Commercial Law
Final Test Solutions
Course Introduction
Commercial Law provides an in-depth exploration of the legal principles and regulations that govern business and commercial transactions. The course covers fundamental topics such as contracts, agency, sale of goods, negotiable instruments, insurance, and the legal structures of businesses ranging from sole proprietorships to corporations. Emphasis is placed on understanding rights and obligations within commercial relationships, dispute resolution mechanisms, and relevant statutory frameworks. Students will analyze real-world scenarios to develop practical skills in identifying and addressing legal issues arising in commercial environments.
Recommended Textbook
The Legal Environment of Business 13th Edition by Roger E. Meiners
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22 Chapters
9532 Verified Questions
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Page 2
Chapter 1: Todays Business Environment: Law and Ethics
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327 Verified Questions
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Sample Questions
Q1) Many studies find that there is a strong relationship between:
A) a well-functioning legal system and the number of prisons
B) a well-functioning legal system and incidence of disease
C) a well-functioning legal system and the birth rate
D) the level of corruption and life expectancy
E) none of the other choices
Answer: E
Q2) Integrity means:
A) thinking things through before making decisions
B) not living by a moral code, but maintaining a certain standard of ethics
C) living by a moral code and standards of ethics
D) all of the other specific choices
E) none of the other specific choices
Answer: C
Q3) Companies that follow Department of Justice compliance codes carefully are not prosecuted for violations of related laws.
A)True
B)False
Answer: False
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Page 3
Chapter 2: The Court Systems
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Sample Questions
Q1) If a dispute may be resolved in a state court only, the state court is said to have:
A) binding jurisdiction
B) expedient jurisdiction
C) redundant jurisdiction
D) in rem jurisdiction
E) none of the other choices are correct
Answer: E
Q2) An action may be removed from state court to federal court by a defendant based on diversity of citizenship.
A)True
B)False
Answer: True
Q3) State courts of general jurisdiction:
A) are very limited in their authority
B) have authority to decide almost any kind of dispute
C) only have authority on specific issues assigned by the state governor
D) are limited to cases involving less than $2000
E) none of the other choices are correct
Answer: B
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Page 4
Chapter 3: Trials and Resolving Disputes
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Sample Questions
Q1) When an appellate court's opinion agrees with (upholds) the decision of the trial court, the court is said to have ____ the decision.
A) affirmed
B) remanded
C) concurred with D) reversed
E) none of the other choices
Answer: A
Q2) A case may enter the appellate stage if the losing party at the trial stage believes an error in determining the facts has been made during the course of the trial.
A)True
B)False
Answer: False
Q3) Even if the physical or mental condition of a party to a lawsuit is an issue, an examination by doctors cannot be required due to the constitutional right of privacy.
A)True
B)False
Answer: False
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5
Chapter 4: The Constitution: Focus on Application to Business
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Sample Questions
Q1) The Clean Air Act imposes civil penalties on executives of companies violate air pollution standards. If the government sued an executive for violating this law and asked for $100,000 in civil penalties to be imposed, the executive would have:
A) no right to a jury trial
B) no right to a jury trial only if the trial was held in some state courts
C) a right to a jury trial in any court
D) a right to a jury trial only if the trial was held in some state courts
E) no right to a trial since this is a civil law case
Q2) To protect the public, government agencies may share any damaging evidence obtained in any search or seizure of business property.
A)True
B)False
Q3) The Seventh Amendment provides for the right to jury trial in most common law cases.
A)True
B)False
Q4) The Fourth Amendment protects individuals against self-incrimination at trial. A)True B)False
Page 6
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Chapter 5: Criminal Law and Business
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Sample Questions
Q1) While the Sentencing Guidelines are advisory, they tend to restrict the range of sentences judges impose in criminal convictions.
