Business Law
Final Test Solutions
Course Introduction
Business Law introduces students to the fundamental legal principles that govern commercial transactions and the operations of businesses. The course covers topics such as contract law, agency, employment law, business organizations, intellectual property, and regulatory compliance. Students will explore the structure of the legal system, learn how to recognize legal risks, and understand the implications of legal decisions in business contexts. Through case studies and real-world examples, the course emphasizes critical thinking and practical application, preparing students to navigate the legal environment of business with confidence.
Recommended Textbook Essentials of Business Law 4th Edition by Jeffrey F. Beatty
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34 Chapters
1548 Verified Questions
1548 Flashcards
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Page 2
Chapter 1: Introduction to Law
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Sample Questions
Q1) The doctrine that requires a judge to decide a case based on previous rulings has its roots in:
A)the English common law.
B)English equitable remedies.
C)the US Constitution.
D)the civil law tradition.
Answer: A
Q2) The federal judicial branch of the U.S.government:
A)interprets statutes.
B)passes statutes.
C)issues executive orders.
D)creates administrative agencies.
Answer: A
Q3) When the Food and Drug Administration allows a certain drug from being marketed in the United States,this is:
A)public law.
B)common law.
C)private law.
D)an executive order.
Answer: A
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Chapter 2: Business Ethics and Social Responsibility
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Q1) In analyzing a situation to determine how to act ethically,a business manager should:
A)gather background information by either talking firsthand with the people involved or by talking to those who gained information informally through the company "grapevine."
B)narrowly focus on a single issue.
C)determine whether an alternative violates important values.
D)All of the answers are correct.
Answer: C
Q2) Advertising provides a good example of a sector where ethics is critical.
A)True
B)False
Answer: True
Q3) Unethical behavior can be costly.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Dispute Resolution
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Sample Questions
Q1) Arthur sued Benton Corp.for negligence,and a jury awarded him $1.2 million.Benton Corp.filed a motion for judgment NOV,and that motion was denied by the trial court.Benton Corp.then appealed the case.Discuss a judgment NOV and when it is appropriate for a judge to grant such a judgment.
Answer: A judgment NOV (non obstante veredicto or not withstanding the jury's verdict)can be entered by the court when the judge is convinced that the evidence presented does not equate to the verdict reached by the jury.the judge,being a trier of fact as well as of law,shares the fact-finding process with the jury -- the jury cannot award damages in a civil trial inconsistent with the evidence.Generally,the judge will defer to the decision of the jury but in some cases where extreme findings are reached by the jury totally inconsistent with the evidence,the judge will nullify the jury's verdict.
Q2) The decision issued by an arbitrator is binding upon the parties.
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) Luke had his driver's license suspended by the state department of transportation.He believes his constitutional due process rights were violated by the administrative agency and wishes to file a claim.Which of the following statements is true:
A)A state court has the jurisdiction to immediately review an agency's alleged unconstitutional action.
B)Luke must file a claim in a federal court - not a state court.
C)Luke must first utilize the administrative agency's procedures to review the suspension before he seeks judicial review by a court.
D)A court of law does not have jurisdiction to review an administrative agency's actions.
Q2) Discuss the role of money in the legislative process and the Congressional and Supreme Court controls on campaign spending since the 1970s.
Q3) Common law is the primary source of law in torts and contracts.
A)True
B)False
Q4) Discuss the four most important limitations on the power of federal administrative agencies.
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Page 6
Chapter 5: Constitutional Law
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Q1) West Virginia passed a statute regulating working conditions in its mines.If the statute is challenged in court on substantive due process grounds:
A)it would be presumed invalid and would be struck down since it involves a fundamental right to work.
B)it would be presumed invalid but would be struck down only if it is not necessary to achieve a compelling government interest.
C)it would be presumed valid since it regulates economic or social conditions.
D)it carries no presumptions, but must be evaluated based on the procedures involved.
Q2) If there is a conflict between federal and state statutes,the federal law controls the issue.This is the application of:
A)the Due Process Clause.
B)the doctrine of preemption.
C)the doctrine of federalism.
D)the doctrine of federal superiority.
