Corporate Law Exam Review
Course Introduction
Corporate Law explores the legal framework governing the creation, operation, and dissolution of corporations. The course examines key principles such as corporate personality, limited liability, corporate governance, directors' duties and responsibilities, shareholder rights, and the regulation of mergers and acquisitions. Students analyze statutory provisions and case law addressing issues like fiduciary duties, securities regulation, and corporate finance, and discuss contemporary challenges in corporate practice both domestically and globally. The course equips students with a solid foundation in understanding the roles, risks, and regulatory environment that shape corporate decision-making and accountability.
Recommended Textbook
Canadian Business and the Law 4th Edition by Dorothy Duplessis
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28 Chapters
1994 Verified Questions
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Page 2
Chapter 1: Knowledge of Law as a Business Asset
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57 Verified Questions
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Sample Questions
Q1) Identify two basic values of the Canadian legal system? Discuss your own view of how successful the Canadian legal system is in its pursuit of achieving justice,citing examples.
Answer: Examples of the basic values of the Canadian system are broad application,accessibility,definition of rights and obligations,striving for just outcomes,fair and reasonable laws applied in a fair process free of bias,judges' application of law with objective impartially to determine liability according to certain principles and procedures regarded as just,creation of certainty in relationships,protection.
Q2) Organic Veggies'4'U Inc.has entered into a one-year extendable supplier contract with EcoWise Fertilizers Ltd.for the delivery of 1.5-ton pallets of worm castings fertilizer at a price of $2,000 per ton in March and June.Which of the following would a lawyer most likely identify as the role played by contract law and its contributions to the establishment of this business relationship?
A) gacilitating role, providing definition, context, and certainty.
B) ethical role, facilitating better environmental practices
C) litigation role, defining clear areas of liability for breach
D) governing role, providing a comprehensive action plan
Answer: A
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Page 3
Chapter 2: The Canadian Legal System
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Q1) Which of the following is the name given to the document used in Canada's common law court system to set out the basis of a legal dispute?
A) statement of code infraction
B) statement of complaint
C) statement of claim
D) statement of dispute
Answer: C
Q2) The Senate of one of Canada's legislatures has traditionally become known as the chamber of sober second thought.Which of the following legislatures is distinguished by being the lower chamber to this Senate?
A) the Legislative Assembly of British Columbia
B) the Parliament of Canada
C) the House of Assembly of Nova Scotia
D) the House of Commons
Answer: D
Q3) The judicial branch of government includes the courts and the legislatures.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Managing Legal Risks
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Sample Questions
Q1) Law firms typically comprise a group of lawyers practising as sole practitioners.
A)True
B)False
Answer: False
Q2) Insurance policies covering business risks will provide coverage for all losses as part of their standard terms,so there is no need for the legal risk management team to review the policies.
A)True
B)False
Answer: False
Q3) Compliance with legal requirements and anticipation of changes in the legal environment are distinguishing characteristics of which one of the following approaches to managing interaction with the law and legal issues?
A) preventative
B) anticipatory
C) precautionary
D) reactionary
Answer: A
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Chapter 4: Dispute Resolution
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Q1) In addition to an employee's contract,a company's policy manuals,established company rules,and the relevant job description should specify an employee's authority and the consequences of exceeding that authority.
A)True
B)False
Q2) Which of the following correctly describes the meaning of "evidence" in the legal environment?
A) the proof presented in court to support a claim
B) facts that are strictly documentary in nature
C) facts that are strictly verbal in nature
D) the oral details of the defence to the claim
Q3) Which of the following correctly identifies the goal of negotiation?
A) to set priorities for dispute resolution
B) to prolong the negotiation process
C) to reach a fair and acceptable outcome
D) to assess resolutions to legal disputes
Q4) Procedural rules dictate how a claim is carried through the civil justice system.
A)True
B)False
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Chapter 5: An Introduction to Contracts
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Q1) Identify the role that a contract plays in any commercial operation.Provide several examples of what activities a business is able to do through a contract.Identify and briefly explain the role contract law plays with respect to contractual participants and their commercial operations.
