Corporate Law
Exam Preparation Guide
Course Introduction
Corporate Law is a comprehensive course that examines the legal framework governing the formation, operation, and dissolution of corporations. The course covers the rights and responsibilities of corporate shareholders, directors, and officers, as well as issues related to corporate governance, fiduciary duties, mergers and acquisitions, and corporate finance. Students will analyze statutes, case law, and regulatory policies that influence corporate decision-making, while exploring contemporary issues such as ethical conduct and corporate social responsibility. Through practical case studies and legal analysis, students will gain a deeper understanding of the pivotal role corporations play in the modern economy and the legal mechanisms designed to balance stakeholder interests.
Recommended Textbook
Essentials of Business Law 4th Edition by Jeffrey F. Beatty
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Page 2
Chapter 1: Introduction to Law
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Q1) The treaty known as the North American Free Trade Agreement could only become law in the United States after being ratified by the U.S.Senate.
A)True
B)False
Answer: True
Q2) The federal judicial branch of the U.S.government:
A)interprets statutes.
B)passes statutes.
C)issues executive orders.
D)creates administrative agencies.
Answer: A
Q3) At Nick's request,a court issued an injunction to prevent Heather from publishing a book he claims is defamatory.This is an equitable remedy.
A)True
B)False
Answer: True
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Chapter 2: Business Ethics and Social Responsibility
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Q1) The behavior of top executives regarding ethical issues has little effect on the behavior of the employees of the organization.
A)True
B)False
Answer: False
Q2) The Chief Executive Officer of Ticor,Inc.must decide about the disposal of toxic waste materials.Which of the following considerations should help the CEO reach an ethical business decision?
A)Toxic waste disposal law.
B)The harm the disposal could cause to the environment.
C)The impact on the business if the decision is publicly disclosed through the news media.
D)All of the above.
Answer: D
Q3) Compassion and integrity are generally not considered universal.
A)True
B)False
Answer: False
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Chapter 3: Dispute Resolution
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Q1) The decision issued by an arbitrator is binding upon the parties.
A)True
B)False
Answer: True
Q2) Advantages of Alternative Dispute Resolution (ADR)include:
A)ADR is faster than litigation.
B)ADR keeps the parties talking rather than fighting.
C)ADR is less expensive than litigation.
D)All of the above are advantages of ADR.
Answer: D
Q3) When the Supreme Court issues a writ of certiorari,that means that:
A)the Court overrules the Court of Appeal's decision.
B)the Court states that it doesn't have jurisdiction over the case.
C)the Court agrees to hear the case.
D)the Court's decision is unanimous.
Answer: C
Q4) Discovery is a critical stage of both litigation and arbitration.
A)True
B)False
Answer: False
Page 5
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Chapter 4: Common Law, statutory Law, and Administrative Law
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Q1) The Administrative Procedure Act:
A)applies to all federal agencies.
B)applies to executive branch agencies but not to independent agencies.
C)applies to independent agencies but not to executive branch agencies.
D)does not apply to federal agencies.
Q2) What is the major distinction between executive and independent agencies?
A)Executive agencies govern business issues while independent agencies regulate individual matters.
B)The President has greater control over executive agencies.
C)The Administrative Procedure Act regulates independent agencies but not executive agencies.
D)Subpoenas may be issued by independent agencies; executive agencies do not have subpoena power.
Q3) The power of federal agencies is limited by:
A)statutory control in the enabling legislation and the Administrative Procedures Act.
B)political control by Congress and the President.
C)judicial review.
D)All of the above.
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Chapter 5: Constitutional Law
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Q1) Assume that the state of Wisconsin passed a statute seeking to protect the general public and workers against asbestos.The state statute did not violate the Commerce Clause because it imposed no restriction on interstate commerce.Both the state statute and the federal Occupational Safety and Health Act established job safety standards and specified worker training and employer licensing,but the requirements differed.Discuss which statute(s)Wisconsin corporations had to obey,and identify the source of the answer.
Q2) Nevada passed a law banning all commercial billboards along state highways to rid the state highways of billboards,which are offensive to citizens.If this law were to be challenged,which of the following would a court examine to determine if the law is constitutional?
A)It would have to be established that the law furthers an interest of the state of Nevada to create a more aesthetically pleasing environment.
B)It would have to be shown that the law directly and materially advances the state's goal of a more aesthetically pleasing environment.
