Business Law
Midterm Exam
Course Introduction
Business Law provides an introduction to the legal principles and frameworks that govern commercial transactions and business relationships. The course covers topics such as contract formation and enforcement, business organizations, agency, torts, intellectual property, employment law, and government regulation of businesses. Through case studies and real-world examples, students will develop an understanding of the legal environment in which businesses operate, learn to recognize potential legal issues in business settings, and explore the ethical implications of business decisions in relation to the law.
Recommended Textbook
The Legal and Regulatory Environment of Business 16th Edition by O. Lee Reed
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Page 2
Chapter 1: Law As a Foundation for Business
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Q1) Rule-of-law nations adopt laws supporting the private market because it is in everyone's interest, including the lawmakers'.
A)True
B)False
Answer: True
Q2) In constitutional law the idea that courts should understand the meaning of the Constitution relative to the times in which they interpret it is known as _____.
A) constitutional relativity
B) legal realism
C) originalism
D) dicta
E) rule of law
Answer: A
Q3) Common law relies more on legislation than judicial decisions to determine what the law is.
A)True
B)False
Answer: False
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Chapter 2: The Role of Ethics in Decision Making
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Q1) Of the world's 100 largest economies, 49 of them are countries and 51 are companies.
A)True
B)False
Answer: True
Q2) According to Rawls, it is important to forget our own age, gender, race, intelligence, strength, wealth, or social status when determining just actions. What is the purpose of this?
A) This permits us to act as pure American citizens.
B) It keeps us from being self-interested in the ethical values we consider.
C) This makes each individual like a blank sheet of paper on which a contract may be written.
D) It makes it easier to consider the usefulness of our actions.
E) This promotes the assumption that what one personally needs or wants is morally correct.
Answer: B
Q3) Growing diversity in the workplace has reduced concerns over ethical values.
A)True
B)False
Answer: False
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Page 4
Chapter 3: The Court System
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Q1) What is judicial review? How did it originate and what was the rationale for its existence?
Answer: Judicial review is the power of the federal judiciary to declare acts of federal and state legislatures to be unconstitutional. Although judicial review is not provided for in the Constitution, it was established by the Supreme in the case of Marbury v. Madison. In his opinion Chief Justice John Marshall stated that the constitution controls any legislative act and that a legislature may not alter the constitution by an ordinary act. The decision maintained that it was the court's duty to review legislative acts to assure that they did not violate the constitution.
Q2) The philosophy of judicial restraint is sometimes referred to as strict constructionism. A)True
B)False
Answer: True
Q3) A lawyer's first duty is to his client.
A)True
B)False
Answer: False
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Chapter 4: Litigation
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Sample Questions
Q1) Which of the following is a feature of appellate review?
A) Calling witnesses.
B) Oral argument.
C) Introduction of new evidence.
D) Statute of limitations.
E) Discovery.
Q2) If the judge agrees with the decision of the jury, he will enter the _____.
A) verdict
B) judgment
C) appeal
D) summation
E) deposition
Q3) A lawsuit that is totally lacking in merit is referred to as _____.
A) deposed
B) peremptory
C) res judicata
D) cognizable
E) frivolous
Q4) What must lawyers do in order to preserve an argument for appeal of an evidentiary ruling?
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Chapter 5: Alternative Dispute Resolution
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Q1) What is a caucus? How is it used in mediation?
Q2) The decision by an arbitrator is called a(n):
A) submission.
B) award.
C) verdict.
D) judgment.
E) edict.
Q3) Individual states are not limited by the Constitution when they make laws that deny arbitration of certain disputes
A)True
B)False
Q4) According to Roger Fisher, William Ury, and Bruce Patton, in principled negotiation, _____ are outcomes that are possible without the agreement of the other party.
A) commitments
B) alternatives
C) options
D) interests
E) relationships
Q5) What are some of the constitutional challenges to mandatory arbitration?
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Chapter 6: The Constitution
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Questions
Q1) Gerard was hired to publish a weekly journal in the state of California. When he printed another person's article that criticized the governor of a state at the time, Gerard was accused of a certain tort theory. Which of the following tort theories would he most likely be accused of?
A) Libel
B) Calumny
C) Slander
D) Vilification
E) Traducement
Q2) Under the _____, courts may be called upon to decide if a state law is invalid because it conflicts with a federal law.
