Corporate Law Exam Questions
Course Introduction
Corporate Law is a foundational course that explores the legal framework governing corporations, focusing on their formation, management, and dissolution. Students examine the roles and responsibilities of directors, officers, and shareholders, as well as the regulatory standards that guide corporate behavior. The course covers key topics such as corporate governance, fiduciary duties, mergers and acquisitions, financing, and compliance with securities regulations. By analyzing landmark cases and statutory provisions, students gain a deep understanding of how law shapes business operations and protects various stakeholders in the corporate environment.
Recommended Textbook
The Legal Environment Today 7th Edition by Roger LeRoy Miller
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27 Chapters
1810 Verified Questions
1810 Flashcards
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Page 2
Chapter 1: Business and Its Legal Environment
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Sample Questions
Q1) Criminal law focuses on duties that exist between persons.
A)True
B)False
Answer: False
Q2) A federal law that conflicts with the U.S.Constitution will be deemed unconstitutional.
A)True
B)False Answer: True
Q3) Grady is a judge.In his court,Grady may bar a suit if it is not filed within a proper time according to
A)a statute of limitations.
B)the doctrine of stare decisis.
C)the chancellor's discretion.
D)the king's conscience.
Answer: A
Q4) No state has adopted the Uniform Commercial Code in its entirety.
A)True
B)False Answer: False
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Chapter 1: A: Online Developments:
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Sample Questions
Q1) According to the ruling of the United States Supreme Court in Gibbons v.Ogden,as used in the Constitution's commerce clause,commerce means
A)all business dealings.
B)all business dealings that affect more than one state.
C)most business dealings that affect more than one state.
D)only business dealings that affect all of the states.
Answer: B
Q2) Paoli asserts against River City a claim based on allegedly conflicting rights and protections stemming from the U.S.Constitution.In this case,the role of the United States Supreme Court is to
A)decline to review the claim due to the conflict.
B)defuse the conflict by eliminating rights or protections.
C)designate a lower court to make a decision.
D)determine the appropriate balance.
Answer: D
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4
Chapter 2: Ethics and Business Decision Making
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Sample Questions
Q1) Business ethics is consistent only with short-run profit maximization.
A)True
B)False
Answer: False
Q2) Bribery of foreign government officials is both an ethical and a legal issue.
A)True
B)False
Answer: True
Q3) Bilt-Well Construction Corporation makes a side payment to a government official in Nigeria to obtain a contract.In the United States,this is
A)illegal and unethical.
B)illegal but not unethical.
C)unethical but not illegal.
D)legal and ethical.
Answer: A
Q4) Simply obeying the law does not fulfill all ethical obligations.
A)True
B)False
Answer: True
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Chapter 3: Courts and Alternative Dispute Resolution
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Sample Questions
Q1) Transnational Corporation and United Shipping,Inc.,agree to a contract that includes an arbitration clause.If a dispute arises,a court having jurisdiction may
A)monitor any arbitration until it concludes.
B)order an arbitrator to rule in a particular way.
C)order a party to bring the dispute to court.
D)order a party to submit to arbitration.
Q2) Interrogatories are written questions for which written answers are prepared and signed under oath.
A)True
B)False
Q3) A justiciable controversy is a case in which the court's decision-the "justice" that will be served-will be controversial.
A)True
B)False
Q4) Mandatory arbitration clauses in employment contracts are not enforceable.
A)True
B)False
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6
Chapter 4: Constitutional Authority to Regulate Business
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Sample Questions
Q1) The Bill of Rights protects individuals against types of interference by the states.
A)True
B)False
Q2) The state legislature of Iowa enacts a transportation statute that impinges on interstate commerce.This statute will be
A)balanced in terms of Iowa's interest in regulating a certain matter against the burden placed on interstate commerce.
B)balanced in terms of the burden on Iowa against the merit and purpose of interstate commerce.
C)struck down.
D)upheld.
Q3) The Bill of Rights confers absolute rights,not subject to interpretation by the United States Supreme Court.
A)True
B)False
Q4) A state law that places a significant burden on religion is unconstitutional.
A)True
B)False
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Chapter 5: Torts,cyber Torts,and Strict Liabiity
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Sample Questions
Q1) The use by one person of another paerson's likelness without permission and for the benefit of the user constitutes the tort of appropriation.
A)True
B)False
Q2) For purposes of establishing negligence,causation in fact exists if an injury would have occurred even without the defendant's act.
A)True
B)False
Q3) Publishing false information about another's product is conversion.
