Course Introduction
Commercial Law
Textbook Exam Questions
Commercial Law introduces students to the fundamental legal principles governing business and commercial transactions. The course covers key areas such as the formation and enforcement of contracts, the sale of goods, agency relationships, negotiable instruments, and secured transactions. Students will also explore topics related to consumer protection, bankruptcy, and the regulation of commercial enterprises. Through case studies and real-world examples, the course emphasizes practical applications of commercial law in various business contexts, equipping students with the legal knowledge necessary to navigate the complexities of modern commerce.
Recommended Textbook
Contemporary Business Law 8th Edition by
Henry R. Cheeseman
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41 Chapters
4106 Verified Questions
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Page 2
Chapter 1: Legal Heritage and the Digital Age
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Sample Questions
Q1) The followers of Analytical School of jurisprudence are known as realists.
A)True
B)False
Answer: False
Q2) The Critical Legal Studies School of jurisprudence believes that legal disputes should be solved by applying arbitrary rules.
A)True
B)False
Answer: True
Q3) Mark Walton was involved in a car accident in which the airbag of his car failed to deploy.He sued the car manufacturer for installing faulty airbags.But in the course of the case being heard in court,the car company and Mark decided to settle the lawsuit out of court.What important function of the law was served in this case?
A) promoting social justice
B) maximizing individual freedom
C) providing a basis for compromise
D) maintaining the status quo
Answer: C
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3
Chapter 2: Constitutional Law for Business and E-commerce
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Sample Questions
Q1) How does the Supreme Court decide whether the government's different treatment of people or businesses violates or does not violate the Equal Protection Clause?
Answer: The Supreme Court has adopted three different standards of review for deciding whether the government's different treatment of people or businesses violates or does not violate the Equal Protection Clause.They include the strict scrutiny test,intermediate scrutiny test,and rational basis test.
The strict scrutiny test is a test that is applied to classifications based on suspected classes such as race,national origin,and citizenship,and fundamental rights such as voting.
The intermediate scrutiny test is a test that is applied to classifications based on protected classes such as gender.
The rational basis test is a test that is applied to classifications not involving a suspect or protected class.
Q2) The Free Exercise Clause guarantees that there will be no state-sponsored religion.
A)True
B)False
Answer: False
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4
Chapter 3: Courts and Jurisdiction
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Sample Questions
Q1) ________ are courts that hear cases of a general nature that are not within the jurisdiction of limited-jurisdiction trial courts.
A) Courts of record
B) Intermediate appellate courts
C) Inferior trial courts
D) State supreme courts
Answer: A
Q2) To bring a lawsuit,a plaintiff must have standing to sue.
A)True
B)False
Answer: True
Q3) Analyze the jurisdiction of the U.S.Supreme Court.
Answer: The Supreme Court,which is an appellate court,hears appeals from federal circuit courts of appeals and,under certain circumstances,from federal district courts,special federal courts,and the highest state courts.No new evidence or testimony is heard.As with other appellate courts,the lower court record is reviewed to determine whether there has been an error that warrants a reversal or modification of the decision.Legal briefs are filed,and the parties are granted a brief oral hearing.The Supreme Court's decision is final.
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Page 5
Chapter 4: Judicial Alternative Administrative and E-Dispute Resolution
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Sample Questions
Q1) What is the purpose of a pretrial hearing?
A) requesting the other party to produce all documents relevant to the case
B) assessing the factual accuracy of the deposition of witnesses
C) instructing the judge to decide the case without a jury
D) facilitating the settlement of a case before it goes to trial
Q2) Which of the following is a legislative power granted to an administrative agency?
A) the power to adopt a rule or regulation
B) the power to adjudicate a dispute
C) the power to issue an interpretive rule
D) the power to issue a substantive rule
Q3) A(n)________ is a document filed by the original plaintiff to answer the defendant's cross-complaint.
A) rejoinder
B) answer
C) reply
D) plea
Q4) A jury cannot be sequestered in important cases.
A)True
B)False
6
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Chapter 5: Intentional Torts and Negligence
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Q1) The publication of an untrue statement of fact is equivalent to the publication of an opinion.
A)True
B)False
Q2) ________ refers to a lawsuit wherein the plaintiff from a previous lawsuit becomes the defendant and vice versa.
