Business Organization and the Law
Pre-Test Questions
Course Introduction
This course provides a comprehensive overview of how businesses are structured and governed within the framework of the law. It examines the different types of business organizations such as sole proprietorships, partnerships, corporations, and limited liability companies and explores the legal principles that apply to each form. Topics include formation, management, and dissolution of businesses; fiduciary duties of managers and directors; the rights and responsibilities of stakeholders; and relevant regulatory issues. Through case studies and analysis of statutes, students will gain insight into the legal challenges faced by businesses and the role that law plays in shaping organizational decision-making and strategy.
Recommended Textbook
Business Law and the Legal Environment Standard Volume 23rd Edition by David P. Twomey
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39 Chapters
2081 Verified Questions
2081 Flashcards
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Chapter 1: The Nature and Sources of Law
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Sample Questions
Q1) Those uniform state laws that have been adopted by individual states were first written by Congress.
A)True
B)False
Answer: False
Q2) A new state law mandates that all employers must prohibit smoking on employer premises.The law further provides that any employer who allows an employee or a client/ customer to smoke on its premises is subject to a court order requiring the employer to enforce the law.Describe this statute in terms of all possible classification methods.
Answer: The law is substantive because it defines rights and liabilities of business owners. The law is also equitable, based on the remedy of specific performance, since it subjects the employer to a court order requiring the employer to actually do something; i.e., forbid smoking on its premises.
Q3) The Uniform Commercial Code is a good example of uniform state laws.
A)True
B)False
Answer: True
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3
Chapter 2: The Court System and Dispute Resolution
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Sample Questions
Q1) Arbitration procedures occur in a court of law.
A)True
B)False
Answer: False
Q2) Billy has a dispute with Sleepdigit Bedspring Company over a number of beds Billy recently purchased from Sleepdigit for use in his hotel.Billy needs to decide whether to pursue litigation or employ an alternative means of dispute resolution.What advantages are most often associated with alternative dispute resolution? Which choice would be most appropriate in this case?
Answer: The most frequently cited advantages of alternative dispute resolution, compared to litigation, are a) cost savings and b) time savings. As far as a specific method of alternative dispute resolution, arbitration might be the best approach for Billy in his commercial dispute with Sleepdigit; in addition to the cost-saving and time-saving advantages of alternative dispute resolution, arbitration has a long history of success in the area of commercial contracts.
Q3) A probate court is an example of a general trial court.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Business Ethics, Social Forces, and the Law
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Sample Questions
Q1) Kant's theory understood that sometimes you have to use someone to achieve a one-sided benefit.
A)True
B)False
Answer: False
Q2) Rights theory includes all of the following except:
A)is also known an entitlement theory.
B)states that everyone has a set of rights.
C)believes that it is the government's responsibility to protect our rights.
D)using others in a way that gives you a one-sided benefit.
Answer: D
Q3) Which of the following is not a question business ethicist Laura Nash has developed to help businesspeople reach the right decision in ethical dilemmas?
A)Have you defined the problem accurately?
B)How would you define the problem if you stood on the other side of the fence?
C)How did the situation occur in the first place?
D)Does your proposed solution to the problem effectively balance the competing objectives of ethical decision-making and corporate profitability?
Answer: D
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Page 5
Chapter 4: The Constitution As the Foundation of the Legal Environment
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Sample Questions
Q1) Until 1937, the Supreme Court held that the Commerce Clause gave Congress the power to regulate only interstate commerce, such as an interstate telegraph message.
A)True
B)False
Q2) The Fifth Amendment protects individuals and corporations from unreasonable searches in their homes, and places of business.
A)True
B)False
Q3) Under the "bedrock view" of Constitutional interpretation, the purpose of a constitution is to state certain fundamental principles for all time.
A)True
B)False
Q4) A business' right to commercial speech - or advertising - has the same protections as a natural person.
A)True
B)False
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Page 6
Chapter 5: Government Regulation of Competition and Prices
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Q1) A person who is harmed by a conspiracy that violates the Sherman Antitrust Act may sue the wrongdoers for treble damages, which is four times the actual damages.
