Business Law
Final Exam Questions
Course Introduction
Business Law provides an overview of the legal principles and regulations that govern commercial transactions and the operation of businesses. Students will learn about contract law, agency, sales, and negotiable instruments, as well as the legal structures of business organizations, such as partnerships, corporations, and limited liability companies. The course also addresses issues related to employment law, intellectual property, dispute resolution, and government regulation, equipping students with essential knowledge to navigate the legal environment of modern business.
Recommended Textbook Managers and the Legal Environment Strategies for the 21st Century 6th Edition by Constance E.
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25 Chapters
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Page 2
Chapter 1: law, value creation, and risk management
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Sample Questions
Q1) Managers can make their own "public" law.
A)True
B)False
Answer: False
Q2) Molly,the CEO of a corporation owning a number of pet stores,calls you for advice.She tells you that she had inside information that the stock of the company was going to go down because of reports a number of dogs sold by the store had become ill and,therefore,immediately sold all her stock in the company before the information became public.She tells you that she has been advised that she is going to be charged with a securities violation involving insider trading.Which of the following is true regarding her situation?
A)Corporate executives may be fined but may not be sent to jail.
B)Corporate executives may be sent to jail,but only for offenses endangering others.
C)Corporate executives may be sent to jail,but only for fraud involving banks.
D)Corporate executives may be sent to jail for violation of criminal laws.
Answer: D
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Chapter 2: Ethics ant the law
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Sample Questions
Q1) Rawlsian moral theory seeks to maximize the condition of the worst off person in society.
A)True
B)False
Answer: True
Q2) Which of the following is a federal law passed in 2002 in an attempt to reduce corporate wrongdoing?
A)The Jones-Whaley Act
B)The Glover-Laughlin Act
C)The Sarbanes-Oxley Act
D)The Corporate Reduction and Ethics Act
Answer: C
Q3) Nobel prize winner Milton Friedman asserts that "social responsibility" is a fundamentally ____________ doctrine.
A)positive
B)risky
C)good
D)subversive
Answer: D
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Page 4
Chapter 3: Courts, sources of law, and dispute resolution
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Sample Questions
Q1) A ________ reverses the jury verdict on the ground that the evidence of the prevailing party was so weak that no reasonable jury could have resolved the dispute in that party's favor
A)directed verdict
B)summary judgment
C)judgment n.o.v.
D)judgment on the pleadings
Answer: C
Q2) The _____________ officially notifies a defendant that a lawsuit is pending and that a response to the complaint must be filed within a certain number of days.
A)Subpoena
B)Summons
C)Complaint
D)Suggestion
Answer: B
Q3) Jury challenges for cause are called preemptory challenges.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Constitutional bases for business regulation
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Sample Questions
Q1) Refer to fact pattern 4-2.What should Wally tell Rebecca regarding whether the U.S.Constitution requires that jury trials be held in state court civil cases?
A)That there is no federal constitutional requirement that jury trials be held in state court civil cases.
B)That the federal constitution requires that jury trials be held in state court civil cases only if the controversy involved exceeds the amount of $75,000.
C)That the federal constitution requires that jury trials be held in state court civil cases only if the controversy involved exceeds the amount of $20.
D)That is all state court civil cases the federal constitution gives any party the right to demand a jury trial.
Q2) The U.S.Supreme Court has original jurisdiction over cases affecting ambassadors and cases in which a state is a party.
A)True
B)False
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6
Chapter 5: Agency
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Sample Questions
Q1) Which of the following terms refers to a slight deviation from the employer's business that is still within the scope of employment?
A)Frolic
B)Detour
C)Errand
D)Chore
Q2) Agency by estoppel creates an agency relationship where one does not actually exist.What elements are necessary for an agency by estoppel? What are the legal consequences to the principal,agent,and third party? Discuss.
Q3) Which of the following is not a duty of an agent to a principal?
