Corporate Law
Final Exam Questions
Course Introduction
Corporate Law explores the legal framework governing the formation, operation, and dissolution of corporations. The course covers foundational topics such as corporate personality, governance structures, fiduciary duties of directors and officers, shareholder rights, mergers and acquisitions, and regulatory compliance. Students will engage with real-world case studies and statutory materials to understand the implications of corporate decision-making and its impact on stakeholders. Emphasis is placed on both the theoretical underpinnings and practical applications of corporate law in a domestic and global business environment.
Recommended Textbook
Business Law Today Text and Summarized Cases E Standard 9th Edition by Roger LeRoy Miller
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Page 2
Chapter 1: The Legal Environment
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Q1) A state constitution is supreme within the state's borders so long as it does not conflict with the U.S.Constitution or a federal law.
A)True
B)False
Answer: True
Q2) Network Corporation files a suit against Omega,Inc.,alleging that Omega breached a contract to sell Network a computer system.Network is A) the appellant.
B) the appellee.
C) the defendant.
D) the plaintiff.
Answer: D
Q3) Common law is a term for the law that is known to most of us.
A)True
B)False
Answer: False
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Chapter 2: Constitutional Law
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Q1) Vacation Village enacts an ordinance to allow only a few street vendors to operate in certain areas,for the purpose of reducing traffic.A court would likely subject this ordinance to
A) a police power test under the commerce clause.
B) a "rational basis" test under the equal protection clause.
C) intermediate scrutiny under the due process clause.
D) strict scrutiny under the First Amendment.
Answer: B
Q2) A law that restricts a fundamental right does not violate substantive due process if it promotes a compelling state interest.
A)True
B)False
Answer: True
Q3) Political speech that would otherwise be protected by the First Amendment is prohibited if its source is a corporation.
A)True
B)False
Answer: False
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Chapter 3: Courts and Alternative Dispute Resolution
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Q1) Refer to Fact Pattern 3-1.Resolving the dispute between Java and Kaffe by having a neutral third party render a binding decision is one of the advantages of A) arbitration.
B) conciliation.
C) intervention.
D) mediation.
Answer: A
Q2) Refer to Fact Pattern 3-1.If Java and Kaffe have a long-standing business relationship that they would like to continue,a preferred method of settling their dispute may be mediation because
A) the case will be heard by a mini-jury.
B) the dispute will eventually go to trial.
C) the process is not adversarial.
D) the resolution of the dispute will be decided an expert.
Answer: C
Q3) A judge instructs a jury as to the law that applies in a case. A)True
B)False
Answer: True
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Page 5
Chapter 4: Torts and Cyber Torts
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Q1) Under the doctrine of comparative negligence,both the plaintiff's and the defendant's negligence are taken into consideration.
A)True
B)False
Q2) Lew angrily accuses Mandy,a broker with New Financial Services,of fraudulently inducing him to invest in Open Pit Oil Company,whose wells are dry.The reliance that gives rise to liability for fraud is normally based on a statement of A) emotion.
B) fact.
C) opinion.
D) puffery.
Q3) Disparagement of property is another term for slander of quality.
A)True
B)False
Q4) If it can be shown that a trespass to personal property was warranted,a complete defense exists.
A)True
B)False
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Chapter 5: Intellectual Property and Internet Law
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Q1) A generic term is not protected under trademark law unless it acquires a secondary meaning.
A)True
B)False
Q2) In 2010,Online Marketing Corporation registers its trademark as provided by federal law.After the first renewal,this registration
A) is renewable every ten years.
B) is renewable every twenty years.
C) runs for the life of the corporation plus seventy years.
D) runs forever.
Q3) Trade dress has the same legal protection as trademarks.
A)True
B)False
Q4) Bubbly Cola features Sparkly Cola's trademark without its owner's permission.Bubbly's use of the mark is actionable provided A) consumers are confused.
B) Bubbly's use is intentional.
C) Bubbly's use reduces the value of Sparkly's mark.
D) Sparkly's mark is registered.
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Chapter 6: Criminal Law
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Q1) Biff wrongfully takes an unopened carton from a Cold Storage Warehouse loading dock,puts the carton in his car,and drives away.This is
A) burglary.