C)It would have to be shown that the law reaches no further than necessary to promote the state goal.
D)All of the above.
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Page 7
Chapter 6: Torts
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Sample Questions
Q1) A tort is a violation of a duty imposed by the criminal law.
A)True
B)False
Q2) Mavrex,Inc.received an application from Larry and,since his written qualifications seemed to meet a pressing current need,they hired him without checking his references or prior records.Actually,Larry had been in prison for murder several years earlier.Tom,a long-time Mavrex employee,angered Larry when Tom tried to tell Larry how to do his job.Larry attacked and injured Tom.If Tom sues Mavrex,what would his cause of action be,and what elements would Tom need to prove to win his case?
Q3) Runyon was ready to sign a two-year agreement with Barnett Corp.to become Barnett's sales representative for a three-state area.LaPrise,who wants to be the representative for that area,threatens Runyon with bodily harm if he takes the position.Runyon decides his physical well being is more important to him than the job,so he does not accept the position.LaPrise:
A)committed tortuous interference with a contract.
B)committed tortuous interference with a prospective advantage.
C)committed a battery.
D)caused a breach of contract and committed the tort of intrusion.
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Chapter 7: Crime
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Q1) Roger assaulted Jim in a tavern,causing medical expenses and lost wages.
A)Roger can be prosecuted by the state for a criminal offense and Jim may sue him for money damages.
B)If Roger is convicted of criminal assault, Jim is not allowed to sue him for money damages since that would violate the double jeopardy clause of the Constitution.
C)If Jim refuses to press charges against Roger, the state cannot initiate a criminal proceeding against him.
D)Jim can elect to sue for money damages or proceed with criminal charges.
Q2) Elisa was suspicious of her neighbor,whom she thought was involved in selling illegal drugs.One day she arrived at her apartment and saw a large paper sack tied up with string in front of her neighbor's door.She took the bundle into her apartment,opened it,and discovered it was full of cocaine.She called the police and the neighbor was arrested.Could the neighbor claim that the evidence was illegally obtained under the Fourth Amendment?
Q3) Criminal defendants have the right to a lawyer at all the important stages of the criminal process.
A)True
B)False
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Chapter 8: International Law
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Questions
Q1) Archer Co.has decided it wants to expand into international business,but it is concerned about expropriation of its property or losses caused by political unrest.Archer is considering purchasing insurance through the Overseas Private Investment Corporation (OPIC).OPIC:
A)provides insurance, but the cost is relatively high.
B)provides insurance, but the list of countries in which it is willing to provide such protection is fairly short.
C)has had remarkable success at no cost to the U.S.government.
D)insures against expropriation, but not against losses stemming from political violence.
Q2) If a foreign company "dumps" goods on the United States market:
A)the goods will be considered illegal goods and not be allowed to be sold in the United States.
B)the United States will issue trade sanctions against the country that allowed the dumping.
C)a "dumping duty" will be imposed on the dumped goods if the Commerce Department determines the goods are being sold at less than fair value and that this harms an American industry.
D)All the above are correct.
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Page 10
Chapter 9: Introduction to Contracts
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Sample Questions
Q1) Which of the following types of property would be goods under the Uniform Commercial Code?
A)A promissory note.
B)A stock.
C)A patent.
D)A computer.
Q2) List and briefly describe the basic elements of a contract.
Q3) Which of the following statements about an express contract is true?:
A)It must be in writing.
B)It may be inferred by the conduct of the parties involved.
C)The two parties explicitly state all important terms of their agreement.
D)None of the above.
Q4) Miles purchased a lawnmower with an attached warning that said,"The manufacturer is not responsible in the case of an injury caused by the lawnmower." If Miles is injured because of a defect in the mower and sues the lawnmower manufacturer,he will most likely:
A)lose, as he agreed to not hold the lawnmower manufacturer liable.
B)lose, as he assumed the risk.
C)win, as this warning would be unenforceable.
D)win, as all lawnmower manufacturers are strictly liable.
Page 11
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Chapter 10: Agreement
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Q1) Revocation is the withdrawal of an offer by the offeror.
A)True
B)False
Q2) Bob signed an agreement with Joe under which Bob agreed to purchase all the hay that Joe grew during the coming growing season.This contract will be:
A)unenforceable due to its vagueness.
B)unenforceable due to the difficulty of devising an appropriate remedy for a breach.
