Business Law
Review Questions
Course Introduction
Business Law introduces students to the fundamental principles and concepts governing the legal environment of business. The course covers key topics such as contracts, torts, agency, sales, negotiable instruments, employment law, forms of business organization, and the regulatory framework affecting businesses. Through case studies and real-world examples, students learn how legal issues impact business decisions and operations, gain an understanding of dispute resolution mechanisms, and develop the skills to identify and analyze legal risks in business contexts. This foundational knowledge prepares students to navigate the complexities of todays business world within ethical and legal parameters.
Recommended Textbook
Essentials of Business Law 4th Edition by Jeffrey F. Beatty
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Chapter 1: Introduction to Law
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Q1) The Governor of Minnesota is part of the state's:
A)federal branch.
B)judicial branch.
C)legislative branch.
D)executive branch.
Answer: D
Q2) Identify and explain the parts of the following case name: Palsgraf v.Long Island Railroad Co.,248 N.Y.339,162 N.E.99,New York Court of Appeals.
Answer: the case name is Palsgraf v.Long Island Railroad Co.Palsgraf and the Long Island Railroad Co.are the parties to the lawsuit.the order of the names does not necessarily identify which party initially brought the lawsuit.the part stating "248 N.Y.339,162 N.E.99" is the legal citation,which indicates where to find the case in a law library.the first part of the citation means the Palsgraf case can be found on page 339 of the 248th volume of the official court reporter of the state of New York.the decision is also reported starting on page 99 of the 162nd volume of the Northeast Reporter,a regional reporter.the reported case was heard by the New York Court of Appeals.
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Page 3
Chapter 2: Business Ethics and Social Responsibility
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Q1) Nortron Corporation wants to create an ethical environment in its company.Which of the following has been found to help foster a sense of ethics within an organization?
A)The company may develop a formal, written ethics code.
B)The company may institute a formal ethics training program for the employees.
C)The top executives may provide good examples by behaving ethically themselves.
D)All of the above alternatives have been used by U.S.companies to create an ethical environment in their organizations.
Answer: D
Q2) 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
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Chapter 3: Dispute Resolution
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Q1) A jury decision in a civil case:
A)must be unanimous.
B)must be reached in the same day the case is heard.
C)depends on whether or not the parties have agreed to have their case decided by less than a unanimous verdict.
D)is achieved by informal deliberations.
Answer: D
Q2) Judge Zellar was asked to decide if a plaintiff could see the interrogatories procured by the defendant.The judge viewed the documents alone and decided that they should be made available to the plaintiff.The judge made:
A)an in camera inspection.
B)a motion to compel answers to interrogatories.
C)a request for admission.
D)a request for the production of documents.
Answer: A
Q3) Summary judgment is appropriate when essential facts are disputed.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Common Law, statutory Law, and Administrative Law
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Q1) Because of the concept of stare decisis,the U.S.Supreme Court,in interpreting a statute in 2009,will necessarily interpret certain statutory language in the same way as the U.S.Supreme Court interpreted the same statutory language in 1971.
A)True
B)False
Q2) The Federal Trade Commission promulgated detailed rules governing any site directed to young children.One of the rules is that the site operator must obtain verifiable parental consent before collecting,using,or disclosing any personal information.This legislative rule has the effect of a statute.
A)True
B)False
Q3) Administrative agency rules consist of:
A)executive and independent rules.
B)legislative and interpretive rules.
C)informal and "notice and comment" rules.
D)promulgated and unpromulgated rules.
Q4) Administrative agencies exist at the federal,state,and local levels.
A)True
B)False
Page 6
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Chapter 5: Constitutional Law
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Q1) Congress passed the federal OSHA establishing job safety standards.Illinois passed its own statute,seeking to protect the general public and workers from hazardous wastes.The Illinois statute did not violate the Commerce Clause because it imposed no restriction on interstate commerce.Local workers were obligated to obey both the federal and the state regulations.
A)True
B)False
Q2) The Framers of our Constitution,a true cross section of the population at the time,created the Constitution by drafting a new document rather than amending the Articles of Confederation,which had been the governing document of the colonists.
A)True
B)False
Q3) 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.
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7
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) A tort action differs from a contract action in which of the following ways?
A)How the obligation is enforced.
B)How the obligation is created.
C)Monetary damages cannot be awarded.
D)All of the answers are correct.
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) Written defamation is called "libel."
A)True
B)False
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Chapter 7: Crime
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Q1) Which of the following statements about the exclusionary rule is correct::
A)Illegally obtained evidence is not permitted to be used at a criminal trial.
