Business Law for Managers Exam Bank
Course Introduction
Business Law for Managers provides an essential overview of legal concepts relevant to the business environment, equipping current and aspiring managers with the knowledge to make sound decisions within legal and ethical boundaries. The course covers topics such as contract law, agency, employment law, intellectual property, dispute resolution, and regulatory compliance. Through case studies and real-world scenarios, students will develop the ability to identify legal risks, understand the implications of various business decisions, and effectively collaborate with legal professionals to protect organizational interests and ensure regulatory adherence.
Recommended Textbook
Business Law Text Cases An Accelerated Course 14th Edition by Roger LeRoy Miller
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Page 2
Chapter 1: Law and Legal Reasoning
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Q1) The courts, in interpreting statutory law, may rely on the common law as a guide to what the legislators intended.
A)True
B)False
Answer: True
Q2) The stability and predictability of the law are essential to business activities.
A)True
B)False
Answer: True
Q3) Jessie, an employee of Kim's Restaurant, believes that her employer has violated her rights in the workplace. Larson argues that a Metro City government agency has imposed a ordinance that violates his rights under the U.S. Constitution. The branch of law dealing with the definition and enforcement of all private or public rights is
A) administrative law.
B) civil law.
C) constitutional law.
D) federal law.
Answer: B
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3
Chapter 2: Business and the Constitution
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Q1) The First Amendment prevents limits from being placed on independent political expenditures by corporations.
A)True
B)False
Answer: True
Q2) In a federal form of government, the national government shares sovereign power with the states.
A)True
B)False
Answer: True
Q3) Under the Constitution, speech-oral, written, or symbolized by conduct-cannot be restricted in any way.
A)True
B)False
Answer: False
Q4) Under the Constitution, the judicial branch is responsible for foreign affairs.
A)True
B)False
Answer: False
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Chapter 3: Courts and Alternative Dispute Resolution
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Sample Questions
Q1) Sforza files a suit against Thieu. If this suit is like most cases, it will be
A) dismissed during a trial.
B) settled before a trial.
C) resolved only after a trial.
D) appealed to a higher court.
Answer: B
Q2) McHenry, a New York resident, files a suit in a New York state court against OneWorld Inc., a company based in California. OneWorld's only contact with McHenry is the company's app, which McHenry downloaded while traveling across the United States.
According to the sliding-scale analysis, the factor most likely to confer jurisdiction on the New York court is
A) the geographical distance between McHenry and OneWorld.
B) the degree of interactivity via the app between McHenry and OneWorld.
C) OneWorld's location when the app was created.
D) McHenry's location when the app was downloaded.
Answer: B
Q3) No court offers mediation as an option before a case goes to trial.
A)True
B)False
Answer: False
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Chapter 4: Tort Law
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Q1) Felix tells Genie, a prospective tenant, that the roof of the Hillside Apartments building does not leak when Felix knows that it does. This may give rise to an action for fraud, because the statement is one of A) puffery.
B) fact.
C) illusion.
D) opinion.
Q2) Beth makes and markets cosmetics. For an ad, Beth superimposes her logo onto a photo of Chelsea, a famous model, suggesting that Chelsea uses Beth's products. Beth does not ask Chelsea's permission. Beth is most likely liable to Chelsea for A) trespass.
B) fraudulent misrepresentation.
C) defamation.
D) appropriation.
Q3) Under the theory of negligence, the duty of care requires an intentional act.
A)True
B)False
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Page 6
Chapter 5: Criminal Law and Cyber Crime
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Q1) A verdict of guilty to a criminal charge nearly always requires a unanimous jury.
A)True
B)False
Q2) Edie uses TV ads to defraud millions of people. She can most likely be charged with A) larceny.
B) no crime.
C) robbery.
D) wire fraud.
Q3) Edith works for Fast Trades, Inc., a brokerage that facilitates frequent, quick securities transactions for investors. Edith steals her employer's computer program to start up her own competing business, Get Rich Quick, Inc. This is A) obtaining goods by false pretenses.