Q2) In order for a court to be convinced that both parties deliberately entered into a contractual relationship there must be evidence of their intention to create legal relations.
A)True
B)False
Q3) When asked to determine a matter involving a dispute between parties regarding the formation of a contract,a court will apply a specific test.Which of the following is the defining characteristic of that test?
A) whether the contract is sufficiently complete to provide certainty to all parties
B) whether the terms of the contract provide sufficient mutual consideration
C) whether a reasonable person could conclude that an offer and acceptance occurred
D) whether the parties to the agreement have legal capacity to enter into contracts
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Chapter 6: Forming Contractual Relationships
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Q1) Identify and briefly describe the provisions of the Uniform Electronic Commerce Act that deal with communication of acceptance messages.Identify and briefly explain what step an electronic trader must take to avoid disputes involving where acceptance becomes effective.
Q2) An advertisement in a newspaper will never be considered to constitute an offer.
A)True
B)False
Q3) On Tuesday,Jatelle offered to sell one of her racing motorcycles to Rofan for $8,000.Rofan said he needed time to consider her offer.On Friday morning,Jatelle sent Rofan an e-mail message advising the offer was no longer open.After reviewing the e-mail from Jatelle,which of the following actions would allow Rofan to try to complete the purchase of her motorcycle?
A) present Jatell with an offer to buy the motorcycle
B) revitalize the offer by communicating a counteroffer
C) immediately communicate a need for further time to Jatelle
D) immediately communicate acceptance of Jatelle's offer to her
Q4) An invitation to treat is one of the basic components of a contract.
A)True
B)False
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Chapter 7: The Terms of a Contract
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Q1) A product that contains a shrink-wrap licence typically bears a notice stating that opening the package constitutes agreement to the licence terms.
A)True
B)False
Q2) When the parties fail to address an important aspect of their contractual relationship,the law may help to "fill in the blanks" through implied terms.
A)True
B)False
Q3) What is meant by the term "contractual quantum meruit"?
A) as much as merited or deserved
B) a term required to imply payment
C) as much as someone will pay
D) a promise to pay a fair price
Q4) The principle of business efficacy makes an obligation explicit.
A)True
B)False
Q5) The courts will not imply a duty to act in good faith in commercial contracts.
A)True
B)False
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Chapter 8: Non-enforcement of Contracts
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Sample Questions
Q1) If a contract is one that the Statute of Frauds requires must be written in order to be enforceable,what must appear in writing?
Q2) What was the intended purpose of the creation and enactment of the Statute of Frauds?
A) to require that commercial contractual relationships be stated in one document
B) to avoid the difficulty in proving the value of the goods or services exchanged
C) to allow performance to take the place of a written duly executed agreement
D) to impede perjury and fraud by documented evidence of specified types of contracts
Q3) Cory,aged 17,plays hockey under contract with the Northern Manitoba Huskies junior hockey team.What is the legal term given to this particular type of contractual arrangement?
A) beneficial contract of training
B) beneficial development contract
C) beneficial contract of service
D) beneficial minor training contract
Q4) What is an "electronic signature," and is it legally valid?
Q5) What must be proven in order to have a contract set aside for misrepresentation?
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Page 10
Chapter 9: Termination and Enforcement of Contracts
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Q1) A court has refused to order specific performance owing to the effects it would have on a third party.Which of the following would the defendant's lawyer most likely identify as the circumstances that gave rise to the court's refusal?
A) impossibility to enforce an employment contract
B) improper behaviour on the part of the defendant
C) improper imposition of severe hardship
D) improper delay on the part of the defendant
Q2) What is synonymous with the phrases "better than 50 percent" and "to the court's satisfaction"?
A) burden of certainty
B) burden of proof
C) beyond reasonable doubt
D) balance of probabilities
Q3) What four things must generally be shown on the balance of probabilities in order for a party to succeed in an action for breach of contract?
Q4) Both contractual rights and contractual obligations can be assigned.