B)It is based on the Fourth Amendment.
C)Good faith is an exception to the rule.
D)All of the above.
Q2) Bieber v.People considered the intent requirement in an armed robbery case.
A)True
B)False
Q3) Under the laws of most states,a corporation cannot be held criminally responsible.
A)True
B)False
Q4) Entrapment can be a defense to a criminal act.
A)True
B)False
Q5) The primary purpose of RICO was:
A)to raise revenue.
B)to be a tool against organized crime.
C)to prosecute those engaged in tax fraud.
D)all of the above
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Chapter 8: International Law
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Q1) Hardhat Machine Company sold goods to Irish Eyes Company of Northern Ireland.Big Bank issued a letter of credit on behalf of Irish Eyes and the letter was given to Hardhat.The documents required by the letter of credit are presented to the bank for payment while the goods are still in transit.Is Hardhat entitled to be paid?
A)No, payment is not due until the goods are delivered.
B)No, payment is not due until 30 days after delivery.
C)No, payment is not due until the buyer has had a reasonable time to inspect the goods.
D)Yes, the letter of credit is a promise by the bank to pay when certain documents are presented.
Q2) Explain what the General Agreement on Tariffs and Trade (GATT)is and give pro and con arguments concerning this agreement.
Q3) It is a violation of United States law for a domestic company to pay money to a foreign governmental official in order to obtain favorable influence of the foreign government.
A)True
B)False
Q4) Explain the origin and purpose of the World Trade Organization.
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Page 10
Chapter 9: Introduction to Contracts
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Q1) 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?
Q2) Strawly Corp.wants to sell land which has toxic waste underground.It may shift all the responsibility for environmental cleanup to the buyer by including such a provision in the sales contract.
A)True
B)False
Q3) Reliance on the promise made by the defendant doesn't need to be evidenced in order for promissory estoppel to apply.
A)True B)False
Q4) One purpose of contract law is to make business matters more predictable. A)True
B)False
Q5) List and briefly describe the basic elements of a contract.
Q6) Discuss the requirements of promissory estoppel.
Page 11
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Chapter 10: Agreement
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Q1) In seeking to ascertain whether there is a meeting of the minds,the courts use the reasonable person standard to objectively examine the language or actions of the parties.
A)True
B)False
Q2) Travel Lust offered to sell 10 round-trip tickets to Elaine.Travel Lust stated that the acceptance must be in writing by USPS next-day service.Which of the following acceptances will create a contract between Travel Lust and Elaine?
A)Elaine calls Travel Lust and states that she will buy the tickets.
B)Elaine sends an email to Travel Lust stating she will buy the tickets.
C)Elaine sends a letter by USPS next-day service to Travel Lust stating that she will buy the tickets.
D)All of the above responses will create a contract between Travel Lust and Elaine since they constitute reasonable means of communication.
Q3) According to the UCC,one or more open terms will cause a sales contract to fail for indefiniteness.
A)True
B)False
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Chapter 11: Consideration
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Q1) Benny's Furniture Company promised in a written agreement to purchase all the oak wood it needs Forestry Products,Inc.If Benny's purchased oak wood from Milton Wood Co.and Forestry Products sued,what is the likely result?
Q2) In the historic case of Hamer v.Sidway,the nephew:
A)lost, as there was no consideration.
B)lost, as the uncle was dead.
C)won, as there was consideration.
D)won, as there was a completed gift.
Q3) Hilda owes Lex $3,000,which is an undisputed amount.If she offers him her car in full settlement of the debt and he accepts,the agreement is binding and he can no longer claim she owes him anything on the original debt.
A)True
B)False
Q4) Discuss the concept of consideration.
Q5) "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.
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Chapter 12: Legality
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Q1) To raise revenues,the City of St.Cloud required restaurants to purchase a special permit if they wanted to serve food in an open-air patio.While at Hola Taco,a restaurant in St.Cloud,a customer notices that Hola Taco's permit expired.Because Hola's Taco's permit expired,the customer is not legally required to pay for her food.
A)True
B)False
Q2) If a contract is made with a person required by law to hold a license,and the purpose of the license is protection of the public,the contract made by an unlicensed person will generally be unenforceable.
A)True
B)False
Q3) Which of the following relationships will ordinarily not create an insurable interest?
A)Husband and wife.
B)Doctor and patient.
C)Debtor and creditor.
D)Chief executive officer and corporation.
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14
Chapter 13: Capacity and Consent
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Q1) 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.