A)True
B)False
Q2) What is defined as a degree of careless amounting to a culpable disregard of rights and safety of others:
A) felony
B) Class B acts
C) misdemeanor
D) ordinance violation
E) none of the other choices
Q3) When a person deals in a security when in possession of non-public information, and they have an obligation not to reveal or use the information it is:
A) embezzlement
B) racketeering
C) money laundering
D) insider trading
E) money fraud
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Chapter 6: Elements of Torts
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Sample Questions
Q1) Suppose a surgeon is sued for negligence by a patient for having accidentally botched an operation. The standard that applies to the surgeon is the reasonable person, which means:
A) strict liability
B) the care expected of any ordinary person under the circumstances
C) proximate cause is established res ipsa loquitur
D) none of the other choices; surgeons are exempt from liability
E) none of the other choices
Q2) In Geczi v. Lifetime Fitness, where Geczi suffered an injury when a treadmill at Lifetime malfunctioned but a jury held Lifetime not to be negligent, the appeals court held that Lifetime:
A) was liable for negligence for failure to warn Geczi of the risks
B) was liable for negligence because the machine was not properly maintained
C) was not liable because Geczi had been seen not exercising good judgment when using the machine
D) was not liable because Geczi assumed the risk and signed a liability waiver
E) none of the other choices
Q3) The only defense in case of negligence is that of assumption of risk.
A)True
B)False
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Chapter 7: Business Torts and Product Liability
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Sample Questions
Q1) The tort of misrepresentation can be based on:
A) negligence, but not intent
B) intent, but not negligence
C) neither intent or negligence; it requires fraud
D) deceit only
E) none of the other choices
Q2) In a intentional misrepresentation suit, the facts alleged to have been presented falsely:
A) must be material
B) need not be material
C) must not be material
D) must be unrelated
E) need not be related to the injury
Q3) The tort of fraud requires the wrongdoer to have a legal relationship with the tort victim.
A)True
B)False
Q4) About a half-million tort cases are filed each year.
A)True
B)False
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Chapter 8: Real and Personal Property
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Sample Questions
Q1) Unlike real property, personal property:
A) is immovable
B) is taxable
C) is not taxable
D) is movable
E) is valueless
Q2) The most common way in which to transfer ownership interests in property is through a legal document known as:
A) a devise
B) a will
C) easements appurtenant
D) tenancies in the extremity
E) none of the other choices
Q3) The person who holds the legal title to a property in a trust is known as the:
A) leader
B) executive
C) trustee
D) majordomo
E) magnate
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Page 10
Chapter 9: Intellectual Property
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Sample Questions
Q1) Over a half-million copyrights are registered each year.
A)True
B)False
Q2) Since Holiday Inn is a descriptive mark, it receives no protection.
A)True
B)False
Q3) In case of infringement of a trademark, suit may be brought under the Lanham Act.
A)True
B)False
Q4) Which of the following is a drawback to patents:
A) the application process is easy
B) the application process is cheap
C) the application process is not time-consuming
D) the application process is expensive
E) all of the other specific choices are correct
Q5) Patents law provides one of the weakest forms of protection in intellectual property law.
A)True
B)False
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Chapter 10: Contracts
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Sample Questions
Q1) The doctrine of anticipatory breach comes from the Statute of Frauds.
A)True
B)False
Q2) A transfer of contractual duties to a third party is a(n):
A) enlistment
B) assignment
C) reassignment
D) termination
E) none of the other choices are correct
Q3) Invitations to negotiate or to make an offer are known as:
A) manifestations of intent
B) offers of intent
C) early negotiations
D) preliminary negotiations
E) beginning negotiations
Q4) Misrepresentation, to be grounds for rescinding a contract, must have included a misstatement of a material fact.
A)True
B)False
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Chapter 11: Domestic and International Sales
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424 Verified Questions
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Sample Questions
Q1) After a breach of contract by a buyer, expenses associated with stopping delivery, transporting and taking care of the goods after the breach, returning or reselling the goods are all examples of:
A) breach damages
B) explicit damages
C) punitive damages
D) cost damages
E) none of the other choices are correct
Q2) The UCC extends express warranties made to buyers to designated third parties.
A)True
B)False
Q3) When terms in contracts conflict, it is called:
A) the "amalgamation of the forms"
B) the "conflict of the forms"
C) the "fight of the forms"
D) the "tangle of the forms"
E) none of the other choices are correct
Q4) Services are excluded from the CISG.
