Business Law
Test Questions
Course Introduction
Business Law provides a comprehensive introduction to the legal principles that govern commercial activities and transactions. The course covers the foundational elements of contract law, agency, sales, negotiable instruments, business organizations, and property law, with an emphasis on their application in a business context. Students learn how to identify legal risks, understand regulatory frameworks, and analyze court cases relevant to business operations. Through real-world examples and case studies, the course equips students with the knowledge to make informed business decisions while adhering to legal and ethical standards.
Recommended Textbook
Business Its Legal Ethical and Global Environment 10th Edition by Marianne M. Jennings
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21 Chapters
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Page 2
Chapter 1: Introduction to Law
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Sample Questions
Q1) Anna would like to incorporate her plumbing business, which is located in Tempe, Arizona. Where can she find out the requirements for incorporation?
A) Tempe city ordinances
B) her rental agreement
C) Arizona Revised Statutes
D) none of the above
Answer: C
Q2) Enactments of federal administrative agencies are found in:
A) the United States Code.
B) the Code of Federal Regulations.
C) U.S.C.
D) none of the above
Answer: B
Q3) Which of the following is not a source of private law?
A) lease
B) employment agreement
C) ordinance
D) marriage prenuptial agreement
Answer: C
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Page 3
Chapter 2: Business Ethics and Social Responsibility
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Sample Questions
Q1) Whether everyone else does it is one method for evaluating the ethics of a particular course of action.
A)True
B)False
Answer: False
Q2) Ethics consists of the unwritten rules we apply in both business and personal lives.
A)True
B)False
Answer: True
Q3) Ethics are key to the success of economic systems.
A)True
B)False
Answer: True
Q4) Having a code of ethics does not reduce a company's sentence under the federal sentencing guidelines.
A)True
B)False
Answer: False
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Page 4
Chapter 3: The Judicial System
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Sample Questions
Q1) Which label is appropriate for the party appealing a case?
A) respondent
B) defendant
C) appellant
D) either a or c
Answer: C
Q2) Generally, three judges review a case at the court of appeals level in both the state and federal levels.
A)True
B)False
Answer: True
Q3) What type of case is this?
A) Small claims
B) Court of claims
C) Civil matter
D) Bankruptcy matter
Answer: C
Q4) Name three courts in the federal system that are not courts of general jurisdiction.
Answer: Bankruptcy court Court of claims Indian Tribal Court
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Chapter 4: Managing Disputes: Alternative Dispute
Resolution and Litigation Strategies
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Sample Questions
Q1) The is the largest ADR provider in the country for commercial disputes.
A) National Arbitration Forum
B) American Arbitration Forum
C) American Arbitration Association
D) American Arbitration forum
Q2) The rules of the AAA require the parties to be represented by an attorney.
A)True
B)False
Q3) Which of the following methods of alternative dispute resolution involves a hearing?
A) arbitration
B) mediation
C) negotiated settlement
D) settlement conference
E) All of the above involve hearings.
Q4) A motion for judgment NOV:
A) is a motion for judgment notwithstanding the verdict.
B) can only be made by the plaintiff.
C) is made only before the verdict is returned.
D) none of the above
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Chapter 5: Business and the Constitution
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Sample Questions
Q1) Police power is:
A) the states' authority to bypass the Fifth Amendment.
B) the states' authority to conduct searches under the Fourth Amendment.
C) government agencies' authority to conduct a search of private property at any time.
D) the states' power to pass laws to promote public welfare and health and safety .
Q2) Corporate political speech is afforded the same First Amendment protection as individual political speech.
A)True
B)False
Q3) The Fifth Amendment and Fourteenth Amendment are the "due process" amendments.
A)True
B)False
Q4) The Bipartisan Campaign Reform Act:
A) regulates soft money use.
B) regulates PACs.
C) outlawed think tanks.
D) none of the above
Q5) Discuss the ruling and the importance of Citizen's United.
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Chapter 6: Administrative Law
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Sample Questions
Q1) Administrative agencies are created by some legislative body.
A)True
B)False
Q2) The substantial evidence challenge cannot be used in cases where formal rule-making procedures were followed.
A)True
B)False
Q3) During the public comment period for a proposed rule, only affected businesses can make comments.
A)True
B)False
Q4) Where else would the proposed regulations need to be published?
A) The only requirement is that the regulations be published in the Federal Register.
B) They must be published in any trade magazine of affected industries.