B) forgery.
C) larceny.
D) no crime.
Q2) Under the exclusionary rule,all illegally obtained evidence must be included in any criminal prosecution.
A)True
B)False
Q3) On the orders of their corporate employer,Della and Efron,employees of Fabulous Fashionista,a clothing store,switch trademarks on clothing that comes into the store to be sold to consumers.This is
A) forgery.
B) larceny.
C) obtaining goods by false pretenses.
D) no crime.
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Chapter 7: Cyber Crime
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Q1) Nestor establishes a phony account in Meet+Greet,a social network,and creates a fictitious persona to cyberbully Leona.This is
A) cyber stalking.
B) employment fraud.
C) phishing.
D) vishing.
Q2) Most states regulate spam.
A)True
B)False
Q3) Computer fraud is a state,not a federal,crime.
A)True
B)False
Q4) Identity theft occurs when a wrongdoer steals another's form of identification. A)True
B)False
Q5) The full extent of cyber crime is well known.
A)True
B)False
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Chapter 8: Ethics and Business Decision Making
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Q1) The role played by women may present some difficult ethical problems for firms doing business internationally.
A)True
B)False
Q2) Ryan,the owner of SuperMart Stores,Inc.,adheres to the "principle of rights" theory.Under this theory,a key factor in determining whether a business decision is ethical is how that decision affects
A) the right determination under a cost-benefit analysis.
B) the rights of others.
C) the "right" thing to do.
D) the right to make a profit.
Q3) Superior Energy Corporation engages in ethical behavior solely for the purpose of getting good publicity and thereby increasing profits.Superior is
A) acting unethically in its pursuit of publicity.
B) acting unethically in its pursuit of profits.
C) acting unethically in its setting of priorities.
D) not acting unethically.
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Chapter 9: Nature and Classification
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Q1) An express contract must be in writing.
A)True
B)False
Q2) Jack promises to buy Kris's computer for $400.Jack is
A) an executor.
B) an offeree.
C) a promisee.
D) a promisor.
Q3) Mona asserts that a contract she entered into with Nate is unenforceable.Defenses to the enforcement of a contract include
A) a desire not to perform.
B) adverse economic consequences.
C) results that do not match expectations.
D) the lack of a party's genuine assent.
Q4) To be valid,a contract must be enforceable by all of the parties to it. A)True
B)False
Q5) An implied-in-fact contract is implied from the conduct of the parties.
A)True
B)False
11
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Chapter 10: Agreement in Traditional and E-Contracts
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Q1) Lightspeed Corporation makes computers,each of which is packaged with a shrink-wrap agreement.Milo buys a Lightspeed desktop.The shrink-wrap agreement is most likely enforceable if
A) Milo buys the computer directly from Lightspeed.
B) Milo expressly agrees to the terms in the shrink-wrap agreement.
C) Milo reads the shrink-wrap agreement.
D) the terms in the shrink-wrap agreement concern warranties.
Q2) An agreement is evidenced by a single event: an acceptance.
A)True
B)False
Q3) Lovett County Bank offers to lend money to Kino,the owner of Java Stop,at 15 percent interest.Before Kino accepts,a state statute is enacted prohibiting loans at rates greater than 12 percent.Kino and the bank have
A) have a contract for a loan at 15 percent interest.
B) have a contract for a loan at 12 percent interest.
C) have a contract for a loan at 0 percent interest.
D) no contract for a loan.
Q4) An acceptance must be unequivocal.
A)True
B)False
Page 12
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Chapter 11: Consideration, capacity, and Legality
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Q1) A person who enters into a contract when he or she is intoxicated can void the contract if the terms are obviously favorable to the other party.
A)True
B)False
Q2) Intoxicated but fully aware of the consequences,Uri agrees to a two-year cell-phone service contract with Wander Talk,Inc.,at more than the average market price.This contract is
A) enforceable.
B) not enforceable because contracting parties can change their minds.
C) not enforceable because the contract clearly favors Wander Talk.
D) not enforceable because Uri was intoxicated when he agreed to it.