A)Loyalty
B)Due care
C)Maximizing profits
D)Obedience
Q4) The respondeat superior doctrine typically applies to the actions of independent contractors.
A)True
B)False
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Chapter 6: Administrative Law
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Sample Questions
Q1) Explain the process that an administrative agency must follow to create and implement a new rule.
Q2) Refer to fact pattern 6-1.What should Laura tell Bruce regarding his plan to provide additional evidence to the federal court judge?
A)That his plan is a good one and that the judge will consider the additional evidence.
B)That judicial review will likely be confined to the record compiled before the agency.
C)That he will only be allowed to present sworn affidavits for additional judicial review.
D)That he will only be allowed to present additional test scores for additional judicial review.
Q3) When an administrative agency adopts a regulation,it becomes binding on the A)agency
B)public
C)Congress
D)the agency and the public,but not Congress
Q4) The president of a company wishes to comment on a proposed administrative agency rule.What does a comment letter usually contain?
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Page 8
Chapter 7: Contracts
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Sample Questions
Q1) A counteroffer does not terminate the original offer.
A)True
B)False
Q2) To which of the following does the statute of frauds apply?
A)A promise to pay the debt of another person.
B)A contract that cannot be performed within the space of six months.
C)Any contract of employment.
D)Any contract involving commerce.
Q3) Which of the following is a type of conditional promise?
A)Condition concurrent
B)Condition subsequent
C)Condition illusory
D)Both a condition concurrent and a condition subsequent
Q4) Most non-English-speaking countries follow the common law tradition.
A)True
B)False
Q5) In a requirements contract,the buyer agrees to purchase all of the seller's output of a particular product.
A)True
B)False
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Chapter 8: sales, licensing, and e-commerce
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Sample Questions
Q1) A contract is ________ if its terms are unduly harsh or oppressive or unreasonably favorable to one side.
A)substantively unconscionable
B)procedurally unconscionable
C)procedurally impracticable
D)substantively impracticable
Q2) Which of the following is governed by Article 2 of the UCC?
A)A contract for sale of a commercial building.
B)A contract for sale of office supplies.
C)An employment contract.
D)A life insurance contract.
Q3) The UCC applies identical rules concerning the sales of goods to merchants and nonmerchants.
A)True
B)False
Q4) Under the UCC,the implied warranty of merchantability guarantees that the goods are reasonably fit for the general purposes for which they are sold,and that they are properly packaged and labeled.
A)True
B)False
10
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Chapter 9: Torts and Privacy protection
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Sample Questions
Q1) Written defamation is known as
A)libel.
B)slander.
C)malicious intent.
D)invasion of privacy.
Q2) Paul is suing Dan for negligence arising out of a boating accident.What are the elements that Paul must prove in order to win his case? What defenses may Dan use to prevent Paul from recovering,or to at least lessen his recovery? Discuss fully.
Q3) __________ is the publication of statements derogatory to the quality of the plaintiff's business,to the business in general or to the plaintiff's personal affairs in order to discourage others from dealing with him or her?
A)Disparagement
B)Critical falsehood
C)Defamation
D)Malicious derogatorism
Q4) Trespass may occur below the surface of land.
A)True
B)False
Q5) What are the requirements for the application of res ipsa loquitur?
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Chapter 10: product liability
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Sample Questions
Q1) The preemption defense involves certain ________,which set minimum safety standards for products.
A)federal laws
B)court decisions
C)state laws
D)private guidelines
Q2) What was the result in James v.Meow Media Inc.,the case in the text addressing whether a video game manufacturer was strictly liable for a teenager's shooting spree?
A)That the shooting was so aberrant as to be unforeseeable by the video game producer.
B)That the products were defective.
C)That the video game manufacturer was liable for the shooting.
D)That the shooting was so aberrant as to be unforeseeable by the video game producer and also that the products were defective.
Q3) The doctrine of strict product liability is grounded in the common law and was transported to this country from England in the 1800's.