A)True
B)False
Q4) Precise Engineering Corporation has a contract with Quik Mart Stores to provide customized software for Quik's inventory control system.Retail Outlets,Inc,Quik's competitor,induces Sam,a Precise subcontractor who is writing code for the Quik software,to delay delivery of the code for one week.As a result,Precise's delivery of the software is delayed,and Quik sustains $500,000 in lost profits.On what ground could Quik recover damages from Retail Outlets
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Chapter 6: Criminal Law and Cyber Crime
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Sample Questions
Q1) A suspect cannot be tried twice in the same court for the same crime.
A)True
B)False
Q2) The intent to return the embezzled property is a defense to the crime of embezzlement.
A)True
B)False
Q3) Refer to Fact Pattern 6-1.Minka's secretly installed software allows her to forward transmissions from her unauthorized network to even more systems.This network is
A)a hacker.
B)a bot.
C)a botnet.
D)a worm.
Q4) A criminal case must be proved beyond a reasonable doubt.
A)True
B)False
Q5) A federal judge must adhere strictly to federal sentencing guidelines.
A)True
B)False
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Chapter 7: International Law in a Global Economy
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Sample Questions
Q1) A foreign state is immune from the jurisdiction of U.S.courts as long as the state is involved in commercial activity in the United States.
A)True
B)False
Q2) A forum-selection clause indicates the place for the resolution of a dispute arising under a contract.
A)True
B)False
Q3) The management of Sport Shoes Corporation,a U.S.firm,wants to expand into foreign investment and employment markets.They are considering either opening their own production facility in a foreign country or entering into a licensing agreement with a foreign firm.What are the advantages and disadvantages of each of these courses of action
Q4) Secure Investments,Inc.,a U.S.firm,expands into international markets through a joint venture.In this situation,Secure owns
A)all of the operation,and its profits and liabilities.
B)all of the operation,and none of its profits and liabilities.
C)none of the operation,and none of its profits and liabilities.
D)part of the operation,and shares its profits and liabilities.
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Chapter 8: Intellectual Property and Internet Law
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Sample Questions
Q1) Diamond Financial Planners employs Ella,who is the firm's most productive performer.Ella,dissatisfied with the commission structure,quits to work for Feldstar Investments,Inc.She takes her list of Diamond clients to induce them to switch to Feldstar.Trade secrets law covers
A)Diamond's list of clients.
B)Ella's performance.
C)Feldstar's commission structure.
D)none of the choices.
Q2) Paula develops a new espresso machine,which she names "Quik Shot." She also writes the operating manual.Paula can obtain trademark protection for A)the espresso machine.
B)the "newness" of the espresso machine.
C)the name.
D)the operating manual.
Q3) The Madrid Protocol concerns trademarks.
A)True
B)False
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Chapter 8: A: Online Developments:
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Sample Questions
Q1) Orly's debts are discharged in a liquidation bankruptcy.Pester & Recover,Inc.,buys the discharged debt obligations.With respect to these debts,Pester
A)can do nothing.
B)can pressure Orly into paying them.
C)must give Orly additional help to rebuild her life after the discharge.
D)must report the debts to credit reporting agencies as "discharged."
Q2) New York enacts a statute that requires a label on a video game to warn parents when "the range of options available to a player include dismembering or sexually assaulting the image of a human being." On appeal from a challenge by gamemakers,the state asks a federal court to enforce the statute.Based on the decisions of other federal courts in cases involving similar statutes,the court in this case is most likely to
A)refuse to extend restrictions on sex-based content to violence in video games.
B)expand the label's warning to include other forms of violence.
C)impose market-share liability on makers of violent video games.
D)replace the voluntary rating system currently in use.
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Chapter 9: Formation in Traditional and E-Contracts
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Sample Questions
Q1) Myra owns a house,which she advertises for sale for $200,000.On May 1,Nicole offers Myra $180,000 for the house.On May 5,Myra delivers to Nicole a form that includes additional terms but does not state a price.At 9 a.m.on May 6,Nicole signs the form and gives it to Odell,her administrative assistant,with instructions to mail it.At 10 a.m.,Myra calls to tell Nicole that the deal is off.The next day,Odell mails the signed form to Myra.When Myra refuses to sell the house,Nicole files a suit against her,alleging breach of contract.Myra claims that there was no contract.What are arguments supporting each party's position? What is the court likely to rule? Explain.
Q2) A partnering agreement reduces the likelihood that a dispute will arise under a contract.