Q3) An accord and satisfaction requires that the amount of a debt be certain.
A)True
B)False
Q4) Refer to Fact Pattern 11-2."Adequacy" of consideration refers to
A) "how much" consideration is given.
B) legally sufficient value in the eyes of the law.
C) the intangible value to a contracting party of a thing exchanged.
D) the substantiality of the consideration exchanged.
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Chapter 12: Defenses to Contract Enforceability
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Q1) Olin convinces Pia,who has no artistic ability,that Pia has considerable talent and induces Pia to pay Olin $10,000 for art lessons.When Pia realizes the truth,she files a suit against Olin.Pia is most likely to recover on the basis of A) fraud.
B) mistake.
C) undue influence.
D) none of the choices.
Q2) Lem buys a used MP3 player for $50 and a new laptop for $1,500,and signs a one-year employment contract for a $4,000 monthly salary to start at the beginning of the next month.The Statute of Frauds covers
A) the employment contract, and the laptop and MP3 purchases.
B) the employment contract and the laptop purchase only.
C) the employment contract only.
D) the laptop and MP3 purchases only.
Q3) All collateral promises must be in writing to be enforceable.
A)True
B)False
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Page 14
Chapter 13: Third Party Rights and Discharge
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Q1) Lon enters into a contract to mine limestone in Mica's quarry,sell it,and share the profits on its sale with Mica.If the duties under this contract are discharged like those under most contracts,the duties will be A) assigned. B) breached. C) performed. D) rescinded.
Q2) A transfer of contract rights to a third party is an assignment. A)True
B)False
Q3) Sam contracts to harvest Tina's crop on August 1.Due to an unexpected regional fuel shortage,Sam cannot perform on the specified date.This A) breaches the contract. B) discharges the contract. C) has no effect on the contract. D) suspends the contract.
Q4) No special form is required to create a delegation of duties.
A)True B)False
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Chapter 14: Breach and Remedies
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Q1) Development Associates (DA)agrees to buy five acres of land from Eastside Properties for $15,000.Eastside sells the acreage to Fealty Realty,and fails to go through with DA's deal on the agreed date,when the market price of the land is $17,000.DA may recover
A) $17,000.
B) $15,000.
C) $2,000.
D) $0.
Q2) To avoid liability for intentional injuries,Vermont Power Corporation includes in its contracts an exculpatory clause.This is
A) enforceable if the other parties are protected from liability.
B) enforceable if the other parties consent to it.
C) enforceable if the other parties have equal bargaining power.
D) not enforceable.
Q3) Specific performance is the remedy customarily used when one party has breached a contract for a sale of land.
A)True
B)False
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Chapter 15: The Formation of Sales and Lease Contracts
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Q1) A sale of "things attached" to realty is always considered a sale of goods.
A)True
B)False
Q2) A bailee is a buyer or lessee.
A)True
B)False
Q3) A lessee is a party who transfers a right to the possession and use of goods under a lease.
A)True
B)False
Q4) In a dispute over a sale involving a bicycle,Dain argues that as to this deal Elle's Hobby Shop,where Dain bought the bike,is a merchant.A court may determine whether Elle's is a merchant by assessing whether
A) it has sold any bikes within the last year.
B) it holds itself out by occupation as having knowledge or skill unique to the bike in the transaction.
C) its owner enjoys biking.
D) it subscribes to Bike, a biweekly trade magazine.
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Chapter 16: Performance Breach of Sales Lease Contracts
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Q1) Refer to Fact Pattern 16-1.Kwik's refusal constitutes
A) a justified response based on Kwik's relation to the contract.
B) an assignment of Internet's rights under the contract.
C) a reasonable suspension of performance under the contract.
D) a repudiation of the contract.
Q2) Bayou Boats,Inc.,and Eventide Fishing Tours enter into a contract for a sale of seven swamp boats.Eventide pays for the goods,but Bayou does not deliver.Eventide can use replevin as a remedy if
A) Bayou is lawfully withholding the goods.
B) Eventide cannot effectively cure the defect.
C) Eventide is unable to cover for the goods.