Q2) Angie,a minor,wants to avoid a contract she made with Cumberland Cycles.She may disaffirm the contract by:
A)notifying Cumberland orally that she will not honor the agreement.
B)filing a lawsuit to have a court formally cancel the contract.
C)just refusing to perform her obligations under the contract.
D)All of the answers are correct.
Q3) Anne,a 15-year-old,has made several purchases at a department store.She bought frozen pasta dinners,a coat,two bars of soap and a cashmere scarf,as winter is here.A few days later,Anne returns the goods and demands her money.Will she be refunded?
Q4) Discuss two types of misrepresentation and how they differ.List the three things a party must show to rescind a contract based on misrepresentation.
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Chapter 14: Written Contracts
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Q1) When a contract falls within the statute of frauds but is not reduced to a writing,the contract is:
A)illegal.
B)unenforceable.
C)void.
D)voidable.
Q2) In the Seton Co.v.Lear Corp.,the federal Court of Appeals applied the merchant exception rule to hold that a confirming memo between merchants formed a contract.
A)True
B)False
Q3) On October 24th,Jake applied for a job at a store.On October 27th,he receives a call from Martin,the owner of the store,offering him the job.Martin says: "you will work for us for one year.If you agree,you will start on November 1st and will receive a salary of $500 per week".Jake answers: "Thank you.I accept!" Three months after starting the job Jake was fired without cause.Will Jake be successful in an action brought against the employer for breach of contract?
Q4) Explain the reason behind having a statute of frauds and give arguments for and against having such a statute.
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Page 16
Chapter 15: Third Parties
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Q1) The status of a third party is determined by:
A)the type of contract.
B)whether the third party gave consideration.
C)the reasonable expectations of the third party.
D)the intent of the contracting parties.
Q2) Briefly discuss the enforceability of contracts by third parties.
Q3) If Velma,as a birthday present,assigns to Jim her contractual right to collect $50 from Wood Co.,this would be a gratuitous assignment.
A)True
B)False
Q4) Norm and Frank have a legal contract that is silent with regard to an assignment of the contract.In order for Norm to assign all or part of his rights under a contract,Frank must grant permission to Norm to make the assignment legally effective.
A)True
B)False
Q5) An assignment is effective from the moment it is made,provided the assignor notifies the obligor.
A)True
B)False
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Chapter 16: Performance and Discharge
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Q1) Alice signs a contract with Bob to buy Bob's house for $150,000 "if I am able to obtain a mortgage loan for $125,000,at no more than 7% interest,payable over 15 years." Assume that Alice tries but is unable to obtain the described loan,and therefore refuses to proceed with the purchase.Alice is in breach of the contract.
A)True
B)False
Q2) In the Strategic Resources Group v.Knight-Ridder,Inc.case,the court found that Knight-Ridder:
A)intentionally breached the contract.
B)did not substantially perform the contract, so the trial court incorrectly granted summary judgment.
C)intentionally reduced the size of its advertisements, but that the size reduction was not easily discernable.
D)properly notified its customers it was reducing the size of the advertisements.
Q3) Identify four factors courts consider in deciding commercial impracticability and frustration of purpose claims.
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Chapter 17: Remedies
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Q1) When a court partially "rewrites" a contract,it is:
A)mitigation.
B)rescission.
C)reformation.
D)novation.
Q2) Solomon breaches his contract with Neal to purchase the 500 pairs of socks he had promised to buy.Neal is able to sell the 500 pairs to Renny for a much lower amount.Neal then sues Solomon for damages.Neal will be able to recover:
A)the amount in the liquidated damages clause.
B)the difference between Solomon's contract price and the amount paid by Renny.
C)Solomon's contract price.
D)an amount which depends on whether Solomon intentionally breached because he found cheaper socks somewhere else.
Q3) Tess,a tenant,moves from her apartment in breach of the lease agreement.The landlord,Lenny,has no duty to mitigate his damages by attempting to rent the apartment.
A)True
B)False
Q4) Discuss the remedy of specific performance.
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Chapter 18: Introduction to Sales
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Q1) In the case Superior Boiler Works,Inc.v.R.J.Sanders,Inc.the Supreme Court of Rhode Island held that:
A)No contract had been formed as the parties disagreed on time of delivery.
B)Superior did not breach the contract as its performance was reasonable.
C)Superior breached the contract under UCC Section 2-207 (2).
D)Sanders breached the contract under UCC Section 1-204 (2).
