Corporate Law
Study Guide Questions
Course Introduction
Corporate Law explores the legal framework governing the creation, operation, and dissolution of corporations. The course covers topics such as corporate formation, governance structures, fiduciary duties of directors and officers, shareholder rights, mergers and acquisitions, and compliance with relevant statutes and regulations. Students will gain an understanding of how corporate entities interact with stakeholders and the broader legal and ethical considerations affecting corporate decision-making in both domestic and international contexts.
Recommended Textbook
The Legal Environment of Business 13th Edition by Roger E. Meiners
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Chapter 1: Todays Business Environment: Law and Ethics
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Sample Questions
Q1) Executive orders are issued by:
A) Congress
B) the Supreme Court
C) the President
D) the heads of administrative agencies
E) none of the other choices are correct
Answer: C
Q2) Surveys suggest that, over the past years:
A) business leaders have become more ethical
B) workers at for-profit firms have become more ethical
C) workers at not-for-profit firms have become more ethical
D) public confidence in the ethical standards of business leaders has fallen
E) public confidence in the ethical standards of politicians has risen
Answer: D
Q3) Misdemeanors are civil offenses generally punishable by imprisonment for less than a year.
A)True
B)False
Answer: False
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Page 3
Chapter 2: The Court Systems
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Sample Questions
Q1) When a dispute brought in a state court involves incidents that occurred in more than one state, what problem may arise?
A) an Erie Railroad v. Tompkins issue of federal versus state common law
B) a real and substantial party problem
C) a quasi-in-rem problem
D) a conflict-of-law problem
E) all of the other choices are correct
Answer: D
Q2) The ____ guarantees federal judges the right to serve "during good behavior."
A) Bill of Rights
B) Supreme Court
C) President
D) Constitution
E) judicial system
Answer: D
Q3) The Constitution requires each state court system to have appeals courts and a supreme court.
A)True
B)False
Answer: False
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Chapter 3: Trials and Resolving Disputes
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Sample Questions
Q1) The process of discovery before trial encourages settlement of cases.
A)True
B)False
Answer: True
Q2) In the pleading known as the ____, the defendant will admit, deny, or say that it does not know the truth, with respect to each assertion of the plaintiff.
A) rebuttal
B) answer
C) response
D) recall
E) counterpoint
Answer: B
Q3) The rules of civil procedure require judges to allow attorneys to engage in as much direct examination of witnesses, and cross examination of the witnesses, as they believe necessary to establish their case.
A)True
B)False
Answer: False
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Chapter 4: The Constitution: Focus on Application to Business
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Sample Questions
Q1) In addition to not being allowed to interfere with interstate commerce, states are not allowed to:
A) interfere with international commerce
B) interfere with international laws
C) interfere with unwritten codes of conduct
D) promote international commerce
E) none of the other choices are correct
Q2) If Congress imposes a regulation on business, the states:
A) may not have any regulations in the same area of concern
B) may adopt regulations to replace the federal regulations, but they may only apply inside the borders of the state
C) may impose stronger conditions on out-of-state businesses that come to the state than are imposed by the federal rules
D) usually may pass rules that would reduce the effect of the federal rule inside the state, if justified by special local conditions
E) none of the other choices
Q3) The Bill of Rights was added to the Constitution after it had been adopted.
A)True
B)False
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Chapter 5: Criminal Law and Business
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Sample Questions
Q1) Acts may be designed as crimes by either the federal or state governments.
A)True
B)False
Q2) Foreigners working in other countries are subject to prosecution under the laws of those countries, not under the terms of the law of their home countries..
