Business Law
Exam Solutions
Course Introduction
Business Law examines the legal framework within which businesses operate, focusing on the principles and regulations that govern commercial transactions, organizational structures, and professional conduct. This course covers topics such as contract law, the sale of goods, agency relationships, employment law, intellectual property, and dispute resolution. Students will gain an understanding of how laws protect both businesses and consumers, how to identify and manage legal risks, and how ethical considerations influence business decision-making. Through case studies and practical examples, learners will develop the analytical skills necessary to navigate the legal aspects of the business environment.
Recommended Textbook
Business Law and the Legal Environment Standard Edition 6th Edition by Jeffrey F. Beatty
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45 Chapters
2060 Verified Questions
2060 Flashcards
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Chapter 1: Introduction To Law
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Source URL: https://quizplus.com/quiz/19813
Sample Questions
Q1) The Occupational Safety and Health Administration promulgated a rule requiring warehouse employees to wear hardhats when in the vicinity of an operating forklift.The purpose of the hardhats is to protect employees from danger of falling objects.This rule is:
A) an executive order.
B) a statute.
C) common law.
D) administrative law.
Answer: D
Q2) In the case of Panavision Int'l v.Toeppen,the Ninth Circuit Court of Appeals affirmed the district court's decision.This means that the Ninth Circuit approved the district court's decision and upheld the outcome in the case.
A)True
B)False
Answer: True
Q3) Under the natural law theory of jurisprudence,an unjust law is no law at all.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Business Ethics And Social Responsibility
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Sample Questions
Q1) Tianhui was recently hired as a sales representative by Oxtron,Inc.Before leaving on his first sales trip,a number of the other sales representatives take Tianhui aside and tell him that it is customary for the sales representatives to "pad" (increase)their expense reports each month by 20%.Use utilitarian ethics to decide what Tianhui should do about the expense report he submits to Oxtron.
Answer: According to utilitarian ethics,Tianhui could justify padding his report because: It will increase his overall happiness.
Increase in pay will help him feel better about going on trips,and make him more successful.
Help him "fit in" with the other sales staff,increasing morale for all.
The end result will be better because he will more likely stay with this job,decreasing employee turnover costs.
Q2) John Akers,former chairman of IBM,argues that ethics are not important to economic competitiveness.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Dispute Resolution
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Source URL: https://quizplus.com/quiz/19815
Sample Questions
Q1) In order for a federal court to have jurisdiction,there must be a federal question involved and at least $75,000 in dispute.
A)True
B)False
Answer: False
Q2) A prospective juror was excused from serving after being questioned by the plaintiff's attorney.No reason was given for the rejection.This would be accomplished by the use of a peremptory challenge.
A)True
B)False
Answer: True
Q3) In a civil case,the plaintiff must prove the case:
A) by a preponderance of the evidence.
B) by clear and convincing evidence.
C) beyond a reasonable doubt.
D) None of the above; the burden of proof is on the defendant.
Answer: A
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Chapter 4: Common Law,Statutory Law,And Administrative Law
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Q1) From tax returns,the Internal Revenue Service (IRS)has information concerning Elizabeth Jones.Generally,the IRS may not divulge this information to the Federal Bureau of Investigation unless Elizabeth has given written consent.
A)True
B)False
Q2) The majority of work done by legislative bodies is performed in committees.
A)True
B)False
Q3) What is the major distinction between executive and independent agencies?
A) Executive agencies govern business issues while independent agencies regulate individual matters.
B) The President has greater control over executive agencies.
C) The Administrative Procedure Act regulates independent agencies but not executive agencies.
D) Subpoenas may be issued by independent agencies; executive agencies do not have subpoena power.
Q4) Administrative agencies exist at the federal,state,and local levels.
A)True
B)False
6
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Chapter 5: Constitutional Law
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Sample Questions
Q1) The Framers of our Constitution,a true cross section of the population at the time,created the Constitution by amending the Articles of Confederation,which had been the governing document of the colonists.
A)True
B)False
Q2) The Bill of Rights refers to:
A) the inalienable rights found at the beginning of the Constitution. B) the first ten amendments to the Constitution.
C) a specific listing of individual rights found in the original text of the Constitution. D) a grouping of individual rights set forth by the United States Supreme Court shortly after the Constitution was ratified by the states.
Q3) Tim received a letter from his state college stating he had been expelled from the school.The letter stated his finance professor reported him to the Dean's office for cheating and that a committee had decided to expel him.He was reminded in the letter he had been disciplined earlier that same year for plagiarizing a term paper.Tim believes his due process rights have been violated by the college.Discuss what factors should be considered to determine the validity of Tim's claim.
