Commercial Law
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Course Introduction
Commercial Law introduces students to the legal principles that govern business transactions and commercial relationships in both national and international contexts. The course covers key areas such as contract law, sales of goods, agency, negotiable instruments, partnership, company law, and secured transactions. Students will analyze how legal rules affect the operations of businesses, resolve commercial disputes, and regulate commercial conduct. Through case studies and practical examples, the course equips learners with the foundational understanding necessary to identify, interpret, and apply commercial law principles in real-world business scenarios.
Recommended Textbook
The Legal Environment of Business 13th Edition by Roger E. Meiners
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Page 2
Chapter 1: Todays Business Environment: Law and Ethics
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Sample Questions
Q1) If someone is sued in a civil suit, such as in tort for hitting someone on the head with a stick, to find the wrongdoer liable, the jury must find that the injured party was favored by:
A) evidence beyond a reasonable doubt
B) substantive evidence
C) felony evidence
D) judicial doubt
E) none of the other choices are correct
Answer: E
Q2) The United States Constitution:
A) has both clear rules and general principles
B) has only clear rules
C) has only general principles
D) has one fundamental goal
E) none of the other choices
Answer: A
Q3) Examples of private law include contract law and partnership law.
A)True
B)False
Answer: True
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Chapter 2: The Court Systems
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Q1) The U.S. Constitution provides that the judicial power (the court system) is:
A) determined by the Congress establishing such courts as it deems necessary B) determined by the President with the advice and consent of the Senate C) in one Supreme Court and in lower courts as the Supreme Court may establish D) in one Supreme Court and in lower courts as Congress may establish E) none of the other choices are correct
Answer: D
Q2) Nearly all appeals to the Supreme Court are accepted at its discretion.
A)True
B)False
Answer: True
Q3) The power of a court over a defendant is called in personam jurisdiction.
A)True
B)False
Answer: True
Q4) Subject-matter jurisdiction is a constitutional or statutory limitation on the disputes a court can resolve.
A)True
B)False
Answer: True
Page 4
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Chapter 3: Trials and Resolving Disputes
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Sample Questions
Q1) Since World War II, German trial procedure is patterned after U.S. trial procedure.
A)True
B)False
Answer: False
Q2) If a plaintiff files a case and the defendant agrees with all the facts claimed by the plaintiff, the defendant may still be able to get the case dismissed for failure to state a claim.
A)True
B)False
Answer: True
Q3) The process of obtaining information about the dispute is known as:
A) processing
B) counterclaim justification
C) pretrial informing
D) counterclaim informing
E) none of the other choices are correct
Answer: E
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Page 5
Chapter 4: The Constitution: Focus on Application to Business
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Sample Questions
Q1) In Quill Corp. v. North Dakota, a state sales tax was imposed on out-of-state firms doing mail-order business with North Dakota residents. This law was found:
A) unconstitutional violation of the necessary and proper clause
B) constitutional because it involves all mail-order firms
C) constitutional because it involves interstate commerce
D) unconstitutional violation of the First Amendment rights of the mail-order businesses
E) none of the other choices are correct
Q2) Which of the following statements is correct?
A) the way the Supreme Court interprets the Constitution changes over time
B) there have been no amendments to the Constitution since the 1930s
C) all Constitutional rights are clearly spelled out in the document, there is no disagreement about those rights
D) the interpretation by the Supreme Court of the Constitution has not changed in 200 years
E) none of the other choices
Q3) Restrictions on misleading commercial speech are generally constitutional.
A)True
B)False
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Chapter 5: Criminal Law and Business
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Sample Questions
Q1) Criminal acts may be based on negligence.
A)True
B)False
Q2) The Supreme Court has held the Sentencing Guidelines to be purely advisory; courts may impose any sentence "reasonable."
A)True
B)False
Q3) The copying of a genuine item without authorization, especially when passed off as the original item is:
A) economic espionage
B) fraud
C) racketeering
D) insider trading
E) none of the other choices
Q4) Companies that have compliance programs can receive lower punishments for criminal violations than those that do not, for the same action.