C)enforceable as long as both parties act in good faith and Bob doesn't suddenly demand more hay than what was reasonably estimated.
D)No contract was formed as the quantity term was indefinite.
Q3) If an offer specifies no time limit in which to accept:
A)the offeree has 30 days to respond.
B)the offeree has 10 days to respond.
C)the offeree has a reasonable period during which to accept.
D)the offer is not valid due to its indefiniteness, therefore the time of acceptance is irrelevant.
Q4) Discuss the circumstances under which an offer would be terminated by law and give examples.
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Page 12
Chapter 11: Consideration
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Q1) Contracts in which one party agrees to buy all his requirements of certain goods from the other party are generally unenforceable because there is no definite amount.
A)True
B)False
Q2) Consideration can be a promise or an act.
A)True
B)False
Q3) A promise by Derkin Restaurants to buy all of the produce it needs this next year at an established price from Elfredo's Produce would be an:
A)enforceable requirements contract.
B)enforceable output contract.
C)unenforceable, illusory contract.
D)unenforceable promise based on past consideration.
Q4) An agreement to pay a lesser amount to settle an unliquidated debt is:
A)enforceable, as there is consideration.
B)unenforceable, as there is no consideration.
C)enforceable in only some states.
D)unenforceable as a violation of public policy.
Q5) What two exceptions did the UCC create for accord and satisfaction check cases?
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Chapter 12: Legality
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Q1) Mike overhears his class mate Billy's plans to sail across the Atlantic Ocean by himself over the summer break.Even though he does not really know Billy,Mike rushes out and buys an insurance policy for $100,000 on Billy's life.Billy never makes it to the other side of the Ocean and his boat is found upside down 2,000 miles from the coasts of Ireland.Mike can collect the $100,000.
A)True
B)False
Q2) Marcy and Elliot are both sophisticated merchants who deal in diamonds.Marcy contracted to purchase a diamond for $20,000.The day after the purchase,Marcy took the diamond to a jeweler's show but the highest offer for the diamond was only $10,000.Is Marcy's contract for purchase of the diamond for $20,000 unconscionable?
Q3) Elias sold a auto body shop to Ben for $295,000.As part of the agreement,Elias promised not to open another auto body shop for five years within a 75-mile radius of the one sold.Is this agreement enforceable against Elias?
Q4) Morality plays no part of gambling contract legality.
A)True B)False
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Chapter 13: Capacity and Consent
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Q1) Peter,a minor,purchased a car from ACME Motors.Using a fake ID,he misrepresented his age to be 18.The contract is fully executed.Which of the following is correct?
A)Peter cannot disaffirm the contract because a car is a necessary.
B)Peter cannot disaffirm the contract because of his misrepresentation.
C)Peter can disaffirm the contract, because a minor must be saved from his own poor judgment, including his lie.
D)Either b or c may be applicable depending on the law of the jurisdiction in which the contract was formed.
Q2) Brad,a minor,buys a video game system from GamePlanet,Inc.He uses the system for a few months,returns it to GamePlanet,and demands his money back.In a majority of states,Brad may return the game system but he will be liable for the use and depreciation of the product.
A)True
B)False
Q3) Discuss two types of misrepresentation and how they differ.List the three things a party must show to rescind a contract based on misrepresentation.
Q4) Discuss the concept of a "material fact" in fraud situations.
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15
Chapter 14: Written Contracts
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Q1) Which of the following types of contracts cannot be either contradicted or supplemented by evidence of prior agreements or expressions?
A)Totally integrated contracts.
B)Incomplete contracts.
C)Ambiguous contracts.
D)All of the above.
Q2) Explain the reason behind having a statute of frauds and give arguments for and against having such a statute.
Q3) Robin and Bellman,both merchants,orally agree to a contract for the sale of $5000 of accessories.Bellman,the buyer,sends to Robin,the seller,a written confirmation of the sale,which is sufficient against Bellman under the statute of frauds and which Bellman signs.Robin fails to perform the contract and does not ship out the goods.Bellman sues.This contract is:
A)unenforceable, because Robin did not sign any contract.
B)unenforceable, because Bellman did not pay for the goods.
C)enforceable, because Bellman sent the written confirmation of the sale, thereby partially performing the contract.
D)enforceable even without Robin's signature because both parties are merchants.