A)True
B)False
Q3) Another term for misdemeanor is:
A) small crime
B) civil crime
C) penal crime
D) petty misdemeanor
E) none of the other specific choices are correct
Q4) The Sentencing Guidelines were created to:
A) make sentencing consistent across the country
B) prevent favoritism to state residents in cases with out-of-state residents
C) make sentencing consistent within each state, but not across the whole country
D) prevent bias against foreign companies
E) none of the other choices are correct
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Chapter 6: Elements of Torts
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Sample Questions
Q1) Most tort suits arise from:
A) customer ignorance
B) failure to plan for unexpected catastrophes
C) natural disasters
D) repeated failure to comply with industry regulations
E) none of the other choices
Q2) In Chambers v. Travelers Companies, where Chambers sued for defamation after she was fired for her behavior, which included failure to reveal certain information about a business trip, but the district court held for Travelers, and the appeals court agreed because:
A) Chambers was new to the company and could be fired for any reason within the first 90 days of employment
B) there was no evidence of actual malice by the employer
C) the manager who fired Chambers did not know her
D) all of the other specific choices
E) none of the other specific choices
Q3) In most courts the tort of emotional distress requires evidence of physical injury to the victim.
A)True
B)False
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Chapter 7: Business Torts and Product Liability
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Sample Questions
Q1) In a suit for fraud, the plaintiff must establish a good reason to rely on the bad information provided by the defendant.
A)True
B)False
Q2) An express warranty is:
A) illegal in many states
B) one the manufacturer contractually provides to the consumer
C) one the law inserts into the relationship regardless of the actual contract terms
D) one the consumer insists on
E) none of the other choices are correct
Q3) Negligence of other parties is irrelevant to the imposition of liability in ____ cases.
A) megahazardous activity
B) limited liability
C) misrepresentation
D) fraud
E) none of the other choices are correct
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Chapter 8: Real and Personal Property
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Sample Questions
Q1) The major difference between public nuisance and private nuisance is:
A) a public nuisance involves public health and private nuisance involves citizens' welfare
B) whether the property involved is owned by a government or by a private party
C) a public nuisance interferes with the enjoyment of land; private nuisance impacts health
D) public nuisance can exist only if there is physical damage to land; that is not the case with private nuisance
E) none of the other choices
Q2) Furniture, since it is movable, is an example of:
A) fake property
B) intangible property
C) taxless property
D) real property
E) none of the other choices are correct
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Chapter 9: Intellectual Property
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Sample Questions
Q1) In Audi AG v. D'Amato, where Audi sued D'Amato for trademark violations for selling Audi logo goods on his website audisport.com, the appeals court held that it would consider certain factors about possible infringement; the factors do not include:
A) defendant's intent in selecting the mark
B) similarity of the marks
C) strength of plaintiff's mark
D) evidence of actual confusion by consumers
E) all of these are factors considered by the court
Q2) One advantage of a patent is that:
A) the owner has exclusive rights to its use for the length of his life
B) it never expires
C) it provides strong legal protection for its life
D) the owner may not be sued for 15 years
E) it is automatically registered worldwide
Q3) Public facts presented in an original manner may be copyrighted.
A)True
B)False
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Chapter 10: Contracts
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Sample Questions
Q1) In Hinson v. N&W Construction, where Hinson submitted the low bid to N&W for plumbing work to be part of a larger construction project by N&W, but then refused to do the work when construction was started by N&W, the court held that Hinson's bid: A) could not be relied upon by N&W because he was not licensed for such work B) was unrealistically low, which N&W recognized, so it could not rely on the bid C) was valid, so there was a breach of contract; Hinson was liable for the full value of the contract
D) created liability based on promissory estoppel, so he was liable for the extra costs incurred by N&W
E) created liability based on promissory estoppel, so he was liable for the full value of the contract
Q2) Liquidated damages are usually determined by the parties to a contract in the contract itself.
A)True
B)False
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Page 12
Chapter 11: Domestic and International Sales
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Sample Questions
Q1) Goods bought for household uses, such as a refrigerator bought by a consumer, are not covered by the CISG.
A)True
B)False
Q2) Under the UCC, an offeror may not impose a term in an offer that does not allow the offeree to change terms of the offer.
A)True
B)False
Q3) Under the UCC, when contracts go back and forth between parties with conflicting terms, often written on standard forms, it is referred to as the "battle of the forms."
A)True
B)False
Q4) Because of the extra complexities in international sales, the CISG requires a formal written and signed contract.