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Page 7
Chapter 6: Intentional Torts And Business Torts
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Sample Questions
Q1) Ahmi was a witness in a lawsuit.When asked why he fired Rana,Ahmi replied,"Rana was fired for willful misconduct." Indeed,Rana had not engaged in any misconduct.Rana will be able to successfully sue Ahmi for defamation based on what Ahmi said in court.
A)True
B)False
Q2) The elements in a defamation case are:
A) defamatory statement; falseness; communication; and injury.
B) a contract; knowledge of the contract; improper inducement; injury.
C) false or misleading fact statements; statements in commercial advertising; likelihood of harm.
D) duty; breach of duty; proximate causation; and damages.
Q3) Shortly after Brian started to work at Trevit,Inc.,a co-worker,Ann,began asking him out.Brian said no.Nevertheless,Ann persisted.One day Ann playfully,but intentionally touched Brian "below the belt." Which statement is correct?
A) Ann defamed Brian.
B) Ann committed the tort of trespass.
C) Ann committed the tort of interference with a prospective advantage.
D) Ann committed the tort of battery.
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8
Chapter 7: Negligence And Strict Liability
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Sample Questions
Q1) Most states recognize some form of comparative negligence.
A)True
B)False
Q2) If a court applies res ipsa loquitur:
A) the plaintiff needs to prove the case by a preponderance of the evidence.
B) the plaintiff must prove the case by clear and convincing evidence.
C) the defendant has the burden of proving he or she is not liable.
D) the defendant is strictly liable.
Q3) A plaintiff sues in negligence but has no direct proof that the defendant behaved unreasonably.Which of the following is most likely to help the plaintiff?
A) Res judicata.
B) Stare decisis.
C) Res ipsa loquitur.
D) Mens rea.
Q4) Punitive damages are awarded:
A) for past and future medical expenses.
B) to repay the victim for losses suffered.
C) to punish the defendant.
D) for past and future pain and suffering.
Q5) Discuss the concepts of contributory negligence and comparative negligence.
Page 9
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Chapter 8: Crime
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Sample Questions
Q1) Approximately how much merchandise is stolen from United States retail stores every year?
A) $10 million
B) $50 million
C) $10 billion
D) $25 billion
Q2) The parties to a criminal trial are the government and the defendant.
A)True
B)False
Q3) Under the laws of most states,a corporation cannot be held responsible for committing crimes.
A)True
B)False
Q4) The fraudulent conversion of property which is already in the defendant's possession is:
A) money laundering.
B) exclusion.
C) embezzlement.
D) trespassory taking.
Q5) Compare and contrast money laundering and embezzlement.Give an example of each.
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Chapter 9: International Law
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Sample Questions
Q1) What is a major argument against the GATT Treaty?
A) The United States will have to compete against countries with unlimited pools of exploited labor.
B) The United States will lose millions of jobs involving low-end employment and these types of workers are least capable of finding other employment.
C) Both a and b above are major arguments against GATT.
D) Neither a nor b above is a major argument against GATT.
Q2) Although the United States government officially signed the GATT treaty,the United States Congress has refused to ratify the agreement.
A)True
B)False
Q3) MagNet is a U.S.company based in Utah.It is negotiating to sell $4 million worth of computer goods to a French company,Legran.MagNet's attorney suggests that payment be by a letter of credit.What is a letter of credit and why does MagNet's attorney recommend payment by letter of credit?
Q4) Explain the origin and purpose of the World Trade Organization.
Q5) Explain what the General Agreement on Tariffs and Trade (GATT)is and give pro and con arguments concerning this agreement.
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Chapter 10: Introduction To Contracts
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Sample Questions
Q1) John enters into a contract to paint Chad's house.When Chad decides on a color,John will buy the paint and paint the house for the price of $2,500.This contract is governed by:
A) the common law of contracts governs because this is a mixed contract (one for services and goods).
B) the common law of contracts governs because the predominant factor of the contract is for the sale of services and not goods.
C) the Uniform Commercial Code governs because a sale of goods is involved.
D) both the common law and the Uniform Commercial Code will govern this contract.
Q2) Some of the elements of a contract are agreement,consideration,legality,and capacity.
A)True
B)False
Q3) Paid surrogacy contracts are viewed by the legislative majority in all states as immoral and illegal.
A)True
B)False
Q4) List and briefly describe the basic elements of a contract.
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Page 12
Chapter 11: Agreement
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Sample Questions
Q1) Dick offers to sell Jane his 1955 Thunderbird convertible.Before Jane can accept the offer,lightning strikes the car and it is totally destroyed.Which of the following is true?
A) Jane can still accept the offer and John must find a 1955 Thunderbird to sell.
B) The offer is terminated by law.
C) Dick can still revoke his offer so long as he does so before Jane accepts.
D) Jane can still accept the offer. She will be entitled to the insurance proceeds.