A)True
B)False
Q3) An implied contract is implied from the conduct of the parties.
A)True
B)False
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Page 13
Chapter 10: Contract Performance,breach,and Remedies
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Sample Questions
Q1) Rig Heli-Pads,Inc.,enters into a contract to employ Scott as an on-site project manager for two years.If Rig breaches the contract,Scott has a duty to
A)do nothing.
B)reduce the damages that Scott might otherwise suffer.
C)rescind the contract with Rig.
D)sue Rig to deter others from similar acts.
Q2) Refer to Fact Pattern 10-1.With respect to Mutual's duties,Neil's performance most likely
A)discharges Mutual from the contract.
B)has no effect on Mutual's performance.
C)increases Mutual's duties under the contract.
D)suspends Mutual's duty to perform.
Q3) Under the Statute of Frauds,all contracts must be in writing to be enforceable.
A)True
B)False
Q4) Reformation enables a court to rewrite a contract to reflect the parties' true intentions.
A)True
B)False
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Chapter 11: Sales,leases,and Product Liability
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Sample Questions
Q1) To constitute an express warranty,a representation must be in writing.
A)True
B)False
Q2) Toyoda Company buys gas pedals and other parts from subcontractors and puts them in its vehicles without changing their composition.If the pedals or other parts are defective,strictly liable for any damage caused by the defects are
A)neither Toyoda nor the subcontractors.
B)Toyoda and the subcontractors.
C)the subcontractors only.
D)Toyoda only.
Q3) The brakes on a Central & Coastal Railroad train malfunction and it rolls towards maintenance workers on the tracks.Everyone gets out of the way except Dick,who wants to show off.The train hits Dick,who sues EZ Hydraulics,Inc.,the brakes' manufacturer.EZ can raise the defense of
A)a component-part manufacturer.
B)assumption of risk.
C)consumer expectations.
D)product misuse.
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Chapter 12: Creditor-Debtor Relations and Bankruptcy
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Sample Questions
Q1) Seth files a petition for bankruptcy.Seth must include with the petition
A)proof of each creditor's claim.
B)a list of creditors and the amount of the debt owed to each.
C)all of his debit and credit cards to be disposed of by the court. d an affidavit testifying to his having read the Bankruptcy Code.
Q2) A debtor does not need to be insolvent to file for bankruptcy relief.
A)True
B)False
Q3) A reorganization plan is a plan to conserve and administer the debtor's assets in the hope that all of the creditors will eventually be paid in full.
A)True
B)False
Q4) Certain debts are not dischargeable in bankruptcy.
A)True
B)False
Q5) Certain reorganization cases may be converted to repayment plan cases with the consent of the debtor.
A)True
B)False
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Chapter 13: Mortgages Foreclosures After the Recession
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Sample Questions
Q1) If a lender fails to provide certain material disclosures,a borrower has up to seven years to rescind the mortgage.
A)True
B)False
Q2) Main Street Lenders,Inc.,attempts to coerce Nolan-who specializes in determining the value of real and personal property-into misstating the value of a property on which a loan is to be issued.This is
A)a legal and ethical-but morally arguable-financial ploy.
B)a legal-but unethical-business practice.
C)a necessary tactic to generate a profitable loan in today's market.
D)a violation of the law.
Q3) Consumer Mortgage Loans provides Demi with a mortgage to buy a home.Under the terms,Demi can choose to pay only the interest portion of the monthly payments and forgo paying of the principal for five years.This is
A)a fixed-rate mortgage.
B)an adjustable-rate mortgage.
C)an interest-only mortgage.
D)a violation of the law.
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Chapter 14: Small Business Organizations
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Sample Questions
Q1) Jim organized,and owns and operates,Jim's Landscaping Service in the simplest form of business organization.This is
A)none of the choices.
B)a limited liability company.
C)a partnership.
D)a sole proprietorship.
Q2) Greta is a member of Hovercraft LLC.As a member,Greta is
A)a manager or officer,but not an owner.
B)an investor,but not a manager,officer,or owner.
C)an owner.
D)a participant,but not an investor,manager,officer,or owner.
Q3) A sole proprietor owns the entire business but does not receive all of the profit.
A)True
B)False
Q4) Laws governing franchising are designed in part to prevent franchisors from terminating franchises without good cause.
A)True
B)False
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Chapter 14: A: Landmark in the Legal Environment:
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Sample Questions
Q1) Riverside Development Inc.is a U.S.corporation.Riverside and other U.S.corporations have a right under the First Amendment
A)to fund political broadcasts.