A)True
B)False
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Page 13
Chapter 12: Business Organizations
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Sample Questions
Q1) In most states a limited partnership does not have to file what information with the appropriate state official?
A) name of the business
B) names and addresses of all partners
C) contributions each partner has made
D) the share of profits to be paid to each partner
E) all of the other choices must be filed
Q2) After reviewing a corporation's application, the state issues a:
A) certificate of business
B) certificate of taxes
C) certificate of incorporation
D) certificate of institution
E) certificate of corporation
Q3) The document that sets forth the rights and obligations of the franchisor and franchisee is known as the:
A) franchise contract
B) franchise list
C) franchise agreement
D) franchise document
E) agreement of franchise
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Chapter 13: Negotiable Instruments, Credit, and Bankruptcy
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Q1) If a negotiable instrument is ____, the transferee takes the instrument free of any of the transferor's contract obligations.
A) transferred by assignment
B) transferred by negotiation
C) transferred by court
D) assigned
E) delegated
Q2) An open account means:
A) multiple payments are made on a regular schedule
B) minimum monthly payments are made on an account balance
C) half payment is due when the invoice is received
D) full payment is due within a fixed time period
E) the borrower may borrow up to the full amount of the credit limit
Q3) A(n) ____ is a legally binding written order to pay a fixed sum of money that involves three parties.
A) promissory note
B) real estate mortgage note
C) balloon note
D) easement
E) none of the other choices are correct
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Chapter 14: Agency and the Employment Relationship
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Sample Questions
Q1) Which of the following can determine the scope of authority given to an agent:
A) statements of the agent
B) the principal's personal relationship with the agent
C) the trade customs in business
D) all of the other specific choices are correct
E) none of the other specific choices are correct
Q2) If an agent claims to have authority but in fact has none, the principal is:
A) not responsible for the agent's dealings with third parties who have no reason to think the agent has authority
B) responsible for the agent's dealings with third parties who have no reason to think the agent has authority
C) responsible for up to 50% of the monetary value of any contracts entered into by third parties and the agent
D) responsible for up to 25% of the monetary value of any contracts entered into by third parties and the agent
E) none of the other choices are correct
Q3) Agents rarely can change a principal's legal obligations.
A)True
B)False
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Page 16
Chapter 15: Employment and Labor Regulations
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Sample Questions
Q1) The Wagner Act of 1935 is also known as the National Labor Relations Act and it created the National Labor Relations Board.
A)True
B)False
Q2) The law in China prohibits worker unionization as the state protects all workers.
A)True
B)False
Q3) Since OSHA cannot inspect all workplaces it tends to focus on those:
A) where conditions have little potential to be dangerous
B) where employees or others have called to complain
C) where few accidents have occurred
D) all of the other specific choices are correct
E) none of the other specific choices are correct
Q4) ERISA deals only with retirement pension benefit plans.
A)True B)False
Q5) Workers' compensation is a no-fault insurance system.
A)True
B)False
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Chapter 16: Employment Discrimination
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Sample Questions
Q1) Choosing to promote a younger person rather than an older person, because the older person is likely to retire in several years, may violate the Age Discrimination in Employment Act.
A)True
B)False
Q2) A company with 30 employees has no personnel department. Several male employees pester several female employees, including making sexual gestures, comments, and, at times, grabbing them. Telling the men to stop does not change behavior. Several women quit and file a complaint against the employer for sexual harassment. It is likely that the women will:
A) have a case because the company does not have a personnel office as required by law
B) have a case because there was a persistent hostile environment that was not corrected.
C) not have a case because they did not complain sufficiently to the company manager before they quit
D) not have a case because they did not complain to the EEOC (or equivalent state office) before they quit
E) not have a case because they may not act as a group; only individually
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Chapter 17: The Regulatory Process
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Sample Questions
Q1) In Lone Mountain Processing v. Secretary of Labor, a mining firm railed to respond to a citation from the Mine Safety and Health Administration (MSHA) for regulatory violations within 30 days, so the citations became final. The firm protested the refusal to reconsider the matter after 30 days. The appeals court held that the agency was inconsistent in when it allowed review, which was arbitrary and capricious, so review would be granted.