Q2) 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
Q3) During the development of commercial law centuries ago,businessmen throughout England and Europe:
A)settled disputes in trade organizations rather than in civil courts.
B)relied on a body of rules which became known as the lex mercatoria.
C)began to treat their own customs as law.
D)All of the above.
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Chapter 19: Ownership and Risk
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Q1) To determine ownership in goods,the UCC looks at title,insurable interest and identification.
A)True B)False
Q2) If Terrill steals a digital camera and sells it to Samuel,Samuel will get a valid title as long as he can prove he gave value for the camera and acted in good faith.
A)True B)False
Q3) Brian left his computer with CompuGeeks for repair.The following week,when he goes back to the shop to pick up his computer,he finds out that CompuGeeks sold it to Ian,a customer who was looking for a used computer.Brian can have his computer back from Ian.
A)True B)False
Q4) Under the UCC,the party who has title to the goods always has the risk of loss. A)True B)False
Q5) Explain the concept and significance of identification of goods.Discuss how identification takes place.
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Chapter 20: Warranties and Product Liability
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Q1) Under which of the following warranties must the seller be a merchant?
A)Express warranties.
B)Implied warranty of merchantability.
C)Implied warranty of fitness for a particular purpose.
D)Both b and c.
Q2) In a strict product liability case,proof that the defendant acted reasonably is a defense.
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.
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22
Chapter 21: Performance and Remedies
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Q1) Leonna orders five table settings of china from Elite China.Each set includes a dinner plate,cup & saucer,bowl,and dessert plate.The china is sold only in sets.When the delivery arrives,Leonna discovers that Elite China sent the wrong pattern.Leonna immediately calls Elite China and is instructed to send the shipment back.While repacking the shipment,Leonna changes her mind and decides to keep the cups and saucers.She returns everything else.Can she do this?
Q2) A homeowner has a contract with a firewood supplier to bring a rick of hardwood at the beginning of each month from October through March.If,for the first three deliveries,the supplier has brought a mixture of hard and soft woods,the homeowner cannot reject a delivery in January because it includes some soft wood.
A)True
B)False
Q3) A buyer who accepts goods but notifies the seller the goods are non-conforming:
A)cannot recover any damages.
B)can recover the difference between the goods as promised and as delivered, plus incidental and consequential damages.
C)cannot recover incidental damages.
D)cannot recover consequential damages.
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23
Chapter 22: Creating a Negotiable Instrument
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Q1) It was payday.Navidida decided to run some errands and then deposit her check in the bank over her lunch hour.So that she wouldn't have to spend too long at the bank,Navidida indorsed the back of the paycheck as follows,"Navidida Jones," before leaving work.While window shopping,Navidida lost the check.Roger finds Navidida's paycheck.
(A)Will Roger be able to cash Navidida's check?
(B)How could have Navidida indorsed the check so that she would not have to be concerned about losing the check?
Q2) There are three kinds of commercial paper: negotiable,non-negotiable and promissory.
A)True
B)False
Q3) Discuss the effect on an instrument of: (a)contradictory amounts between the numerals and amount written in words on a check; (b)the interest rate left blank on a promissory note; and (c)contradictory terms that are typed onto a promissory note and terms that are preprinted on the note form.
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) The accidental destruction of a negotiable instrument will result in its cancellation.
A)True
B)False
Q2) Dwight Stringer signed three promissory notes as an agent for his company.The first,he signed "Dwight Stringer,agent for Park Systems,Inc." The second,he signed "Dwight Stringer,Agent." The third note was signed merely "Park Systems,Inc." Discuss the liability of Dwight and Park Systems,Inc.on each of the notes.
Q3) List the warranties a transferor of a negotiable instrument makes.
Q4) Negotiable instruments are usually not issued to fulfill a contract.
A)True
B)False
Q5) 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.
Q6) Discuss the difference between the impostor rule and the fictitious payee rule.
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Page 25
Chapter 24: Liability for Negotiable Instruments: Banks and Their Customers
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Q1) Discuss warranty liability of a bank that transfers or presents an electronic or substitute check.
Q2) Krammer contracted to buy 15 boats from Elaine's Enterprises,Inc.To pay for the boats,Krammer issued a check payable to Elaine's Enterprises,Inc.The check was properly negotiated to Midtown Motors.Before the check is cashed,Krammer placed a stop payment order on the check.Krammer issued the order because the boats did not meet the contract specifications.The bank negligently paid the check over the valid stop payment order.Discuss the bank's liability.
Q3) First National Bank wrongfully dishonored an authorized check written by Horton,Inc.First National Bank:
A)is liable for all actual and consequential damages.