Q3) Identify the basic job of a President of the United States,the source of executive power,and three key powers associated with the position of President.
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Chapter 6: Torts
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Q1) Lori works for Big Corporation as an "at will" employee.Richard,owner of a small store,offers to pay Lori much more money if she will leave Big Corp and work for his store.When Lori starts to work for Richard,Big Corp correctly claims Richard is liable for tortuous interference with a contract.
A)True
B)False
Q2) Identify and discuss two specific causes of action a plaintiff can allege that deal specifically with privacy rights.
Q3) A salesclerk at Manny's Record Store observed a customer look at a classic heavy metal LP from the 1970s and discretely put it in her backpack.Manny's can detain the customer for suspicion of shoplifting without being held liable for false imprisonment.
A)True
B)False
Q4) Punitive damages are intended to punish the defendant for conduct that is extreme and outrageous.
A)True
B)False
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8
Chapter 7: Crime
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Q1) Diane,a police officer,stops Tim's car for a traffic offense.While talking to Tim,she shines a flashlight into the passenger compartment of Tim's car and sees evidence of drug paraphernalia.Which statement is correct?
A)Diane may search the passenger compartment of the car and any place else in the car, including the trunk, without Tim's consent.
B)Diane may search the passenger compartment of the car without Tim's consent; however, she may not search the trunk of the car without his consent or without a search warrant.
C)Diane may not search the passenger compartment of the car (nor any place else) without Tim's consent or a search warrant.However, she can require Tim to remain parked until the search warrant is brought to her.
D)Under the above circumstances, Diane can write Tim a traffic citation but cannot search the vehicle.
Q2) A felony is a crime for which a defendant can be sentenced to up to one year in prison.
A)True
B)False
Q3) Compare and contrast money laundering and embezzlement.Give an example of each.
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Page 9
Chapter 8: International Law
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Q1) If the United States sets a limit on the number of cars that can be imported,this action is a form of tariff.
A)True
B)False
Q2) International comity holds that the courts of one nation lack the jurisdiction to hear suits against foreign governments.
A)True
B)False
Q3) The primary goal of the North American Free Trade Agreement (NAFTA)is to:
A)allow Canada, the United States, and Mexico to compete as a common economic entity against other countries in the world.
B)allow for the free and unrestricted movement of people from one country to another to improve the labor market of all three counties.
C)eliminate almost all trade barriers between the three nations.
D)All the above are correct.
Q4) Explain what the General Agreement on Tariffs and Trade (GATT)is and give pro and con arguments concerning this agreement.
Q5) Explain the origin and purpose of the World Trade Organization.
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Chapter 9: Introduction to Contracts
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Sample Questions
Q1) Dawn and Isaac sign a contract in which Dawn agrees to deliver 8 bags of flour in exchange for Isaac's promise to pay $25 per bag.Dawn delivers the flour.Isaac pays for the goods.This contract is fully executory.
A)True
B)False
Q2) LarsonSoft,Inc.is a software producer that entered into a verbal agreement with XYZ Corporation wherein XYZ agreed to buy LarsonSoft's newly developed software.The agreement also provided that LarsonSoft would supply training personnel,as well as technical personnel,to work with XYZ employees in installing and learning the software.What law governs this agreement?
Q3) The basic distinction between a bilateral contract and a unilateral contract is that:
A)only one promise is involved in a bilateral contract.
B)only one promise is involved in a unilateral contract.
C)the Statute of Frauds applies to one and not the other.
D)one is enforceable, the other is not.
Q4) List and briefly describe the basic elements of a contract.
Q5) Explain what the Restatement of Contracts is and describe the role it plays in contract law.
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Chapter 10: Agreement
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Sample Questions
Q1) Which of the following is generally considered to be a legal offer?
A)Placing an item up for auction.
B)A catalog advertisement.
C)A price list.
D)None of the above.
Q2) Wally owns 200 acres of land.Wally offers to sell the land to Robert for $1,500 per acre.Robert replies that he does not need 200 acres of land but would like to buy 40 acres at $1,500 per acre.Wally agrees to sell but does not identify which 40 acres.Later,Wally refuses to sell any land to Robert.What is the result?