A) Slander
B) Trade libel
C) Malicious prosecution
D) Defamation of character
Q3) Discuss whether the application of strict liability is fair to someone adjudged to be liable for the same.
Q4) Oral defamation of character is known as libel.
A)True
B)False
Q5) If a person were to get a speeding ticket despite him not knowing he was over speeding,would the person be liable for negligence or intentional tort?
Q6) Compare and contrast between reasonable person standard and reasonable professional standard.
Page 7
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Chapter 6: Criminal Law and Cyber Crimes
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Q1) ________ is a crime that involves the willful or malicious burning of a building.
A) Larceny
B) Arson
C) Battery
D) Embezzlement
Q2) ________ is a crime in which one person gives another person money,property,favors,or anything else of value for a favor in return.
A) Battery
B) Bribery
C) Larceny
D) Embezzlement
Q3) A(n)________ is considered a less serious crime;not inherently evil but prohibited by society;and is punishable by fines or imprisonment for one year or less.
A) indictable offence
B) violation
C) felony
D) misdemeanor
Q4) Explain felony murder rule with an example.
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Chapter 7: Intellectual Property and Cyber Piracy
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Q1) Contrast registered and unregistered marks and evaluate the advantages of the former over the latter.
Q2) The Digital Millennium Copyright Act is a federal statute that prohibits unauthorized access to copyrighted digital works by circumventing encryption technology.
A)True
B)False
Q3) A ________ protects the functionality of an invention.
A) hallmark
B) design patent
C) utility patent
D) wordmark
Q4) Which of the following can be patented as a design patent?
A) an academic book on chemical engineering
B) a blueprint of a hood ornament of a car
C) a photograph of a rare comet sighting
D) a map excavated from an archaeological site
Q5) Define intellectual property and elaborate on its significance and vulnerabilities.
Q6) Can encryption and its legal enforcement keep up with digital piracy?
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Chapter 8: Ethics and Social Responsibility of Business
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Sample Questions
Q1) Stakeholder interest theory argues that a corporation should take actions in the interest of all its stakeholders including suppliers,creditors,and customers.
A)True
B)False
Q2) Which of the following is true of the Sarbanes-Oxley Act?
A) It penalizes companies that violate ethical standards that are not enacted by the rule of law.
B) It prevents companies from acting only in the interest of maximizing the wealth of its stakeholders.
C) It requires public companies to disclose whether it has a code of ethics for senior financial officers.
D) It penalizes companies that fail to contribute toward social issues.
Q3) According to Kantian ethics,a person is under no moral obligation to abide by a contract if it turns out to be detrimental to the obligated party.
A)True
B)False
Q4) Explain utilitarianism with an example.
Q5) Explain corporate citizenship with an example.
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Chapter 9: Nature of Traditional and E-Contracts
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Q1) In order for an agreement to be valid,there must be mutual assent by the parties.
A)True
B)False
Q2) In applying the objective theory of contracts,the pertinent question to ask is: "Would a hypothetical reasonable person conclude that the parties intended to create a contract after considering the words and conduct of the parties and the surrounding circumstances?"
A)True
B)False
Q3) Otto approaches Mary and says,"If you pick up my new suit for me at the mall tomorrow,I'll pay you $20." Mary replies,"I don't know if I'll have time to get it,but I'll see if I get a chance." As a result of this conversation ________.
A) Otto and Mary have formed a bilateral contract
B) Mary has a legal obligation to use her best efforts to pick up the suit
C) a contract will be formed only if Mary picks up the suit
D) the contract Otto and Mary have formed is void because Mary did not promise a performance
Q4) What is the importance of quasi-contracts?
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Chapter 10: Agreement and Consideration
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Q1) Techstate,a hardware manufacturer in the United States,has an existing contract with a client based in the Republic of Karthasia,which is going through a civil war.The resulting upheaval in that country has led to some of the shipments to the client being destroyed by warring factions.As a sanction against the country,the United States government places an embargo on all exports to that country by U.S.firms.What will be the state of the contract between Techstate and the client in Karthasia after the embargo?
A) It will be terminated due to destruction of subject matter.
B) It will be terminated due to incompetency of the offeror.
C) It will be terminated due to lapse of time.