B)is liable for treble damages.
C)is liable for incidental damages. D)all of the above.
Q4) The case Broxton-King v.LaSalle Bank,N.A.was about violation of the Electronic Fund Transfer Act.
A)True B)False
Q5) Discuss a bank's liability for both stale checks and post-dated checks.
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Chapter 25: Secured Transactions
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Q1) A buyer in ordinary course of business takes the goods free of a security interest unless the security interest is perfected.
A)True
B)False
Q2) In the case In Re CFLC,Inc.,the court ruled that:
A)Expeditors had a security interest in Everex's goods because the latter were consumer goods.
B)Expeditors' security interest in Everex's goods had not been perfected.
C)Expeditors did not have a security interest in Everex's goods absent an agreement.
D)Expeditor's security interest was void because it was obtained by fraud.
Q3) Fowler Bros.has applied to Gibralter Bank for a $50,000 loan for its business expansion.If Fowler Bros.plans to use its account at Gibralter Bank as collateral,discuss what the bank needs to do for a security interest to attach.
Q4) Discuss the concept of software under Article 9.
Q5) In the case In Re CFLC,Inc.,the court ruled that Expeditors had a security interest in Everex's goods.
A)True
B)False
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Chapter 26: Bankruptcy
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Q1) What are the three main purposes of the federal Bankruptcy Code? How are these purposes supported and fostered in the Code?
Q2) In the Jackson v.Holiday Furniture,the court held that:
A)Holiday was in violation of Chapter 13 provisions.
B)Holiday was not in violation of the Bankruptcy Code.
C)Holiday violated the automatic stay provision of the Bankruptcy Code.
D)Jackson was not entitled to any damages.
Q3) Bill negligently ran his car into Philip,causing $50,000 in injuries.Bill was intoxicated at the time of the accident.Can Bill discharge this debt in bankruptcy?
A)Yes, claims based on negligence are dischargeable.
B)Yes, provided a court orders discharge.
C)No, such claims are not dischargeable in bankruptcy.
D)No, unless discharge is expressly requested in the petition.
Q4) A Chapter 7 debtor's agreement to pay a creditor on a debt after receiving a discharge in bankruptcy is called a:
A)voidable preference.
B)reaffirmation.
C)payment plan.
D)all of the above terms refer to the same concept.
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Chapter 27: Agency
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Q1) Jolene hired Lacy to find a buyer for her house.Adam was interested in buying the house.If both Jolene and Adam agree,Lacy,a real estate agent,may represent both parties.
A)True
B)False
Q2) Mrs.O'Leary hired Jenna to sell her house in Michigan.She executed a power of attorney in favor of Jenna authorizing her to do "anything and everything associated with the sale of real estate,acting as a prudent person." On May 30,Jenna finalized a deal with Brandon for the purchase of the house.Brandon and Jenna signed the real estate contract that day.Jenna learned the next day that Mrs.O'Leary had died May 29.The contract is:
A)void since the agency terminated May 29.
B)valid since the agency's purpose was achieved before Jenna was notified of Mrs.O'Leary's death.
C)voidable at the option of Mrs.O'Leary's estate.
D)voidable at the option of Brandon.
Q3) John is an agent for MegaCorp.He signed a contract on behalf of MegaCorp "John Miloni,as agent for MegaCorp" to purchase $250,000 worth of equipment from Big Machine Company (BMC).Is John liable to BMC if MegaCorp refuses to pay the bill?
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Page 29
Chapter 28: Employment Law
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Questions
Q1) Jim was a mechanic.One day when he attempted to weld a car's gasoline tank,it exploded and he was hurt.He filed to collect workers' compensation.His employer resisted on grounds that Jim had been negligent and had also violated the express regulations of the company when he attempted to weld a gasoline tank.Which statement is correct?
A)Jim cannot recover if it is shown that his negligent conduct caused the explosion.
B)Jim cannot recover if it is shown that he violated the express regulations of his employer.
C)Workers' compensation doesn't apply in situations like this.
D)Jim can recover even if he was negligent and violated the employer's rules.
Q2) In the Smith v.City of Jackson case,police officers were:
A)Discriminated against based on their race.
B)not adversely affected as a result of their age.
C)discriminated against based on their sex.
D)Discriminated against because of their disabilities.
Q3) Firing an employee for her refusal to violate the law would raise a claim of wrongful discharge.