A)True
B)False
Q2) For violation of the Sherman Act, the maximum fine that may be imposed on a natural person is:
A)$1 million.
B)$500,000.
C)$0.
D)$100 million.
Q3) Price discrimination is not permitted even when it can be justified on the basis of a difference in grade, quality, or quantity.
A)True
B)False
Q4) Price discrimination is expressly permitted in all of the following except:
A)In differences involving product grade or quality.
B)When involving the cost of transportation.
C)When making good faith efforts to meet the competition.
D)In situations involving resale price maintenance.
7
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Chapter 6: Administrative Agencies
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Sample Questions
Q1) The Freedom of Information Act provides access to any information upon request.
A)True
B)False
Q2) The term "exhaustion of administrative remedies" means that:
A)parties to an agency action must be diligent in pursuing their case.
B)parties to an administrative action must take their appeal to a court of law.
C)parties to an administrative action can appeal only after the agency has made a final decision.
D)administrative agencies tend to work very hard.
Q3) The public has access to the activity of administrative agencies in three ways: (1) open records, (2) open meetings, and (3) public announcement of agency guidelines.
A)True
B)False
Q4) A consent decree is an informal settlement of an enforcement action brought by an administrative agency.
A)True
B)False
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8
Chapter 7: Crimes
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Q1) The Racketeer Influenced and Corrupt Organizations (RICO) Act was designed primarily to prevent individuals involved in organized crime from investing money obtained through racketeering in legitimate businesses.
A)True
B)False
Q2) Because a corporation is not a human being, it cannot be convicted of a crime.
A)True
B)False
Q3) In some states, the taking of information from a computer without the consent of the owner is called _______.
A)unauthorized use of computers
B)diverted delivery by computer.
C)computer trespass.
D)economic espionage by computer.
Q4) A crime generally consists of:
A)an act or omission.
B)a mental state.
C)a mental state and an act or omission.
D)a mental state, an act or omission, and harm.
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Chapter 8: Torts
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Sample Questions
Q1) What type of damages are recoverable when the defendant's tortious conduct is accompanied by fraud, malice, or willful or wanton conduct?
A)compensatory
B)consequential
C)nominal
D)punitive
Q2) Interactive web sites are immune from liability for content created by a third-party user, unless the web site actively edits the content.
A)True
B)False
Q3) Professionals have a duty to perform their functions at the same level as would a reasonable person.
A)True
B)False
Q4) Professionals have a duty to perform their jobs at the level of:
A)a reasonable person.
B)a reasonable professional in the same business.
C)an extraordinarily careful person.
D)an extraordinary person.
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Chapter 9: Intellectual Property Rights and the Internet
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Sample Questions
Q1) Under the Semiconductor Chip Protection Act reverse engineering exemption, competitors may study mask works but may not use the results of that study to design their own semiconductor chip.
A)True
B)False
Q2) Smarts and Then Some, Inc.developed a software program after several years of research and development.The particular software program was then test-marketed, at which point a competitor filed suit claiming that the Smarts and Then Some program violated the competitor's copyright on a program they too were test-marketing.What is the test to determine whether a copyright has been violated?
Q3) The type of patent that may be granted to developers of new and non-obvious ornamental features of manufactured articles is called a(n):
A)design patent.
B)functional or utility patent.
C)improvement patent.
D)plant patent.
Q4) Protection for trade dress is available under the Lanham Act.
A)True
B)False
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Chapter 10: The Legal Environment of International Trade
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Sample Questions
Q1) The Alexo Corporation has been charged in a United States court with violation of American antitrust laws in its foreign dealings.The firm has raised the defense that its actions were compelled by the government of its host country.Alexo based its defense on the__________ doctrine.
A)act-of-state
B)sovereign compliance
C)sovereign immunity
D)Treaty of Rome
Q2) Under the act-of-state doctrine, the courts of one country will not sit in judgment of the acts of the government of another country conducted within its own territory.
A)True
B)False
Q3) TRIPS is the WTO agreement that deals with trade rules that impact tariffs and embargoes.
A)True
B)False
Q4) United States antitrust laws have broad extraterritorial reach.