A)Robert wins; this is an enforceable contract with complete and definite terms.
B)Robert wins; the UCC will decide which 40 acres are to be sold.
C)Wally wins; the original offer was not intended to be an offer but merely an invitation to negotiate.
D)Wally wins; this agreement is too indefinite since it does not identify which 40 acres are to be sold.
Q3) Discuss the circumstances under which an offer would be terminated by law and give examples.
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Page 12
Chapter 11: Consideration
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Sample Questions
Q1) Consideration can be a promise or an act.
A)True
B)False
Q2) "I'll sell you my car if I decide to sell it" is an example of:
A)a conditional offer.
B)an unliquidated offer.
C)a unilateral contract.
D)an illusory promise.
Q3) Under the Uniform Commercial Code,an agreement modifying a contract:
A)always requires consideration.
B)may not require consideration.
C)requires consideration only when it is not written.
D)requires consideration only when one of the parties is a minor.
Q4) If Ellen and Daryl are in disagreement as to the exact amount of money that Ellen owes Daryl,then they may choose to form a new agreement at a set amount.If they both perform the new agreement,their conduct would be an example of:
A)a rescission.
B)a contract modification.
C)an accord and satisfaction.
D)past consideration.
Page 13
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Chapter 12: Legality
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Q1) In the case King v.Head Start Family Hair Salons,Inc.,the court decided that the noncompetition agreement was entirely valid.
A)True
B)False
Q2) Elias sold a auto body shop to Ben for $295,000.As part of the agreement,Elias promised not to open another auto body shop for five years within a 75-mile radius of the one sold.Is this agreement enforceable against Elias?
Q3) E-mation,Inc hires Marvin to steal trade secrets from one of its competitors for $10,000.Marvin demands half of the money up front.E-mation pays Marvin $5000 but Marvin decides not to pursue theft of the trade secrets.E-mation sues Marvin for the return of the $5000.What will the court do with this contract?
A)The court will order Marvin to return the $5000.
B)The court will order Marvin to return the $5000 with interest.
C)The court will order Marvin to obtain the trade secrets.
D)The court will not do anything to help E-mation get its money back.
Q4) Discuss the pros and cons of gambling and whether there might be any reason for a court or legislature to treat gambling on credit any differently from gambling itself.
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Page 14
Chapter 13: 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) The most accurate statement regarding economic duress is:
A)it is never grounds for rescission.
B)it is always grounds for rescission.
C)it is a UCC concept only.
D)it may be grounds for rescission.
Q3) Sam,a minor,contracted to sell his computer to Cheryl,a 28-year-old.Sam later refused to complete the sale.If Cheryl sues to enforce the contract,she will:
A)win because Ryan breached the contract.
B)win because minors can only avoid contracts when they are the buyers.
C)lose, as the contract is void because of Sam's lack of capacity
D)lose, because the contract is voidable by Sam.
Q4) Discuss the concept of a "material fact" in fraud situations.
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Chapter 14: Written Contracts
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Sample Questions
Q1) parole evidence refers to anything (other than the written contract itself)that was said,done,or written before or as the parties signed the contract.
A)True B)False
Q2) 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.
Q3) Sweet Plantation,Inc.made a written contract with Candy,Inc.whereby Sweet Plantation agreed to supply all of Candy's sugar requirements for the next year at $.25 per pound.A dispute arose as to how much sugar Sweet is to supply.The parole evidence rule will bar Sweet's introduction of evidence concerning the intent of the requirements of Candy.
A)True B)False
Q4) The Uniform Commercial Code provides that,under certain circumstances,a merchant may be liable on a written contract,even though that merchant has NOT signed it.
A)True B)False
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Chapter 15: Third Parties
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Sample Questions
Q1) Susan took out a life insurance policy on herself,paying all of the premium payments.She named her daughter,Jessica,as the beneficiary under the policy.Jessica has not given anything in consideration for the policy.Jessica is:
A)a donee beneficiary who has rights to enforce the policy once Susan dies.
B)a creditor beneficiary who has rights to enforce the policy once Susan dies.
