Commercial Law
Chapter Exam Questions
Course Introduction
Commercial Law examines the legal principles and regulations governing business and commercial transactions. This course explores topics such as contracts, the sale of goods, consumer protection, agency, business organizations, negotiable instruments, and secured transactions. Students will analyze how laws facilitate commercial activity, resolve disputes, and balance the interests of various stakeholders in the marketplace. The course integrates case studies and real-world scenarios to deepen understanding of the legal framework that underpins business operations, both domestically and in international commerce.
Recommended Textbook
The Legal Environment of Business 13th Edition by Roger
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Page 2
E. Meiners
Chapter 1: Todays Business Environment: Law and Ethics
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Sample Questions
Q1) Which of the following statements is true?
A) law imposes structure on society by limiting activities that hurt the "public interest"
B) the sale of marijuana is illegal worldwide
C) the sale of alcoholic beverages is legal worldwide
D) laws do not apply to individuals; only to society as a whole
E) all of the other choices are correct
Answer: A
Q2) Both ____ and ____ are part of the rules that govern behavior in most nations.
A) philosophy and sociology
B) psychology and ethics
C) formal rules and informal rules
D) all of the other specific choices
E) none of the other specific choices
Answer: C
Q3) Delaware is the only state with a legislature that only has one part or house. All other states have a two-part legislature.
A)True
B)False
Answer: False
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Page 3
Chapter 2: The Court Systems
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Q1) Federal courts have limited jurisdiction and are empowered to hear only those cases within the judicial power of the United States.
A)True
B)False
Answer: True
Q2) Every state has one federal district court judge, for a total of 50 in the U.S.
A)True
B)False
Answer: False
Q3) In rem jurisdiction is most likely to include jurisdiction over:
A) a bank account
B) the terms of a trust or a will
C) misdemeanors in other states
D) felonies in other states
E) none of the other choices are correct
Answer: A
Q4) The only federal courts in which a jury is used are the courts of appeals.
A)True
B)False
Answer: False
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Chapter 3: Trials and Resolving Disputes
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Sample Questions
Q1) Which of the following is NOT part of a mediator's job:
A) collecting information
B) outlining key issues
C) encouraging compromise
D) discussing options
E) all of the other specific choices are part of a mediator's job
Answer: E
Q2) An allegation by the defendant that that the law furnishes no remedy for plaintiff's claimed injury is known as:
A) a motion to call for failure of evidence
B) a motion to rescind for failure to state a claim
C) a motion to resign for failure to state a claim
D) a motion to dismiss for failure of evidence
E) none of the other choices are correct
Answer: E
Q3) The first of the pleadings is known as "a claim."
A)True
B)False
Answer: False
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Page 5
Chapter 4: The Constitution: Focus on Application to Business
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Sample Questions
Q1) A person caught taking over $350,000, in cash, out of the country without reporting the fact to the government was required by the Supreme Court to forfeit the cash to the government; it was not an excessive fine in violation of the Eighth Amendment.
A)True
B)False
Q2) States may not copy federal regulations if:
A) the imitation promotes interstate commerce
B) the imitation promotes intrastate commerce
C) the imitation inhibits factory production
D) the imitation inhibits intrastate commerce
E) none of the other choices are correct
Q3) The way the Constitution is interpreted has changed over time.
A)True
B)False
Q4) As required by Article III of the Constitution, the Supreme Court has the primary role in amending the Constitution.
A)True
B)False
Page 6
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Chapter 5: Criminal Law and Business
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Sample Questions
Q1) Improperly collecting benefits intended for victims of a natural disaster, such as Hurricane Katrina, is an example of:
A) embezzlement
B) insider trading
C) money laundering
D) personal fraud
E) government fraud
Q2) Federal and state constitutions:
A) limit the number of years chief magistrates can serve
B) limit the determination of what civil laws are
C) increase federal power at the expense of personal freedom
D) set limits on how many charges may be brought against a business
E) none of the other choices are correct
Q3) Evidence that is gathered improperly may be used at trial, but the judge and jury must be informed of the problems in obtaining the evidence.