A)True
B)False
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Chapter 11: Nature and Classes of Contracts: Contracting on
the Internet
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Sample Questions
Q1) With regard to a unilateral contract, the offeree does not accept the offer by express agreement, but rather by performance.
A)True
B)False
Q2) The subject matter of a contract can never relate to the performance of personal services.
A)True
B)False
Q3) An agreement arises when one person, the __________, makes an offer and the other person to whom the offer is made, the __________, accepts.
A)grantor; grantee
B)grantee; grantor
C)offeror; offeree
D)offeree; offeror
Q4) A contract is a(n) ________ agreement for which the _______.:
A)promissory, parties make mutual promises.
B)multi-party, law gives a remedy.
C)obligation, obligor promises to pay the obligee.
D)legally binding, law gives a remedy.
Page 13
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Chapter 12: Formation of Contracts: Offer and Acceptance
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Q1) An offer gives the offeror the power to bind the offeree by contract.
A)True
B)False
Q2) If no termination date is specified for an offer, the offer will remain open:
A)for one year.
B)for six months.
C)for a reasonable period of time.
D)until someone accepts the offer.
Q3) Bart owned 100 shares of a stock that was actively traded on a national stock exchange.Bart wanted to sell the shares but felt that his profit would be seriously diminished by selling through a broker and paying the customary brokerage commission.Bart offered the 100 shares to any of a group of six people in a conversation at a party.The offered price was $72.50 per share, the price at which the shares had closed that day.No one really responded to the offer at that time.Ten days later when the shares were trading at $76.25, Marie, one of the offerees at the party, appeared at Bart's office saying that she accepted the offer.Bart claimed the offer no longer was available.Evaluate the legal outcome of this dispute.
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Page 14
Chapter 13: Capacity and Genuine Assent
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Sample Questions
Q1) Fraud requires intent that the listener rely on the false statement of fact.
A)True
B)False
Q2) A minor cannot avoid a contract to purchase a car if the:
A)car has been destroyed.
B)car has been damaged.
C)car is used for non-commercial purposes.
D)minor is able to return the car but does not do so.
Q3) When a minor avoids contracts, the minor always must return the other contracting parties to their original financial positions.
A)True
B)False
Q4) A factual incapacity may exist when, because of a mental condition caused by medication, drugs, alcohol, illness, or age, a person does not understand that a contract is being made or understand its general nature.
A)True
B)False
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Chapter 14: Consideration
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Sample Questions
Q1) Ordinarily, a promise to perform an existing legal obligation is:
A)not consideration.
B)binding if the promisor promises to perform with extra care.
C)binding if the promisor promises to perform to suit the personal satisfaction of the promisee.
D)binding if the promisee would experience substantial loss due to breach of the promise.
Q2) When there is no consideration for a promise, the agreement is:
A)a quasi contract.
B)equitable.
C)not binding.
D)unethical.
Q3) If one party's promise contains no real obligation, then the promise is merely an illusory promise and the contract will fail for lack of mutuality.
A)True
B)False
Q4) A cancellation provision cannot exist in a binding enforceable contract.
A)True
B)False
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Chapter 15: Legality and Public Policy
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Sample Questions
Q1) Which of the following is not illegal?
A)an office football "pool" with a cash entry fee and cash prize
B)a raffle with an entry fee to win a car
C)a "giveaway" to every tenth person who buys meat at a butcher shop
D)a "giveaway" to every tenth person entering a department store
Q2) An illegal provision in a contract:
A)causes the entire contract to be void.
B)causes the entire contract to be rescinded.
C)can be ignored by the parties in their performance of the remaining legal provisions of the contract.
D)can be ignored by the parties, because an illegal provision in a contract is not deemed substantial.
Q3) A take-it-or-leave-it contract of adhesion is an example of substantive unconscionability.
A)True
B)False
Q4) In most states the usury laws apply to loans made to both individuals and corporations.
A)True
B)False
Page 17
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Chapter 16: Writing, Electronic Forms, and Interpretation of Contracts
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Sample Questions
Q1) If the main purpose of a promise is to pay the debt of another and benefit the promisor, the statute of frauds is not applicable, and the oral promise to pay the debt is binding.