A)True
B)False
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11
Chapter 10: Introduction to Tort Law
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Sample Questions
Q1) Which of the following circumstances is synonymous with the legal term "joint tort-feasor"?
A) A culpable party has committed more than one tort.
B) It is a form of court order prohibiting certain conduct.
C) All blameworthy parties to the tort share joint liability.
D) A victim is found responsible for a portion of the loss.
Q2) Which of the following is considered to be the critical intent behind prosecution of criminal acts that contravene the laws prescribed in the Criminal Code of Canada?
A) to facilitate the rehabilitation of society's less than fortunate citizens
B) to determine awards of compensation for the victims of crimes
C) to determine and enforce adequate punishment of wrongdoers
D) to maintain respect for established societal rights of the Canadian people
Q3) Which of the following would immediately justify a court finding an employer vicariously liable?
A) authorized actions within the ordinary course of employment
B) evidence of unauthorized mode of performance
C) evidence establishing a significant connection
D) authorized actions outside the ordinary scope of employment
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Chapter 11: The Tort of Negligence
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Sample Questions
Q1) Which of the following would immediately allow a court to justify enforcing tort law's general regard for Lypam's pure economic loss as unrecoverable?
A) the reasonable person test
B) an absence of contractual relationship
C) the foreseeability test
D) a breach in a contractual relationship
Q2) Sheps & Shaps LLP is thinking about having its employees sign a waiver for alcohol-related lawsuits.If Soma Ray were consulted about this,what might you reasonably expect him to say?
A) It's a good idea for company parties.
B) It's unlikely to reduce liability.
C) It's an actual way to reduce liability.
D) It's effective if it's clearly drafted.
Q3) What is the question posed in step 3 of the negligent action process? Identify and briefly describe how that question is sometimes dealt with by the legal community.Include a brief indication of how and what the courts have adapted to more easily discern the needed information at this stage of the process.
Q4) Briefly describe how a prima facie duty of care is established.
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Page 13
Chapter 12: Other Torts
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Q1) Which of the following would the authors of your text suggest is the most common occurrence that gives rise to a tort action in relation to commercial use of property?
A) an occupier of a property harms others
B) customer's injuries sustained by a slip and fall
C) occupier detaining suspected shoplifters
D) occupier adversely affecting adjacent landowners
Q2) Which of the following is the most likely outcome of a court's finding of a defendant's libellous conduct as particularly reprehensible and oppressive?
A) punitive damages
B) special damages
C) general damages
D) exemplary damages
Q3) In law,which of the following most strongly supports a complete remedy for a businesses experiencing harm arising from another's deceptive copying?
A) an award of damages for a passing-off action
B) an injunction restraining interference with contractual relations
C) a statutory law remedy for passing off
D) an injunction restraining the offending activity and damages
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Chapter 13: The Agency Relationship
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Sample Questions
Q1) With respect to the determination of the nature and extent of an agent's authority,how would an agency contract be similar to other contracts?
A) formal terms
B) express terms
C) inherent terms
D) implied terms
Q2) An agency relationship created when the principal acts such that third parties reasonably conclude that an agency relationship exists is legally described as an agency by ratification.
A)True
B)False
Q3) An agency relationship created when one party adopts a contract entered into on his behalf by another who acted without authority at the time is legally known as an agency by estoppel.
A)True
B)False
Q4) Identify and briefly describe the ways in which the nature of the authority given to an agent is inherently flexible and easily customized.
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Chapter 14: Business Forms and Arrangements
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Q1) Under which circumstances will a court hold the shareholders personally responsible for the corporation's actions?
A) employee misrepresentation of a product
B) fraud on customers
C) employee negligence
D) fraud on creditors
Q2) Identify the situations in which a court applying the Partnership Act would find a relationship to be something other than a partnership.
Q3) With respect to agency relationship and the Partnership Act,the term "partners" is synonymous with which of the following?