A)True
B)False
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Chapter 6: Elements of Torts
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Sample Questions
Q1) Express assumption of risk is when:
A) the parties agree beforehand that the defendant will relieve the plaintiff of his or her legal duty towards the defendant
B) the parties agree beforehand that the plaintiff will do everything in his power to protect the defendant from known risks
C) the parties agree beforehand that the defendant is only responsible for unknown risks
D) the parties agree beforehand that the plaintiff will relieve the defendant of his or her legal duty toward the plaintiff
E) none of the other choices
Q2) Which of the following is not an intentional tort involving interference with personal rights:
A) defamation
B) false imprisonment
C) nuisance
D) mental distress
E) malicious prosecution
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Chapter 7: Business Torts and Product Liability
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Sample Questions
Q1) Only express warranties may create liability for the seller for defective products.
A)True
B)False
Q2) When a person suffers an injury due to deliberate deception, there may be a tort of:
A) fraud
B) assault
C) battery
D) all of the other specific choices
E) none of the other specific choices
Q3) The elements needed to establish strict liability in tort do not include which of the following:
A) the product was defective
B) the defect created an unreasonably dangerous product
C) the defect was the proximate cause in producing the injury suffered
D) the injury caused damages
E) all of the other choices are necessary
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Chapter 8: Real and Personal Property
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Sample Questions
Q1) The trustee of a property in a trust has a duty to manage the property for the:
A) beneficiary
B) owner
C) leader
D) heir
E) executive
Q2) Real property includes:
A) furniture
B) trucks
C) trees
D) patents
E) all of the other choices
Q3) Deeds:
A) are in writing
B) are written or oral
C) are legal only in certain states
D) can only be used when the property being transferred is worth more than $10,000
E) none of the other choices are correct
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Chapter 9: Intellectual Property
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Sample Questions
Q1) The term of copyright protection is:
A) 10 years
B) 17 years
C) the life of the author
D) the life of the author plus 21 years
E) none of the other choices
Q2) There is a fair use defense for infringement that covers news or educational use.
A)True
B)False
Q3) Infringement means a seller causes confusion about the origins of a product by improper use of a trademark.
A)True
B)False
Q4) Trade names are registered under the Lanham Act and are protected by the Patent and Trademark Office.
A)True
B)False
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11
Chapter 10: Contracts
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Q1) "I will sell you my car for $5,000," says A. "How about $4,000 instead?" says B. The offer to sell for $5,000 has been terminated.
A)True
B)False
Q2) If a party fails to perform a nonbinding promise:
A) contract law will provide a remedy
B) contract law will not provide a remedy
C) contract law will provide a remedy in some states, but not others
D) the injured party must bring the case to the Supreme Court
E) the party that fails to perform will be held liable for up to $100,000 worth of damages
Q3) The basic elements of a contract:
A) vary from state to state
B) vary from business to business
C) are understood by few
D) come from ancient Greek law
E) none of the other choices are correct
Q4) A transfer of contract rights to a third party is an assignment.
A)True
B)False
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Chapter 11: Domestic and International Sales
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Sample
Questions
Q1) A(n) ____ is when a buyer agrees to take all of the output of a certain seller.
A) complete sale contract
B) input contract
C) requirements contract
D) total contract
E) none of the choices are correct
Q2) Under Article 2, a seller can exclude any express or implied warranty, as long as those limits follow the rules of Article 2.
A)True
B)False
Q3) By definition, a sale under Article 2 of the UCC requires that:
A) both parties involved be merchants
B) contracts be for goods or services; that the sale be between merchants; and that the sale take place in the normal course of commerce
C) the product or service (good) be classified as a bailment
D) title to the goods pass from the seller to the buyer and that a price be paid for the good
E) all of the other choices
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13
Chapter 12: Business Organizations
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Sample Questions
Q1) Franchise companies may not control the use of the company name of a franchisee that has the legal right to use the name.