Q2) The Johnsons decided to sell their summer cabin on Beech Lake.They sent flyers out to all who previously had expressed an interest in buying the cabin stating that they were planning on selling their cabin.The flyer described the location of the property,the size of the lot,and the price.If one of the recipients responds by sending a letter accepting,an agreement:
A) will not be formed because the flyer was sent out as an invitation to make an offer.
B) will be formed because the first to respond gets the property.
C) will be formed because the price is included.
D) will not be formed because of the parol evidence rule.
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Chapter 12: Consideration
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Sample Questions
Q1) Douros Realty & Construction Co.had a lead on a "prime" piece of real estate.Although Douros did not have a listing agreement with the seller of the property,he contacted Kelley Properties.Douros knew that Kelley was looking for a location for a commercial development.Douros contacted Kelley stating only that he had the "finest,most outstanding,viable location in the county and it just came on the market." Douros said he would reveal the location of the property and the owner's name if Kelley would sign an agreement which would require Kelley to pay a 10% commission if a sale of the property resulted.The agreement was signed.Four months later,Kelley bought the property after negotiating the deal himself.Kelley claims he does not owe a commission to Douros because there was insufficient consideration to support the payment of commission so large.Kelley claims that all Douros did in the entire transaction was to reveal the location of the property and the owner's name.Was there sufficient consideration to make this promise enforceable?
Q2) An agreement in which a buyer agrees to buy all the goods produced by a manufacturer is known as:
A) a requirements contract.
B) an output contract.
C) an exclusive dealing contract.
D) an option contract.
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Page 14
Chapter 13: Legality
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Sample Questions
Q1) Wendell,new to the area,selects a doctor from the telephone book and visits that doctor to have a splinter extracted.Unbeknownst to Wendell,the doctor has never passed the state licensing exams.Later,when Wendell discovers the truth,he refuses to pay his bill.If the doctor sues for recovery of the fee,will the court support the doctor's claim?
A) Yes, it was up to Wendell to verify the doctor's qualifications prior to having the splinter extracted.
B) No, the court is likely to take the position that it is not in the public's best interests to enforce contracts with unlicensed doctors.
C) It depends on whether Wendell's injury healed properly.
D) No, but the doctor could probably recover under quasi-contract.
Q2) L & M loaned Joan $400 so that she could buy her textbooks for the current semester.L & M's terms for repayment of the loan (including interest)are,$200 in two months,$200 in four months,and another $100 at the end of the fifth month.The legal maximum rate of interest on this type of loan is six percent per annum.L & M's loan is usurious.
A)True
B)False
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Page 15
Chapter 14: Capacity And Consent
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Sample Questions
Q1) When a party to a contract makes a unilateral mistake,the contract:
A) generally can be rescinded by the mistaken party. B) is void.
C) can be rescinded by either party.
D) generally cannot be rescinded by the mistaken party unless the contract is unconscionable or it is proven that the nonmistaken party knew of the error.
Q2) Which of the following is most likely to constitute fraud?
A) A false prediction that a painting's value will rise.
B) A false statement that a used car is "the best deal in town."
C) A false statement that a $30,000 car attracts members of the opposite sex.
D) Silence as to a toxic waste problem on real property that the buyer would not reasonably find.
Q3) Adrianna wants to purchase a ten-acre tract of land.Under what circumstances would the seller be required to divulge information Adrianna does not possess?
Q4) All states allow the remedy of rescinding a contract for the sale of goods while still allowing the remedy of suing for damages.
A)True
B)False
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Page 16
Chapter 15: Written Contracts
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Sample Questions
Q1) Robin and Bellman,both merchants,orally agree to a contract for the sale of $5000 of accessories.Bellman,the buyer,sends to Robin,the seller,a written confirmation of the sale,which is sufficient against Bellman under the statute of frauds and which Bellman signs.Robin does not sign.Robin fails to perform the contract and does not ship out the goods.Bellman sues.This contract is:
A) unenforceable, because Robin did not sign any contract.
B) unenforceable, because Bellman did not pay for the goods.
C) enforceable, because Bellman sent the written confirmation of the sale, thereby partially performing the contract.
D) enforceable even without Robin's signature because both parties are merchants.
Q2) Explain the reason behind having a statute of frauds and give arguments for and against having such a statute.
Q3) Herb was interviewed for a job on Wednesday.The employer orally offered Herb a job right on the spot.Herb orally agreed to start working the following Monday,to be employed from that Monday,for one year thereafter.Three weeks after starting the job Herb was fired without cause and replaced by the employer's friend.Will Herb be successful in an action brought against the employer for breach of contract?
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Chapter 16: Third Parties
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Sample Questions
Q1) Which of the following duties can probably be delegated?
A) An agreement to perform an operation.
B) A contract to paint a picture.
C) An agreement by an attorney to draft a contract.