D) It will be terminated due to supervening illegality.
Q2) ________ is a stipulation in an offer that says the acceptance must be by a specified means of communication.
A) Option contract
B) Mirror image rule
C) Implied authorization
D) Express authorization
Q3) Describe the different effective dates of communication.
Q4) Analyze the requirements of a consideration.
Q5) Explain,in brief,express terms and their significance.
Page 12
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Chapter 11: Capacity and Legality
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Q1) ________ is a rule that states that if a minor has transferred money,property,or other valuables to the competent party before disaffirming the contract,that party must place the minor in status quo.
A) Emancipation doctrine
B) Infancy doctrine
C) Duty of restitution
D) Duty of restoration
Q2) If a minor makes a contract with an adult,and the minor does not disaffirm the contract either during the period of minority or within a reasonable time after reaching the age of majority,________.
A) the adult is no longer obligated to the contract
B) the minor can disaffirm it later and obtain full restitution
C) the contract is considered ratified
D) the minor is no longer obligated to the contract
Q3) How is the doctrine of unconscionability related to public policy?
A) The doctrine of unconscionability is derived from public policy.
B) All contracts contrary to public policy are considered unconscionable.
C) Both are used to save a contracting party from a bad bargain.
D) Both are very distinctly defined by law.
Q4) Explain the concept of usury laws with an example.
Page 13
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Chapter 12: Genuineness of Assent and Statute of Frauds
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Q1) A person enters into a contract with another by writing the terms of the contract on a notepad.Is this a valid contract? Does the law accept writing on the notepad as a proof of that contract?
Q2) The term scienter means ________.
A) good faith
B) innocent heart
C) bad faith
D) guilty mind
Q3) An ambiguity in a contract does not constitute a mutual mistake of a material fact.
A)True
B)False
Q4) Which of the following is true of duress?
A) It is liable for fraud.
B) Its threat should involve physical harm for it to be actionable as duress.
C) It is not enforceable against the innocent party.
D) Intoxicating a person to sign a contract is considered duress.
Q5) What is parol evidence? Discuss the parol evidence rule and its exceptions.
Q6) Explain in detail the doctrine of promissory estoppel.
Q7) Analyze the elements that a party has to show in order to prove fraud.
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Chapter 13: Third-Party Rights and Discharge
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Q1) A(n)________ is used if the obligor does not want to deal with or render performance to an unknown third party.
A) anti-assignment clause
B) approval clause
C) novation agreement
D) anti-delegation clause
Q2) Howard is injured by Penny in a car accident,caused due to Penny's negligence.Which of the following statements holds true for Howard's right to assign?
A) Howard cannot assign the recovery of punitive damages from Penny.
B) Howard can only assign the recovery of his medical expenses from Penny.
C) Howard's right to sue Penny cannot be assigned.
D) Howard can only assign his right to take the case to the appellate court.
Q3) Which of the following phrases describes the term "covenant"?
A) an unconditional promise to perform
B) a breach of contract
C) mutual rescission of a contract
D) successive assignments of a right
Q4) Explain how the assignment of rights facilitates an obligor to assert any defense against the assignor or the assignee.
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Chapter 14: Breach of Contract and Remedies
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Q1) In an intentional interference with contractual relations,a third party can contract with a breaching party without becoming liable for this tort if a contracting party has already breached the contract.
A)True
B)False
Q2) Disclaimer of consequential damages does not excuse breaching parties from paying compensatory damages.
A)True
B)False
Q3) The most common remedy for a breach of contract is an award of ________.
A) injunctions
B) substitute contracts
C) reformations
D) monetary damages
Q4) Contract disputes cannot be heard or decided upon by any nonjudicial process.
A)True
B)False
Q5) Why would a buyer want to rescind an existing contract with a seller?
Q6) Discuss the effects of liquidated damage on contracts.
Page 16
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Chapter 15: Digital Law and E-Commerce
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Q1) Top-level domain names representing cultural identities are prohibited under the new rules issued by the Internet Corporation for Assigned Names and Numbers.
A)True
B)False
Q2) LetsConnect is a three-month-old Internet service provider in the U.S.A.In the last two months,it was discovered that several LetsConnect users exchanged online material that is illegal in the United States.The ISP took no measures to investigate the matter or prevent it.Which of the following holds true in this case?