A)True
B)False
Q2) The articles of incorporation usually include all of the following except:
A) classes of stock to be issued
B) address of the corporation
C) purpose of the business
D) address of the corporation and the purpose of the business only are included
E) address of the corporation and the purpose of the business and classes of stock to be issued are included
Q3) A complete termination comes about only after the partnership has been ____ and its affairs have been wound up.
A) dissolved
B) disillusioned
C) standardized
D) reorganized
E) finalized
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Chapter 13: Negotiable Instruments, Credit, and Bankruptcy
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Sample Questions
Q1) A check must have ____ as its drawee.
A) a court
B) an individual
C) a corporation
D) a bank
E) none of the other choices are correct
Q2) A negotiable instrument is a promise by one party to pay a undefined sum of money to another party. There are two parties: the maker and the payee. While the amount to be paid may vary, the date of payment must be set at a specific time in the future.
A)True
B)False
Q3) The most common bankruptcy proceeding is known as adjustment of debt.
A)True B)False
Q4) Promises to pay include drafts and checks.
A)True
B)False
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Chapter 14: Agency and the Employment Relationship
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Sample Questions
Q1) The principal's duty to indemnify the agent means the principal must:
A) pay reasonable wages to the agent
B) insure the agent against losses suffered during the course of authorized transactions
C) pay for expenses incurred by agent that result from negligent behavior
D) refrain from providing the agent with inferior goods
E) pay reasonable wages to the agent and refrain from providing the agent with inferior goods
Q2) Principals are liable for all torts committed by their agents.
A)True
B)False
Q3) An agency coupled with an interest is created:
A) when the principal provides the agent with a general power-of-attorney
B) when an agent is hired to work for another agent
C) when a person volunteers her services out of interest in the business
D) when the agent is authorized to delegate any authority to an interested party
E) none of the other choices
Q4) Destruction of the subject matter of an agency ends an agency relationship.
A)True
B)False
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Chapter 15: Employment and Labor Regulations
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Sample Questions
Q1) In Zambelli Fireworks v. Wood the appeals court held that the noncompete agreement Wood had signed with his former employer, Zambelli, was too restrictive and could not be enforced.
A)True
B)False
Q2) When an employer, union or employee files a labor practice complaint with the National Labor Relations Board it goes to:
A) federal court for resolution if the NLRB staff finds there to be merit in the complaint
B) either federal or state court for resolution if the NLRB staff finds merit in the complaint
C) an administrative law judge for final resolution
D) an administrative law judge for resolution if the NLRB staff finds merit in the compliant
E) a panel of three NLBR members in Washington, D.C. for resolution
Q3) The NLRB has jurisdiction over all unionized employees and all government workers.
A)True
B)False
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17
Chapter 16: Employment Discrimination
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Sample Questions
Q1) In a few situations, such as modeling clothing, an employer may discriminate on the basis of sex as a bona fide occupational qualification.
A)True
B)False
Q2) In general, to require job applicants to pass an aptitude tests is:
A) invalid because they are related to job performance
B) valid if given only to minorities
C) valid if shown to be an accurate predictor of ability to do the job
D) valid if one of the tests certified by the Department of Labor
E) none of the other choices
Q3) Requiring a pregnant woman to go on leave when she is able to do her job is:
A) legal, as long as there is specific company policy in place
B) legal in most states
C) illegal because it is a form of pregnancy discrimination
D) illegal because it is a form of religious discrimination
E) none of the other choices are correct
Q4) The Equal Pay Act allows pay differentials between men and women if based on a merit system.
A)True
B)False
Page 18
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Chapter 17: The Regulatory Process
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Sample Questions
Q1) Congress gives administrative agencies power through legislative delegations.