A)True
B)False
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12
Chapter 11: Intellectual property
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Sample Questions
Q1) Terms that were once enforceable trademarks may become generic and thereby not protected.
A)True
B)False
Q2) Perry is a playwright.He wrote and produced an off-Broadway play about the life of Colonel Sanders,"Just a Drop in the Bucket," that closed after the third performance.Later that same year,on vacation in Los Angeles,he went to see a new production called "Fry It Anyway." Perry was appalled to discover that the play was substantially similar to his own."Fry It Anyway" becomes a big hit.What protections are available for Perry? What defenses are available against any claims Perry might make? What additional protections would be available had Perry registered under the federal Copyright Act? Discuss fully.
Q3) Patent law defines ________ infringement as the active inducement of another party to infringe a patent.
A)direct
B)indirect
C)contributory
D)inevitable
Q4) Explain in detail the process for obtaining a patent.
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Chapter 12: The employment agreement
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Sample Questions
Q1) The Employee Polygraph Protection Act completely bans the use of polygraph exams.
A)True
B)False
Q2) Traditionally,defamation law requires ______,meaning that the communicator of the defamatory information must disclose the information to a third party.
A)utterance
B)publication
C)exposure
D)revelation
Q3) Joe is the owner of a manufacturing company called ProfitMax.Joe finds out that a union is attempting to organize the employees at ProfitMax.Joe tells you that he will never deal with a union and that he has no plans to pay a higher wage if the union is elected.Joe has plans to tell his supervisors that they may not encourage union activity.Joe has plans to do surveillance regarding which employees attend union meetings so that he can fire them.He is also going to announce to all employees that they will get a raise if they vote against the union.He asks you what his obligations are if the union gets elected and if his other plans are legal.What would you tell him?
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Chapter 13: civil rights and employment discrimination
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Sample Questions
Q1) What is the major provision of the Equal Pay Act of 1963?
A)It mandates equal pay for equal work without regard to gender only.
B)It mandates equal pay for equal work without regard to gender or age.
C)It mandates equal pay for equal work without regard to gender,race,or age.
D)It mandates equal pay for equal work without regard to race only.
Q2) The _________ establishes minimum standards for employees who waive their rights under the Age Discrimination in Employment Act.
A)The Fairness Benefit Protection Act
B)The Older Workers' Benefit Protection Act
C)The Civil Rights Guarantee Act
D)There is no such act.
Q3) Which of the following is not a factor in determining whether or not a "reasonable accommodation" is an "undue hardship" on the employer?
A)The type of disability to be accommodated.
B)The nature and cost of the accommodation needed.
C)The overall financial resources of the employer.
D)The overall size of the business.
Q4) Set forth the categories of individuals classified as disabled under the Americans with Disabilities Act.
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Chapter 14: executive compensation and employee benefits
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Sample Questions
Q1) What criticism of restricted stock plans do stock option plans avoid,and how is that done?
Q2) The board of directors of A-1 Company sets vesting restrictions on stock options for executives.What do "vesting restrictions" mean?
Q3) Shareholder proposals regarding executive compensation are disallowed by the Securities and Exchange Commission.
A)True
B)False
Q4) When a nonqualified stock option is involved,the spread is taxable to the optionee as ordinary income whether or not the optionee actually sells the shares.
A)True
B)False
Q5) Multiemployer pension plans are barred by ERISA.
A)True
B)False
Q6) What do you believe should be done to provide health insurance in this country? What problems exist,and how should they be remedied? Discuss fully.
Page 16
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Chapter 15: Criminal law
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Sample Questions
Q1) In the ________,a prosecutor must present evidence demonstrating probable cause that the defendant committed the crime.
A)arraignment
B)preliminary hearing
C)informational hearing
D)trial
Q2) ________ is the process whereby the prosecutor agrees to reduce the charges in exchange for a guilty plea from the accused.