A) minimum rationality approach
B) exclusion clause
C) strict scrutiny approach
D) supremacy clause
E) contract clause
Q3) Explain the features of commercial speech.
Q4) Briefly explain the supremacy clause.
Q5) List the approaches applied by courts while using the equal protection clause.
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Chapter 7: The Property System
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Q1) A(n) _____ means that an adjoining landowner cannot do anything that would cause your land to cave in or collapse, such as digging a ditch that would cause the land on your side to collapse.
A) easement by prescription
B) negative easement
C) mutual benefit bailment
D) eminent domain
E) accession
Q2) You're lying in bed when a piece of a meteorite enters the Earth's atmosphere and flies through the window of your apartment, landing at your feet.
A) Your apartment complex has a right to claim the property because it landed on their land.
B) You may keep the property because of the rule of first possession.
C) You and your apartment complex must share the property as equal co-owners.
D) The government can exercise its right of eminent domain and claim the property for the good of the public.
E) The property must be turned over to police and cannot be claimed until 60 days have passed.
Q3) Explain what eminent domain is and what must be done for it to be valid.
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Page 9
Chapter 8: Contract Formation
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Sample Questions
Q1) Which of the following terms refers to force or threat of force?
A) Unilateral mistake
B) Misrepresentation
C) Undue influence
D) Duress
E) Mutual mistake
Q2) Mayra offers to sell her home to Hanna for "about $100,000 plus closing costs." Hanna accepts Mayra's offer but later, a dispute arises concerning the precise dollar amount of the purchase price. How will a court resolve this dispute?
A) The court will determine a reasonable price to be paid by Hanna.
B) The court will determine that Hanna pay only the figures mentioned in the contract.
C) The court will appoint a licensed real estate appraiser to determine the price to be paid by Hanna.
D) The court will require Hanna to pay the average of her price and Mayra's price.
E) The court will declare the purchase price and terms too indefinite to create a binding contract.
Q3) Explain the doctrine of promissory estoppel.
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Chapter 9: Contractual Performance and Breach
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Sample Questions
Q1) Principals hire _____ to do tasks and represent them in transactions.
A) contractors
B) agents
C) third parties
D) organizations
E) suppliers
Q2) _____ are court-awarded damages to put the plaintiff in the same position as if the contract had been performed.
A) Nominal damages
B) Consequential damages
C) Liquidated damages
D) Compensatory damages
E) Specific damages
Q3) _____ is a level of performance below what is reasonably acceptable.
A) Breach of contract
B) Material breach
C) Complete performance
D) Substantial performance
E) Quantitative performance
Q4) Explain divisibility of performance.
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Chapter 10: Torts Affecting Business
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Sample Questions
Q1) John rents a movie from Video Rental Co. but instead of returning it he lends it to Sam in whose care the movie is destroyed. What tort did John commit?
A) Conversion
B) Theft
C) Battery
D) Trespass
E) Invasion of privacy
Q2) Which of the following terms represents the legal responsibility for injury-causing behavior that is neither intentional nor negligent?
A) Strict liability
B) Battery
C) Assumption-of-the-risk
D) Comparative fault
E) Cause in fact
Q3) Rita was drunk while driving her car and she hit Ana's car. This makes Ana a tortfeasor.
A)True
B)False
Q4) What is the dram shops act?
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Chapter 11: Intellectual Property
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Sample Questions
Q1) Whom does the PTO assign to consider a patent application?
A) Claims officer
B) Patent examiner
C) Patent officer
D) The Supreme Court
E) Patent issuer
Q2) As part of the trademark application process, the Patent and Trademark Office places a proposed mark in the ________ which gives existing mark owners notice and allows for objection.
A) Official Gazette
B) Federal Register
C) Legal section of major newspapers
D) Congressional Record
E) Principal Register
Q3) Can misappropriation trade secrets account for criminal prosecution?
Q4) What does it mean for a trademark to become generic? Give some examples of trademarks that have become generic.
Q5) The Coca-Cola Co. has restricted employees at soda fountains to offer another soda when a customer asks for a "Coke". Why?
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Chapter 12: International Law
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Sample Questions
Q1) Irrevocable letters of credit do not recognize the concept of substantial performance.
A)True
B)False
Q2) The Foreign Sovereign Immunities Act ______:
A) codifies the modern-traditional theory of trade and tariffs.
B) provides immunity for private acts.
C) rejects immunity for commercial acts carried on in the countries trading with the U.S.