A)True
B)False
Q2) A person who is prevented from enforcing a contract because of the statute of frauds also is prevented from recovering the value of services, property, or money furnished the other party to the oral contract.
A)True
B)False
Q3) Parol evidence is not admissible to show fraud, duress or mistake.
A)True
B)False
Q4) The parol evidence rule does not apply in which of the following scenarios?
A)contradict a complete written contract.
B)prove the modification or termination of a contract.
C)replace the statute of frauds.
D)create a contract.
18
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Chapter 17: Third Persons and Contracts
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Sample Questions
Q1) Alberto enters into a contract with a contractor to build a parking garage in Gotham City.Stop-N-Go will greatly benefit from this contract since Alberto's parking garage is adjacent to Stop-n-Go.In this scenario Stop-n-Go is:
A)an incidental beneficiary.
B)a partial beneficiary.
C)a donee beneficiary.
D)an implied beneficiary:
Q2) In general, an assignee stands:
A)in a position subordinate to the assignor.
B)exactly in the position of the assignor.
C)in a position superior to the assignor.
D)in a position similar to, but not equal to, the assignor.
Q3) Unless language or circumstances indicate the contrary, a general assignment is:
A)a transfer of property only.
B)both a transfer of rights and a delegation of duties.
C)a delegation of duties only.
D)a transfer of rights only.
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Chapter 18: Discharge of Contracts
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Q1) In most bilateral contracts, the performances of the parties are concurrent conditions.
A)True
B)False
Q2) The parties may agree that the adequacy of performance under a contract is to be determined by a third party.
A)True
B)False
Q3) Commercial impracticability discharges a party's contractual obligations when the contract becomes more expensive to perform due to drastic and severe economic downturns.
A)True
B)False
Q4) When a debtor makes a payment to a creditor specifying how it should be applied, the creditor must apply the payment:
A)as directed by the debtor.
B)to the oldest outstanding debt.
C)to the most recent outstanding debt.
D)to the largest outstanding debt.
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Chapter 19: Breach of Contract and Remedies
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Sample Questions
Q1) Which is not a correct statement concerning rescission of a contract?
A)The breach must be material.
B)The injured party who rescinds may recover money paid under the contract.
C)The contract remains in effect after the rescission.
D)Rescission is the undoing of the contract.
Q2) In a breach of contract situation, the innocent party has all of the following are remedies available to her, except:
A)bringing an action for money damages.
B)rescinding the contract.
C)seeking specific performance.
D)waiver of breach
Q3) Only direct losses from a breach of contract may be recovered by an injured party.
A)True
B)False
Q4) Between experienced businesspersons, exculpatory clauses are generally:
A)voidable.
B)void.
C)valid.
D)unenforceable.
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Chapter 20: Personal Property and Bailments
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Q1) Joint tenancy and tenancy in common both feature the right of survivorship.
A)True
B)False
Q2) In certain cases, real property can constitute a bailment.
A)True
B)False
Q3) The intent to make a gift requires an intent to transfer title at that time.
A)True
B)False
Q4) If Susan rents a locked space in a U-Haul storage facility, she and U-Haul:
A)have created a mutual benefit bailment.
B)have not created a bailment until she pays the first month's storage fee.
C)have not created a bailment because there was no delivery of goods.
D)have created a constructive bailment.
Q5) Unclaimed property is often transferred to the government under the concept of escheat.
A)True
B)False
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Chapter 21: Legal Aspects of Supply Chain Management
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Q1) A transferor of a bill of lading makes all of the following implied warranties to the transferee, except:
A)the transferor has no knowledge of defects.
B)the transfer is rightful.
C)the bill of lading is genuine
D)the goods are market value.
Q2) A contract carrier holds itself out as willing to furnish transportation for compensation without discrimination to all members of the public who apply.
A)True
B)False
Q3) The rights of a transferee of a negotiable bill of lading are defeated if the goods have been stopped in transit.
A)True
B)False
Q4) What is not included in a common carrier's lien on goods that it transports?
A)consequential damages
B)demurrage
C)costs of preserving the goods
D)costs of a sale to enforce the lien
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Chapter 22: Nature and Form of Sales
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Q1) Consumer protection statutes may require a writing that is more detailed than the writing required by the statute of frauds provision of the Uniform Commercial Code.