A) The users of LetsConnect are not liable for the material they exchanged.
B) LetsConnect is not liable for the content transmitted over its network.
C) LetsConnect will be prosecuted for abusing the freedom of speech.
D) LetsConnect will be prosecuted for violating the Communications Decency Act.
Q3) The computers that constitute the World Wide Web use a standard set of rules known as ________ for the exchange of information.
A) POP
B) POP3
C) HTTP
D) IMAP
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17
Chapter 16: Formation of Sales and Lease Contracts
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Q1) Which of the following acceptances is allowed for an offer under common law?
A) mirror image rule acceptance
B) open term acceptance
C) accommodation
D) additional terms acceptance
Q2) A ________ is a document that is issued by a bank on behalf of a buyer who purchases goods on credit from a seller that guarantees that if the buyer does not pay for the goods,then the bank will pay the seller.
A) remittance advice
B) certified check
C) cashier's check
D) letter of credit
Q3) How can the Statute of Frauds writing requirements be satisfied under the written confirmation rule if both the parties to a contract are merchants?
Q4) The UCC permits an acceptance of sales contracts to contain additional terms and still to act as an acceptance rather than a counteroffer.
A)True
B)False
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Chapter 17: Title to Goods and Risk of Loss
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Q1) Explain how the Uniform Commercial Code (UCC)rejects the common law's notion of placing the risk of loss of goods on the parties to a contract.
Q2) ________ refers to an arrangement in which a seller delivers goods to a buyer to sell on his or her behalf.
A) Consignment
B) Void entitlement
C) Entrustment
D) Leasing
Q3) In a sale on approval,the risk of loss and title to the goods pass to the buyer when the ________.
A) seller receives notification of the rejection of goods within reasonable time
B) buyer uses the goods consistently with the purpose of trial
C) seller ships the goods to the buyer's destination
D) buyer accepts the goods under the contract
Q4) If a buyer has the right to reject nonconforming goods,the risk of loss remains on the seller.
A)True
B)False
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19
Chapter 18: Remedies for Breach of Sales and Lease Contracts
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Q1) Nonconforming goods must be rejected within a reasonable time after their delivery for a successful exercise of the right to reject nonconforming goods.
A)True
B)False
Q2) The right to replevy is available to the seller if the buyer wrongfully rejects or revokes acceptance of the goods,fails to make a payment when due,or repudiates the contract. A)True
B)False
Q3) A sales contract that requires the seller to deliver the goods to the buyer's place of business or another specified location is defined as a destination contract.
A)True
B)False
Q4) A seller who learns of the buyer's insolvency while the goods are in transit has a right to stop delivery of the goods in transit,regardless of the size of the shipment.
A)True
B)False
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Chapter 19: Warranties and Product Liability
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Q1) Which of the following is true of strict liability?
A) Strict liability is liability with fault.
B) Only the manufacturer of a defective product is strictly liable for the injuries caused by that product.
C) Strict liability does not require the injured person to prove that the defendant breached a duty of care.
D) Defendants cannot claim monetary recovery in cases of strict liability.
Q2) Plaintiffs can allege multiple product defects in one lawsuit.
A)True
B)False
Q3) Casual sales and transactions by nonmerchants are covered by the doctrine of strict liability.
A)True
B)False
Q4) Examine the role of punitive damages in contract law.
Q5) The doctrine of strict liability applies to sellers and lessors of products who are engaged in the business of selling and leasing products.
A)True
B)False
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Chapter 20: Creation and Transfer of Negotiable Instruments
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Q1) Which of the following is true of an unqualified indorsement?
A) The order and liability of the indorsers is presumed to be the order in which they indorse the instrument, unless otherwise agreed.
B) The first indorser is presumed to be liable for the full amount in the instrument, unless otherwise specifically agreed.
C) It guarantees payment of the instrument if the maker defaults.
D) It protects subsequent indorsees from liability.
Q2) A primary function of a negotiable instrument is that it acts as a substitute for ________.
A) money
B) goods sold
C) services rendered
D) the assets held by the drawer
Q3) A(n)________ is negotiated by delivery,with the necessary indorsement.