B)of access to the courts and can sue and be sued.
C)to due process.
D)of freedom from unreasonable searches and seizures.
Q2) Kirby is a manager of Jumpstart Fitness LLC,a limited liability company.Jumpstart is formed in a state that imposes fiduciary duties on LLC managers.Kirby owes these duties to
A)Jumpstart's members.
B)Jumpstart's suppliers.
C)Jumpstart's customers.
D)none of the choices.
Q3) Eduard is a shareholder of Deutsche Internationale,a German firm.In Germany
A)most claims against firms are alleged in shareholders' derivative suits.
B)the law does not provide for derivative litigation.
C)derivative actions can only challenge directors' actions that shareholders could not legally ratify.
D)if a derivative action is unsuccessful,a firm can sue the plaintiff.
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Page 19
Chapter 15: Corporations
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Sample Questions
Q1) Corporate profits can be subject to double taxation.
A)True
B)False
Q2) Gladys is a shareholder of Frozen Yogurt,Inc.As a shareholder,Gladys must approve
A)amending the bylaws.
B)declaring a corporate dividend.
C)hiring a chief executive officer.
D)issuing additional shares.
Q3) Heidi and Ian are directors and shareholders of Globe Software,Inc.Heidi's written authorization to Ian to vote Heidi's shares at a Globe shareholders' meeting is
A)a violation of the duty of loyalty.
B)a preemptive right.
C)a proxy.
D)a quorum.
Q4) Shareholders are personally liable for the debts of a corporation.
A)True
B)False
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Chapter 16: Agency
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Sample Questions
Q1) An agency relationship may be created for any legal purpose.
A)True
B)False
Q2) Brenda is a purchasing agent for Commodities Exchange Corporation.Dennis,a Commodities corporate officer,gives Brenda written authority to buy for the firm as many computers and peripheral devices as necessary.The next day,Dennis calls Brenda and tells her to buy only fifty notebook computers and nothing else.Brenda shows the written authority to E-Products,Inc.,and enters into a contract with E-Products to buy sixty notebook computers and a selection of printers,scanners,and extra storage media.E-Products ships the order to Commodities.Is Commodities liable to E-Products under the contract Is Brenda liable In each case,if so,why If not,why not
Q3) A fiduciary relationship involves trust and confidence.
A)True
B)False
Q4) Building subcontractors are not independent contractors.
A)True
B)False
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Chapter 17: Employment,immigration,and Labor Law
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Sample Questions
Q1) Only state law governs drug tests of private-sector employees.
A)True
B)False
Q2) Link and Meryl are employees of Natural Resources,Inc.(NRI).When Odel,the president of NRI,learns that Link and Meryl are active in union activities,he discharges them.Link and Meryl may bring an action against NRI under
A)federal labor law.
B)federal or state unemployment law.
C)state workers' compensation law.
D)the employment at-will doctrine.
Q3) Employers who provide pension plans for retired workers must comply with certain standards in managing the plans.
A)True
B)False
Q4) Unions must allow their members to participate in union meetings.
A)True
B)False
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Chapter 18: Employment Discrimination
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Sample Questions
Q1) Lee is seventy years old and Mira is gay.Based on this information,members of protected classes include
A)Lee and Mira.
B)Lee only.
C)Mira only.
D)neither Lee nor Mira.
Q2) Riki files an employment,gender-based discrimination suit against Superior Corporation under Title VII,on a disparate-impact theory.To succeed,Riki must show that Superior hires fewer women than the percentage of
A)qualified women in the local labor market.
B)qualified women in the United States.
C)women in Superior's state.
D)women who apply to Imperial for work.
Q3) Job requirements that relate to job performance cannot violate employment discrimination laws.
A)True
B)False
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Chapter 19: Powers and Functions of Administrative Agencies
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Sample Questions
Q1) The U.S.Social Security Administration is a federal agency.The Iowa Department of Social Services is a parallel state agency.If these agencies' actions conflict
A)the federal agency's actions will prevail.
B)the state agency's actions will prevail.
C)the two agencies' actions will be given equal weight.
D)the two agencies' actions will cancel each other.
Q2) Labor Recruiters,Inc.,has been ordered to appear at a hearing before an administrative law judge of the National Labor Relations Board.A significant difference between a trial and an administrative hearing is that
A)attorneys are not allowed to attend administrative hearings.
