Corporate Law Test Questions
Course Introduction
Corporate Law explores the legal framework governing the formation, operation, and regulation of corporations. The course covers topics such as corporate governance, fiduciary duties of directors and officers, shareholder rights, mergers and acquisitions, and compliance with securities regulations. Students will develop an understanding of the principles that underlie corporate structures, learn to analyze complex legal issues affecting businesses, and gain practical insights into the regulatory environment that shapes corporate conduct at both the national and international levels.
Recommended Textbook
Business Law and the Legal Environment Standard Edition 6th Edition by Jeffrey F. Beatty
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45 Chapters
2060 Verified Questions
2060 Flashcards
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Page 2
Chapter 1: Introduction To Law
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Sample Questions
Q1) Explain the origins of equity and its place in contemporary American law.
Answer: Historically,in England,judges would at times refuse to hear a case,ruling that there was no legal basis for the claim.The injured party might then take the case to the Chancellor,whose status in the king's council gave him unique,flexible powers.The Chancellor was to accomplish what "good conscience" required,or what was fair and equitable.Today,judges in the United States still exercise equity powers.Only a judge can exercise equitable powers because,historically,there was no jury involved in the Chancery court.An injunction is an example of an equitable remedy.
Q2) If Milan asks a court to order Pamela to stop reprinting his copyrighted material,he is seeking a legal,rather than an equitable,remedy.
A)True
B)False
Answer: False
Q3) The three branches of government in the United States are:
A) the executive, legislative, and administrative.
B) the administrative, executive, and statutory.
C) the executive, legislative, and judicial.
D) the administrative, legislative, and international.
Answer: C
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Page 3
Chapter 2: Business Ethics And Social Responsibility
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Sample Questions
Q1) Wever,Inc.is considering relocating a facility to Mexico.The interests of the various stakeholders affected by this decision may conflict.
A)True
B)False
Answer: True
Q2) Ethics is the study of how people should act.
A)True
B)False
Answer: True
Q3) A manager making a decision without fraud,prejudice,or favoritism is exhibiting the value of:
A) compassion.
B) integrity.
C) fairness.
D) responsibility.
Answer: C
Q4) A company that engages in unethical behavior may suffer severe consequences.
A)True
B)False
Answer: True
Page 4
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Chapter 3: Dispute Resolution
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Sample Questions
Q1) In order for a federal court to have jurisdiction,there must be a federal question involved and at least $75,000 in dispute.
A)True
B)False
Answer: False
Q2) An inmate in a state prison claims his United States constitutional rights prohibiting cruel and unusual punishment are being violated by the state correctional facility.This case:
A) may not be decided by a federal court since it involves a state facility.
B) must be decided by the state court where the inmate established residency before going to prison.
C) is a federal question case over which the federal courts have jurisdiction.
D) cannot be heard, as prisoners lose the right to sue.
Answer: C
Q3) Emails and their attachments are not subject to pretrial discovery.
A)True
B)False
Answer: False
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5
Chapter 4: Common Law,Statutory Law,And Administrative Law
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Sample Questions
Q1) Congresswoman Sloan introduced a bill in the House of Representatives.If the bill is approved by the House committee specializing in that subject,the bill will go to:
A) a Senate committee specializing in the subject matter of the proposed legislation.
B) the full House.
C) a Conference Committee made up of representatives of both the House and Senate.
D) the voters of her state for approval.
Q2) Which statement is correct concerning judicial review of an administrative agency's action?
A) Courts usually accept the facts of the case as determined by the agency and often defer to the agency's interpretation of the law.
B) Courts conduct a de novo review of the case.
C) Courts ignore the facts of the case.
D) Courts substitute their opinion for that of the agency.
Q3) Administrative agencies exist at the federal,state,and local levels.
A)True
B)False
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6
Chapter 5: Constitutional Law
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Sample Questions
Q1) The doctrine of preemption is based on the Constitution's:
A) Commerce Clause.
B) Due Process Clause.
C) Equal Protection Clause.
D) Supremacy Clause.
Q2) The primary source of federal power to regulate business is the:
A) Supremacy Clause.
B) Commerce Clause.
C) Contract Clause.
D) Privilege and Immunities Clause.
Q3) Tim received a letter from his state college stating he had been expelled from the school.The letter stated his finance professor reported him to the Dean's office for cheating and that a committee had decided to expel him.He was reminded in the letter he had been disciplined earlier that same year for plagiarizing a term paper.Tim believes his due process rights have been violated by the college.Discuss what factors should be considered to determine the validity of Tim's claim.