C)an incidental beneficiary because Jessica did not give any consideration for the policy and therefore cannot enforce the policy even when Susan dies.
D)None of the above.
Q2) A party may make either an assignment or a delegation,but cannot make both an assignment and a delegation simultaneously.
A)True
B)False
Q3) Generally,duties may not be delegated.
A)True
B)False
Q4) Claims for personal injury are generally assignable.
A)True
B)False
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Chapter 16: Performance and Discharge
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Q1) Jennifer substantially performs her service contract with Gretchen.Due to Jennifer's failure to render complete performance,Gretchen:
A)is discharged from any further contractual obligations.
B)is required to pay the full contract price, minus the value of Jennifer's defective performance.
C)is required to pay the full contract price.
D)may declare a material breach and pay only for the value received.
Q2) A contract between a company in the U.S.and one in China,contained a clause that stated: "If an event happens which is extraordinary and out of the control of the parties such as a strike,act of God,fire,accident,or transportation difficulties,then the affected party shall be relieved of its obligations under the contract." This type of clause is:
A)an objective impossibility clause.
B)a force majeure clause.
C)a concurrent condition clause.
D)a condition precedent clause.
Q3) Most contracts are discharged by mutual agreement.
A)True
B)False
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Chapter 17: Remedies
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Q1) Ralph is a professional football player.He signs a valid contract with the Jets.Later,the Giants offer him more money,so he signs a contract with them.If the Jets sue Ralph,the most likely result would be?
A)The court will order Ralph to play with the Jets.
B)The court will order Ralph to play with the Jets, but Ralph is entitled to be paid the amount he negotiated under the Giants contract.
C)The court will enjoin Ralph from playing with any team other than the Jets.
D)The court will order Ralph to pay compensatory damages in the amount of the difference between the two contracts.
Q2) Abigail signed a contract to purchase a new car from Wolf's Auto Sales Company.The seller breached its agreement by not delivering the car.Abigail went to another car dealer and purchased the same model of car at the same price.Although she had experienced a legal injury,Abigail has no actual financial or other damages as a result of the breach.If Abigail sues and wins,what type of damages will she be awarded?
Q3) Identify and describe the four principal contract interests a court may seek to protect.
Q4) Discuss the remedy of specific performance.
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Chapter 18: Introduction to Sales
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Sample Questions
Q1) Which of the following contracts is most likely to be declared unconscionable?
A)A contract between wholesaler and retailer which adds delivery charges at 15% of the costs of the goods.
B)A consumer sales contract which limits the consumer's remedies to repair or replacement.
C)A consumer sales contract which charges 300 times the fair market value of the goods.
D)All of the above
Q2) Price's Department Store contracted to buy 1,000 drop-waist velour dresses in heather gray from TriColor.Subsequently,TriColor called and asked to ship mink-colored dresses instead of heather gray.Price agreed,in writing,to the change.Which statement is correct?
A)The modification is not enforceable since there was no consideration for the change.
B)The modification is not enforceable since the parties are merchants.
C)The modification is enforceable.
D)Whether the modification is enforceable depends on the gap-filler rule.
Q3) Discuss the importance of the UCC to the law of sales.Include who created the UCC,how it becomes law,and the stated purposes of the statute.
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Page 20
Chapter 19: Ownership and Risk
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Q1) Under the UCC,the party who has title to the goods always has the risk of loss.
A)True
B)False
Q2) What are the requirements for the doctrine of entrustment to apply?
A)The goods must be entrusted to a merchant who deals in goods of the kind.
B)The entrustee may transfer the rights of the entruster only if the buyer is a purchaser in ordinary course.
C)The owner must have delivered the goods to a merchant or permitted him to retain them.
D)All of the above.
Q3) Discuss the concept of insurable interests.
Q4) Buyer is located in Des Moines,Iowa and seller is located in Sacramento,California.The contract specifies F.O.B.Des Moines.This contract is a:
A)destination contract.
B)sale or return.
C)shipment contract.
D)sale on approval.
Q5) Discuss the concept of entrustment.