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Page 16
Chapter 15: Third Parties
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Q1) Generally,in comparison to a donee beneficiary,and a creditor beneficiary has:
A)about the same legal rights.
B)substantially greater rights.
C)substantially fewer legal rights.
D)virtually no legal rights.
Q2) In the case Rosenberg v.Son,Inc.,the Court held that:
A)Son, Inc., as the assignee, was liable to the Rosenbergs.
B)Despite the assignment of her rights, Pratt remained liable to the Rosenbergs.
C)The assignment became a novation because Rosenberg signed it.
D)The Rosenbergs became liable to Son, Inc.
Q3) Joan purchases a recreational vehicle on credit from RV World.RV World keeps a security interest in the vehicle.RV World then assigns the security interest to West First Bank.Explain what having a security interest means.Under the UCC,what defenses can Joan assert against West First Bank?
Q4) Generally,the assignment of the obligation to perform personal services is invalid. A)True
B)False
Q5) Briefly discuss the enforceability of contracts by third parties.
Q6) Discuss the potential liability differences between a delegation and a novation.
Page 17
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Chapter 16: Performance and Discharge
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Q1) In the case Strategic Resources Group v.Knight-Ridder,Inc.,the Florida appelate court held that Knight-Ridder,Inc.had breached the contract by reducing by 3.83% the size of the advertisements for Strategic Resources Group.Knight-Ridder had failed to substantially perform their obligation.
A)True
B)False
Q2) A court may never discharge a party who has not performed.
A)True
B)False
Q3) If a condition does not occur:
A)public policy will require only substantial performance by the party for whom the condition failed.
B)the requirement of good faith will be eliminated.
C)one party will probably be discharged without performing.
D)it is considered an anticipatory breach.
Q4) Identify four factors courts consider in deciding commercial impracticability and frustration of purpose claims.
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18
Chapter 17: Remedies
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Q1) In a construction contract,there is a $1000 per day estimate of damages for each day that the contract runs over the completion date.The contractor is 30 days late when the job is completed,resulting in a prospective damage award of $30,000.What is this type of clause,and when will it be enforced?
Q2) Which of the following is an example of incidental damages you might be awarded if you are wrongfully terminated from your job?
A)The costs of mailing resumes to prospective employers.
B)The costs of psychological counseling.
C)The cost of house payments until he finds a new job.
D)All of the above.
Q3) When a court partially "rewrites" a contract,it is:
A)mitigation.
B)rescission.
C)reformation.
D)novation.
Q4) The Milicic v.Basketball Marketing Company,Inc.illustrates when courts may order specific performance.
A)True
B)False
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Chapter 18: Introduction to Sales
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Q1) In a mixed contract involving goods and services,Article 2 of the UCC will govern if the predominant purpose is the sale of goods.
A)True
B)False
Q2) Frank buys his friend Andy's jet-ski for $2,300.There agreement is governed by the UCC as a jet-ski is within the definition of "goods."
A)True B)False
Q3) The UCC does not apply to contracts for the sale of goods if the value of the goods is less than $500.
A)True B)False
Q4) Discuss the importance of the UCC to the law of sales.Include who created the UCC,how it becomes law,and the stated purposes of the statute.
Q5) Zubair,Inc.leased the 34 floor in an office building in downtown Pittsburgh.This contract is governed by Article 2A of the UCC.
A)True B)False
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Chapter 19: Ownership and Risk
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Q1) In a shipment contract,title and risk of loss pass to the buyer when the goods are properly tendered at the destination point.
A)True
B)False
Q2) Buyer is located in Des Moines,Iowa and seller is located in Sacramento,California.The contract specifies F.O.B.Des Moines.This contract is a:
A)destination contract.
B)sale or return.
C)shipment contract.
D)sale on approval.
Q3) A purchaser can acquire better title than the seller had.
A)True
B)False
Q4) Rayco entered into a contract to buy Chia Pets from We Grow 'Em.The contract specified that the shipment would be "F.O.B.destination; title to pass on the date of shipment." The goods were destroyed in transit to Rayco.Rayco argues that the loss is We Grow 'Em's.Analyze the situation and determine who is liable for the loss.
Q5) Discuss the concept of entrustment.
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Chapter 20: Warranties and Product Liability
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Q1) A common problem in cases of express warranty is being able to separate statements that create express warranties from statements that do not.Discuss what type of statements create an express warranty and four indications that a statement is likely to create an express warranty.