D) provides immunity for commercial acts having direct effects in the U.S.
E) rejects immunity for commercial acts carried on in the U.S.
Q3) The Convention on the International Sale of Goods resolves all areas of contract law.
A)True
B)False
Q4) Discuss the role of intermediaries under the FCPA.
Q5) Under the CSIG, parties are not allowed to negotiate contract terms and cannot opt out of the CISG.
A)True
B)False
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Page 14
Chapter 13: Criminal Law and Business
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Sample Questions
Q1) Which of the following is true of phishing?
A) Rummaging through the trash looking for personal information.
B) Pretending to be financial institutions or companies to get individuals to reveal their personal information.
C) Stealing credit/debit card numbers using a special storage device when processing a card.
D) Diverting billing statements to other locations.
E) Stealing wallets, purses, mail, credit cards, checks, tax information and so forth.
Q2) Explain the difference between larceny, burglary, and robbery.
Q3) In which of the following is there no expectation of privacy, while there is an irrevocable consent to a warrantless search?
A) A person living in his apartment.
B) A building suspected to have violated a building code.
C) A lawyer's office.
D) Presenting oneself at an airport checkpoint.
E) A celebrity having a party on her premises.
Q4) What protections are provided by the 6th Amendment in criminal cases?
Q5) Discuss embezzlement and money laundering.
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Chapter 14: Business Organizations
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Sample Questions
Q1) The formal application for a corporate charter is called the:
A) articles of confederation.
B) articles of incorporation.
C) articles of partnership.
D) articles of association.
E) articles of integration.
Q2) Explain the term "creation" as a factor considered when selecting a business organizational form.
Q3) One of the advantages for a proprietor is that he may transfer the ownership of his proprietorship whenever desired.
A)True
B)False
Q4) To prevent problems that may arise when a partner dies or withdraws from a partnership, the articles of partnership should include a(n):
A) buy and sell agreement.
B) escrow instruction.
C) dissolution contract.
D) purchase contract.
E) interest agreement.
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Chapter 15: The Regulatory Process
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Q1) Which of the following legislations prohibits any physician the legal right to prescribe controlled substances for the purpose of assisting suicide?
A) ODWDA
B) TADA
C) CSA
D) WDWDA
E) DDNC
Q2) _____ regulates interstate and foreign communications by means of radio, television, wire, cable, and satellite.
A) FCC
B) FTC
C) CPSC
D) EEOC
E) FERC
Q3) The general language used in delegating quasi-judicial authority usually involves grants of substantial discretion to an agency.
A)True
B)False
Q4) How has been the Controlled Substances Act (CSA) interpreted?
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Chapter 16: Regulating Competition_Antitrust Laws
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Q1) What is the Noerr-Pennington doctrine?
Q2) The Wheeler-Lea amendment of 1938 made unfair or deceptive acts or practices in commerce illegal under:
A) the Sherman Act.
B) the Noerr-Pennington doctrine.
C) the Clayton Act.
D) the Robinson-Patman Act.
E) the Federal Trade Commission Act.
Q3) The University of Dover and Dover University are bitter cross-town rivals. They compete in everything from sports to academics. The schools, because of shrinking enrollment, make an agreement to give all incoming students free tuition for one semester before raising the existing rates the following semester. This action would be considered:
A) a horizontal agreement in violation of the Sherman Act.
B) a vertical agreement in violation of the Sherman Act.
C) a tying agreement in violation of the Clayton Act.
D) a reciprocal dealing agreement violating the Clayton Act.
E) a licensing agreement violating the Clayton Act.
Q4) What are franchise contracts?
Q5) Can the existence of a monopoly be lawful? Explain why or why not.
Page 18
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Chapter 17: Financial and Securities Regulations
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Q1) According to the Securities Act of 1933, which of the following is illegal during the waiting period?
A) Soliciting buyers for a company's securities.
B) Receiving offers to buy a company's securities.
C) Selling security subject to the act.
D) Soliciting through the use of a summary prospectus.
E) Soliciting offers for later acceptance.
Q2) Under the 1934 Act, an individual found guilty of filing false or misleading documents with the SEC may be imprisoned up to:
A) 5 years.
B) 10 years.
C) 15 years.
D) 20 years.
E) 25 years.
Q3) The Uniform Securities Act has been the model for blue sky laws.
A)True
B)False
Q4) Explain the concept of fraud under Section 10(b) of the Securities Exchange Act of 1934.