A)True
B)False
Q2) The parol evidence rule does not apply to the sale of goods.
A)True
B)False
Q3) Any modification of a sales contract between merchants must be supported by some form of consideration.
A)True
B)False
Q4) To satisfy the statute of frauds, the writing must be signed and must include the price of the goods.
A)True
B)False
Q5) The CISG governs all contracts between parties in the countries that have ratified it.
A)True
B)False
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Chapter 23: Title and Risk of Loss
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Q1) In a __________, no sale takes place (meaning there is no transfer of title) until the buyer accepts the goods.
A)conditional sale
B)contingency sale
C)sale or return
D)sale on approval
Q2) A consignment sale is treated as a sale or return under UCC Article 2.
A)True
B)False
Q3) In a consignment, the dealer-consignee is often referred to as a(n):
A)remainder.
B)factor.
C)quotient.
D)exponent.
Q4) If a buyer purchases goods on approval, the buyer's creditors cannot reach such goods until there is an approval.
A)True
B)False
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Chapter 24: Product Liability: Warranties and Torts
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Q1) If a merchant sells a lawn mower that will not cut any type of grass, there is a breach of the warranty of merchantability.
A)True
B)False
Q2) Federal law requires every product sold to have an express warranty.
A)True
B)False
Q3) A seller who makes a written express warranty for consumer goods costing more than $50 must conform to FTC regulations.
A)True
B)False
Q4) A merchant has greater potential warranty liability than does a casual seller. A)True B)False
Q5) With used or secondhand goods, what is fit for normal use is generally:
A)a higher standard than with new goods.
B)a lower standard than with new goods.
C)the same standard as with new goods.
D)not applicable since the goods are not new.
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Chapter 25: Obligations and Performance
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Q1) If a contractually-specified mode of transportation is not available, the:
A)contract is automatically voided.
B)seller must make delivery by a commercially-reasonable substitute.
C)buyer must arrange to pick up the goods.
D)seller must make personal delivery.
Q2) The UCC does not specify the form that the assurance of performance is to take.
A)True
B)False
Q3) In a cash sale that does not require the physical moving of the goods, the:
A)parties are required to perform concurrently.
B)seller is required to tender the goods before the buyer must pay for them.
C)buyer must pay for the goods in advance.
D)buyer must actually receive the goods before he or she is required to pay for them.
Q4) A non-repudiating party has the right to require a guarantee of performance or a pledge of security.
A)True
B)False
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Chapter 26: Remedies for Breach of Sales Contracts
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Q1) When a buyer has possession of goods after rightfully rejecting them, the buyer is treated:
A)the same as a seller in the possession of goods after default by a buyer.
B)as being strictly liable for the safety of the goods.
C)the same as if an entrustment had been created.
D)as an insurer of the goods until the seller retakes possession.
Q2) A liquidation of damages clause in a consumer contract is enforceable if it:
A)is not in excess of twice the provable damages.
B)is agreed to by both parties to the contract.
C)reasonably attempts to estimate the actual harm caused by a breach.
D)is a reasonable amount designed to punish the breaching party.
Q3) Fran had a very rare, and therefore expensive, automobile that she wished to sell.Fran worried that if the first attempt at selling the auto failed, the value of the auto might come into question.To prevent any potential loss of profit if the auto needed to be resold, Fran created a sales contract that provided for an estimation of damages should the contract later be breached by the potential buyer.A potential buyer was found, and the contract was signed.Later, because of a lack of sufficient financing, the buyer breached the sales contract.Fran requested the estimated damages provided for in the contract.The buyer refused, calling the clause unconscionable and excessive.Can Fran recover?
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Chapter 27: Kinds of Negotiable Instruments and Negotiability
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Q1) When ambiguous language in an instrument exists:
A)the instrument becomes non-negotiable.
B)handwriting supersedes typewritten words.
C)typewritten words supercede handwritten words.
D)judgment interest accumulates at the rate of 5% per annum.
Q2) A negotiable instrument may be partly printed and partly typewritten.
A)True
B)False
Q3) To be negotiable, an instrument must include all of the following, except:
A)a writing.