A) profits
B) principals
C) limits on authority
D) capital contributions
Q4) Sole proprietorships are limited to having to comply with provincial regulations with respect to registration or licensing requirements.
A)True
B)False
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Page 16
Chapter 15: The Corporate Form: Organizational Matters
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Sample Questions
Q1) Amy's corporation will have a broad distribution base.She is currently working on a statement pertaining to matters that are likely to affect the value of securities.Which of the following matters must be disclosed,in accordance with securities legislation,in the document Amy is preparing?
A) registration, disclosure, and insider-trading restrictions set out in a prospectus
B) registration and continuous disclosure obligations set out in an offering memorandum
C) full, true, and plain disclosure of material facts set out in an equity option memorandum
D) complete, accurate, and undisguised disclosure of material facts set out in a prospectus
Q2) Explain how a corporation is formed and identify all of the issues that must be considered when contemplating this choice of business vehicle.
Q3) Which of the following is synonymous with the term "widely held"?
A) restrictions on classes of shares
B) private corporations
C) rights attaching to a share class
D) public corporations
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17
Chapter 16: The Corporate Form: Operational Matters
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Q1) Identify the elements that the court has recommended be examined in order to determine whether the appropriation of a corporate opportunity by a director or officer is a breach of fiduciary duty.
Q2) A corporation's preferred shares generally carry the right to share in dividends,the right to vote,and a right to share in the proceeds on dissolution.
A)True
B)False
Q3) Briefly discuss statutory derivative actions,including what they permit and what is required for their commencement.
Q4) Why is knowing whether directors have been purchasing shares of a corporation a fundamental right belonging to the shareholders of a corporation?
A) Permits shareholders to maintain the optimum proportionate share of ownership.
B) It is the simplest and least costly method of earning capital gains.
C) It is the simplest and least costly method of soliciting proxies.
D) Permits shareholders to determine use of confidential information for personal profit.
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Chapter 17: Personal Property
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Q1) WeMove4U Inc.is a transport company that operates in Alberta and Saskatchewan.The company has recently adopted a new standard charge agreement that severely limits its liability in the event of mishap with bailed property.By pointing out this clause to its customers,WeMove4U is shifting the burden for damage or loss to the bailor,who should purchase adequate insurance coverage.
A)True
B)False
Q2) The risks relating to personal property concern proof and protection of ownership,rights to possession,and the preservation of economic value.
A)True
B)False
Q3) Identify the elements that are applied to determine the liability of bailees.
Q4) Which of the following is a distinguishing characteristic of a commercial chattel lease?
A) It is regulated by consumer protection legislation.
B) It is regulated by general law of contract.
C) Rules are implied through legislation.
D) Rules come mainly from statute law.
Q5) Identify the risks relating to personal property.
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Chapter 18: Intellectual Property
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Sample Questions
Q1) Rhafayl Furniture by Design Inc.owns several industrial design patents.Larroyce,Rhafayl's patent lawyer,confirmed apparent infringement of a number of their patents by a national competitor.Larroyce assured Rhafayl's executive the company will be entitled to claim monetary damages for infringement.Which of the following would most strongly support Larroyce's opinion in this regard?
A) Proper marking by capitalized "R" inside a small circle is on all products.
B) Rhafayl's products all bear the registration mark "TM" inside a small circle.
C) Rhafayl's patents are in good standing re: annual maintenance fees.
D) Proper marking denoting the registration is on all Rhafayl's patented products.
Q2) What role does an ISP's conduit function have to hold in order to receive protection from liability by the communication exemption?
A) intermedial
B) primary
C) private use
D) non-disturbing
Q3) Identify the general categories of information commonly used in a business or commercial context that would be considered confidential.
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Page 20
Available
Study
Chapter 19: Real Property
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Q1) Juha and Tesalle presented an offer to purchase at $15 000 below Rickie's asking price for her home.Rickie did not accept the offer,stating that she would accept $2000 less than asking price.The couple countered,offering $5000 below asking price,with the appliances included,and Rickie accepted.How many types of offers did this transaction require before a contract of purchase and sale existed?