B)clients are not allowed to communicate with their attorneys dur?ing adminis?trative hearings.
C)hearsay can be introduced as evidence in an administrative hearing.
D)the burden of proof is on the charged party to prove innocence.
Q3) Federal agencies must consider ways to reduce the economic impact of new regulations on small businesses.
A)True
B)False
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Chapter 20: Consumer Protection
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Sample Questions
Q1) Cleaners & Solvents,Inc.(CSI),engages in deceptive advertising when it markets its product Dirt Remover as able to kill germs over long periods of time.In an action against CSI regarding Dirt Remover,the firm is ordered to stop its false advertising of Dirt Remover and other products.This is
A)a counteradvertising order.
B)a multiple product order.
C)a "cooling-off" law.
D)a validation notice.
Q2) Under federal law,the calorie content of the food on a menu must be posted by Organic Mix,LLC,if Organic Mix is
A)a restaurant chain with twenty or more locations.
B)a food distributor with twenty or more customers.
C)a food processor with twenty or more products.
D)a food producer with twenty or more acres.
Q3) Labels on fresh meat must indicate where the food originated.
A)True
B)False
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Chapter 21: Protecting the Environment
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Sample Questions
Q1) Different standards for air quality apply to existing sources of pollution and major new sources.
A)True
B)False
Q2) Water-quality standards are set by the states under Environmental Protection Agency supervision.
A)True
B)False
Q3) Industrial Solvents,Inc.,averages $15,000 profit per day before deciding to ignore air pollution standards,after which the average is $30,000.Industrial Solvents is subject to a fine of
A)$0.
B)$15,000 per day.
C)$30,000 per day.
D)$30,000 total.
Q4) Environmental clean-up efforts include control of toxic chemicals used in agriculture and in industry.
A)True B)False
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Chapter 22: Real Property and Land-Use Control
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Sample Questions
Q1) Generally,contract doctrines apply to a landlord-tenant relationship.
A)True
B)False
Q2) Rita believes that Shady Grove Apartments,Inc.,her landlord,has violated the law in a way that entitles her to withhold the rent.This remedy is generally associated with A)breach of the covenant of quiet enjoyment.
B)breach of the implied warranty of habitability.
C)discrimination.
D)failure to provide security against crimes in com?mon areas.
Q3) Utility Power Company has the right to run its power lines across Velma's land.This is A)a license.
B)an easement.
C)a profit.
D)a tenancy at sufferance.
Q4) Personal property may become real property by attaching it to real property.
A)True
B)False
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Chapter 23: Antitrust Law and Promoting Competition
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Sample Questions
Q1) Gourmet Foods,Inc.,requires all distributors of its products to sell them at a specified minimum price.Under the Sherman Act,this is a violation
A)if the anticompetitive effects outweigh the competitive benefits.
B)if the competitive benefits outweigh the anticompetitive effects.
C)under any circumstances.
D)under no circumstances.
Q2) A trade association practice or agreement that restrains trade is analyzed under the rule of reasons.
A)True
B)False
Q3) Listen Up! Corporation books and promotes concerts and other entertainment events,for which Listen Up! also sells tickets.In weighing a challenge to Listen Up!'s "monopolistic" ticket prices,a court looks at the relevant geographic market.This encompasses
A)only areas in which Listen Up! does not have monopoly power.
B)only areas in which Listen Up! has monopoly power.
C)the area in which Listen Up! and its competitors sell,and their customers buy,the tickets.
D)the entire United States in all cases.
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Page 28
Chapter 24: Investor Protection and Corporate Governance
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Sample Questions
Q1) In May 2009,National Biotech Corporation generally advertises that it will make a $4 million offering of stock in June.National makes the offering as advertised and,ten days after the first sale,notifies the Securities and Exchange Commission (SEC).All buyers of the stock are given material information about the company,its business,and the stock.Before the end of the year,the offering is completely sold out.The buyers include forty unaccredited investors and fifty accredited investors.National does not register the offering.The SEC files a suit against National,seeking civil sanctions on the ground that this offering was not exempt from registration.National argues that the applicable exemption is Rule 505 of Regulation D of the Securities Act of 1933 and that because of this exemption,any resale of the stock is also exempt.Who is correct
Q2) A corporation whose security does not qualify for an exemption can avoid the cost and complexity associated with registration.
A)True
B)False
Q3) Willful violations of the Sarbanes-Oxley Act of 2002 may be subject to criminal prosecution.
A)True
B)False
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Page 29