A)True
B)False
Page 13
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Chapter 12: Business Organizations
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Sample Questions
Q1) In Eagles Landing Development, LLC vs. Eagles Landing Apartments, LP, where the LLC built apartments for the LP, but the LLC was not paid for all its work, the OOC sued some limited partners in the LP for payment. The appeals court held that:
A) the limited partners had agreed to be personally liable on the debts of the LP, so were responsible
B) the limited partners share equally in the debts of a limited partnership unless the agreement among the partners states something to the contrary
C) the LLC had agreed not to sue any limited partners individual, so could not later go back on that agreement
D) the LLC must first proceed against the bank that granted a mortgage to the LP as it was the primary creditor of the project
E) none of the other choices
Q2) When the sole owner of a corporation dies, the corporation ceases to exist and the business must be reorganized.
A)True
B)False
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14
Chapter 13: Negotiable Instruments, Credit, and Bankruptcy
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Sample Questions
Q1) Which of the following requirements is necessary to be a holder in due course:
A) the transferee must give value for the negotiable instrument
B) the transferee must take the instrument without knowledge that it is overdue or defective
C) the transferee must take the instrument in good faith
D) all of the other specific choices are necessary
E) none of the other specific choices are necessary
Q2) To be found a holder in due course, a transferee must:
A) be in possession of an instrument in the form of either a draft or a check (but not a note) made out "to bearer "
B) have agreed in writing not to be bound as a contractual assignee
C) have given value for the negotiable instrument, taken it without knowledge of any defects and in good faith
D) provided a signed unconditional writing, promising (or ordering to pay), at a specified time in the future and made out "to order" or "to bearer "
E) all of the other choices are required to be a holder in due course
Q3) Bankruptcy in Chapter 13 is usually to be completed in five years.
A)True
B)False
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Page 15
Chapter 14: Agency and the Employment Relationship
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Sample Questions
Q1) If an agency agreement did not specify how much an agent would be paid for his work, the principal has a ____ the "customary" amount.
A) duty to cooperate
B) duty to compensate
C) duty of obedience to
D) duty to indemnify
E) none of the other choices would apply
Q2) Employment-at-will:
A) allows employees to quit their jobs for any reason at any time
B) allows employers to discharge employees for any reason at any time subject to contract obligations
C) has been restricted by the courts or legislatures in some states that recognize some public policy limitations on the employer's right to fire an employee
D) a and b
E) a, b and c
Q3) An agency that is for the sale of land usually must be evidenced by a written contract.
A)True
B)False
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Page 16
Chapter 15: Employment and Labor Regulations
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Sample Questions
Q1) 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
Q2) The intent of the Norris-La Guardia Act was to:
A) allow unions to name two representatives to the National Labor Relations Board
B) regulate internal finances of labor unions
C) let striking employers file for injunctions against striking workers
D) legalize all union tactics
E) none of the other choices
Q3) Employers may use the CIS-Verify program to check employee eligibility status.
A)True
B)False
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Chapter 16: Employment Discrimination
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Sample Questions
Q1) Title VII of the Civil Rights Act does not apply to which of the following:
A) selection of independent contractors
B) employment agencies
C) labor unions in the private sector
D) law firms
E) Title VII applies to all of the other specific choices
Q2) Before the passage of federal discrimination laws, the labor unions were the only groups that consistently did not engage in discriminatory membership policies.
A)True
B)False
Q3) It would be age discrimination for an employer to advertise that it wants to hire a young, dynamic person for a position working with young people that requires a high-level of energy and the ability to relate to teenagers.
A)True
B)False
Q4) Under Title VII, the definition of sex is only gender-male or female-not sexual orientation.
A)True
B)False
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Chapter 17: The Regulatory Process
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Sample Questions
Q1) Under the Government in the Sunshine Act, an agency is not required to have an open meeting when the meeting concerns:
A) secrets related to national defense
B) disclosures of trade secrets
C) disclosures of protected financial information
D) all of the other specific choices are correct
E) none of the other specific choices are correct
Q2) The administrative agency equivalent to a court trial is:
A) a commissioner's hearing
B) a Congressional review
C) a rulemaking
D) a magistrate hearing
E) none of the other choices
Q3) The aspects of agency actions given the most intense scope of review by the courts are:
A) Congressional responsiveness requirements
B) factual basis for imposition of regulations
C) connection to statutory power grant
D) cost to benefit relationships
E) none of the other choices
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Chapter 18: Securities Regulation
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Sample Questions
Q1) Liability for securities fraud is imposed only on the directors of a company.