D) An agreement to paint a house.
Q2) Contract prohibitions against assignments are invalid as a matter of public policy.
A)True
B)False
Q3) A party may make either an assignment or a delegation,but cannot make both an assignment and a delegation simultaneously.
A)True
B)False
Q4) Norm and Frank have a legal contract that is silent with regard to an assignment of the contract.In order for Norm to assign all or part of his rights under a contract,Frank must grant such permission to Norm.
A)True
B)False
Q5) Discuss the potential liability differences between a delegation and a novation.
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Chapter 17: Performance And Discharge
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Sample Questions
Q1) Buddy was hired to play drums for a rock group scheduled to tour the Midwest.Part way through the tour,Buddy was tragically killed in a plane crash.The tour had to be discontinued until a new drummer could be found.The band lost money on the tour.Is Buddy's estate or agent responsible for the loss to the band?
Q2) Name and describe the types of conditions,explain how conditions are created,and discuss whether it is important to identify the type of condition in a contract.
Q3) Statutes of limitations:
A) define how much money the injured party can sue for under a breach of contract claim.
B) define whether there has been substantial performance of a contract or a material breach.
C) limit the time in which an injured party may sue.
D) only apply to the sale of goods. There is no statute of limitations on a service contract.
Q4) Concurrent conditions arise when there is both a condition precedent and a condition subsequent.
A)True
B)False
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Chapter 18: Remedies
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Sample Questions
Q1) Injunctions are frequently used by courts to force employees to complete their contractual obligations with their employers.
A)True
B)False
Q2) The first step a court takes in choosing a remedy is to determine:
A) what interest it is trying to protect.
B) if the damages can be quantified with reasonable certainty.
C) if punitive damages should be awarded.
D) whether the injured party mitigated its damages.
Q3) 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 two cannot settle this dispute,and Archie still wants to deliver the champagne,then Archie should sue for the remedy of:
A) reformation.
B) rescission.
C) restitution.
D) reliance.
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 19: Practical Contracts
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Sample Questions
Q1) Compare and contrast the perspectives of a lawyer and a client when approaching the negotiation of a contract.
Q2) It is unethical to use your lawyer as an excuse for a provision of a contract,such as,"My lawyer insists that I have a liquidated damages clause..."
A)True
B)False
Q3) You should hire a lawyer to review any legal papers you have to sign,including such papers as lease agreements or car purchases.
A)True
B)False
Q4) Ambiguities in contracts are always interpreted in favor of the side that wrote the contract,since they are the ones who know what the provision is supposed to mean. A)True
B)False
Q5) The legal term for a promise in a contract is "provision." A)True
B)False
Q6) Define and compare the terms "vagueness" and "ambiguity."
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Chapter 20: Introduction To Sales
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Sample Questions
Q1) The stated purpose(s)of Article 2 of the UCC is/are:
A) to simplify the law governing sales.
B) to permit the continued development of business practices through custom and usage.
C) to make the laws governing sales uniform among the various states.
D) All of the above are correct.
Q2) In a mixed contract involving goods and services,Article 2 of the UCC will govern if the predominant purpose is the sale of goods.
A)True
B)False
Q3) The difference between the UCC requirement of good faith and doctrine of unconscionability is that:
A) good faith prohibits shockingly one-sided terms in a contract.
B) good faith focuses on the parties' behavior as they perform the contract.
C) unconscionability looks at the parties' attempt to carry out the terms of the contract in a reasonable manner.
D) unconscionability focuses on whether a party is honest in fact and exercises reasonable commercial standards of fair dealing.
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Page 22
Chapter 21: Ownership And Risk
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Q1) If Terrill steals a digital camera and sells it to Samuel,Samuel will get a valid title as long as he can prove he gave value for the camera and acted in good faith.
A)True
B)False
Q2) In which case does the buyer receive no title to the goods he purchases?
A) Owner has good title. Max steals the goods and sells them to buyer.
B) Owner has good title. Max purchases the goods using deception. He then sells them to buyer who gives value and acts in good faith.
C) Owner has good title. Max purchases the goods using fraud. He then sells them to buyer who is not a BFP.
D) All of the above.
E) Both a and c.
Q3) Which of the following sales would fall within the bulk sales provisions of Article 6?
A) The sale of a substantial part of the equipment of a business.
B) The sale of a substantial part of a store's inventory.
C) The sale of an office building.
D) The sale of the chairs in a barber's shop.
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Page 23
Chapter 22: Warranties And Product Liability
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Q1) Crytrin Manufacturing,Inc.contracted with Molfrey,Inc.to manufacture three large pieces of equipment.The contract contained a clause stating that Crytrin agreed to repair or replace any defective equipment,but that was the only remedy Molfry would have.This clause:
A) is an effective disclaimer.