A) bearer paper
B) order paper
C) promissory note
D) check
Q4) Discuss the methods of transferring checks.
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Chapter 21: Holder in Due Course and Liability of Parties
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Q1) Ellen draws a check on his checking account at Center Bank "payable to the order of Cary Gardner." When Cary presents the check for payment,Center Bank refuses to pay it even though there are sufficient funds in Ellen's account to pay Cary.Can Cary collect the amount of the check? If yes,how?
Q2) Which of the following requirements has to be met for a holder to qualify as an HDC under the shelter principle?
A) The holder must not be in possession of a prior negotiable instrument.
B) The holder must have notice of a defense or claim against the payment of the instrument.
C) The holder must have been a party to a fraud or an illegality affecting the instrument.
D) The holder must have acquired the instrument from an HDC.
Q3) An agent is a person who is in possession of a negotiable instrument that is drawn,issued,or indorsed to him or to his order,or to bearer,or in blank.
A)True
B)False
Q4) Give an example of a situation where a personal defense cannot be raised against an HDC.
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Chapter 22: Banking System and Electronic Financial Transactions
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Q1) Francis Jeffers purchased a cashier's check in the amount of $5,000 from Northern Star Bank.The check was made payable to Kyle Naughton and was delivered to him.Twelve months later,the Northern Star Bank branch manager informed Jeffers that the cashier's check was still outstanding.Jeffers subsequently signed a form,requesting that payment be stopped and a replacement check be issued.Northern Star Bank issued a replacement check to Jeffers.Eight months later,Naughton deposited the original cashier's check in his bank,which was paid by Northern Star Bank.Northern Star Bank requested that Jeffers repay the bank $5,000.When he refused,Northern Star Bank sued Jeffers to recover this amount and the court awarded Northern Star Bank damages amounting to $5,500.Which of the following,had it happened,would have resulted in the court ruling in Jeffers' favor?
A) Jeffers cashed the replacement check before Naughton had presented the original check at his bank.
B) Jeffers paid Naughton the $5,000 in cash after obtaining the replacement check from Northern Star Bank.
C) Jeffers indemnified Northern Star Bank for potential damages arising from the issue of the replacement check.
D) Jeffers renewed the stop-payment order on the original check at the end of six months.
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Chapter 23: Credit, Real Property Financing, and Secured Transactions
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Q1) Which article of the Uniform Commercial Code governs secured transactions in personal property?
A) Article 8
B) Article 9
C) Article 18
D) Article 19
Q2) A(n)________ is a situation in which a creditor has an enforceable security interest against a debtor and can satisfy the debt out of the designated collateral.
A) floating lien
B) acquisition
C) attachment
D) redemption
Q3) ________ allows a mortgagor to regain real property after default and before foreclosure.
A) Foreclosure
B) Right of redemption
C) Lien release
D) Power of sale
Q4) Explain the process involved in perfection by filing a financing statement.
Page 25
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Chapter 24: Bankruptcy and Reorganization
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Q1) If the value of the collateral securing the secured loan exceeds the secured interest,the secured creditor is referred to as an undersecured creditor.
A)True
B)False
Q2) A Chapter 13 plan of payment cannot be modified if the debtor's income subsequently decreases.
A)True
B)False
Q3) Discharge of unsatisfied debts can be denied if the debtor made False representations about his or her financial position.
A)True
B)False
Q4) Which of the following is also referred to as straight bankruptcy?
A) Chapter 7
B) Chapter 13
C) Chapter 11
D) Chapter 12
Q5) Why is the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 considered "creditor friendly?"
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Chapter 25: Agency law
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Q1) The outbreak of a war between the principal's country and the agent's country would lead to a ________.
A) termination by an unusual change in circumstances
B) termination by operation of law
C) termination by impossibility of performance
D) wrongful termination
Q2) An express agency agreement that is often used to give an agent the control to sign legal documents on behalf of the principal is known as a(n)________.
A) assignment
B) accommodation
C) power of attorney
D) letter of credit
Q3) How can one determine whether a person is an independent contractor or an employee?
Q4) Why are principals liable for the torts committed by agents when they are acting within the scope of their employment? Discuss with an example.
Q5) Analyze a principal's duties toward an agent.