Q4) Discuss the Miller test to determine if a creative work is obscene.
Q5) Identify the basic job of a President of the United States,the source of executive power,and three key powers associated with the position of President.
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Chapter 6: Intentional Torts And Business Torts
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Sample Questions
Q1) Dewayne sold a space heater to Vivian,telling her it would heat a 200-square-foot area,even though he knew it would effectively heat only about one third of that space.Dewayne is liable for the intentional tort of fraud.
A)True
B)False
Q2) Rodney was employed by Deluxe Discount Store.Rodney's manager directed him to check the prices of dog food at Huge Savings Store.The manager of Huge Savings Store saw Rodney writing down prices and asked him to leave.Rodney,fearful that he would be fired by Deluxe,refused to leave.Rodney committed the tort of:
A) larceny.
B) trespass.
C) misrepresentation.
D) conversion.
Q3) Wilma's arm is broken when Paula knocks her down during an argument.If Wilma sues Paula for battery,what damages is Wilma likely to receive?
Q4) A tort is a violation of a duty imposed by the civil law.
A)True
B)False
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Page 8
Chapter 7: Negligence And Strict Liability
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Sample Questions
Q1) While hunting,Roger enters Adele's property without permission and is injured by falling into a ditch that was obscured by the underbrush.Under the common law,Adele is liable for Roger's injuries.
A)True
B)False
Q2) Tort law is not concerned with how to respond to injury caused by criminals,as this would be addressed by criminal law.
A)True
B)False
Q3) Kyle was eating clam chowder soup in a restaurant when a very small piece of bone lodged in his throat.Fortunately,he was able to remove the bone with his fingers.However,he was upset by the incident and sued the restaurant for negligence.The most likely result would be:
A) Kyle will not collect any damages since he did not sustain any damages.
B) Kyle will collect damages as bones in chowder are common.
C) Kyle will collect damages if he proves it was possible to prevent tiny fish bones from being present in clam chowder.
D) Kyle will collect damages, as res ipsa loquitur applies.
Q4) Discuss the concepts of contributory negligence and comparative negligence.
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Chapter 8: Crime
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Sample Questions
Q1) The criminal penalties under RICO include all EXCEPT:
A) imprisonment.
B) capital punishment.
C) confiscation of property acquired through the criminal activity.
D) fines.
Q2) Mulcare Corp.started a compliance program to prevent and detect criminal conduct within the company and had specific,high-level officers in charge of overseeing the program.The company effectively communicated the program to its employees and monitored those employees who were in a position to cheat.It promptly disciplined anyone who broke the law.One effect of having this program is:
A) federal investigators would no longer investigate the company since Mulcare could take care of any problems internally.
B) federal investigators might be convinced to limit any prosecution to those directly involved rather than attempting to get a conviction against high-ranking officers or against the company itself.
C) the Federal Sentencing Guidelines no longer apply.
D) any cases would be prosecuted in state, rather than federal, court.
Q3) Compare and contrast money laundering and embezzlement.Give an example of each.
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Page 10
Chapter 9: International Law
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Sample Questions
Q1) When considering both imports and exports,the country trading the most goods with the United States is:
A) Canada.
B) China.
C) Japan.
D) Mexico.
Q2) Notren,Inc.,a U.S.company,and SWT,a Singapore company,entered into a contract under which SWT is to ship party supplies to Notren.One of the terms of the contract states,"Any disputes that arise under this contract will be resolved in the courts of Singapore." This contract term is a:
A) letter of credit.
B) choice of language clause.
C) choice of forum clause.
D) draft clause.
Q3) Explain the origin and purpose of the World Trade Organization.
Q4) If the United States sets a limit on the number of cars that can be imported,this action is a form of tariff.
A)True
B)False
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Chapter 10: Introduction To Contracts
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Sample Questions
Q1) Contracts for the sale of fabric,automobiles,computers,furniture,and paper clips would all be governed by Article 2 of the Uniform Commercial Code.
A)True
B)False
Q2) When promissory estoppel is used by the courts,it is because there is NOT an enforceable contract present.
A)True
B)False
Q3) Which of the following represents a unilateral offer?
A) "I will pay you $50 if you mow my lawn."
B) "I will pay you $50 if you promise to trim that tree."
C) "I will pay you $50 for your CD player."