C) They must be published in the Congressional Record.
D) They must be published first in the Code of Federal Regulations.
Q5) Discuss what made Earl Devaney such an ethical standout in the federal government.
Q6) Why is the Code of Federal Regulations not solely online to save money and time?
Page 8
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Chapter 7: International Law
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Sample Questions
Q1) Expropriation or nationalization is protected under the act of state doctrine.
A)True
B)False
Q2) U.S. businesses that break laws while operating in foreign countries:
A) cannot be prosecuted in those countries.
B) are immune under the act of state doctrine.
C) are subject to full prosecution, fines, and imprisonment.
D) none of the above
Q3) NATO is the result of a multilateral treaty.
A)True
B)False
Q4) Which of the following is not a source of international law?
A) custom
B) private law
C) treaties
D) All of the above are sources of international law.
Q5) There was some resistance to granting China MFN status.
A)True
B)False
Q6) Why are pirates so difficult to prosecute?
Page 9
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Chapter 8: Business Crime
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Sample Questions
Q1) The Fourth Amendment is the Miranda warning amendment.
A)True
B)False
Q2) Officer Muldoon is on foot patrol in Tempe, Arizona when he looks inside a garage (the garage door is open) and sees a statute that he knows is a rare art work that was stolen the night before from a building downtown. Officer Muldoon: A) cannot use the sighting as a basis for a warrant.
B) cannot enter the premises to recover the statute.
C) is not permitted to look inside the garage from the street even when the door is open.
D) none of the above
Q3) Mr. Parnell and others formerly with the company had their charges issued through a grand jury. Which of the following would have been issued?
A) Indictment
B) Information
C) Subpoena
D) Warrant
Q4) Discuss the procedural changes made as a result of Arizona v. Gant.
Q5) Explain the changes Sarbanes-Oxley made to criminal laws.
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Page 10
Chapter 9: Business Torts
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Sample Questions
Q1) John Reisen posted the following message in a chat room, " MIC Corporation will have to restate its earnings for the past 3 years. Its CEO will resign in disgrace because he is responsible." The message is false and MIC Corporation's shares lose 45% of their value before the company can stop the rumor.
A) Reisen has committed the tort of defamation.
B) Reisen has not committed the tort of defamation because there is no publication.
C) Reisen has not committed defamation because there are no damages to the company, only the shareholders.
D) both b and c
E) none of the above
Q2) A screensaver program that uses the likeness of a person is commercial appropriation.
A)True
B)False
Q3) A breach of duty can still be established for negligence cases even when the defendant has complied with the law.
A)True
B)False
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11
Chapter 10: Cyberlaw, Social Media, and Privacy
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Sample Questions
Q1) The privacy rights of cloud customers are clearly established.
A)True
B)False
Q2) Which of the following would be a federal crime?
A) copying FDIC data without authorization
B) changing figures on military invoices without authorization
C) placing a virus on a federal computer system
D) All of the above are federal crimes.
Q3) Which agency is responsible for consumer complaints about e-merchants?
A) The Federal Trade Commission.
B) There is no federal agency responsible because the federal government has no jurisdiction in cyberspace.
C) The Social Security Administration.
D) none of the above
Q4) Which of the following is correct about Lakes' policy on Facebook access?
A) The monitoring may be overly broad.
B) The monitoring may be prohibited in certain states.
C) The monitoring policy may not fit within current legal standards.
D) The monitoring is not permitted.
E) a, b, and c
Page 12
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Chapter 11: Environmental Regulation and Sustainability
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Sample Questions
Q1) Most insurers now include an exclusion policy on CERCLA exposure, but coverage is available as a policy rider.
A)True
B)False
Q2) Which of the following acts established the Superfund?
A) Solid Waste Disposal Act
B) Resource Recovery Act
C) Toxic Substances Control Act
D) none of the above
Q3) The federal government is required to build a border fence along the U.S. and Mexican border. As construction began, several environmental groups brought suit because the Army Corps of Engineers and the Department of Homeland Security had not complied with federal law. Which of the following federal laws would the two agencies have to comply with before constructing the wall?
A) They would need to do due diligence on the land before building the fence.
B) They would need to do an EIS.
C) They would need to designate any area where the fence is located as a brownfield.
D) both b and c
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Chapter 12: Contracts and Sales: Introduction and Formation
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Sample Questions
Q1) Under the CISG, acceptance is effective only upon receipt.