Q6) Discuss the importance of providing a notice of termination for an agency.
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Chapter 26: Small Business, Entrepreneurship, and Partnerships
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Q1) A limited liability limited partnership is required to have at least ________.
A) two limited partners
B) one general partner, and two limited partners
C) one general partner, and one limited partner
D) two general partners
Q2) Which of the following statements is true of general partnership?
A) A business should make a profit in order to qualify as a general partnership.
B) The general partners need not be the co-owners of the business.
C) Charity organizations and schools are mostly formed from general partnerships.
D) A general partnership can be either oral or implied from the conduct of the parties.
Q3) The dissolution of a general partnership discharges the liability of an outgoing partner for existing partnership debts and obligations.
A)True
B)False
Q4) A person cannot be forced to be a partner or to accept another person as a partner.
A)True
B)False
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Chapter 27: Corporate Formation and Financing
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Q1) Which of the following must be included in an article of incorporation?
A) The minutes of the first organizational meeting of the board of directors.
B) The number of shares the corporation is authorized to issue.
C) The dissolution terms of the incorporation.
D) The corporate seal must be used in the articles of incorporation.
Q2) A corporation in the state in which it was formed is referred to as a(n)________ corporation.
A) foreign
B) domestic
C) alien
D) overseas
Q3) A corporation has the same basic rights to perform acts and enter into contracts as a physical person.
A)True
B)False
Q4) Notes can be either unsecured or secured.
A)True
B)False
Q5) How can a corporation incorporated in one state conduct interstate commerce?
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Chapter 28: Corporate Governance and the Sarbanes-Oxley Act
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Q1) Which of the following is true of the Sarbanes-Oxley Act?
A) It permits a person to knowingly alter documents to influence a federal investigation.
B) It allows public companies to make personal loans to their directors.
C) It requires the submission of CEO and CFO certification with the company's annual report.
D) It entitles an officer to continue in his or her post even after being guilty for securities fraud.
Q2) ________ voting is a system in which each shareholder votes the number of shares he or she owns on candidates for each of the positions open.
A) Cumulative
B) Straight
C) Accumulation
D) Weighted
Q3) Shareholders can bind the corporation to contracts.
A)True
B)False
Q4) Explain the effect of the Sarbanes-Oxley Act on corporate governance.
Q5) Explain cumulative voting and its differences from noncumulative voting.
Page 30
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Chapter 29: Corporate Acquisitions and Multinational Corporations
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Q1) Federal proxy rules require proxies to be confidential documents.
A)True
B)False
Q2) Mr.Davidson,who owns 17 percent of his company's shares,is displeased with the six incumbent directors of the corporation.He proposes a slate of directors consisting of five other persons and himself to become members of the board of directors of the corporation and replace the incumbent directors.In the proxy contest,Mr.Davidson manages to acquire proxies from shareholders who control only 35 percent of the company's shares.Which of the following is true in this context?
A) The shareholders who voted for Mr. Davidson's slate of directors will constitute 35 percent of the new board of directors.
B) The incumbent directors will continue to form the board of directors.
C) Since a clear majority was not established by the proxy contest, another proxy contest must be held.
D) The slate of directors proposed by Mr. Davidson will form the new board of directors.
Q3) A corporation is not liable for the contracts of its branch office.
A)True
B)False
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Chapter 30: Limited Liability Companies and Limited
Liability Partnerships
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Q1) A member's distributional interest in an LLC is ________ and may be transferred in whole or in part.
A) state property
B) the LLC's property
C) personal property
D) federal property
Q2) The conversion of a business into an LLC takes effect when the articles of organization are filed with the secretary of state.
A)True
B)False
Q3) The conversion of an existing business to an LLC takes effect when ________.
A) the articles of organization are filed with the secretary of state
B) an agreement of amendment is filed with the secretary of state
C) a written operating agreement is prepared by the members
D) the first certificate of interest is issued
Q4) An LLC is not obligated to reimburse members and managers for payments made on behalf of the LLC.
A)True
B)False
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Chapter 31: Franchise and Special Forms of Business
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Q1) According to the FTC franchise rule,a franchisor that makes sales or earnings projections based on hypothetical examples must disclose the assumptions underlying the estimates.
A)True
B)False
Q2) Which of the following mandatorily requires a license to be operational and legal?