A)True
B)False
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Page 7
Chapter 6: Elements of Torts
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Sample Questions
Q1) To use a person's name without permission for commercial purposes may be the tort of invasion of privacy.
A)True
B)False
Q2) Steve has a disorder that causes him to pass out randomly. While driving one day, he passes out, is in an accident, and injures Juan.
A) The black-out is an "act of God," so there is no liability
B) Steve is probably liable due to contributory negligence
C) Steve is probably liable due to strict liability
D) Juan is probably liable for being in Steve's way
E) none of the other choices
Q3) Defamation includes the torts of slander and misappropriation of a likeness.
A)True
B)False
Q4) A tort is broadly defined as a criminal wrong, other than a breach of contract, for which the law provides a remedy.
A)True
B)False
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8
Chapter 7: Business Torts and Product Liability
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Q1) Any injuries suffered because a consumer ignored warning labels on prescription drugs will result in the manufacturer being strictly liability in tort.
A)True
B)False
Q2) In MacPherson v. Buick Motor Co. the court held Buick not liable because it did not make the wheel that collapsed and was the proximate cause of injury.
A)True
B)False
Q3) The rule of strict liability in torts used in the Restatement (Second) of Torts helped bring about nationwide adoption of the rule.
A)True
B)False
Q4) Most tort suits are filed in:
A) state courts
B) federal courts
C) appellate courts
D) small claims courts
E) municipal courts
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Chapter 8: Real and Personal Property
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Sample Questions
Q1) ____ is the tort that occurs when intellectual property, such as copyrights, patents, trade secrets or trademarks, is taken by others without permission.
A) conversion
B) trespass to personal property
C) misappropriation
D) nuisance
E) invasion of privacy
Q2) The tort of ____ occurs when someone has interfered with the right of the owner to exclusive possession and enjoyment of personal property.
A) conversion
B) misappropriation
C) trespass to personal property
D) battery
E) none of the other choices are correct
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Page 10
Chapter 9: Intellectual Property
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Sample Questions
Q1) Counterfeit goods:
A) may be sold with Trademark Office permission
B) may be sold so long as identified as "not original"
C) may be sold so long as identified as "not approved"
D) may be sold so long as identified as "not genuine"
E) none of the other choices
Q2) Under the Copyright Act, a copyright owner has which of the following rights?
A) to perform the work in public
B) to prepare derivative works
C) to publish the work
D) to reproduce the work
E) all of the other choices
Q3) If a company owns trade secrets it may require employees to sign contracts promising not to use the trade secrets they learn at work elsewhere and holding the employees liable if they do.
A)True
B)False
Q4) A generic trademark receives no legal protection.
A)True
B)False
Page 11
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Chapter 10: Contracts
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Q1) Because of the war on terrorism, the U.S. government prohibited doing business with certain countries. Contracts that existed at the time the prohibition was announced were:
A) unenforceable
B) unconscionable
C) exculpatory
D) quasi-contracts
E) unilateral
Q2) An offer that has unclear major terms, or is missing important terms:
A) can be the basis for an implicit, but not express, contract
B) can be the basis for an express, but not implicit, contract
C) makes the offeree liable if not executed properly
D) makes the offeror liable if not executed properly
E) none of the other choices are correct
Q3) Termination of an offer by operation of law does not occur:
A) if a law is passed making the subject of the offer illegal
B) by death or insanity of the offeror
C) if the subject matter of the offer is destroyed
D) by physical incapacity of the offeree
E) all of the other choices are correct and termination occurs
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Chapter 11: Domestic and International Sales
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Sample Questions
Q1) When a seller agrees to supply all of the goods needed by a buyer, it is called a requirements contract.
A)True
B)False
Q2) Parties to the sale of some goods may control, by contract, when title to the goods is to pass.