B) will not keep Molfry from obtaining consequential damages since, under the UCC, consequential damages cannot be excluded.
C) is a limitation of remedy clause, which limits or excludes normal remedies permitted under the Code.
D) limits any express warranties made by Crytrin.
Q2) How do the tort theories of negligent product liability and strict product liability differ from each other? List and describe the elements an injured party must establish for recovery under each cause of action.
Q3) An express warranty can be created by which of the following?
A) An affirmation of fact or promise.
B) A description.
C) A model.
D) All of the above.
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Chapter 23: Performance And Remedies
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Q1) If a buyer does not receive goods by the contract deadline,remedies available include:
A) incidental and consequential damages.
B) cover.
C) damages for non-delivery.
D) All of the above.
Q2) Reba orders a pair of custom-made cowboy boots,C.O.D.from Home on the Range Western Wear.When the boots arrive,Reba pays the carrier for the boots,then opens the package,only to discover that the boots are the wrong snake skin color and three sizes too big.At this point:
A) she is entitled to inspect the goods after payment (due to the C.O.D. terms) and she can reject the boots because they are nonconforming.
B) Reba cannot revoke the acceptance, because the wrong color and size of the boots are not substantial impairments.
C) Home on the Range can allege that Reba did not conduct a proper inspection; therefore, though Home on the Range must cure, Reba is obligated to pay for the return of the incorrect boots and the shipment of replacement boots.
D) None of the above.
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25
Chapter 24: Secured Transactions
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Questions
Q1) Aubry purchased a washing machine,a freezer,and a refrigerator from Gateway Appliances on credit,giving Gateway a security interest in the appliances.The appliances were for Aubry's household use.Gateway did not file a financing statement.Six months later,Aubry had a garage sale and sold the appliances to Tam.Tam bought the appliances for her student rental property.Aubry left town owing money on the appliances.If Gateway can trace the appliances to Tam,can Gateway repossess the appliances? Explain in detail.
Q2) Article 9 applies to any transaction intended to create a security interest in real property.
A)True
B)False
Q3) To perfect a security interest in a negotiable instrument,Second State Savings and Loan should:
A) file a financing statement.
B) take possession of the instrument.
C) do nothing. Perfection is automatic.
D) secure a court order.
Q4) For a security interest to attach,there must be an agreement.
A)True
B)False
Page 26
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Chapter 25: Creating A Negotiable Instrument
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Sample Questions
Q1) The section of the UCC that governs negotiable instruments is:
A) Article 3.
B) Article 2.
C) Article 6.
D) Article 9.
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 a 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) To be negotiated,bearer paper must simply be delivered to the recipient.
A)True
B)False
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Chapter 26: Liability For Negotiable Instruments
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Q1) Which of the following parties has primary liability on a draft?
A) The drawee.
B) The acceptor.
C) The drawer.
D) Any accommodation parties.
Q2) A drawee has primarily liability on a draft.
A)True
B)False
Q3) A check was indorsed as follows:
Jessica Hall
without recourse
Paul Samuels
Collection guaranteed
Melissa Liston
Which of the following will discharge all of the indorsers?
A) Notice of dishonor.
B) The without recourse indorsement within the chain.
C) Insolvency of drawer.
D) Certification of the check.
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Chapter 27: Accountants' Liability
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Q1) Clint is auditing MegaCorp.In reviewing the sales ledger,Clint saw that MegaCorp had sold 3,000 disk drives to CompSales,Inc.Clint reviewed the original invoice of this sale to ensure that the date,price,quantity,and customer's name all match.He then verified each step along the paper trail until the disk drives left the warehouse.This illustrates:
A) tracing.
B) vouching.
C) following.
D) monitoring.
Q2) Halbeck,LLC was negligent in its audit of E-treme,Inc.Unbeknownst to Halbeck,E-treme used the financial statements to secure a loan from Great State Bank.Under the Ultramares doctrine,Halbeck will be liable to Great State Bank for its losses on the loan.
A)True
B)False
Q3) Under the UCC,contracts between accountants and their clients must be in writing.
A)True
B)False
Q4) Discuss the advantages and disadvantages of using IFRS.
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Chapter 28: Agency Law
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Q1) HBR Accounting hired Denise,a CPA,to prepare tax returns.Which statement is correct?
A) Denise is a gratuitous agent and has a duty not to commit gross negligence.
B) Denise is an agent and has a duty not to commit ordinary negligence.
C) Denise, as a CPA, is an agent with special skills. She is held to a higher duty than ordinary negligence.
D) Denise, as a CPA, is an agent with special skills. She is held to a lower standard than ordinary negligence.
Q2) Jim agreed to show Donna's car to a potential buyer.Donna was not able to be home since she had to attend a meeting.After showing the car,Jim left the keys in it and the car was stolen.Which statement is correct?