A)True
B)False
Q2) E-Sign requires that there be faxes or written verification of electronic contracts.
A)True
B)False
Q3) Under common law, a counteroffer is also a rejection.
A)True
B)False
Q4) Under the UCC, offers need price, subject matter, and quantity to be definite enough.
A)True
B)False
Q5) The Equal Credit Opportunity Act prohibits which of the following?
A) Basing the credit decision on the receipt of public assistance income.
B) Basing the credit decision on a bankruptcy of five years ago.
C) Basing the credit decision on the fact that the applicant was in prison for a felony three years ago.
D) Basing the credit decision on unemployment.
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Chapter 13: Contracts: Performance, Remedies, and Rights
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Sample Questions
Q1) Compensatory damages are in addition to liquidated damages.
A)True
B)False
Q2) Dana Riley purchased a home in the Brentwood area of Los Angeles. After she purchased the home, she learned that the home had been the residence of a long-time drug dealer. She experienced many late-night visitors and often noticed cars parked outside near the street curb with the drivers and passengers studying the home. The former owner has been convicted of drug charges. Dana has become uncomfortable with the visitors and the surveillance. She just wants out of the house. Which of the following statements is true?
A) Dana has no grounds for rescinding her agreement.
B) The information about the drug dealer was material and should have been disclosed to her.
C) Withholding information about the former drug-dealer owner is not misrepresentation.
D) none of the above
Q3) A bill of lading is a receipt for shipment issued by the seller.
A)True
B)False
Q4) List what cannot be disclosed in a credit report for a $2,000 loan.
Page 15
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Chapter 14: Sales: Product Advertising and Liability
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Sample Questions
Q1) Ralph Walters wanted to begin an exercise program and decided to enroll in a local aerobics class. He was told that he would need proper aerobic work-out shoes. Ralph went to an athletic shoe store and explained his needs to the sales clerk and also added that since he had never done aerobics, he was unsure what type of shoe he would need. The sales clerk recommended a shoe that Ralph purchased. When Ralph arrived at aerobics class, his instructor said his shoes were not appropriate for aerobics and that Ralph might injure himself if he used them for the workout. When Ralph returned to the store with the shoes, the store refused to exchange them, citing the three-day limitation on returns. The shoe store:
A) is within its rights to refuse to take the shoes back.
B) has breached the implied warranty of fitness for a particular purpose and is required to refund Ralph's money or exchange the shoes.
C) has not breached any warranty since Ralph had no contract with any promises written in it.
D) none of the above
Q2) Proof of negligence in product design or manufacture allows recovery of punitive damages.
A)True
B)False
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Page 16
Chapter 15: Products: Business Intellectual Property
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Sample Questions
Q1) Cheong Choon Ng, the owner of Rainbow Loom, developed a rubber-band jewelery making kit that has a distinctive trade dress C-shaped clip that allows kids to connect loops of rubber bands to form bracelets. The looming technique in the kit dates back to the 1800s when the technique of looping knits was called Brunnian Links. Mr. Ng says he developed the C-Clip as he watched his daughters trying to make bracelets out of tiny rubber bands. After three years of enjoying a monopoly on a hot-selling craft item, Mr. Ng faced competition from FunLoom. Mr. Ng has filed suit against FunLoom for copying the C clip in its craft kit for the rubber band bracelets. Which of the following statements by the owner of FunLoom would be the best avenue for defense against the infringement suit by Rainbow Loom?
A) "Our clip is larger."
B) "It works the same, but it isn't the same. It just looks like it."
C) "Is a loom something new and novel? It isn't."
D) "This issue should be decided by competition, not the courts."
Q2) Trademark protection lasts for 17 years.
A)True
B)False
Q3) Discuss the potential penalties under the Industrial Espionage Act.
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Chapter 16: Business Competition: Antitrust
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Sample Questions
Q1) The market definition controls whether there is market power.
A)True
B)False
Q2) Several art distributors have met and agreed to limit the number of Hummel figurines being imported into the United States. Is there any anticompetitive behavior involved in doing this?
Q3) Which of the following acts prohibits unfair methods of competition?
A) Sherman Act
B) Federal Trade Commission Act
C) Robinson-Patman Act
D) Clayton Act
E) none of the above
Q4) Private parties can bring suit under the Federal Trade Commission Act.
A)True
B)False
Q5) Suggested retail prices sent to retailers by the manufacturer constitute:
A) resale price maintenance.