A)True
B)False
Q2) The courts generally will not find that an agency's decisions are arbitrary, capricious, or an abuse of discretion if the following conditions are met except:
A) the agency's action was approved by its Congressional oversight committee
B) the agency has established a factual basis that is in the agency's record
C) a reasonable person could reach the same judgment as the agency on the basis of the agency's record
D) the agency has sufficiently explained the facts and its policy concerns
E) all of the other choices are necessary
Q3) Interpretative rules may never be challenged by parties affected by such rules.
A)True
B)False
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Page 19
Chapter 18: Securities Regulation
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Sample Questions
Q1) The Securities Act of 1933 concerns truth in disclosure at the time securities are first sold; the 1934 Securities Exchange Act concerns regulation of securities already in the market.
A)True
B)False
Q2) The Insider Trading Sanctions Act holds that someone found guilty of insider trading may pay triple damages.
A)True
B)False
Q3) Since it is not practical for many stock owners to attend corporate meetings at which shareholders vote to approve major decisions, shareholders are sent ____ to be voted on their behalf.
A) proxies
B) substitutes
C) informants
D) secret ballots
E) open ballots
Q4) The SEC sets the rules of operation for the stock exchanges and its members. A)True
B)False
Page 20
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Chapter 19: Consumer Protection
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Sample Questions
Q1) Comparing regulation of drugs to other countries, the U.S. is:
A) not very strict compared to nations of Europe
B) not very strict compared to most underdeveloped nations
C) one of the strictest nations but has little impact on the world market
D) one of the strictest nations and has great impact on the world market
E) none of the other choices
Q2) The Kefauver Amendment of 1962 requires the FDA to approve drugs based on their proven safety.
A)True
B)False
Q3) A financial institution (such as a bank) that issues electronic fund-transfer cards must provide consumers:
A) a yearly statement of account
B) a weekly statement of account
C) a bi-annual statement of account
D) the institution is under no obligation to provide consumers with statements of account
E) none of the other choices
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Chapter 20: Antitrust Law
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Sample Questions
Q1) When a seller will sell a product only on the condition that the buyer also purchase a different product is a tie-in sale.
A)True
B)False
Q2) Price fixing is generally considered to be the worst violation of antitrust law.
A)True
B)False
Q3) Refer to Fact Pattern 20-1. Assume that a merger does take place. Which legal standard will a court apply that reviews the merger?
A) a rule of reason analysis
B) a per se analysis
C) an indirect damages analysis
D) a rule of reason analysis and an indirect damages analysis
E) none of the other choices
Q4) All antitrust suits are brought by the federal government. A)True
B)False
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Chapter 21: Environmental Law
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Sample Questions
Q1) A trespass is defined as:
A) an illegal entry onto one's own property
B) an entry onto the property of another person
C) an entry onto one's property by government officials holding a warrant
D) a pre-authorized breach of the boundaries of one's property
E) none of the other choices
Q2) The person responsible for bringing a public nuisance case against a polluter is:
A) a city or state attorney
B) a private citizen whose land is affected
C) a private citizen who has been made ill by the pollution
D) the Supreme Court
E) the governor of the state affected by the pollution
Q3) States are responsible for designating the intended use of all surface water. A)True
B)False
Q4) The National Ambient Air Quality Standards are based on plant locations, pollution control cost, reasonableness of pollution, and similar factors.
A)True
B)False
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Chapter 22: The International Legal Environment of Business
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Sample Questions
Q1) A force majeure clause in an international contract provides for the method of payment in the event of an unexpected event that adversely affects performance.
A)True
B)False
Q2) A place of entry in a country that does not assess duties or tariffs on products is called:
A) foreign trade zone
B) countervailing duty zone
C) duty-free port
D) trade-enhancement zone
E) none of the other choices
Q3) Early trade customs included:
A) rights of shipping in foreign ports
B) salvage rights
C) fishing rights
D) freedom of passage
E) all of the other specific choices are correct
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