A) Since Jim is a gratuitous agent, he will only be liable for the loss of the car if his conduct constitutes gross negligence.
B) Since Jim is a gratuitous agent, he will be liable for the loss of the car if his conduct constitutes ordinary negligence.
C) Since Jim is a gratuitous agent, he has no liability for the car.
D) Since Jim is a gratuitous agent, he is strictly liable for the loss of the car.
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Chapter 29: Employment Law
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Q1) Under the Family and Medical Leave Act,an employee can take up to 12 weeks of paid leave each year for certain personal and family illness situations.
A)True
B)False
Q2) When may an employer require an employee to submit to a lie detector test?
A) When the employee has been hired for less than 90 days
B) When the test is part of an on-going investigation into crimes that have occurred.
C) When the employer has reason to believe the employee is using illegal drugs on the job.
D) When all employees are being questioned using a lie detector.
Q3) Which of the following statements is correct?
A) It is much easier for a government employer to test an employee for drugs or alcohol than it is for a private employer.
B) Generally speaking, in most states, it is easier for a private employer than the government to test an employee for drugs or alcohol.
C) Neither may test for drugs or alcohol.
D) Both may test for drugs or alcohol without restriction.
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Chapter 30: Labor Law
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Q1) Valley Mart told its employees that they would be fired if they actively supported a unionizing effort.Valley Mart has committed an unfair labor practice.
A)True
B)False
Q2) Which of the following is an unfair labor practice for a union?
A) To encourage an employer to discriminate against a particular employee because of a union dispute.
B) To bargain collectively.
C) To engage in a legal strike.
D) All of the above are unfair labor practices by a union.
Q3) Identify some of the trends and characteristics of organized labor.For example,discuss how the statistics compare for percentage of government vs.private sector employees with union membership,what occupational groups and industries have the highest percentage of unionized workers,and what regions of the country have the highest and lowest union membership.
Q4) Rick and Allan want to start a union in the small factory where they work.Outline the basic procedures they will need to follow to get a union recognized as the exclusive bargaining unit for the company employees.
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Chapter 31: Starting A Business
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Q1) Corporations have perpetual existence.
A)True
B)False
Q2) An S Corporation cannot have more than ____ shareholders.
A) 100
B) 75
C) 50
D) 25
Q3) Which of the following forms of organization is a compromise between starting one's own business as an entrepreneur and working for someone else as an employee?
A) Limited liability company.
B) Business trust.
C) Close corporation.
D) Franchise.
Q4) The importance of a Subchapter S corporation is:
A) its organizational structure.
B) its treatment of shareholders for income taxation purposes.
C) its requirement of restrictive transfer rights of the shares.
D) its small cost of formation.
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Chapter 32: Partnerships
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Q1) Nicholas and Holly are partners in a toymaking shop.If Rudolph obtains a judgment against Nicholas for injuring Rudolph while Nicholas was on partnership business,Rudolph must try to collect from the partnership before going after Nicholas' personal assets.
A)True
B)False
Q2) Lori and Dan own a small restaurant as partners.Dan works several hours a day cooking,waiting on tables,doing the books,and so forth.Dan believes he is entitled to be paid at least a standard wage for all his work since,at the present time,the part-time kitchen helpers earn more than he does! Lori claims Dan is not entitled to anything other than one-half the net profits.Is Lori right?
A) Yes. The UPA states a partner may not collect a "wage" from the partnership business under any circumstances.
B) Yes, as there is no agreement between Lori and Dan allowing for either of them to be paid wages for work done at the restaurant.
C) No. Dan may collect only minimum wage, as required by federal law.
D) No. Dan may collect a fair wage for the work he has performed.
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) A business corporation can be incorporated under either state law or federal law.
A)True
B)False
Q2) It is illegal for shareholders to transfer their stock to a trust and give the trustee the power to vote the shares.
A)True
B)False
Q3) Zach decided to incorporate his business under the name of "Zamm." In addition to "Zamm," the Model Act requires that Zach include one of the following words: "corporation," "incorporated," "limited," or "company" or an abbreviation thereof.
A)True
B)False
Q4) Incorporators are required to sign the charter,deliver it to the proper state officials,and purchase a certain percentage of the initial stock offering.
A)True
B)False
Q5) What are some of the advantages for a business to incorporate in Delaware?
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Chapter 34: Corporate Management
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Q1) Corporate responses to takeover attempts are largely governed by federal law.
A)True
B)False
Q2) The Williams Act regulates the conduct of the target company in a takeover situation.
A)True
B)False
Q3) A finding by a court that a manager's decision had a rational business purpose does not necessarily protect the manager from a finding that he breached a duty of care.
A)True
B)False
Q4) A manager who first offers an opportunity to disinterested directors or shareholders who turn it down has the right to take advantage of the opportunity herself.