B)signature of the maker or drawer.
C)unconditional promise or order to pay.
D)holder in due course.
Q4) Article 3 of the UCC establishes a __________-year statute of limitations for most actions involving negotiable instruments.
A)one
B)two
C)three
D)four
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Chapter 28: Transfers of Negotiable Instruments and
Warranties of Parties
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Q1) When a special indorsement is made, the instrument continues to be order paper and may be negotiated only by an indorsement and delivery.
A)True
B)False
Q2) If a lost instrument is order paper, the finder __________.
A)becomes the assignee of the instrument.
B)becomes the owner of the instrument.
C)becomes the holder of the instrument.
D)does not become the holder of the instrument.
Q3) If an instrument is drawn in favor of a named officer of a corporation, the instrument is payable only to that officer..
A)True
B)False
Q4) The order or bearer character of a paper is determined as of the time the negotiation takes place.
A)True
B)False
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Chapter 29: Liability of the Parties Under Negotiable Instruments
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Q1) Bad faith may exist because a transferee takes an instrument under suspicious circumstances.
A)True
B)False
Q2) A holder through a holder in due course:
A)has greater rights than a holder in due course.
B)has fewer rights than a holder in due course.
C)has the same rights as a holder in due course.
D)must meet the requirements for becoming a holder in due course in order to achieve holder in due course status.
Q3) If a person signs a negotiable instrument because he is fraudulently deceived regarding its nature or essential terms gives the holder a universal defense..
A)True
B)False
Q4) A holder can recover from any of the parties who are liable on the instrument, regardless of the order of the signatures on the instrument.
A)True
B)False
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Chapter 30: Checks and Funds Transfers
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Q1) A thief stole Art's checkbook and forged Art's name as drawer of a check.The drawee paid the check in good faith and sent it to Art with the monthly statement on January 3, 2013.The thief forged other checks during February and March of 2013, which the drawee in good faith paid.All paid checks were sent to Art with monthly statements.On May 25, 2014, Art discovered all of the forgeries and notified the drawee.For which check(s) is Art entitled to be reimbursed?
A)none of them
B)all of them
C)the first check only
D)the last check only
Q2) A notice of dishonor may be oral, written or electronic.
A)True
B)False
Q3) When a drawee bank pays on a check that lacks an essential endorsement:
A)the drawer is liable.
B)the payee is liable.
C)the drawee bank is liable.
D)no one is liable.
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Chapter 31: Nature of the Debtor-Creditor Relationship
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Q1) Standby letters of credit are used only in international trade situations.
A)True
B)False
Q2) Consideration is not required to establish or modify a letter of credit.
A)True
B)False
Q3) The issuer of a letter of credit can revoke or modify the letter at any time without the consent of the beneficiary, even if that right is not expressly reserved in the letter.
A)True
B)False
Q4) When a surety pays a debt that it is obligated to pay, it automatically acquires the claim and the rights of the creditor through:
A)assignment.
B)exoneration.
C)subrogation.
D)default.
Q5) Letters of credit are a two-party agreement used for financing.
A)True
B)False
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Chapter 32: Consumer Protection
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Q1) Consumers must re-register every three years in order to stay on the National Do Not Call Registry.
A)True
B)False
Q2) Sue Thompson received a home "cold-canvas" sales call at her home from a representative of the Enlightened Encyclopedia Company.The salesperson, after a rather aggressive presentation, convinced Sue to order a $1,200 Deluxe Encyclopedia set for her two children.Sue was impressed with the quality of the books, but shortly after signing the contract, she realized that she could not really afford to make the required monthly payments.What rights, if any, does Sue have in this situation?
Q3) When improper collection methods are used, it is no defense to the creditor that the improper acts were performed by an agent, an employee, or any other person acting on behalf of the creditor.
A)True B)False
Q4) Consumer protection even protects a consumer from the consumer's own negligence.
A)True
B)False
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Chapter 33: Secured Transactions in Personal Property
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Q1) Attachment provides creditors with rights against debtors.
A)True
B)False
Q2) Because the financing statement is intended as notice to third parties, it must be filed in a public place.