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Chapter 20: Warranties and Product Liability
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Q1) An express warranty may be created by a sample.
A)True
B)False
Q2) Privacy is required in strict product liability cases.
A)True
B)False
Q3) Bill is injured while standing on the corner of Hollyhock and Vine when Mia's new Hog speeds out of control because of a defective part.In most jurisdictions,Bill:
A)can sue the motorcycle manufacturer even though he was only a bystander.
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 lemon laws require arbitration.
D)cannot sue the motorcycle manufacturer because there is no privity of contract.
Q4) A tag attached to a tree in a nursery identifying the tree as a Southern Magnolia creates an express warranty.
A)True
B)False
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22
Chapter 21: Performance and Remedies
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Q1) A buyer has an absolute right to reject goods as long as the rejection is timely.
A)True
B)False
Q2) 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.
Q3) A buyer who properly rejects goods:
A)can do so by sending the goods back in any manner.
B)must notify the seller of the rejection within a reasonable time.
C)must pay the costs of returning the rejected goods.
D)None of the above.
Q4) Identify six possible remedies for a seller when the buyer breaches a contract.
Q5) Can the buyer revoke his acceptance? If so,under what circumstances?
Q6) Discuss the UCC rules on the limitation of damages in a contract.
Page 23
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Chapter 22: Creating a Negotiable Instrument
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Q1) The term "issuer":
A)is not used in relation to commercial paper.
B)is an all-purpose term that means both maker and drawer.
C)is synonymous with drawee.
D)is used in relation to commercial paper only to indicate the bank which creates a certificate of deposit.
Q2) Maia wrote a check which said,"Pay to the order of Kevin Mathews $10.97." The next line of the check stated,"One thousand ninety-seven Dollars." In applying the rules of interpretation,how much should the drawee pay?
A)Nothing; when the instrument is ambiguous it is declared non-negotiable.
B)Ten dollars and 97 cents.Numbers control over words.
C)One thousand, ninety-seven dollars or $1,097.00.Words control over numbers.
D)parole evidence would be needed to determine the purpose of the check.
Q3) In the Rosenbaum v.Bulow,the court ruled that Bulow neither gave value for the promissory note nor acted in good faith.
A)True
B)False
Q4) Explain the shelter rule.
Q5) Define commercial paper and explain what it is used for.
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Chapter 23: Liability for Negotiable Instruments
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Q1) Micah signed a check in the lower right-hand corner and Andrew signed on the back.The presumption is that:
A)Micah is the issuer.
B)Micah is the acceptor.
C)Andrew is the drawer.
D)Andrew is the maker and Micah is an indorser.
Q2) Anyone who presents a check for payment warrants all EXCEPT:
A)he or she is a holder.
B)he or she has no reason to believe the drawer is insolvent.
C)he or she has no reason to believe the drawer's signature is forged.
D)the check has not been altered.
Q3) If Liz collects payment from Tyler,then Tyler can demand payment from:
A)Ryan and Breanna.
B)Ryan only.
C)Jessie only.
D)Breanna only.
Q4) Discuss the difference between the impostor rule and the fictitious payee rule.
Q5) Negotiable instruments are usually not issued to fulfill a contract.
A)True
B)False
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Chapter 24: Liability for Negotiable Instruments: Banks and Their Customers
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Q1) Issam and James planned to spend spring break in Mexico.James was to make the final plans.To pay for the trip,Issam gave James a signed check that left the name of the payor and amount blank.Using Issam's check,James made the check out to himself for $500.Issam's bank paid the check not knowing that the completion was improper.The bank:
A)is liable because the instrument was forged.
B)is liable because the instrument was unauthorized.
C)is liable for half of the loss.
D)is not liable.
Q2) Twenty days after receiving her bank statement,Gwen telephoned Great State Bank to notify it that there was an error.The bank must investigate and report the results of the investigation to Gwen within 10 business days.If the bank cannot complete the investigation within the 10 days,it must provisionally recredit Gwen's account and complete the investigation within 45 calendar days.
A)True
B)False
Q3) Article 4 of the UCC governs bank deposits and collections.