A) a general partnership
B) a conglomerate
C) a joint venture
D) a franchise
Q3) In an area franchise,the franchisor manufactures a product and licenses a retail dealer to distribute a product to the public.
A)True
B)False
Q4) Compare and contrast the liabilities of a franchisor and a franchisee to a franchise agreement.Provide an example.
Q5) What constitutes as just cause for the termination of franchisees? How can such causes be held unconscionable?
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Chapter 32: Investor Protection, E-Securities, and Wall Street Reform
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Q1) A(n)________ is an exemption from registration which states that securities transactions not made by an issuer,an underwriter,or a dealer do not have to be registered with the SEC.
A) intrastate offering exemption
B) private placement exemption
C) Regulation A offering
D) nonissuer exemption
Q2) Which of the following is an example of exempt securities?
A) stock dividends and stock splits
B) IPOs made by multinational corporations
C) securities that have been held by a single investor for longer than a year
D) securities worth $1 million or more
Q3) A(n)________ is a person who receives material nonpublic information from another person.
A) issuee
B) tippee
C) grantor
D) tipper
Q4) Explain intrastate offering exemption and the requirements that need to be met for it to occur.
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Chapter 33: Antitrust Law and Unfair Trade Practices
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Q1) Which of the following describes backward vertical merger?
A) a vertical merger between two or more companies that compete in the same business and geographical market
B) a vertical merger between two companies in similar fields whose sales do not overlap
C) a vertical merger in which a supplier acquires a customer
D) a vertical merger in which a customer acquires a supplier
Q2) Agricultural cooperatives enjoy an implied exemption from antitrust laws.
A)True
B)False
Q3) The setting of minimum resale prices is not a per se violation of Section 1 of the Sherman Act.
A)True
B)False
Q4) The ________ is a federal statute,enacted in 1930,that prohibits price discrimination.
A) Sherman Act
B) Clayton Act
C) Robinson-Patman Act
D) Federal Trade Commission Act
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Chapter 34: Consumer Safety and Environmental Protection
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Q1) Which of the following is prohibited under the Clean Water Act?
A) inhabitation on inland areas in the vicinity of wetlands and marshes
B) chemical treatment of wastes to reduce toxicity before discharge into wetlands
C) construction of residences by filling qualified wetlands
D) creation of artificial lakes and waterways for recreation
Q2) Areas that are inundated or saturated by surface water or ground water that support vegetation typically adapted for life in such conditions are called ________.
A) lagoons
B) gullies
C) wetlands
D) reservoirs
Q3) The ________ is a federal administrative agency that is primarily responsible for regulating the safety of meat,poultry,and other food products.
A) U.S. Department of Agriculture
B) Consumer Product Safety Commission
C) Food and Drug Administration
D) Federal Trade Commission
Q4) How does the FDA define and regulate cosmetics?
Page 36
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Chapter 35: Labor, Worker Protection, and Immigration Laws
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Q1) Sometimes employers give employees the title of "manager" to avoid the minimum wage and overtime pay requirements of the FLSA.
A)True
B)False
Q2) Cliff Thomas,a cardiologist,emigrates from the United Kingdom to the United States.Under which of the following visa categories can his wife live in the United States as Mr.Thomas' dependent?
A) H1
B) H4
C) H-1C
D) H-1B
Q3) When is an election necessary to form a union? Can a union be created without an employer contesting the election results?
Q4) It is illegal for a strike to begin during the mandatory 90-day cooling-off period.
A)True
B)False
Q5) How do elected unions use union security agreements to attain maximum power?
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Chapter 36: Equal Opportunity in Employment
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Q1) Title VII of the Civil Rights Act ________.
A) forbids religious organizations to give preference in employment to individuals of a particular religion
B) allows assigning an employee to a noncontact position because of actual or feared customer preference
C) permits an employer to discriminate on the basis of religion if the requested accommodation would be costly
D) gives employees the absolute right to practice their religion at the workplace
Q2) Which of the following is an instance of disparate-treatment discrimination?
A) An employer does not promote Kelly as she is about take maternity leave.
B) Ghalib, who is fluent in English, is not hired as a writer due to his Iraqi heritage.