B) robbery.
C) larceny.
D) no crime.
Q4) A suspect cannot be tried twice in the same court for the same crime.
A)True
B)False
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Chapter 6: Business Ethics
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Q1) Invested Capital Corporation provides other firms with funds to expand operations. If Invested Capital strictly complies with existing laws, the firm's business ethics obligations will
A) be entirely met.
B) not be met.
C) be partially met.
D) not need to be met.
Q2) Dyan, the owner of Expert Restoration Services, Inc., adheres to the "principle of rights" theory. Under this theory, a key factor in determining whether a business decision is ethical is how that decision
A) complies with religious principles.
B) affects the rights of others.
C) causes consequences that would follow if everyone acted the same way.
D) supports the right to make a profit.
Q3) Codes of ethical conduct can indicate how employees are expected to act.
A)True B)False
Q4) Duty-based ethical standards often come from religious precepts. A)True B)False
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Chapter 7: Nature and Terminology
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Q1) In a divorce proceeding, Jonas promises to pay a certain amount of child support to Kelly every month until their daughter Lois is eighteen years old. Jonas's obligation with respect to this promise is
A) moral, not legal.
B) legal, not moral.
C) legal and moral.
D) neither legal nor moral.
Q2) If a contract term is ambiguous, a court can consider outside evidence. A)True
B)False
Q3) In an express contract, the terms are fully and explicitly stated in words. A)True
B)False
Q4) Jim tells Dana that he will take her out to lunch on Thursday. Jim has made Dana A) a prediction.
B) a promise.
C) a bilateral contract.
D) a void contract.
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Chapter 8: Agreement in Traditional and E-Contracts
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Q1) An "offer" to sell an item on an online auction site generally is treated an invitation to negotiate.
A)True
B)False
Q2) An acceptance can materially change or add to the terms of the original offer without rejecting it.
A)True
B)False
Q3) Orb, Inc., does business online around the globe. The United Nations Convention on the Use of Electronic Communications in International Contracts and other international agreements improve global commercial certainty by A) all of the choices.
B) determining an Internet user's location for legal purposes.
C) providing that e-signatures are the equivalent of signatures on paper.
D) providing for the recognition of judgments by other nations' courts.
Q4) An offeror's subjective intent determines the effectiveness of an offer.
A)True
B)False
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Chapter 9: Consideration, Capacity, and Legality
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Q1) If a promise is made, it will be enforced.
A)True
B)False
Q2) If a minor disaffirms a contract, he or she must disaffirm the entire contract.
A)True
B)False
Q3) Stephen offers Theresa $1,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely
A) enforce the deal after questioning the adequacy of consideration.
B) not question the adequacy of the consideration.
C) rewrite the deal after questioning the adequacy of consideration.
D) set aside the deal after questioning the adequacy of consideration.
Q4) Games Galore Corporation hires Haley, a minor, to create new customized game software for certain clients. Haley signs a contract that requires her to work for Games Galore for eighteen months. Before beginning work, however, Haley tells Games Galore that she will not create new software for Games Galore and that she is going to work for Ideal Worldcraft, Inc., a Games Galore competitor. Is Games Galore's contract with Haley enforceable? Why or why not?
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Page 11
Chapter 10: Defenses to Contract Enforceability
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Q1) At an auction, Benny bids on a 1957 Chevy coupe, believing that it is worth more than the price asked. When the car proves to need more repairs than Benny estimated, and thus is worth less as is, Benny is
A) still liable on the bid.
B) not liable on the bid because he underestimated the cost of repairs.
C) not liable on the bid because the auctioneer misrepresented the value.
D) not liable on the bid because an auction is not subject to contract law.
Q2) Refer to Fact Pattern 10-2. Under these circumstances, Sam's best course of action is most likely to
A) scam Riley.
B) induce Riley to give him the commission on her next sale.
C) recover damages or rescind the contract to buy the building.
D) sabotage Riley's career with bad publicity.