D) the goods have not been identified to the contract.
Q3) Owen and Pablo enter into a contract for a sale of fifty Western saddles.Pablo pays,but Owen does not deliver.Pablo can normally recover as damages the difference between
A) any loss avoided and any profit gained.
B) the actual price and the hoped-for price.
C) the contract price and the market price.
D) the current prices in the parties' locations.
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Page 18
Chapter 17: Warranties and Product Liability
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Q1) Privity of contract between the plaintiff and the defendant is required to bring a product liability suit based on negligence.
A)True
B)False
Q2) Mountain Bikes,Inc.(MBI),and Nero enter into a contract for a sale of a mountain bike.MBI,a merchant who deals in goods of the kind sold,makes implied and express warranties in connection with the sale.The Magnuson-Moss Warranty Act attempts to prevent deception in warranties by
A) displacing the UCC as the primary source of warranty rules.
B) making warranties easier to understand.
C) prohibiting disclaimers of warranties.
D) requiring sellers to give written warranties for consumer goods.
Q3) A design defect is not the sort of product defect that will support the imposition of liability on a strict product liability basis.
A)True
B)False
Q4) Any product may be made entirely safe for all consumption.
A)True
B)False
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Chapter 18: Negotiable Instrument: Transferability Liability
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Q1) Vladimir negotiates a bearer instrument to Wendy by A) assignment.
B) delivery.
C) presenting it in response to a demand by Wendy.
D) promising to pay.
Q2) Opal signs a promissory note payable to the order of Payday Loan Company.The note states that it is payable "with interest at the legal rate." This note is A) negotiable.
B) nonnegotiable, because it does not specify a rate of interest.
C) nonnegotiable, because it is a promissory note.
D) nonnegotiable, because it is payable only with interest.
Q3) On the back of a check payable to Nero,he writes "Pay to Odell,without recourse" and signs it.This
A) does not effect the check's negotiability or any party's liability.
B) relieves Nero of liability on the check.
C) relieves Odell of liability on the check.
D) renders the check nonnegotiable.
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Page 20
Chapter 19: Checks and Banking in the Digital Age
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Q1) First Community Bank agrees to accept a check by setting aside sufficient funds to cover the amount.This check is considered A) cashed.
B) certified.
C) deposited.
D) provisionally credited.
Q2) The first bank to receive a check for payment is the depositary bank. A)True
B)False
Q3) Jen signs a check "pay to the order of Key" drawn on Jen's account in Little Bank to buy Key's car.Jen asks Little Bank to indicate on the face of the check that it will accept it when Key presents it for payment.If the bank agrees,this will be A) a cashier's check.
B) a certified check.
C) a trade acceptance.
D) a traveler's check.
Q4) A financial institution must encode a returned check with certain information.
A)True B)False
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Chapter 20: Security Interests in Personal Property
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Q1) A purchase-money security interest in consumer goods is perfected automatically at the time of a credit sale.
A)True
B)False
Q2) Prime Property Investments,Inc.,files a financing statement to provide notice of its security interest in the property of Qwik Breakfast Restaurant.The initial effective term of a financing statement is a period of A) five days.
B) five months.
C) five weeks.
D) five years.
Q3) Mona lives in New Jersey,but she works in New York.Mona borrows $1,000 from National Bank,using her motorcycle as collateral.To perfect its security interest,the bank must file its financing statement in at least A) every state.
B) New Jersey.
C) New Jersey and New York.
D) New York.
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Chapter 21: Creditors Rights and Bankruptcy
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Q1) Donald's debt to Everett is past due.Everett brings a legal action against Donald to collect the debt.To ensure that a judgment in Everett's favor will be collectible,Everett asks the court to order the seizure of Donald's property.This is a request for
A) a guaranty (or suretyship) contract.
B) an order that would violate most state laws.
C) a writ of attachment.
D) a writ of execution.
Q2) Almost all types of property can be garnished.
A)True
B)False
Q3) Elmo files a petition in bankruptcy.If the court concludes that there are grounds for a finding of "substantial abuse," the court will most likely
A) dismiss Elmo's petition.