A)True
B)False
Q3) In Lee v. R&K Marine, where a boat that Lee bought became unusable after only three years when it fell apart, and the seller had expressly disclaimed all warranties, the court held:
A) Lee had no case because all the warranties on the boat expired after 2 years
B) Lee had no case because boats are one of the types of goods not covered by warranties
C) Lee had no case because the retailer's disclaimer met all the UCC requirements
D) Lee had a case because the retailer's disclaimer did not meet all the UCC requirements
E) Lee had a case because the defective boat endangered his life
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Chapter 12: Business Organizations
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Sample Questions
Q1) Shareholders, the board of directors and the managers are the three major groups that make up:
A) a limited partnership
B) a sole proprietorship
C) a joint partnership
D) a nonprofit organization
E) none of the other choices are correct
Q2) Which of the following statements about a corporation is true? Corporations are not entitled to constitutionally protected:
A) free speech
B) equal protection
C) privileges against self-incrimination
D) freedom from unreasonable searches and seizures
E) none of the other choices are true
Q3) Directors of a corporation are responsible for making basic corporate policy.
A)True
B)False
Q4) A closed corporation typically limits the right to transfer stock.
A)True
B)False
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Chapter 13: Negotiable Instruments, Credit, and Bankruptcy
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Q1) Before filing for bankruptcy, a person must go through credit counseling.
A)True
B)False
Q2) If a debtor is likely to dispose of property subject to a lien during a lawsuit, a creditor may obtain an attachment lien to protect itself.
A)True
B)False
Q3) Certificates of deposit are not negotiable because they are specific contracts between banks and payees.
A)True
B)False
Q4) Most creditors seek information about debtors from:
A) trade associations
B) credit reporting agencies
C) customer financial statements
D) banks
E) all of the other choices
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Chapter 14: Agency and the Employment Relationship
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Sample Questions
Q1) European nations generally have more detailed rules regarding employees than does the U.S.
A)True
B)False
Q2) When an employer-employee relationship exists, employers:
A) may be liable for the torts committed by employees in the course of employment
B) are only liable for the torts committed by employees in the course of employment in some states
C) are never liable for the torts committed by employees in the course of employment
D) are liable for the torts committed by employees in the course of employment only if the employees are minors
E) none of the other choices are correct
Q3) To carry out their duties, universal agents are typically granted:
A) powers to act by estoppel
B) a general power of attorney
C) authority to cancel contracts anticipatorily
D) all of the other specific choices
E) none of the other choices
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16
Chapter 15: Employment and Labor Regulations
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Sample Questions
Q1) During a union election, which of the following may employers say?
A) that all employees will be fired if they unionize
B) that employees who join the union will be fired
C) that they will close a plant if a union is voted in
D) b and c are permissible
E) none of the other choices are legal
Q2) A union bargaining unit may consist of all employees of a company.
A)True
B)False
Q3) A strike by workers against their employer whose collective bargaining agreement is in question is called:
A) unprotected activity
B) primary boycott
C) secondary boycott
D) lockout
E) grievance action
Q4) The NLRB has jurisdiction over all unionized employees and all government workers.
A)True
B)False
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Chapter 16: Employment Discrimination
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Sample Questions
Q1) An example of a disability covered by the Americans with Disabilities Act is a serious heart attack.
A)True
B)False
Q2) Under federal law, if a person wishes to file a discrimination charge they must:
A) file the charge within 10 days of an alleged discriminatory event
B) file the charge within 18 days of an alleged discriminatory event
C) file the charge within 60 days of an alleged discriminatory event
D) file the charge within 180 days of an alleged discriminatory event
E) there is no time limit for filing a discrimination charge
Q3) Which is not an officially recognized racial group under Title VII:
A) Hispanics
B) Asians
C) whites
D) Native Americans
E) all of the other choices are recognized
Q4) A person age 19 may not claim protection under the Age Discrimination in Employment Act.
A)True
B)False
Page 18
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Chapter 17: The Regulatory Process
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Sample
Questions
Q1) In Summers v. Earth Island Institute the Supreme Court held that an environmental group had standing as representatives of concerned citizens to seek judicial review of a Forest Service decision to log a burned area of forest.
A)True
B)False
Q2) In Chevron v. NRDC the Supreme Court held that court of appeals, when considering challenges to agency regulations, must give deference to an agency's "construction of of a statutory scheme."
A)True
B)False
Q3) A court's review of an agency's substantive determinations generally receives the lowest scope of judicial review.