Q3) Ranchland Properties and Prairie State Investments sign a written contract for a sale of land. In some states, to be enforceable, this contract must include
A) a correct title, such as "Land Transfer" or "Real Estate Agreement."
B) a declaration of the contract's purpose.
C) a statement of the source of financing.
D) a description of the land.
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Page 12
Chapter 11: Third Party Rights and Discharge
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Q1) In most contracts, promises of performance are not expressly conditioned.
A)True
B)False
Q2) Any breach allows the nonbreaching party to sue for damages.
A)True
B)False
Q3) Delany & Sons, Inc., owes Evermore Bank $50,000. Delany enters into a contract with Floyd under which Delany promises to manage and oversee Floyd's Seaside Marina. Under the contract, Floyd promises to pay Evermore the amount that will be due Delany until his debt to Evermore is paid. Delany performs as promised, but Floyd does not pay the bank. Can Evermore succeed in a suit against Floyd? Why or why not?
Q4) To rescind a contract, the parties must make a second agreement that satisfies the legal requirements for a contract.
A)True
B)False
Q5) A discharge in bankruptcy will ordinarily allow a creditor to subsequently enforce the debtor's contract.
A)True
B)False
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Chapter 12: Breach of Contract and Remedies
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Q1) Rita contracts to work for Social Media Corporation (SMC) during April for $4,500. On March 31, SMC cancels the contract. Rita declines a job of a different type and rank with Tech Talk, Inc., which would have paid $3,500. Rita files a suit against SMC. As compensatory damages, Rita can recover
A) $4,500.
B) $3,500.
C) $1,000 in shares of SMC stock.
D) $0.
Q2) Bread & Bagels Bakery (B&B) enters into a contract with CinePass for discounted movie tickets for B&B's employees. CinePass breaches the contract and B&B enters into a contract with Dine+View for the same service at a lower price. B&B might be awarded nominal damages to
A) establish, as a matter of principle, that CinePass acted wrongfully.
B) provide B&B with funds for a foreseeable loss beyond the contract.
C) provide B&B with funds for its loss of the bargain.
D) punish CinePass and set an example to deter others from similar acts.
Q3) Courts order reformation most often when fraud or mutual mistake is present.
A)True
B)False
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Page 14
Chapter 13: Intellectual Property Rights
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Q1) A patent applicant must demonstrate that an invention is marketable to receive a patent.
A)True
B)False
Q2) Sui Generis, Inc. (SGI), designs and sells solar energy cells to research laboratories, commercial businesses, and individual consumers. Later, without SGI's permission, Mimic Company begins to sell cells of identical design to the same markets. This is most likely A) copyright infringement.
B) patent infringement.
C) trademark infringement.
D) none of the choices.
Q3) A copy must be exactly the same as the original to infringe a copyright.
A)True
B)False
Q4) The theft of trade secrets is a federal crime.
A)True
B)False
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Chapter 14: Internet Law, Social Media, and Privacy
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Q1) Web Marketing Inc. buys and sells domain names with the click of a mouse. A domain name can be bought and sold many times. Each change of owner is registered automatically as part of a mass registration. In this environment
A) cybersquatting can flourish.
B) typosquatting occurs unintentionally through clerical misspellings. C) brands and trademarks are automatically protected from cybersquatters.
D) the Federal Trade Commission can sanction Web Marketing.
Q2) Sonya and other employees of TransGlobal Inc. maintain a password-protected social media page on which they post comments on work-related issues. The posts range from positive to negative, supporting the page's purpose to "vent about work." When TransGlobal learns of the page, the company intimidates Sonya into revealing the password, and after reviewing the posts, fires her and the other participants. Which federal law discussed in thisChapter most likely applies to this situation? Has this law been violated? Discuss.
Q3) Much of the material on the Internet, including software and database information, is not copyrighted.
A)True
B)False
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Page 16
Chapter 15: The Formation of Sales and Lease Contracts
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Q1) Global Outfitters Outlet and Holly, a consumer, enter into a contract for a sale of camping gear. If the contract includes a clause that is perceived as grossly unfair to Holly, its enforcement may be challenged under
A) the mirror image rule.