A)True
B)False
Q2) In a suit for fraud against the issuer of a security, which element would not have to be shown?
A) a security was involved
B) there was a misleading statement or material omission
C) a financial loss was suffered
D) all elements must be shown
E) none of these elements are necessary, but they make for a stronger case
Q3) Equity financing differs from security financing in that, with equity financing, a company:
A) must pay at least 1.5% interest on all investments
B) must pay back at least half a shareholder's investment
C) has complete liability to repay shareholders the amount they have invested
D) must repay all investments, but has no specific time limit for doing so
E) none of the other choices are correct
Q4) Investment advisers may not, by law, be the managers of an investment company.
A)True
B)False
Page 20
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Chapter 19: Consumer Protection
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Sample Questions
Q1) Under the Fair Credit Reporting Act, consumer bureaus may sell consumer credit reports to:
A) anyone willing to pay for one
B) any person or business who signs an affidavit attesting to legitimate use of the information
C) any person or business who signs an affidavit attesting to legitimate use of the information, knowing that the fact of the purchase is public record
D) those needing reports for legitimate business needs
E) firms that comply with the Truth-in-Lending Act's disclosure rules
Q2) If you lose the bank card you use to withdraw cash from your bank by machine, and you report it to the bank within two days, you are liable for how much in losses?
A) $0
B) $50
C) $500
D) $5,000
E) however much is in your account
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21
Chapter 20: Antitrust Law
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Sample Questions
Q1) Trade arrangements governing the relationships in the different states of production, distribution and sale of the same product are:
A) horizontal business arrangements
B) vertical business arrangements
C) real business arrangements
D) single product business arrangements
E) sideways business arrangements
Q2) Treble damages may only be collected by direct purchasers of goods in state antitrust suits.
A)True
B)False
Q3) The Clayton Act restricts which of the following?
A) exclusive dealing arrangements
B) tying arrangements
C) mergers found to substantially lessen competition
D) interlocking directorates
E) all of the other choices
Q4) Certain "exclusive deals" are prohibited by the Clayton Act.
A)True
B)False
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Chapter 21: Environmental Law
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Sample Questions
Q1) The main goal of the Clean Water Act of 1972 is to:
A) reduce the amount of dumping in oceans around the U.S.
B) restore and maintain the integrity of the waters of the U.S.
C) improve the quality of drinking water from the nation's reservoirs
D) increase the amount of undeveloped wetlands in the U.S.
E) all of the other choices
Q2) The fact that many old industrial areas have become abandoned and firms do not wish to buy the land for future use because of potential Superfund liability is called the problem of:
A) urban blight
B) urban Superfunds
C) urban toxic abandonment
D) brownfields
E) none of the other choices
Q3) The ____ was first passed in 1947 to regulate pesticides.
A) Federal Pesticide Regulation Act
B) Federal Toxic Substances Act
C) Federal Insecticide, Fungicide, and Rodenticide Act
D) National Insecticide, Fungicide, and Rodenticide Act
E) National Pesticide Act
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Chapter 22: The International Legal Environment of Business
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Sample Questions
Q1) A(n) ____ may not be withdrawn.
A) nonbinding letter of credit
B) revocable letter of credit
C) conditional letter of credit
D) unconditional letter of credit
E) none of the other specific choices are correct
Q2) Some choice-of-law and forum selection clauses used in international contracts have been held to violate the Commerce Clause of the U.S. Constitution.
A)True
B)False
Q3) When the value of a country's exports exceeds the value of its imports, the country runs a trade deficit.
A)True
B)False
Q4) A U.S. manufacturing firm that has made significant use of franchising in foreign markets is the Nike shoe company.
A)True
B)False
Page 24
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