.
A)True
B)False
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Chapter 12: Breach of Contract and Remedies
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Sample Questions
Q1) Nominal damages are awarded for the breach of a contract to nominate someone or something to a higher office, position, or category.
A)True
B)False
Q2) Renew Turf, Inc., enters into a contract with Sports Park to provide surface material for Sports Park's baseball fields by October 1 for a series to begin October 5. The contract specifies an amount to be paid if the contract is breached. This is a liquidated damages clause if the amount is
A) meant to pay for additional liquid sealant in the event of damage.
B) a reasonable estimate of the loss on a breach.
C) designed to penalize the breaching party.
D) intended to quickly provide cash to the nonbreaching party.
Q3) Compensatory damages compensate a party injured by a breach of contract by punishing the party that breached the contract.
A)True
B)False
Q4) Restitution is limited to rescission cases.
A)True
B)False
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Chapter 13: Intellectual Property Rights
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Sample Questions
Q1) Copyright protection is automatic-registration is not required.
A)True
B)False
Q2) A copy must be exactly the same as the original to infringe a copyright.
A)True
B)False
Q3) Resurgent Corporation designs a new mobile device that the firm names "SyFye." The company can obtain patent protection for A) the device.
B) the idea for the device.
C) the name "SyFye."
D) none of the choices.
Q4) All aspects of software are protected by copyright law.
A)True
B)False
Q5) A patent applicant must demonstrate that an invention is marketable to receive a patent.
A)True
B)False
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Chapter 14: Internet Law, Social Media, and Privacy
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Sample Questions
Q1) Federal law permits the intentional interception of any wire, oral, or electronic communication.
A)True
B)False
Q2) Global Reach Corporation uses invisible files created on the computers, smartphones, and other mobile devices of visitors to its Web sites to track the users' browsing activities. These files are
A) licenses.
B) cookies.
C) cloud computing.
D) a violation of the law.
Q3) Refer to Fact Pattern 14-1. One of the advertisers-either Sound Financials or Instable Investments-is acting within the bounds of federal law. Federal law permits the sending of
A) unsolicited commercial e-mail.
B) solicited commercial e-mail only.
C) commercial e-mail to randomly generated addresses.
D) commercial e-mail to addresses "harvested" from Web sites through the use of specialized software.
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Page 16
Chapter 15: The Formation of Sales and Lease Contracts
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Sample Questions
Q1) Clean Machines Company makes washing machines. Over the phone, Clean offers to sell Dealers Appliance Outlet one hundred model EZ2000 washers at a price of $150 per unit. Clean says that it will keep the offer open for ninety days. Dealers responds that within two or three weeks it will decide whether to accept. One week later, Clean faxes, and Dealer receives, notice that the offer is withdrawn. Dealer immediately phones Clean to accept the $150-per-unit offer. When Clean refuses to deliver at that price, Dealer files a suit. Clean asserts, first, that there is no contract and, second, that if there is a contract, it is unenforceable. Discuss Clean's assertions.
Q2) If the parties to a contract for a sale of goods have not agreed on a price, a court will determine a reasonable price at the time for delivery.
A)True
B)False
Q3) A merchant is a person who deals in goods of the kind involved in the sales contract or who holds herself or himself out as having skill or knowledge peculiar to the practices or goods being purchased or sold.
A)True
B)False
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Chapter 16: Performance, Breach, and Warranties of Sales and
Lease Contracts
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Sample Questions
Q1) Grande Floors, Inc., and Home Decor Stores enter into a contract for a sale of carpeting. Grande Floors, a merchant who deals in goods of the kind sold, makes express warranties in connection with the sale. Under the UCC, at the time a contract is formed, an express warranty can be disclaimed or modified
A) by clear, conspicuous language called to the buyer's attention.
B) by implied affirmations of fact relating to the goods.
C) in any way that the seller sees fit for the ordinary purpose.
D) in no way.
Q2) Water Pipe Company includes in its contracts a provision that reads, in large red letters, "There are no warranties that extend beyond the description on the face hereof."
This disclaimer negates
A) the implied warranty of fitness for a particular purpose.
B) the implied warranty of merchantability.
C) the implied warranty of title.
D) none of the choices.
Q3) If warranties are inconsistent, implied warranties displace express warranties. A)True B)False
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Chapter 17: Agency Relationships in Business
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Sample Questions
Q1) A special power of attorney permits an agent to transact all business for a principal.
A)True
B)False
Q2) Kevin is an agent for Lookout Mountain Accountants, Inc. On Lookout Mountain's behalf and at its request, Kevin pays Nathan for software designed for the management of Lookout Mountain's services. Kevin's right to obtain the amount of those payments from Lookout Mountain arises under the principal's duty of A) compensation.
B) cooperation.
C) indemnification.
D) reimbursement.
Q3) Employment laws apply to the employer-independent contractor relationship.
A)True B)False
Q4) If the principal petitions for bankruptcy, the agency is usually terminated. A)True
B)False
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Chapter 18: Small Businesses and Limited Liability Companies
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Q1) Selections, a partnership, operates a gift shop. Selections has five partners. Tony has a one-third interest in the partnership. Each of the other partners has a one-sixth interest. With respect to management decisions
A) a majority of the partners must agree.
B) Tony rules.
C) the senior partner decides.
D) four of the partners must agree.
Q2) A sharing of profits from a business creates a presumption that a partnership exists. A)True B)False
Q3) Home Healthcare, LLC's owners are Inez and Jan. For purposes of entering into contracts, Home Healthcare is
A) an aggregate of its owners.
B) a non-entity
C) a legal entity apart from its owners.
D) a non-participating third party.
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Chapter 19: Corporations
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Q1) Brad is a shareholder of Cloud Servers Inc. He will be deemed to have a fiduciary duty to Cloud and its minority shareholders if he has a sufficient number of shares to A) assert the business judgment rule.
B) bring a shareholder's derivative suit.
C) exercise de facto control.
D) participate in a cumulative vote.
Q2) Ann is a corporate officer for Blooming Flora, Inc. As a corporate officer, Ann is A) the head of the board of directors.
B) an employee of the firm.
C) the employer of the firm.
D) in charge of approving the shareholders.
Q3) In corporate law, acts of a corporation that are beyond its express or implied powers are de facto acts.
A)True
B)False
Q4) A vacancy on the board of directors can be filled by the board itself.
A)True
B)False
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