B) discharge Elmo's debts.
C) distribute Elmo's property to Elmo's creditors.
D) issue an automatic stay against any actions by Elmo's creditors.
Q4) Bankruptcy law has one goal-to encourage the continued use of credit.
A)True
B)False
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Chapter 22: International Law in a Global Economy
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Q1) Chiang Ltd.,a Chinese firm,imports its goods into the United States and offers those goods for sale at "less than fair value." This is
A) confiscation.
B) defalcation.
C) dumping.
D) expropriation.
Q2) The Foreign Sovereign Immunities Act spells out the particulars of what constitutes a commercial activity.
A)True
B)False
Q3) Restrictions on imports may include quotas.
A)True
B)False
Q4) U.S.laws that prohibit discrimination in employment do not apply to U.S.employees working for U.S.firms located abroad.
A)True
B)False
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Chapter 23: Agency Relationships in Business
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Q1) If a principal does not ratify an authorized contract,the principal is not bound.
A)True
B)False
Q2) Trey,an agent for Uno Music Corporation,executes an unauthorized contract with Variety Recording,Inc.,that is highly advantageous to Uno.Variety withdraws from the deal before Uno ratifies the contract.The contract is
A) valid.
B) variable.
C) void.
D) voidable.
Q3) Bob,a salesperson at a Carpets Galore store,tells Dita,a customer,"Buy your carpet here,and I'll install it for half of what the store would charge." Dita buys the carpet,which Bob installs for half the store's price.Bob keeps the money.Bob has breached
A) no duty.
B) the duty of loyalty.
C) the duty of notification.
D) the duty of obedience.
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Chapter 24: Employment,immigration,and Labor Law
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Q1) First National Bank may subject its employees to lie-detector tests when investigating
A) health and medical conditions.
B) losses attributable to theft.
C) prior work history.
D) suspected drug use.
Q2) An employer can refuse to bargain collectively with an elected employee representative.
A)True
B)False
Q3) Doctors Hospital Corporation employs seven thousand workers in seven locations.These employees have the right to
A) demand that Doctors Hospital Corporation be a closed shop.
B) make "hot-cargo" agreements.
C) organize.
D) refuse to bargain with Doctors Hospital Corporation.
Q4) Employers who provide pension plans for retired workers must comply with certain standards in managing the plans.
A)True
B)False
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Chapter 25: Employment Discrimination
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Q1) Lloyd and Milly are employees of NuTech Corporation.They have the same job.Under the Equal Pay Act,NuTech can legitimately pay Lloyd more than Milly on the basis of
A) Lloyd's greater production only.
B) Lloyd's greater production or seniority.
C) Lloyd's greater seniority only.
D) neither Lloyd's greater production nor his greater seniority.
Q2) Dave has AIDS,Erin is blind,and both work for First Financial Centre.Considered disabled under the Americans with Disabilities Act
A) are Dave and Erin.
B) is Dave only.
C) is Erin only.
D) is neither Dave nor Erin.
Q3) An employer's discrimination against job applicants or employees on certain bases may violate both federal and state laws.
A)True
B)False
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Chapter 26: Sole Proprietorships and Private Franchises
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Q1) One of the advantages of a sole proprietorship is that the owner is not liable for the actions of the business.
A)True
B)False
Q2) In choosing a form of business organization for a new enterprise,important factors include the ambiance of the home office.
A)True
B)False
Q3) Rita buys a Super Grill franchise.Super Grill requires that its franchisees buy its products for every phase of their operations.Because Rita wishes to buy less expensive products,she challenges the requirement.Her best argument is probably that the requirement violates
A) the commerce clause.
B) the Equal Protection Clause.
C) the federal antitrust laws.
D) the First Amendment.
Q4) Normally,a franchisee determines the territory that it will serve.
A)True B)False
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Chapter 27: All Forms of Partnerships
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Q1) Bret is a general partner in Capitol Realty,LLLP,a limited liability limited partnership,which cannot pay its debts.Bret is personally liable for the debts
A) in proportion to the number of partners in the firm.
B) to no extent.
C) to the extent of his capital contribution.
D) to the full extent.