A)Preliminary hearing
B)Nolo contendere
C)Plea bargaining
D)Voire dire
Q3) The Computer Fraud and Abuse Act makes the accidental transmission of computer viruses illegal.
A)True
B)False
Q4) Explain what must be shown to establish violations of RICO and the Wire and Mail Fraud Act.Discuss fully.
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Chapter 16: Environmental law
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Sample Questions
Q1) Failure to comply with environmental laws can result in civil fines but not criminal penalties.
A)True
B)False
Q2) A corporate officer can be held criminally liable under the Clean Water Act if he or she knowingly violated the act.
A)True
B)False
Q3) Which of the following laws applies to all chemical substances both manufactured in and imported into the United States?
A)Toxic Substances Control Act
B)Clean Water Act
C)Clean Air Act
D)Solid Waste Disposal Act
Q4) Policy statements issued by the EPA have the force of law.
A)True
B)False
Q5) Discuss state environmental laws and how the EPA interacts with states that have environmental laws.
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Chapter 17: Antitrust
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Sample Questions
Q1) Which of the following is a component of a market?
A)A product component
B)A geographic component
C)A defined component
D)Both a product component and a geographic component
Q2) Vertical agreements may reduce _________ competition.
A)Interbrand
B)Intrabrand
C)monopolistic
D)illegal
Q3) Courts define market power as the power to control prices or exclude competition in a relevant market.
A)True
B)False
Q4) The Supreme Court considers market divisions between competing firms to be so inherently anti-competitive as to constitute per se violations of the Sherman Act.
A)True
B)False
Q5) What types of price-fixing agreements are considered horizontal price-fixing?
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Chapter 18: Consumer Protection
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Sample Questions
Q1) Under the Fair Credit Billing Act,open-end consumer credit plans must make certain disclosures
A)annually.
B)when the account is opened.
C)in periodic billing statements.
D)all of the responses are correct
Q2) There is much controversy regarding genetically modified food.What potential problems are involved with the use of genetically modified food? Discuss the pros and cons.What laws have been proposed in this country regarding genetically modified food? What action has the European Parliament taken regarding generically modified food?
Q3) The ________ has the power to issue cease and desist orders to advertisers.
A)Food and Drug Administration
B)Consumer Product Safety Commission
C)Federal Communications Commission
D)Federal Trade Commission
Q4) The Fair Credit Reporting Act protects the consumer by limiting the amount of interest charged on credit card accounts.
A)True
B)False
Page 20
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Chapter 19: real property and land use
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Sample Questions
Q1) In a(n)________ listing,the broker has the right to sell the property,and any sale of the property during the term of the listing will entitle the broker to a commission.
A)exclusive
B)open
C)net listing
D)broker
Q2) In a(n)________,the buyer purchases real property from a seller and simultaneously the property is leased back to the seller.
A)sale and leaseback
B)wraparound lease
C)tax-deferred exchange
D)synthetic lease
Q3) _________ occurs when a person acquires ownership on a piece of property by adversely possessing a parcel of land for the period of time specified by a state statute.
A)Adverse possession
B)Independent possession
C)Quitclaim possession
D)Res ipsa possession.
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21
Chapter 20: Forms of business organizations
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Sample Questions
Q1) Which of the following is false regarding decision making in a partnership?
A)Each partner's assets are vulnerable to the poor business decisions of the fellow partners.
B)A partnership is prohibited from placing managerial control of the business in one partner.
C)Unless the partners expressly agree otherwise,partnership law requires unanimous agreement of all partners on all but the most ordinary matters.
D)If the partners in an informal partnership cannot agree on a decision,they may disband the partnership,distribute its assets,and terminate it.
Q2) A partnership is not automatically dissolved upon a partner's ________,and the partners holding a majority of the partnership interests may elect to continue the general partnership.