A)True
B)False
Q4) Agency regulations issued under proper rulemaking procedures require approval by the President.
A)True
B)False
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Page 19
Chapter 18: Securities Regulation
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Sample Questions
Q1) Like Italy, Japan appears to have a great interest in prosecuting insider trading cases.
A)True
B)False
Q2) Regulation Fair Disclosure requires that when public companies release material information, they may not release it to securities professionals before releasing the information to the public.
A)True
B)False
Q3) When a company wants to take over another, it may issue:
A) a tender offer
B) a proxy
C) a merit regulation offer
D) a margin requirement
E) none of the other choices
Q4) Specialist firms are regulated by the SEC, to prevent fraud or the exploitation of the unique position that specialists have in market trades.
A)True
B)False
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Chapter 19: Consumer Protection
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Sample Questions
Q1) Under the FTC's Mail-Order Rule:
A) shipping dates must be stated on offers
B) shipment date is entirely up to the seller
C) if goods cannot be shipped on time, the price must be lowered
D) if goods cannot be shipped on time, the company must pay the customer a fee
E) none of the other choices are correct
Q2) Regulations under the Fair and Accurate Credit Transactions Act (FACT Act) prohibits businesses from keeping consumer information on file more than 90 days in an effort to protect privacy.
A)True
B)False
Q3) Which of the following would be a "red flag" under the FTC's Red Flag Rule:
A) an alert from a consumer reporting agency
B) a suspicious document related to credit accounts
C) a notice from a customer about possible identity theft
D) a peculiar address
E) all of the other specific choices are correct
Q4) Many FTC complaints are settled by consent decree rather than a trial.
A)True
B)False
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Chapter 20: Antitrust Law
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Sample Questions
Q1) Merger guidelines were created by the Department of Justice and the FTC to:
A) help businesses and regulators assess the antitrust implications of a merger
B) help the courts determine what an unfair business practice is
C) help the courts decided what penalties to impose for unfair business practices
D) help the courts break up monopolies evenly
E) help businesses evade antitrust laws
Q2) Horizontal market division allows competing firms to:
A) be more efficient
B) exercise monopoly power within a region
C) hire fewer workers
D) give better worker benefits
E) diversify into more markets
Q3) The Standard Oil Trust was found in violation of Section 1 of the Sherman Antitrust Act. That meant under a rule of reason, the Trust was guilty of monopolizing trade.
A)True
B)False
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Chapter 21: Environmental Law
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Sample Questions
Q1) To help further the goal of water pollution reduction, states must do what regarding point source pollution:
A) permit treated water to be used as drinking water to be "commercially" pure
B) designate all surface water as to intended use
C) keep water designated as recreational water quite pure
D) do nothing, the federal government controls all facets water pollution control
E) none of the other choices
Q2) The Comprehensive Environmental Response, Compensation, and Liability Act defines which of the following as potentially responsible parties who can be held liable for cleanup costs and damages to natural resources from hazardous wastes:
A) current owners of a hazardous waste site
B) prior owners of a site at the time of hazardous waste disposal
C) any hazardous was generator who arranged for disposal at the site
D) all of the other specific choices are correct
E) none of the other specific choices are correct
Q3) Firms that emit waste water into water bodies must have a discharge permit.
A)True
B)False
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Chapter 22: The International Legal Environment of Business
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Sample Questions
Q1) The ____ promotes international trade by working to reduce trade barriers and to establish uniform tariff schedules and trade rules.
A) World Intellectual Property Organization
B) International Monetary Fund
C) World Trade Organization
D) Commission on International Trade Law
E) World Bank
Q2) An ad valorem tariff is:
A) duty or tax levied by a government on an exported good
B) flat tax applied to each unit of the product
C) a tax imposed by the WTO on category B and E goods
D) applied only to such products as weapons, alcohol, and tobacco products
E) none of the other choices
Q3) Which of the following is a way to regulate imports:
A) complicated customs procedures
B) government procurement policies
C) safety and manufacturing standards
D) all the other specific choices are correct
E) none of the other specific choices are correct
Page 24
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