A)True
B)False
Q3) A security interest needs to be perfected, regardless of whether there are competing claims for the collateral.
A)True
B)False
Q4) What is the purpose of a financing statement?
A)to meet UCC accounting requirements under Article 9
B)to create a security interest
C)to amend a security agreement
D)to alert third persons that a creditor has a security interest in the collateral described
Q5) Secured transactions are governed by Article 2 of the Uniform Commercial Code. A)True
B)False
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Chapter 34: Bankruptcy
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Q1) An involuntary bankruptcy case is commenced by creditors filing a petition with a bankruptcy court.
A)True
B)False
Q2) Under no circumstances may a reorganization plan include executory contracts or collective bargaining agreements.
A)True
B)False
Q3) A transfer of property by a debtor within ______ prior to filing with the intent to hinder, delay, or defraud creditors is called a(n) ______.
A)3 months, proof of claim.
B)3 months, voidable preference
C)12 months, proof of claim
D)12 months, voidable preference.
Q4) A court can dismiss a Chapter 7 petition and convert it to a Chapter 13 bankruptcy if the debtor does not satisfy the means test.
A)True
B)False
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Chapter 35: Insurance
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Q1) Homeowner's insurance is a combination of the standard fire insurance policy and comprehensive personal liability insurance.
A)True
B)False
Q2) By statute, an insurance policy may be either oral or written, depending on the nature of the policy.
A)True
B)False
Q3) If an automobile collision results in a permanent serious disfigurement or death, a lawsuit may be brought against the party who was at fault.
A)True
B)False
Q4) The fact that a partnership is terminated after a life insurance policy is obtained by one partner on another invalidates the policy.
A)True B)False
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Chapter 36: Agency
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Q1) An agent is under a duty to obey: ______.
A)all instruction given by the third party.
B)all lawful instructions given by the principal.
C)all instructions given by the principal.
D)none of these, since "obedience" is not an obligation of the agent.
Q2) The term apparent authority is used when an appearance of authority has been created by a principal, but actual authority does not exist.
A)True
B)False
Q3) A general agent is authorized by the principal to do all acts that can be delegated lawfully to a representative.
A)True
B)False
Q4) An agency may arise by appointment, conduct, ratification, or operation of law.
A)True
B)False
Q5) The scope of an agent's authority is always known by the third party.
A)True
B)False
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Chapter 37: Third Persons in Agency
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Q1) An agent's liability to a third person is not affected by the degree of the principal's disclosure.
A)True
B)False
Q2) An owner ordinarily is not liable for harm caused a third person by the negligence of an employee of an independent contractor.
A)True
B)False
Q3) An agent is necessarily liable if the principal is undisclosed.
A)True
B)False
Q4) The principal is bound by knowledge but not by notice of any fact that is acquired by an agent while acting within the scope of actual or apparent authority.
A)True
B)False
Q5) An agent should never sign a contract using "by" or "per" and then his or her name. A)True B)False
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Chapter 38: Regulation of Employment
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Q1) The right of an employee to pension benefits paid into a pension plan in the employee's name by the employer is referred to by the term: ______.
A)venue.
B)accrual.
C)vesting.
D)investing.
Q2) Public policy exceptions to the employment-at-will doctrine apply only to "whistleblowing" situations.
A)True
B)False
Q3) In the case of defined benefit plans, the employer must cover any underfunding that may result from the plan's poor performance.
A)True
B)False
Q4) An employee differs from an agent, who can make contracts with third persons on behalf of a principal.
A)True
B)False
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Page 40
Chapter 39: Equal Employment Opportunity Law
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Q1) A seniority system is unlawful if:
A)workers with longer years of service are laid off last.
B)a union did not agree to the policy.
C)it results from an intention to discriminate.
D)workers with longer years of service are predominantly from one race.
Q2) It is unlawful for employers to undertake special recruiting efforts to hire and train minorities and women in an effort to have a diverse workforce.
A)True
B)False
Q3) Failing to hire an individual who does not have English language skills violates Title VII unless those language skills have a clear connection to the successful performance of the job to which it is applied.
A)True
B)False
Q4) Proof of an employer's discriminatory motive is immaterial in a disparate treatment case.
A)True
B)False
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