Q2) A statute of repose places an absolute limit on when a lawsuit may be filed regardless of when the defect is discovered.
A)True
B)False
Q3) When Angelena was shopping for a new lawn mower,the salesman,Mark,told her the model she was interested in cuts an 18" swath and the only maintenance it needs is an oil change and a new sparkplug at the beginning of each mowing season.He hands her a warranty booklet which describes that model as a mulching mower and says it has a five-year full warranty.The booklet also disclaims "any warranties or statements made by any agent or salesperson or that appear elsewhere in this booklet." The effect of the written disclaimer is:
A)that it is valid to disclaim only the written warranties within the booklet.
B)that it is valid to disclaim both oral and written warranties.
C)it does not disclaim either the oral or written warranties.
D)that it disclaims the oral warranties, but not the written warranties.
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Page 22
Chapter 21: Performance and Remedies
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Q1) Which of the following statements about the UCC "perfect tender" rule is correct?
A)The buyer has the obligation to accept the goods if the nonconformity is not substantial but is entitled to compensation.
B)The buyer can reject the entire shipment if any portion of the goods are nonconforming.
C)The buyer must reject nonconforming goods.
D)If the buyer rejects the goods, he must reject the whole shipment, even though some of the goods are conforming.
Q2) A homeowner has a contract with a firewood supplier to bring a rick of hardwood at the beginning of each month from October through March.If,for the first three deliveries,the supplier has brought a mixture of hard and soft woods,the homeowner cannot reject a delivery in January because it includes some soft wood.
A)True
B)False
Q3) Define these terms: usage of trade; course of dealing; and course of performance.
Q4) Identify six possible remedies for a seller when the buyer breaches a contract.
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Page 23
Chapter 22: Creating a Negotiable Instrument
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Q1) The Hartford Accident & Indemnity Co.v.American Express,Co.,the New York Court of Appeals discussed:
A)the signature requirement for negotiable instruments.
B)the concept of holder in due course.
C)the bankruptcy defense.
D)the shelter rule.
Q2) Felicia,an elderly woman,does not speak or read English well.Felicia is a recent immigrant to this country.A dishonest immigration officer tells Felicia to sign several documents as being necessary to maintain her legal alien status.Unknown to Felicia,she signs a promissory note.The immigration officer thereafter sells the note to Neighborhood Bank,a holder in due course,who goes after Felicia for payment of the note.Felicia's defense to the Neighborhood Bank is:
A)fraud in the inducement; a real defense.
B)fraud in the execution; a real defense.
C)unauthorized completion; a personal defense.
D)breach of contract; a real defense.
Q3) On March 1 Donna wrote a check for $296 to Sun Services.When will the check be overdue? What is the effect of the check's being overdue? What is the effect if the check is stamped "Insufficient Funds" by Donna's bank?
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Page 24
Chapter 23: Liability for Negotiable Instruments
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Q1) Warranty liability is the liability of someone who receives payment on a negotiable instrument.
A)True
B)False
Q2) Generally,indorsers are not liable under signature liability if:
A)they write the words "without recourse" next to their signatures on the instrument.
B)they are not the drawee.
C)a check is presented for payment within 30 days after the indorsement.
D)all of the above.
Q3) Micah signed a check in the lower right-hand corner and Andrew signed on the back.The presumption is that:
A)Micah is the issuer.
B)Micah is the acceptor.
C)Andrew is the drawer.
D)Andrew is the maker and Micah is an indorser.
Q4) List the warranties a transferor of a negotiable instrument makes.
Q5) A drawee has primarily liability on a draft.
A)True
B)False
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Chapter 24: Liability for Negotiable Instruments: Banks and Their Customers
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Q1) Yvette received her bank statement on Monday.On the following Friday,she noticed an omitted transfer and called the bank informing it of the error.Which statement is correct?
A)If the bank finds the error within ten days, the bank must recredit the account, including interest, within one business day of the discovery.
B)If within 10 business days, the bank finds there was no error, the bank must give the customer a full explanation in writing within three business days of the finding.
C)If the bank cannot complete its investigation within 10 business days, it must provisionally credit the account pending the termination of the investigation, which must be completed in 45 calendar days.
D)All of the above.
Q2) A payor bank is:
A)the same bank as the presenting bank.
B)a collecting bank that acts as an agent for the depositary bank.
C)the bank that will eventually honor or dishonor the check on the drawer's account.