A)True
B)False
Q5) Discuss the purposes of the "business judgment rule."
Q6) List and discuss the three ways to acquire control of a corporation.
Q7) What is the definition of the business judgment rule?
Page 36
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Chapter 35: Shareholders
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Q1) Which of the following is correct concerning the SEC regulations on shareholder resolutions?
A) The proposals cannot be used to seek to satisfy a personal grievance against the company.
B) The proposals cannot relate to the ordinary business operations of the corporation.
C) The proposals must relate to operations accounting for at least 5 percent of total assets, gross sales, or net earnings.
D) All the above are correct.
Q2) Alfrieda purchased an ownership interest in a corporation.This gives her the right to use the equipment owned by the corporation,as long as her usage does not interfere with the normal operation of the business.
A)True
B)False
Q3) Kalina is the CEO of Northfield Corporation.Who sets her compensation,and what types of compensation would she likely receive in addition to her salary? Can shareholders do anything to challenge her level of compensation if they think it is unfairly high in comparison to average employee compensation within the company?
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Chapter 36: Securities Regulation
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Q1) The Fallwater Partnership wants to incorporate and is considering using a DPO.Explain what a DPO is and discuss the advantages and disadvantages of this course of action.
Q2) The "tipper" of inside information can be convicted of a crime,the "tippee" cannot. A)True B)False
Q3) Larry was working at his job at the landfill when he got off his tractor to take a break.He noticed some papers on the ground and went to throw them on a trashpile.As he held the papers he saw a confidential report from MegaCorp stating it would be announcing the development of a new super computer in two weeks.Larry has no relationship with MegaCorp.Larry mortgaged his house and borrowed all the money he could to purchase $200,000 worth of MegaCorp stock.Larry bought the stock for $32 a share.When the announcement was made public,MegaCorp's stock skyrocketed.Larry sold his stock a few weeks later and made a huge profit.Larry has:
A) committed a criminal act.
B) violated SEC regulations but not the criminal law. C) committed an act of improper insider trading. D) done nothing legally wrong.
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Chapter 37: Bankruptcy
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Q1) Which of the following is a primary goal of bankruptcy:
A) to preserve as much of the debtor's property as possible.
B) to divide the debtor's assets fairly between the debtor and the creditors.
C) to divide the debtor's assets fairly among the creditors.
D) All of the above.
Q2) Karen has filed for bankruptcy.Who has the authority to confirm or reject a plan of payment,and what factors will be considered when deciding whether to approve a repayment plan under Chapter 13?
Q3) The Bankruptcy Code uses the term "bankrupt" to refer to a person who cannot pay his debts.
A)True
B)False
Q4) Peggy's credit card debts are mounting as her costs of insurance and fuel have dramatically increased and her income,from sporadic free-lance jobs,has dropped.Chapter 13 of the Bankruptcy Code will allow her to reorganize her debt while she keeps most of her assets.
A)True
B)False
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Chapter 38: Antitrust
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Q1) Assume that three automobile manufacturers all merged into one car company.Such a merger would be a:
A) vertical merger.
B) vertical cooperative arrangement merger.
C) horizontal merger.
D) intracompetitive merger.
Q2) Cooperative strategies include all EXCEPT:
A) horizontal agreements.
B) vertical agreements.
C) mergers.
D) spin-offs.
Q3) A marketing representative who is tempted to engage in price-fixing due to heavy competition and similar prices for competitors' products should:
A) emphasize factors of her product that do not involve price.
B) emphasize service, reliability, and other factors of her company.
C) understand the serious criminal and civil penalties of engaging in price-fixing.
D) All the above.
Q4) Discuss when monopoly power is not a violation of Section 2 of the Sherman Act.
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Chapter 39: Consumer Law
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Q1) John loans George money and they sign a written agreement whereby George will repay John in monthly installments.Is this loan subject to the Truth-in-Lending Act?
A) Yes, if the loan is for more than $1,000.
B) Yes, if John and George live in different states.
C) No, if John is not in the business of offering credit.
D) No, if John and George are related.
Q2) The FTC can impose a fine for each violation of a voluntary compliance affidavit,a consent order,an FTC rule,or a cease and desist order,even one issued against someone else.
A)True
B)False
Q3) The Federal Trade Commission Act considers the terms "deceptive" and "unfair" to be synonymous when determining what practices should be prohibited.
A)True
B)False
Q4) The Truth-in-Lending Act applies to private individuals who loan money.
A)True
B)False
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Chapter 40: Environmental Law
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Q1) Under Superfund legislation,to what extent must a hazardous waste site be cleaned?
A) Reasonable conditions under the circumstances.
B) A safe level for the area in which it is located.