A)True
B)False
Q2) When a court reviews the way an agency interprets a statute, it will use which scope of judicial review:
A) the lowest scope possible
B) strict scrutiny compared to review of procedural requirements
C) an arbitrary and capricious standard compared to review of procedural requirements
D) less scrutiny compared to review of procedural requirements
E) remote effects scrutiny
Q3) An administrative law judge is not a federal judge but an employee of an administrative agency.
A)True
B)False
Q4) A business that volunteers information that it has violated a regulatory standard may be punished for that violation.
A)True
B)False
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Page 19
Chapter 18: Securities Regulation
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Sample Questions
Q1) The term "red herring" that is used for a prospectus before it is approved by the SEC comes from:
A) the traditional red ink and reddish paper used in writing a prospectus
B) ancient Roman law traditions
C) a reference to being "in the red"
D) no one knows
E) the red paper used when the Securities Act of 1933 was enacted
Q2) The ____ requires that investors be given material information about new securities and it prevents misrepresentation in the sale of securities.
A) Securities Act of 1933
B) Securities Exchange Act of 1934
C) Financial Security Act of 1935
D) Security Representation Act of 1933
E) Security Stability Act of 1933
Q3) The Securities Act of 1934 prevents the trading of securities of risky companies.
A)True
B)False
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Page 20
Chapter 19: Consumer Protection
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Sample Questions
Q1) The FTC's Disposal Rule:
A) applies to both electronic and paper documents
B) applies to electronic, but not paper documents
C) applies to paper, but not electronic documents
D) cannot apply to electronic documents because there is really no way to destroy an electronic document
E) none of the other choices are correct
Q2) Suppose a debt collector has been calling and sending notices of a debt you owe. If you wish to end further notification from the debt collector, you must:
A) obtain an injunction against further contact
B) pay the debt in full within 30 days
C) contact the Federal Trade Commission to request limits to notification D) send the debt collector a letter requesting they stop contact E) none of the other choices
Q3) The Consumer Leasing Act would apply to a lease of furniture for an apartment for a year.
A)True
B)False
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Chapter 20: Antitrust Law
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Sample Questions
Q1) A vertical merger is when two competitor firms come together to form a new firm.
A)True
B)False
Q2) In Eastman Kodak Co. v. Image Technical Services, Inc., the Supreme Court found evidence of an illegal tying arrangement between product service and the sale of spare parts for Kodak machinery.
A)True
B)False
Q3) In general, ____ is held to be the worst violation of antitrust laws.
A) price fixing
B) horizontal mergers
C) selling at a loss
D) vertical mergers
E) conspiracy
Q4) The original reason for the Robinson-Patman Act was to limit the ability of chain stores to offer merchandise at a lower price than their single-store competitors.
A)True
B)False
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Page 22
Chapter 21: Environmental Law
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Q1) States must issue air pollution permits to emission sources, but EPA can overrule state permit decisions.
A)True
B)False
Q2) The primary purpose of RCRA's manifest system is to:
A) provide a framework for documenting compensation to families injured by dangerous chemical wastes
B) translate the national effluent requirements into specific requirements for waste generators
C) provide for a recording system to document the natural resources adversely affected by a particular hazardous waste
D) translate the Act's requirements to control hazardous wastes into specific individual firm requirements
E) none of the other choices
Q3) Under the U.S. Sentencing Guidelines, companies that violate environmental laws may face reduced penalties if they voluntarily report violations of the law.
A)True
B)False
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Chapter 22: The International Legal Environment of Business
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Q1) The most controversial aspect of the Foreign Corrupt Practices Act is the bookkeeping requirement.
A)True
B)False
Q2) The Department of Commerce maintains a Commodity Control List that states what goods are restricted in sales to other nations.
A)True
B)False
Q3) In the Middle Ages, the private international law of commercial transactions was known as the lex populi.
A)True
B)False
Q4) The U.S. bans a number of products from entering the country. These products include:
A) narcotics
B) foreign manufactured fighter aircraft
C) foreign manufactured tanks
D) rice from Vietnam
E) all of the other choices
Page 24
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