D)interchangeable with the term "depositary bank."
Q3) Discuss a bank's liability for both stale checks and post-dated checks.
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Page 26
Chapter 25: Secured Transactions
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Q1) Gateway sold a big-screen TV and entertainment center to Iris for $2000 on credit.Iris signed a promissory note and gave Gateway a security interest in the TV and entertainment center.Gateway filed a financing statement in the appropriate public office.When Iris defaulted on her monthly payments owing a balance of $1780,Gateway's attorney made arrangements to have the TV and entertainment center repossessed.The attorney then placed classified ads in the local newspaper to sell the goods.The attorney's fees are $300,the repo company charged $150,and the advertising costs are $50.
(A)If Iris chooses to redeem the property,how much must she pay to Gateway to recover the property?
(B)If Iris does not redeem and the TV and entertainment center are sold for $1750,how will the money be disbursed?
Q2) Vicor,Inc.holds a patent on a drug.Vicor used the patent to secure a $1 million loan from First Bank.The patent is a general intangible.
A)True
B)False
Q3) A PMSI can be created only in goods and software.
A)True
B)False
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Chapter 26: Bankruptcy
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Q1) In the In Re Stern case,the court addressed the issue of discharge what type of debts under Chapter 7?
A)Child support.
B)Income taxes.
C)Student loan.
D)Fines owed to the government.
Q2) Forever Yours,Inc.has a secured and perfected security interest in Sally's big-screen TV.On the filing date of Sally's Chapter 7 petition,the balance of the debt owed to Forever Yours is $2,000.The value of the TV is estimated at $1,500.This means that Forever Yours:
A)is secured for the entire debt, $2,000.
B)is unsecured for $500, the excess of the debt over the value of the TV.
C)has a high priority claim of $500.This means that Forever Yours, Inc.will be allowed $500 worth of other unsecured property before other unsecured creditors get anything.
D)is unsecured for the entire debt.
Q3) Chapter 7 bankruptcy petitions are always filed voluntarily.They cannot be involuntary.
A)True
B)False
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Page 28
Chapter 27: Agency
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Q1) In order to determine whether the agent is an employee or an independent contractor,a court will consider which of the following?
A)Whether the principal supplies the tools and place of work.
B)Whether the agent works full time for the principal.
C)Whether the principal controls details of the work.
D)All of the above.
Q2) Victoria is the director of marketing for B & G Corporation.Victoria needed to negotiate an out-of-town contract on behalf of B & G.B & G has a legal duty to reimburse Victoria for the hotel expenses she incurs on the trip to negotiate the contract.
A)True
B)False
Q3) Jolene hired Lacy to find a buyer for her house.Adam was interested in buying the house.If both Jolene and Adam agree,Lacy,a real estate agent,may represent both parties.
A)True
B)False
Q4) The bankruptcy of an agent automatically terminates an agency relationship.
A)True
B)False
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Chapter 28: Employment Law
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Q1) The Employee Retirement Income Security Act (ERISA)requires employers to establish pension plans for employees and allows risky investment by pension plans.
A)True B)False
Q2) Firing an employee for her refusal to violate the law would raise a claim of wrongful discharge.
A)True B)False
Q3) Sandy worked for a small printing company.She found a new job that would pay much more.In accordance with company policy,she gave her employer a two-week notice that she would be leaving.Her employer was upset she was quitting,so he terminated her employment immediately.Sandy was upset because she thought she had acted properly by giving her employer two weeks' notice.Her new employer will not be able to employ her for two weeks.Sandy believes her employer has breached the employment agreement and she should be paid for the two weeks between jobs.Is she right? Explain.
Q4) Some courts have held that employee handbooks create binding contract terms.
A)True B)False
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Chapter 29: Starting a Business: Llcs and Other Options
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Q1) Shelby wishes to buy a national franchise.What information is the seller legally required to provide before she buys the franchise?
Q2) Which of the following statements about limited partnership is correct?
A)Limited partnership is a very popular form of business organization.
B)Limited partners have the right to manage the business.
C)General partners are personally liable.
D)All of the above.
Q3) No filings are required by a limited partnership.
A)True
B)False
Q4) Generally,a joint venture is a partnership created for one limited purpose.
A)True
B)False
Q5) Compare and contrast the following forms of business organization: sole proprietorship,general partnership,limited partnership,limited liability company,and corporation as to ease of formation,liability of owners,management,and tax implications.