C) Pristine condition, regardless of cost, even if this is better than it was before the hazardous waste was dumped onto it.
D) To the condition of the property before the hazardous waste was dumped on it.
Q2) 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.
Q3) Discuss the four major provisions of the Clean Air Act.
Q4) Discuss the purpose of and problems with the Kyoto Protocol from the perspective of the United States.
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Chapter 41: Cyberlaw
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Q1) The Computer Fraud and Abuse Act prohibits all but which of the following?
A) Computer trespass.
B) Sending spam.
C) Negligent damage to a computer attached to the Internet.
D) Trafficking in computer passwords.
Q2) The privacy of e-mail is regulated by:
A) the federal ECPA.
B) spyware.
C) both a and b.
D) neither a nor b. There is currently no regulation of e-mail privacy.
Q3) Spam is illegal per se.
A)True
B)False
Q4) The Electronic Communications Privacy Act is a federal statute regulating e-mail.
A)True
B)False
Q5) It is legal for websites to sell source code for viruses.
A)True
B)False
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Chapter 42: Intellectual Property
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Q1) A patent is available for an idea as well as a tangible application.
A)True
B)False
Q2) AVCO used a famous registered trademark of BNC,Inc.in a manner that reduced its value.This is a violation of the:
A) Federal Fair Use Act.
B) Federal Trademark Dilution Act.
C) Federal Trade Protection Act.
D) Cleveland/Myer Act.
Q3) The requirements for a patent include all EXCEPT:
A) the invention must be novel.
B) the invention must be nonobvious.
C) the invention must be commercially valuable.
D) the invention must be useful.
Q4) Identify the main provisions of the Digital Millennium Copyright Act and two arguments opponents of the Act raise.
Q5) List the four different types of "marks" that can be protected under trademark law.Explain how each mark is used.
Q6) Briefly discuss a patent,copyright,and trademark.
Page 44
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Chapter 43: Real Property And Tenant-landlord Law
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Q1) The Solomans own a cabin on the south side of Mount Henry.One day,the Solomans told Bennie and Claudia they could live in the cabin and use it as they wished until the Solomans wanted to use it again.Twelve years later,the Solomans informed Bennie and Claudia that they were going to spend the summer at the cabin and that Bennie and Claudia would have to make other arrangements for the summer.Bennie and Claudia claimed that they had acquired title by adverse possession,because they had occupied the property for the period of time required for adverse possession under state law (10 years in that state).Are Bennie and Claudia correct?
A) Yes, Bennie and Claudia were living on the property with exclusive, open possession for a continuous period of time for the required 10 years.
B) Yes, Bennie and Claudia had the Solomans' permission, therefore the possession was not illegal.
C) No, Bennie's and Claudia's possession was with the Solomans' permission and therefore the claim was not adverse to the Solomans.
D) No, there was no warranty deed transferred to Bennie and Claudia.
Q2) Sandra and Joe own a hobby farm as tenants in common.They also own a vacation home as joint tenants.What is the difference between the tenancy in common and joint tenancy?
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Chapter 44: Personal Property And Bailment
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Q1) A bailment is different from a gift because:
A) a gift requires consideration, but a bailment does not.
B) a gift requires delivery, but a bailment does not.
C) in a bailment, only possession of the property is transferred to the bailee, whereas with a gift, both possession and ownership must pass to the donee.
D) a gift is always a contract, but a bailment is generally not a contract.
Q2) Distinguish between a contract and a gift.Give an example of each.
Q3) Discuss a bailor's liability for defects in the bailed property.
Q4) Dersett Trucking hauls granite for the major granite companies in Minnesota.Dersett Trucking does not make its trucking services available to the general public.Dersett Trucking is a contract carrier and does not incur strict liability.
A)True
B)False
Q5) Most of the goods contained in a freight train (a common carrier)were destroyed when a tornado wrecked the train.The carrier was sued for damages by all the shippers that had merchandise on the train.Is the carrier strictly liable for the damage done to the goods by the tornado?
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Chapter 45: Planning For The Future: Wills,Trusts,And Insurance
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Q1) Victor purchased $1 million of insurance on his home even though the house was only worth $500,000.Victor's house was destroyed by lightning.Under the insurance policy,Victor will be able to recover $1 million.
A)True
B)False
Q2) Insurance obtained by a limited partnership on the life of the general partner would be:
A) double indemnity insurance, because both the limited partnership and the general partner are insured.
B) key-person insurance, because the general partner is a key person, contributing a great deal to making the business successful.
C) a co-insurance policy because both the limited partnership and the general partner are insured.
D) whole life or straight life insurance which builds a cash value.
Q3) A spouse is entitled to a forced share of a decedent's estate.
A)True
B)False
Q4) Discuss the differences between a will and a trust.
Q5) Identify four ways a trust can be terminated.
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