A)True
B)False
Page 26
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Chapter 25: Secured Transactions
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Q1) Great State Bank and First Federal Bank have a security interest in TriColor's equipment.If neither secured party is perfected,the first to sue or repossess has priority over the collateral.
A)True
B)False
Q2) Which of the following statements about a buyer in ordinary course of business (BIOC)is true?
A)The BIOC takes the goods and is liable for the attached security interest provided it has been perfected.
B)The BIOC takes the goods and is liable for the security interest if the goods are consumer goods.
C)The BIOC takes the goods free of a security interest even though the security interest is perfected.
D)None of the above is true.
Q3) A PMSI can be created only in goods and software.
A)True B)False
Q4) Discuss the concept of software under Article 9.
Q5) Explain the difference between attachment and perfection.
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Chapter 26: Bankruptcy
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Q1) Under the federal Bankruptcy Code,the exemption amount for the debtor's personal residence is:
A)$20,200.
B)$37,100.
C)unlimited.
D)$50,000.
Q2) The Bankruptcy Code has two main goals: rehabilitation and liquidation.
A)True
B)False
Q3) Generally,filing bankruptcy stops the collection activity of creditors.
A)True
B)False
Q4) Agnes plans to file for bankruptcy under Chapter 7.One month prior to filing,Agnes gives Joe's Filling Station $700 to apply to her gas bill.Joe has been so kind to let her charge the gas she needed for her car over the past year.The bankruptcy trustee appointed to the case:
A)can cancel the payment to Joe as a fraudulent transfer.
B)cannot cancel the payment to Joe because it is payment for an existing debt.
C)cannot cancel the payment to Joe because he is not an insider.
D)can cancel the payment to Joe as a voidable preference.
Page 28
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Chapter 27: Agency
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Q1) What are the requirements for and the effect of a ratification of an agent's unauthorized act?
Q2) In order to determine whether the agent is an employee or an independent contractor,a court will consider which of the following?
A)Whether the principal supplies the tools and place of work.
B)Whether the agent works full time for the principal.
C)Whether the principal controls details of the work.
D)All of the above.
Q3) Rob agrees to act as an agent for Diane in selling her car.Diane has a duty of loyalty to Rob.
A)True
B)False
Q4) When the agent breaches his duty,the principal may:
A)recover damages.
B)recover profits wrongfully earned by the agent.
C)rescind the transaction.
D)all of the above.
Q5) The bankruptcy of an agent automatically terminates an agency relationship.
A)True
B)False
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Chapter 28: Employment Law
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Questions
Q1) Maude was denied employment with Trucks R Us as a warehouse worker because she didn't meet the weight requirement of 160 pounds.Trucks argued the weight requirement was reasonable because warehouse workers often have to lift things weighing up to 100 pounds.If she sues Trucks,she will probably:
A)lose, as the weight requirement seems like a reasonable occupational requirement.
B)lose, as the 160-pound requirement doesn't discriminate.
C)win, as the weight requirement is discriminatory and doesn't appear necessary for the requirement of lifting 100 pounds.
D)win, as the employer specifically cannot have a weight requirement.
Q2) Which of the following may be a legitimate,nondiscriminatory criterion for selection of an employee?
A)Age.
B)Race.
C)Color.
D)Educational level.
Q3) What are three general defenses an employer can raise if sued for violating Title VII of the Civil Rights Act?
Q4) Define sexual harassment.
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Chapter 29: Starting a Business: Llcs and Other Options
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Q1) What is a limited liability company? Explain the advantages and disadvantages of this type of business ownership.
Q2) Lawrence,Pablo,and Shanna,who plan to start a business:
A)should consider taxes, potential liability, ease and cost of formation, and transferability of interests when they select a form of organization.
B)will be affected by business law which attempts to balance the rights, obligations, and liabilities of the entrepreneurs, managers, investors, and customers.
C)will be subject to a form of organization the law automatically selects by default if they do not select the form of organization themselves.
D)All of the above.
Q3) Businesses often operate in the legal form of a business trust.
A)True B)False
Q4) Compare and contrast the following forms of business organization: sole proprietorship,general partnership,limited partnership,limited liability company,and corporation as to ease of formation,liability of owners,management,and tax implications.