B) the principle of fair trade.
C) the predominant-factor test.
D) the doctrine of unconscionability.
Q2) When no delivery terms are specified in a contract for a sale of goods, there is no basis for determining a remedy.
A)True
B)False
Q3) Dian, an agent for Expo Motors, Inc., writes a letter to Flynn on November 1 stating that she will sell him a 2017 Subaru Outback for $25,000 between November 1 and December 31. Dian's letter to Flynn is
A) a merchant's firm offer.
B) an acceptance.
C) an option contract.
D) none of the choices.
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Chapter 16: Performance, Breach, and Warranties of Sales and Lease Contracts
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Q1) If a warranty of infringement is breached and the buyer is sued by the claim holder, the buyer need not notify the seller of the lawsuit.
A)True
B)False
Q2) Pavers Inc. contracts to buy some heavy equipment from Earthmovers, Inc. Before either party performs, Earthmovers sells its assets to Excavation Corporation. On learning of the sale, Pavers is concerned about its contract with Earthmovers. Pavers should A) demand assurances of performance from the seller.
B) consider the contract repudiated and sue the seller for breach.
C) buy the equipment from a different firm and bill the seller for the price.
D) buy the equipment from a different firm and bill Excavation for the price.
Q3) Tarts & Pies Bakery contracts with Sweet Fruits for strawberries to be delivered by Refrigerated Trucking Company. On the day of delivery, the refrigeration on the trucks is not working. Sweet Fruits
A) may ship the strawberries to the buyer using a different carrier.
B) must cancel the contract.
C) must wait to ship the strawberries until the carrier fixes its trucks.
D) must ship the goods through a different carrier and pay damages.
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Chapter 17: Agency Relationships in Business
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Q1) Roberta introduces Steve to her friends as "my associate." Steve purports to act as Roberta's agent in several business transactions with those friends. If Roberta is liable for Steve's actions, it will be because their relationship is
A) an agency by agreement.
B) an agency by estoppel.
C) an agency by operation of law.
D) not an agency relationship.
Q2) An agent's duties to the principal are implied from the agency relationship only if the identity of the principal is disclosed to a third party.
A)True
B)False
Q3) Bernard is an expert on exotic flowers. Custom Floral Arrangements, Inc., hires Bernard to order exotic flowers for its arrangements. Bernard does not examine the quality of the flowers he orders on behalf of Custom Floral. Bernard has breached
A) the duty of performance.
B) the duty of loyalty.
C) no duty.
D) the duty of notification.
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Page 19
Chapter 18: Small Businesses and Limited Liability Companies
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Q1) Typically, the articles of organization of a limited liability company (LLC) include information on how the LLC will be managed.
A)True
B)False
Q2) Most states treat a partnership as an aggregate for most purposes.
A)True
B)False
Q3) Refer to Fact Pattern 18-1. Bryn, Cornell, and Duke decide to admit Giselle as a new partner in Equity Lending. Giselle's liability for partnership debts incurred before her admission is
A) limited to her capital contribution to the firm.
B) limited to her personal assets.
C) nothing.
D) unlimited.
Q4) A sole proprietor does not own the entire business.
A)True B)False
Q5) Limited liability companies are entities apart from their owners. A)True
B)False
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Chapter 19: Corporations
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Q1) The board of directors makes corporate policy decisions.
A)True
B)False
Q2) In most states, an individual can be an officer or a director of a corporation, but not both at the same time.
A)True
B)False
Q3) Wings2Go Corporation fails to hold an organizational meeting. In this circumstance, Wings2Go is most likely
A) a corporation by estoppel.
B) a de facto corporation.
C) a de jure corporation.
D) ultra vires.
Q4) Daryl, Elsa, and Ferris are the directors of Go Apps, Inc. Go also has four officers and fourteen shareholders. Dividends can be ordered by the firm's
A) board.
B) minority shareholders.
C) officers.
D) majority shareholders.
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