A)death
B)bankruptcy
C)withdrawal
D)all of the responses are correct
Q3) Define class voting.Why would a group of investors be interested in a guarantee of class voting?
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Chapter 21: Directors, Officers, and Controlling Shareholders
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Sample Questions
Q1) The duty of candor refers to
A)the duty directors are under when providing information to shareholders.
B)the duty shareholders are under when discussing matters among themselves.
C)the duty officers and directors are under when deciding whether to oppose a takeover bid.
D)the duty shareholders have to directors when informing directors of concerns.
Q2) The line of business test is the most widely used test to determine whether or not an officer or director has taken advantage of a corporate opportunity.
A)True
B)False
Q3) You are a director of the PML Corporation.The company needs land to expand its production facilities.You mention to the president that you presently own 50 acres of suitable land,and suggest that she request the board to consider this purchase.What steps should you take to minimize your liability and ensure that the transaction cannot be successfully challenged by the shareholders?
Q4) Who would be classified as a controlling shareholder? What duties do controlling shareholders have to other shareholders?
Q5) What is a poison pill? What factors favor keeping a poison pill in place?
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Chapter 22: Public and Private Offerings of Securities
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Sample Questions
Q1) The Securities Act of 1934 requires continuous disclosure of certain information regarding publicly traded securities.
A)True
B)False
Q2) Which of the following securities is not listed as exempt securities under Section 3 of the 1933 Act?
A)Any security issued by the United States or any state of the United States.
B)Any security issued or guaranteed by any national bank.
C)Any security issued by a charitable organization.
D)Any security issued by any person other than an issuer,underwriter or dealer.
Q3) The ________ is the private offering counterpart to the prospectus.
A)private registration prospectus
B)red-herring prospectus
C)private-placement memorandum
D)restricted sale
Q4) Investors are prohibited under federal securities law from making highly speculative investments.
A)True B)False
Q5) When have courts found a general partnership interest to be a security?
Page 24
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Chapter 23: Securities Fraud and insider trading
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Q1) Under the Sarbanes-Oxley Act of 2002,it is a misdemeanor to knowingly execute a scheme to defraud any person in connection with any security of a publicly traded company.
A)True
B)False
Q2) Under Section 16(b)pertaining to short-swing profits,a person will be considered a(n)________ of any securities held by his or her immediate family or any other relative living in his or her household.
A)family owner
B)beneficial owner
C)actual owner
D)imputed owner
Q3) Section 16(a)of the 1934 Act requires that officers,directors,and greater-than-10 percent shareholders of companies that have registered any class of equity securities under the 1934 Act file ________ reports with the SEC.
A)actual ownership
B)beneficial ownership
C)insider ownership
D)listed stock
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Page 25
Chapter 24: Debtor-Creditor Relations and Bankruptcy
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Q1) A ________ interest rate fluctuates throughout the life of the loan according to the interest rate that the lender would pay if it borrowed the funds in order to relend them.
A)fixed
B)principal
C)base
D)floating
Q2) A revolving loan is based upon the continuous extension of credit of unlimited amount.
A)True
B)False
Q3) A bankruptcy plan that reduces the amount payable to all creditors is known as a ________ plan.
A)composition
B)reduction
C)repayment
D)none of the above
Q4) Commercial paper is a term that describes short-term corporate indebtedness.
A)True
B)False
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Chapter 25: International Business
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Sample Questions
Q1) What is the commercial activity exception to the Foreign Sovereign Immunities Act?
Q2) The members of the European Parliament are elected by the ________ of the member states.
A)legislative branch
B)executive branch
C)citizens
D)Council of Ministers
Q3) The traditional Islamic rules and laws that regulate Muslim life are called Sharia.
A)True
B)False
Q4) Codification is a process by which existing common law positions are restated and laid down in a statute.
A)True
B)False
Q5) Tariffs are a means by which imports may be restricted.
A)True
B)False
Q6) Describe differences between the U.S.and British common law systems.
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