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Chapter 30: Corporations
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Q1) A corporate charter is filed with:
A)a state's Secretary of State office.
B)a state's Treasury and/or Revenue Division.
C)the United States Department of Commerce.
D)All the above.
Q2) For the business judgment rule to apply:
A)there must be a conflict of interest.
B)the director must exercise extraordinary care.
C)the director must act in the best interests of the corporation.
D)All of the above.
Q3) The Lippman v.Shaffer case was about:
A)piercing the corporate veil to hold shareholders personnaly liable.
B)the application of the business judgment rule.
C)the unlawful transfer of a close corporation stock.
D)all of the above.
Q4) The business judgment rule doesn't apply if:
A)the manager's decision amounted to self dealing.
B)the shareholders approved the manager's decision.
C)the charter expressly excludes it..
D)the manager's decision was about the creation of treasury stock.
Page 32
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Chapter 31: Securities Regulation
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Q1) The 1933 Act prohibits fraud in any securities transaction,not just transactions involving public offerings.
A)True
B)False
Q2) A control security is stock which gives the owner a controlling interest in the company.
A)True
B)False
Q3) The SEC regulates the securities industry but cannot create law.
A)True
B)False
Q4) The 1934 Act requires companies with a class of stock that is publicly traded to make regular filings with the SEC.
A)True
B)False
Q5) After the SEC completes its review of a preliminary registration statement,it sends the issuer a comment letter setting forth changes that must be made.
A)True
B)False
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Chapter 32: Property
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Q1) Percival takes his computer to a repair shop to have the disk drive repaired.This is most likely a:
A)bailor benefit bailment.
B)bailee benefit bailment.
C)mutual benefit bailment.
D)leasehold arrangement.
Q2) Erin owns a farm.In a signed writing,she gave her neighbor Hank the irrevocable right to use a road on his farm so that Hank could more easily reach the highway.What kind of interest in land did Erin give to Hank?
A)An easement.
B)A profit.
C)A fee simple defeasible.
D)A license.
Q3) Landlords cannot be held liable in negligence to guests of tenants for criminal attacks that occur on the rental premises.
A)True
B)False
Q4) Discuss the tenant's and the landlord's basic duties under a landlord-tenant relationship.
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Chapter 33: Cyberlaw
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Q1) Consumers have been active in requesting government regulation of web data collection to protect their privacy.
A)True
B)False
Q2) Stuart is vying for a promotion,but faces competition from a co-worker,Brenda.Without authorization,Stuart accesses stored company records and discovers an unfavorable e-mail message Brenda had written about the company.Stuart sends the message to his supervisor in hopes of keeping Brenda from getting the promotion.Discuss whether Stuart has violated any statute and,if so,what sanctions he may face.
Q3) The Electronic Communications Privacy Act is a federal statute regulating e-mail.
A)True
B)False
Q4) If a program is on your computer without your permission which monitors your activities,you may be able to get protection through federal legislation which makes spyware illegal.
A)True
B)False
Q5) Discuss the European Directive on the protection of personal Data.
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Chapter 34: Intellectual Property
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Q1) Richard wrote a song called "College Days." He copyrighted the composition and had it professionally printed.A couple years later he was attending a business meeting about 1500 miles from his home.While sitting in a nightclub,he heard a small local band perform a song called "College Memories." The music and words were extremely similar to his song.The composer of "College Memories" claims he never heard of Richard's song and that she is offended he would accuse her of stealing his work.If Richard wishes to sue for copyright infringement,he must prove:
A)only that his song and the infringer's song are substantially the same.
B)that his work was original, and the infringer actually copied his work or that the infringer had access to his song and that the two works are substantially the same.
C)that he sustained money damages as a result of the infringement.
D)that he registered the song for a copyright.
Q2) Anderson Corp.owns a very long customer list which it guards because it gives the company a competitive advantage.If Alice willfully misappropriates the list,a court may hold her liable to Anderson for double damages.
A)True
B)False
Q3) Briefly discuss a patent,copyright,and trademark.
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