A)True
B)False
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Page 30
Chapter 29: Starting a Business: Llcs and Other Options
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Q1) John and Bob agree to start a gutter cleaning business together.Even though they did not reduce their agreement in writing,the law will treat them as partners if they share management and profits.
A)True
B)False
Q2) Which of the following characteristics is that of a closely held corporation?
A)the shares are not publicly traded.
B)the corporation can typically operate without a board of directors.
C)the shareholders usually restrict share transfer.
D)all of the above
Q3) In the case of Marsh v.Gentry,the court held:
A)Gentry had the right to purchase the property without disclosing his identity to Marsh because of the special rules for auction sales.
B)state statutory law gave Marsh the absolute right to know Gentry was the purchaser.
C)Gentry acted properly because he was following "accepted business practice."
D)Gentry acted properly because Marsh had consented to a sale of the property.
Q4) Shelby wishes to buy a national franchise.What information is the seller legally required to provide before she buys the franchise?
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Page 31
Chapter 30: Corporations
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Q1) Shareholders have the right to manage the day-to-day business of the company.
A)True
B)False
Q2) To be successful in a court challenge regarding an executive's compensation,shareholders must prove that:
A)the board was grossly uninformed before it set the compensation amount.
B)the executive's performance caused the business to become unprofitable.
C)the amount of the executive's compensation was too high in relation to the compensation of the typical employee within the company.
D)the compensation level is not in the company's best interests.
Q3) Discuss the self dealing concept.Under what circumstances is a self-dealing transaction valid?
Q4) The proceeds,if any,of a derivative lawsuit go to:
A)the shareholders of the corporation.
B)the shareholders who actually filed the lawsuit.
C)the board of directors.
D)the corporation.
Q5) Discuss how a corporation is terminated.
Q6) What is the business judgment rule and what is its purpose?
Page 32
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Chapter 31: Securities Regulation
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Q1) MegaCorp wishes to sell $25 million of securities.The only investors will be 20 institutional buyers.Which of the following applies to this offering?
A)Rule 504 of the 1933 Act.
B)Rule 505 of the 1933 Act.
C)Rule 506 of the 1933 Act.
D)None of the above apply to this $25 million offering.
Q2) The "tipper" of inside information can be convicted of a crime,the "tippee" cannot.
A)True
B)False
Q3) A criminal case under the Securities Act of 1933 is prosecuted by:
A)the SEC.
B)the Department of the Treasury.
C)the Justice Department.
D)Any of the above may prosecute.
Q4) The Stonebridge Investment Partners,LLC v.Scientific-Atlanta,Inc.case discusses liability under Section 10(b)of the 1934 Act.
A)True
B)False
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33
Chapter 32: Property
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Q1) Ben has rented an apartment from Gerald with the rental period to begin June 1.According to the rule followed in the majority of American states,Gerald is obligated to remove the previous tenant in time for Ben to take possession on June 1.
A)True
B)False
Q2) All Appliances,Inc.installed a built-in dishwasher in Greta's house and Greta intends that it remain with the house.The dishwasher is a fixture.
A)True
B)False
Q3) A bailee always has a right:
A)to possession of the bailed property.Anyone who interferes with this right is liable to the bailee.
B)to use the bailed property.
C)to compensation.
D)All of the answers are correct.
Q4) Sandra and Joe own a hobby farm as tenants in common.They also own a vacation home as joint tenants.What is the difference between the tenancy in common and joint tenancy?
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Page 34
Chapter 33: Cyberlaw
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Q1) Which of the following protects e-mail messages from unauthorized interception?
A)The Fourth Amendment.
B)The GLB Privacy Act of 1999.
C)The Electronic Communications Privacy Act.
D)COPPA.
Q2) The Children's Online Privacy Protection Act:
A)deals only with the collection of data that will be disclosed to children.
B)deals only with collecting, from children, information that will be disclosed publicly.
C)regulates the activities of Internet operators.
D)is enforced by the EEOC.
E)Both b and
Q3) Explain the difference between an ISP and a Web host,and discuss whether they are treated alike under the Communications Decency Act (CDA).
Q4) Online auctions:
A)are the major source of consumer complaints about online fraud.
B)involve approximately $1 million worth of goods annually.
C)allow people to bid on their own goods.
D)allow owners of goods to cross-bid with a group of other sellers.
Q5) Discuss the European Directive on the protection of personal Data.
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Chapter 34: Intellectual Property
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Q1) Which of the following started out as a trademark name?
A)Zipper.
B)Linoleum.
C)Nylon.
D)All the above.
Q2) 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.
Q3) Describe what copyright infringement means.
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