Q6) The most common form of business ownership is the sole proprietorship.
A)True
B)False
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Chapter 30: Corporations
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Questions
Q1) What is meant by the term "piercing the corporate veil"?
A)Corporate directors and/or officers may be held personally liable to a person damaged by an act of the corporation.
B)Corporate shareholders may be held personally liable to a person damaged by an act of the corporation.
C)Both of the above.
D)None of the above.
Q2) Shyff decided to incorporate his business under the name of "Zamm." In addition to "Zamm," the Model Act requires that Shyff include one of the following words: "corporation," "incorporated," "limited," or "company" or an abbreviation thereof.
A)True
B)False
Q3) Who establishes executive compensation?
A)The board of directors.
B)The shareholders.
C)The officers themselves.
D)An independent CPA firm.
Q4) Discuss the self dealing concept.Under what circumstances is a self-dealing transaction valid?
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Chapter 31: Securities Regulation
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Q1) Under Section 14 of the 1934 Act or SEC rules:
A)a company must solicit proxies from shareholders at least 30 days prior to any shareholder meeting.
B)a company must provide detailed information about officers and directors when soliciting proxies from shareholders.
C)the CEO of a publicly traded company must certify that the information in the annual report is accurate.
D)All of the above.
Q2) The SEC regulates the securities industry but cannot create law.
A)True
B)False
Q3) Which of the following statements is correct?
A)Investors generally do not receive a copy of the registration statement.
B)Investors generally receive the company's prospectus.
C)A prospectus provides disclosure about the offering but does not include as much information as the registration statement, such as information that would be of interest to the SEC but not the typical investor.
D)All the above.
Q4) Define a direct public offering.What are its advantages?
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Chapter 32: Property
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Q1) The bank who lends money in exchange for a mortgage on the borrower's house is considered to be the:
A)mortgagee.
B)mortgagor.
C)profitor.
D)profitee.
Q2) Identify and explain the different types of tenancy.
Q3) Sandra and Joe own a hobby farm as tenants in common.They also own a vacation home as joint tenants.What is the difference between the tenancy in common and joint tenancy?
Q4) Discuss whether or not the following common transactions are bailments and if so,who is the bailor/bailee,and what type of bailment is involved: bailor/bailee,and what type of bailment is involved:
A)Renting storage space in Farmer's Frank's huge barn to keep your classic car out of the snow and ice of winter.The rental agreement provides for $100/month rent and Farmer Frank has the only access to the barn.
B)Hiring a moving company to move your belongings to a new residence.
C)Loaning your lawn mower to your neighbor.
D)Parking your car in a "park and lock" parking lot.
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Chapter 33: Cyberlaw
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Q1) Burns Medicine Shop developed a Web site where customers could ask the pharmacists questions and could refill prescriptions online.What statute requires Burns to have and disclose a privacy policy to anyone using the Web Site?
A)The FTC Act.
B)The Electronic Communications Privacy Act.
C)The Gramm-Leach-Bliley Privacy Act.
D)No statutes presently require Web sites to have or disclose a privacy policy.
Q2) Consumers have been active in requesting government regulation of web data collection to protect their privacy.
A)True
B)False
Q3) To be in compliance with the safe harbor principles of the Department of Commerce agreement with the EU,a company must do all but which of the following?
A)Tell consumers how it intends to use their data and how they can limit its use.
B)Provide an opt-out provision for disclosure of all consumer data.
C)Provide adequate security for the data.
D)Establish a dispute-resolution procedure.
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Chapter 34: Intellectual Property
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Q1) Describe what copyright infringement means.
Q2) Unlike with patents,the ideas underlying copyrighted material need not be novel. A)True
B)False
Q3) A design patent protects the appearance of an item and is valid for 14 years.
A)True
B)False
Q4) The requirements for a patent include all EXCEPT:
A)the invention must be novel.
B)the invention must be nonobvious.
C)the invention must be commercially valuable.
D)the invention must be useful.
Q5) List the four different types of "marks" that can be protected under trademark law.Explain how each mark is used.
Q6) Which of the following is correct?
A)A copyright can be renewed once it expires.
B)A patent can be renewed once it expires.
C)A trademark can be renewed as long as the mark is still in use.
D)None of the above.
Q7) Briefly discuss a patent,copyright,and trademark.
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