A) three
B) two
C) one
D) one plus acceptance
Q2) Briefly discuss the relevance of the sequence of registration in a land registry system and a land titles system.Also identify how the sequence of registration has recently become particularly problematic and the parties affected by those problems.
Q3) Which of the following would a commercial lender indicate as being central to a mortgage on commercial property being taken out by a commercial borrower?
A) that the bank has a first claim against the land
B) morality of the banking institutions lending practices
C) agreement on rate of interest and repayment schedule
D) notice to all other creditors of the existence of the new debt
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Chapter 20: The Employment Relationship
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Q1) Which of the following denotes a unique feature of an employment contract involving inclusion of benefit packages,job descriptions,and company rules and policies?
A) inclusion by implied terms
B) inclusion by express terms
C) inclusion by actual agreement
D) inclusion by reference
Q2) A defence that excuses discrimination on a prohibited ground when it is done in good faith and for a legitimate business reason is legally known as a bona fide occupational requirement.
A)True
B)False
Q3) Explain why the distinction between an employee and an independent contractor is important.
Q4) Which of the following workplaces would most likely be affected by the Employment Equity Act?
A) medical laboratory
B) credit union
C) police department
D) passenger train
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Chapter 21: Terminating the Employment Relationship
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Q1) Bad faith on the part of an employer is often the result of its claiming unfounded allegations of cause for terminating an employment relationship with an employee.
A)True
B)False
Q2) What does the duty to mitigate require of an employee whose position has been constructively terminated?
A) An employee could be required to accept a lower position in the company.
B) It requires the former employee to take reasonable steps to find comparable employment.
C) The individual is expected to accept a lower-level job to reduce loss.
D) It requires the former employee to take the first job available.
Q3) What is the name given to an employee's deliberate failure to carry out lawful and reasonable orders?
A) willful insolence
B) insubordinate conduct
C) willful disobedience
D) incompatible conduct
Q4) Discuss the benefits that may be derived by both parties from a termination settlement.
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Chapter 22: Professional Relationships
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Q1) In which of the following circumstances will the lawyer's indemnification fund compensate the victims of one of its practising members?
A) breach of contract
B) theft of client money from trust
C) breach of confidentiality
D) professional conflict of interest
Q2) A fiduciary is required to act primarily in the interests of the person to whom a responsibility is owed.Which of the following notions would a business law professor most likely identify as capturing the concept of that requirement?
A) good faith and due care
B) loyalty and trust
C) honour of profession
D) due diligence and honesty
Q3) If a contract price is not stated in a professional services contract,the principle of quantum meruit will be deemed to be inapplicable.
A)True
B)False
Q4) Briefly discuss the concept of professional-client privilege.
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Chapter 23: Sales and Marketing: The Contract, Product, and Promotion
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Q1) A specific provision of the Competition Act directed to performance claims considers a representation about the quality of a product that fails to be based on an adequate and proper test to be reviewable conduct.
A)True
B)False
Q2) What is the name given to goods that are identified and agreed on at the time a contract of sale is made?
A) specific goods
B) appropriated goods
C) ascertained goods
D) specified goods
Q3) Unascertained goods must be identified and agreed on at the time a contract is made.
A)True
B)False
Q4) Identify the warranties that are implied in sales transactions by the Sale of Goods Act.
Q5) Briefly discuss the right of repudiation with respect to the sale of goods.
Q6) Discuss regulation relating to the product component of the marketing mix.
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Chapter 24: Sales and Marketing: Price, Distribution, and Risk Management
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Q1) Which of the following is a distinguishing feature of the offence of price discrimination in the market?
A) the criminal burden of proof
B) an upward drive of final retail price
C) the culpability of both parties
D) a unilateral ability to affect pricing
Q2) Briefly discuss abuse of dominant position and describe the anticompetitive acts involved in this offence.
Q3) While a business may strive for market dominance as a means of achieving economies of scale,such market dominance is typically intolerable to Canadians based on which of the following known results?