Q2) A corporation can be a partner.
A)True
B)False
Q3) For most purposes,the law recognizes a partnership as an aggregate of its members.
A)True
B)False
Q4) Cody is a partner in Delta Accounting Service.Cody can inspect
A) all of Delta's books and records.
B) Delta's books and records only as the firm's management permits.
C) Delta's books and records only for a reasonable purpose.
D) Delta's books and records relating to Cody's capital contribution only.
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29
Chapter 28: Limited Liability Companies Special Business
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Q1) Consumers in Delta City form a business organization to provide,without profit,an economic service to its members.This is
A) a business trust.
B) a cooperative.
C) a corporation.
D) a joint stock company.
Q2) Waste Management Services,LLC,is a member-managed limited liability company.If the law in Waste's state is like the law in most states,unless the members have agreed otherwise,voting rights are apportioned according to A) capital contributions.
B) participation in management.
C) seniority.
D) transactions with the firm.
Q3) Most limited liability company statutes have strict provisions regulating members' meetings.
A)True
B)False
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Chapter 29: Corporate Formation, merger, and Termination
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Q1) In a short-form merger,neither corporation's shareholders need to approve the merger.
A)True
B)False
Q2) Generally,there is a uniform body of national corporate law.
A)True
B)False
Q3) A merger between Frosted Confections,Inc.,and Great Brewing Company,in which Frosted absorbs Great Brewing,can be expressed as Frosted Confections + Great Brewing =
A) Frosted Confections.
B) Hot Coffee Corporation.
C) Hot Coffee Corporation + Iced Pastries Corporation.
D) Iced Pastries Corporation.
Q4) Pola and Quincey want to form and do business as River Tours Corporation.A corporation can consist of A) no natural persons.
B) one natural person but not more.
C) one or more natural persons.
D) only more than one natural person.
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Chapter 30: Corporate Directors, officers, Shareholders
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Q1) Natalie is a shareholder of Off-Road Vehicle Company.As a shareholder,Natalie does not have
A) a right to compensation.
B) dividend rights.
C) inspection rights.
D) preemptive rights.
Q2) Directors are rarely compensated,but when they are,they cannot set their own compensation.
A)True
B)False
Q3) Bea is a shareholder of Candy Confections Corporation.The right to inspect corporate books and records is
A) held by Bea only if she is a director.
B) held by Bea, without restrictions.
C) held by Bea, with some restrictions.
D) not held by Bea.
Q4) Guy is Hot Java Company's majority shareholder.Guy decides to sell his Hot Java stock.The sale will be an effective transfer of the control of the company.Does Guy owe a duty to Hot Java or its minority shareholders in this situation?
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Chapter 31: Investor Protection, insider Trading, Corp Gov
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Q1) Violations of the Securities Exchange Act of 1934 may be subject to criminal prosecution.
A)True
B)False
Q2) Flux Corporation is a public company whose shares are traded in the public securities markets.Under the Sarbanes-Oxley Act of 2002,Flux is subject to the direct corporate governance requirements of
A) any other public company with which Flux exchanges shares.
B) any state in which Flux does business.
C) the federal government.
D) the state in which Flux incorporated.
Q3) Against a charge of a violation of the Securities Act of 1933,only an issuer of stock can assert the due diligence defense.
A)True
B)False
Q4) A registration statement must state how a corporation plans to use the proceeds from the sale of the securities.
A)True
B)False
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Chapter 32: Promoting Competition
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Q1) Master Manufacturing Corporation has exclusive control over the market for its product.Under the Sherman Act,this is
A) a per se violation.
B) a violation if it acquired this power through "business acumen."
C) a violation if it acquired this power through "anticompetitive means."
D) not a violation.
Q2) Fresh Vegetables,Inc.,a wholesaler,refuses to sell its produce to Good Mart Stores,Inc.,a retailer.Under the Sherman Act,this is
A) "an unfair or deceptive act or practice."
B) a per se violation.
C) not a violation.
D) subject to analysis under the rule of reason.
Q3) International Software,Inc.,conditions the sale of one of its products on Nationwide Office System's agreeing to buy another of International's products.This deal is
A) legal, depending on its purpose and the effect on competition.