C) An employer refuses to install a wooden ramp to accommodate Lin who is restricted to a wheelchair.
D) A factory hires 22-year old Jerry over 46-year old Barry, citing age as the reason.
Q3) How can an individual assert that he or she has been discriminated with disparate treatment by an employer?
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Chapter 37: Personal Property, Bailment, and Insurance
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Q1) Which of the following is true of ownership titles when confusion occurs?
A) Title to the goods can never be shared between the owners involved.
B) Title to goods commingled without permission goes to the innocent party.
C) Title to goods cannot be acquired by confusion.
D) Title to goods can only be acquired if goods were commingled by accident.
Q2) Explain the accession method of acquiring ownership with an example.
Q3) Explain gift causa mortis with an example.
Q4) Discuss the difference between mislaid and abandoned property.
Q5) Which of the following best describes a warehouse receipt?
A) A receipt received by a warehouse after the bailor has retrieved the bailed goods and payment has been made.
B) A document of title issued by a warehouse company stating that the bailor has title to the bailed goods.
C) An inventory list provided to the warehouse company by the bailor for the bailed goods.
D) A certificate of authenticity issued to a warehouse stating that it is certified to hold goods.
Q6) Explain the duties of insured and insurer in an insurance contract.
Q7) How does a bailment solely benefit the bailee?
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Chapter 38: Real Property, Landlord-Tenant Law, and Land Use Regulation
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Q1) The person who is given a life estate is called the life assignee.
A)True
B)False
Q2) Recording statutes are intended to prevent fraud and to establish certainty in the ownership and transfer of property.
A)True
B)False
Q3) A common form of ownership in a multiple-dwelling building in which the purchaser has title to the individual unit and owns the common areas as a tenant in common with the other owners is called a ________.
A) ranch
B) barndominium
C) condominium
D) cooperative
Q4) Community property is a form of co-ownership that applies specifically to married couples.Explain what constitutes separate property in this method of co-ownership with the help of an example.
Q5) What are the statutory requirements that an adverse possessor must fulfill in order to obtain title to a real property?
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Chapter 39: Family Law, Wills, and Trusts
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Q1) A will cannot be amended by merely striking out existing provisions on the will and adding new provisions on the will itself.
A)True
B)False
Q2) Usually,the grantor of a living trust is the income beneficiary to that trust.
A)True
B)False
Q3) Which of the following statements is true of the fault rule of breaking engagements?
A) If the person who has accepted an engagement ring breaks off the engagement, the ring will be owned by the person who marries first.
B) If the person who has accepted an engagement ring breaks off the engagement, that person can retain the engagement ring.
C) If the person who gave the engagement ring breaks off the engagement, the other side can rightfully keep the engagement ring.
D) If the person who gave the engagement ring breaks off the engagement, the ring is sold at an auction and the proceeds are shared between both parties.
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Chapter 40: Accountants' Duties and Liability
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Q1) Holly Lane is an accountant with Mildred & Lane Co.She has recently been asked to visit Maine Manufacturers to survey their financial records,assess their compliance with federal and state laws,and provide an opinion reflecting the state of the company's financial records.Holly's assessment of the financial records of Maine Manufacturers is called a(n)________.
A) probate administration
B) audit
C) arraignment
D) easement
Q2) The ________ is a state law that provides that an accountant's work papers cannot be used against a client in a court action.
A) work product immunity
B) accountant-client privilege
C) fair use doctrine
D) Noerr Doctrine
Q3) How is an accountant's liability to a client determined in a negligence suit?
Q4) How did the Private Securities Litigation Reform Act of 1995 change the liability of accountants and other securities professionals?
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Chapter 41: International and World Trade Law
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Q1) The UN General Assembly is composed of 15 member nations.
A)True
B)False
Q2) The ________ is an international organization created by a multilateral treaty in 1945 to promote social and economic cooperation among nations and to protect human rights.
A) United Nations
B) League of Nations
C) General Agreement on Tariffs and Trade
D) World Trade Organization
Q3) ________ is an association of several Central American countries and the United States designed to reduce tariffs and trade barriers among member nations.
A) NAFTA
B) ACFTA
C) DR-CAFTA
D) AKFTA
Q4) There is no world executive branch that can enforce international law.
A)True
B)False
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