A) distribution practices that discriminate against customers
B) marketing plans to identify risks involving a business and its customers
C) corporate compliance programs that ensure consumers pay the lowest price
D) unfair and discriminatory higher consumer pricing practices
Q4) The regulations affecting telemarketing do not extend to fax,Internet communications,or automated,prerecorded messages.
A)True
B)False
26
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Chapter 25: Business and Banking
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Q1) A stop payment means that a bank's customer cancels its instructions to pay a particular cheque and orders the bank to refuse payment when that cheque is presented.
A)True
B)False
Q2) Describe Justice LaForest's comments with respect to what a banker is supposed to know,which formed a broader basis for the court's decision in Canadian Pacific Hotels Ltd.v.Bank of Montreal (1987),40 D.L.R.(4th)385 (S.C.C.),where the bank failed to detect forged signatures.
Q3) In legal terms,which of the following is synonymous with the concept that liability for payment of a negotiable instrument is independent of the original debtor-creditor relationship?
A) A negotiable instrument has a life of its own.
B) Each cheque is valuable evidence of contractual obligations.
C) There is always good reason for liability to be borne by the other party.
D) It is convenient and dependable for commerce.
Q4) Briefly discuss the legislative amendment that applied to consumer notes and its ramifications.
Q5) Describe the various models for electronic cashless transactions.
Q6) Discuss the purpose of the banking agreement.
Page 27
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Chapter 26: The Legal Aspects of Credit
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Q1) Which of the following is a valid characterization of the borrower's promise to repay a loan and the lender's collateral or security if the borrow fails to repay?
A) They are the major elements of the credit agreement.
B) Each refers to any interest in property that is of value to a lender.
C) Each reflects the need for extensive security due to uncertain value.
D) They are the lender's value in any property interest.
Q2) Discuss the criteria that will be used to determine the length of reasonable notice required to be given to a debtor by a creditor that has decided to call in a loan.
Q3) Briefly explain what an acceleration clause is,what it does,and the incentive it provides.
Q4) Which of the following would a business law professor most likely indicate to be a distinguishing characteristic of an unsecured debt?
A) loan must be advanced within a designated period
B) formal and deliberate financing arrangements
C) the incidental feature of routineness
D) absence of security interest in debtor's assets
Q5) Discuss the borrower's rights in relation to the lender's seizure and sale of assets.
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Page 28
Chapter 27: Bankruptcy and Insolvency
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Q1) Which of the following would most likely be applicable to the Canada Revenue Agency with respect to a bankrupt's unremitted payroll deductions?
A) superior status to all secured and unsecured creditors
B) unsecured creditor status
C) secured creditor status
D) preferred creditor status over unsecured creditors
Q2) What is the difference between a bankrupt debtor and an insolvent debtor?
A) the acceptance of a proposal
B) a creditor's ability to sue an insolvent
C) the involvement of a trustee
D) a distinct legal status
Q3) Following the granting of a receiving order,which of the following would be the first step a trustee undertakes in order to identify and protect assets and identify liabilities?
A) give public notice of the bankruptcy
B) conduct a detailed examination of book debts
C) secure the business premises and inventory
D) prepare appropriate statements
Q4) Identify the purposes that a proposal is intended to achieve.
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Chapter 28: Insurance
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Sample Questions
Q1) List the possible kinds of liabilities and losses that a business typically seeks to insure against.
Q2) An insurable interest is typically described as being the insured's financial stake in what is being insured.
A)True
B)False
Q3) Which of the following is a distinguishing characteristic of a duty to disclose?
A) It is applicable to the point in time the insurance application is made.
B) It is considered by law to be an insured's ongoing obligation.
C) It requires prompt, oral communication of material changes to the insurer.
D) Compliance automatically adjusts the policy coverage.
Q4) An insurance adjuster investigates and evaluates insurance claims on behalf of the insurer.
A)True
B)False
Q5) Discuss subrogation.
Q6) An insurance broker is one who acts for an insurance company in selling insurance.
A)True
B)False
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