B) legal, depending on production and transportation costs.
C) legal under any circumstances.
D) not legal under any circumstances.
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Chapter 33: Consumer and Environmental Law
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Q1) Mouth-Waterin' Treats Company wants to sell its candy in a normal-sized package labeled "Gigantic Size." NuFabrics,Inc.,wants to advertise its sweaters as having "That Wool Feel," but does not want to specify on labels that the sweaters are 100 percent polyester.Can these firms market their products as they would like? If not,why not?
Q2) Penny Stock Company faxes ads to Quality Personnel Corporation and other businesses without the recipients' permission.This is
A) illegal.
B) legal and smart because such ads are generally cheap.
C) legal but not smart because such ads are generally ineffective.
D) legal but only potentially smart, depending on the response rate.
Q3) Under the Marine Protection,Research,and Sanctuaries Act (the Ocean Dumping Act),Bayside Chemical Company may dump its chemical waste into the ocean
A) after obtaining a permit.
B) before obtaining a permit.
C) without a permit.
D) not at all.
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Chapter 34: Liability of Accountants Other Professionals
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Q1) Feder prepares federal corporate income tax returns for Giant Stores,Inc.,and other firms.Under the Internal Revenue Code,with respect to an understatement of a client's tax liability,Feder may be liable for
A) negligent or willful misconduct.
B) no misconduct.
C) only negligent misconduct.
D) only willful misconduct.
Q2) With respect to negligence,an accountant is subject to no greater standard of care than a person who is not an accountant.
A)True
B)False
Q3) If a third party will be affected by a contract,the parties to the contract are in privity with the third party.
A)True
B)False
Q4) In most courts,accountants can be liable for negligence to any known users of the accountants' financial reports.
A)True
B)False
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Chapter 35: Personal Property and Bailments
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Q1) Ben allows Cody to store his trailer on Ben's property for $20 a month while Cody is out of town.Later,Ben notices rainwater collecting in the trailer and covers it with a tarp at a cost of $40.This cost is most likely borne by
A) Ben and Cody.
B) Ben only.
C) Cody only.
D) neither Ben nor Cody.
Q2) Rhett works at Scarlett's Sandwich Café.After work,in the parking lot,Rhett finds a diamond ring lost by Thalia.Title to the ring is possessed by A) Rhett.
B) Scarlett's.
C) Thalia.
D) the state.
Q3) Stan is liable for the conversion of Tyler's business law textbook
A) if Tyler proves that the book was in Stan's possession when it disappeared.
B) if Tyler proves that the book is now in a third party's possession.
C) if Tyler proves that the book was not in his possession when it disappeared.
D) under no circumstances.
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Chapter 36: Real Property and Landlord-Tenant Law
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Q1) A fixed-term tenancy terminates automatically when its terms ends.
A)True
B)False
Q2) Land includes all of the waters on or under its surface.
A)True
B)False
Q3) Rafe signs a one-year lease with Suki to occupy an apartment in Lawrence,Kansas,near the University of Kansas.Rafe needs the apartment only for two semesters and may have to sublet it for the rest of the term.Rafe's tenancy is A) a periodic tenancy.
B) a tenancy at will.
C) a tenancy at sufferance.
D) a tenancy for years.
Q4) Eminent domain is the right of an owner in fee simple absolute to use his or her property in whatever way he or she wishes.
A)True
B)False
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Chapter 37: Insurance, wills, and Trusts
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Q1) A will is probated in part to establish its validity.
A)True
B)False
Q2) Under a coinsurance clause,a homeowner who insures a home for 80 percent of its value can recover only 80 percent of the cost for damage to it.
A)True
B)False
Q3) A testator is a decedent who dies without a will.
A)True
B)False
Q4) An executor is a personal representative appointed by a court for a decedent who dies without a will.
A)True
B)False
Q5) An express trust is created or declared in explicit terms.
A)True
B)False
Q6) Dieter's will provides for a distribution of his assets on his death.Who will "distribute" Dieter's property,and what are the steps involved?
Page 39
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