Q5) What must an expert prove to successfully present the defense of due diligence?
Page 19
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Chapter 18: Privacy and Consumer Protection
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Q1) Which of the following is considered a nondischargeable bankruptcy debt?
A) Credit card debts
B) Negligence claims
C) Medical expenses
D) Personal loans
E) Intentional torts
Q2) Name the three major rights given to consumers under the Fair Credit Reporting Act.
Q3) In a bankruptcy proceeding against an individual, debts are adjusted under Chapter 13 of the bankruptcy law.
A)True
B)False
Q4) The FTC commissioners are appointed by the president.
A)True
B)False
Q5) Which parties relevant to a delinquent debt collection will be regulated, and which will not be regulated, under the Fair Debt Collection Practices Act (FDCPA)?
Q6) What are the chief legal tools of the Bureau of Consumer Protection and how are they enforced?
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Chapter 19: Environmental Regulation and Resource
Sustainability
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Q1) Mandy sees a watermelon in Mrs. Brown's garden and immediately wants it. In order to get the watermelon, she crosses Mrs. Brown's yard without her permission. Under tort law, which action can be brought against Mandy?
Q2) Under the Endangered Species Act, the right to declare a species as endangered rests with the:
A) director of the EPA.
B) Governors of states where the species habitat is located.
C) Secretary of the Interior.
D) president.
E) upper house of the U.S Congress.
Q3) The primary federal effort in solid waste management is represented by the _____ Act.
A) Waste and Resource Reclamation
B) Solid Waste Disposal
C) Landfill Management
D) National Environmental Policy
E) National Solid Waste Management
Q4) What are the civil and criminal penalties that enforce the Clean Air Act?
Page 21
Q5) Who is responsible for control of overall radiation pollution?
Q6) What reforms have been proposed to the Superfund law by the business community?
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Page 22
Chapter 20: Discrimination in Employment
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Q1) The ADA specifies that in evaluating undue hardship, all of the following must be considered EXCEPT:
A) the availability of other employment for the disabled person.
B) the cost of accommodation.
C) the resources of the employer.
D) the nature of the business.
E) the size of the employer.
Q2) A 911 emergency response service needs operators who are bilingual in English and Spanish. A few applicants of Spanish origin are rejected due to their poor English-speaking skills. They file a complaint on the grounds of discrimination based on nationality. Their complaint is quashed. Here, the defense of the federal government is on the grounds of:
A) undue hardship.
B) inculpatory evidence.
C) exclusionary rule.
D) circumstantial evidence.
E) bona fide occupational qualifications.
Q3) How did the 1991 amendments affect the Civil Rights Act of 1964?
Q4) What advantages exist in using Section 1981 instead of Title VII as the basis of a lawsuit?
Page 23
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Chapter 21: Employment Laws
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Q1) Which of the following statements is true for a paper fortress?
A) It consists of cases of labor violations by an organization.
B) It consists of personnel manuals.
C) It consists of legal injunctions served on an organization.
D) It consists of terms of registration of an organization.
E) It acts as a protection against unjustified employer lawsuits.
Q2) The WARN Act requires that employers give employees prior notice of plant closings or mass layoffs.
A)True
B)False
Q3) A fast food restaurant allowed nine minors to operate a deep fryer. The restaurant's manually operated fryer requires the employees to cook baskets of food in hot oil, according to the department. All of the minors that utilized the fryer did so at the direction of various store managers as well as senior staff members and on a regular and recurring basis. Does the restaurant violate any rule?
Q4) The FLSA requires employers to provide reasonable break time for nursing mothers.
A)True
B)False
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Page 24
Chapter 22: Labor-Management Relationship
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Q1) Collective bargaining subjects are first classified as mandatory or voluntary by:
A) executive orders.
B) legislative enactment.
C) NLRB decisions.
D) the Sherman Act.
E) the Comstock Act.
Q2) Unions are allowed to use members' dues to support political activities.
A)True
B)False
Q3) The Taft-Hartley injunction provision is applicable to all strikes.
A)True
B)False
Q4) Which of the following actions by an employer violates the Wagner Act?
A) Threatening to fire any employees that vote to certify a union
B) Providing refreshments to those attending a union meeting
C) Refusing to allow an employee to have a union representative present when the employee is being questioned about a theft that occurred on the premises
D) All of these
E) None of these
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