B) price fixing.
C) a violation of the antitrust laws if the suggested prices are enforced.
D) none of the above
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Chapter 17: Management of Employee Conduct: Agency
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Sample Questions
Q1) Alan Freeman and Bill Freeman, brothers, operated a residential construction firm. There were three divisions of the firm: single-family homes, townhomes, and custom homes. Alan did not enjoy the demands of custom home buyers and Bill did not enjoy the cookie-cutter work of the other divisions. The brothers agreed to split the business with Bill assuming the responsibilities and contracts of the custom home division and Alan handling the remaining divisions. Alan told Bill he could continue to use the company offices until he was able to find offices of his own. Bill met his clients at the company offices, used the plans of the company and even continued to use the company stationery. Three months later Bill left town, leaving custom homes unfinished and taking the deposits of three customers with him. The customers have sued Alan.
Which of the following statements is true?
A) Alan is not liable since the relationship had been terminated.
B) Alan is liable because of apparent authority.
C) Bill is not liable because he was Alan's agent.
D) none of the above
Q2) Discuss the theories for employer liability on accidents caused by employees falling asleep when returning home from work.
Q3) Discuss why the peer review procedure is successful in some companies.
Q4) What is the difference between implied authority and apparent authority?
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Chapter 18: Governance and Structure: Forms of Doing Business
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Sample Questions
Q1) Limited partners:
A) can use their name in the partnership name.
B) can contribute management services to the partnership.
C) cannot advise the general partner.
D) none of the above
Q2) If members of a limited liability company exercise management authority, they lose their limited liability.
A)True
B)False
Q3) A director who usurps a corporate opportunity:
A) will owe his/her corporation the profits from the opportunity.
B) will not owe the profits to the corporation so long as the venture was disclosed in advance.
C) has violated the business judgment rule.
D) none of the above
Q4) The corporate veil liability theory has been applied in situations that involve environmental clean-up issues.
A)True
B)False
Page 20
Q5) Discuss CEO concerns regarding CEO compensation.
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Chapter 19: Governance and Regulation: Securities Law
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Sample Questions
Q1) A horizontal merger is a merger among competitors.
A)True
B)False
Q2) The states did not have federal legislation prior to the time of the federal securities laws.
A)True
B)False
Q3) Under Sarbanes-Oxley, when must a company file an 8-K?
A) every quarter
B) annually
C) only when selling stock
D) within one day of any changes listed in the statute
Q4) Only those who actually signed the registration statement can be liable for a Section 11 violation.
A)True
B)False
Q5) The SEC prohibits an analyst from issuing a report that is contrary to the analyst's true opinion about a security.
A)True
B)False
21
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Chapter 20: Management: Employee Welfare
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Sample Questions
Q1) Which protection is not part of FLSA?
A) minimum wage
B) maximum hours
C) retirement benefits
D) All of the above are protections.
Q2) Susan McIntyre is employed by the Huff Corporation as a crane operator. During the course of operating the crane, Susan was injured when the cable swung back and shattered the glass in the operating booth. The investigation revealed that Susan was operating the crane improperly. Can Susan still recover for her injuries? How?
Q3) Liz Bonham has a pension plan through her employer. Give a list of her rights and her employer's obligations under the plan.
Q4) In order to hold a union election, a petition filed with the NLRB must be supported by:
A) signatures of 50 percent of the employees.
B) signed authorization cards of 30 percent of the employees.
C) management certification.
D) both b and c
E) none of the above
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Chapter 21: Management: Employment Discrimination
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Sample Questions
Q1) The pattern or practice of discrimination cases:
A) requires proof of intent to discriminate.
B) places the burden of proof on the employer.
C) often involves statistical comparisons of the general population and the employer's work force.
D) none of the above
Q2) A city has its pay structure established by classes of employees. For example, there are administrative staff and maintenance staff. The administrative staff's pay rate is higher and employees in those jobs are nearly all white male. The maintenance staff's rates are lower and the employees there are nearly all female. Several female employees have brought suit challenging the pay structure as violative of Title VII. Is there a problem?
Q3) State agencies are covered under Title VII.
A)True
B)False
Q4) The Family Medical and Leave Act applies only to women.
A)True
B)False
Q5) List all the possible defenses to charges of discrimination.
Q6) Discuss the main racial discrimination issues in the Ricci case.
Page 23
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