D) "I will pay you $50 for your backpack."
Q4) Valerie promises Teresa that she will pay Teresa $75 if Teresa will clean Valerie's house by noon on Saturday.If Teresa cleans the house by noon on Saturday and Valerie pays the $75,then this is an implied,bilateral,executory contract.
A)True
B)False
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Page 12
Chapter 11: Agreement
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Sample Questions
Q1) Vick Valve Company makes valves for plumbing fixtures.At the beginning of the year,it sends out a price list addressing each one,"To our valued customers." Honest Hank Hardware orders a variety of valves at the prices quoted on the price list.Vick Valve must honor the prices on the list and sell the valves to Honest Hank.
A)True
B)False
Q2) Collector Carl displays his beer can collection at the local swap meet.Mary sees the collection and is interested in buying it.Carl says he will sell the collection for $1,500.Mary says she really likes the collection but is only willing to pay $1,000.Which of the following is correct?
A) Mary's counteroffer terminates Carl's offer of $1,500.
B) If Carl rejects Mary's counteroffer, she can still accept Carl's offer of $1,500.
C) Neither offer is valid. Who would ever pay $1,000 or $1,500 for a beer can collection?
D) Mary's offer is a firm offer. Carl has an exclusive right to consider her offer for a reasonable period of time.
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Page 13
Chapter 12: Consideration
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Sample Questions
Q1) Contracts generally do not require bargaining that leads to an exchange between the parties.
A)True
B)False
Q2) The Kelsoe v.International Wood Products,Inc.case was an example of:
A) promissory estoppel.
B) partial performance.
C) illusory promises.
D) lack of consideration.
Q3) What two exceptions did the UCC create for accord and satisfaction check cases?
Q4) Courts enforce all promises in the interests of simple morality.
A)True
B)False
Q5) Courts normally require consideration to be approximately equal on both sides of the bargain.
A)True
B)False
Q6) Discuss the concept of consideration.
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Chapter 13: Legality
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Sample Questions
Q1) The Tavern's secret recipe for its pizza sauce would be considered:
A) a trade secret, and an employment noncompete clause would be enforceable to protect it.
B) a trade secret, and an employment noncompete clause would NOT be enforceable to protect it.
C) just a secret recipe and not something the Tavern could protect in a noncompete clause.
D) an exculpatory clause and not enforceable.
Q2) An insurance contract is not considered to be a legalized form of gambling because:
A) one must have an insurable interest in the person being insured.
B) insurance contracts are underwritten by reputable companies.
C) insurance activities are regulated by the state department of insurance.
D) All of the above.
Q3) To be valid,an agreement not to compete must be ancillary to a legitimate bargain.
A)True
B)False
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15
Chapter 14: Capacity And Consent
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Sample Questions
Q1) A party injured by fraud generally has the choice of suing for damages or rescinding the contract.
A)True
B)False
Q2) Jeff was a subcontractor,bidding on a contract for ACE Corp.,the general contractor.When adding up the total of materials and labor,Jeff's secretary mistakenly moved the decimal point one place,ending up with a bid of $3500 rather than $35,000.ACE Corp.accepted Jeff's bid,mostly because all the other bids were over $30,000.When Jeff learned of the mistake,he tells ACE Corp.that he cannot do the job for $3500.If ACE Corp.sues to enforce this contract,what is the most likely result?
A) The contract is enforceable, since there was an offer, acceptance, and consideration.
B) This is a bilateral mistake, so the contract can be rescinded by either party.
C) This is a unilateral mistake, so the contract cannot be rescinded by Jeff.
D) This is a unilateral mistake, but one where ACE Corp. knew that a mistake had been made. Jeff should be able to rescind the contract.
Q3) Discuss the concept of a "material fact" in fraud situations.
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Page 16
Chapter 15: Written Contracts
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Sample Questions
Q1) Claude agrees to lease his house to Irvin for nine months,the lease to begin six months from the signing of the contract.Under the statute of frauds:
A) the lease is not required to be in writing.
B) the lease is required to be in writing because of the one-year rule.
C) the parol evidence rule renders the lease voidable.
D) the lease is a collateral promise which must be in writing.
Q2) The Uniform Commercial Code provides that,under certain circumstances,a merchant may be liable on a written contract,even though that merchant has NOT signed it.
A)True
B)False
Q3) Bry,Inc.and Gangl Co.entered into an oral agreement for the sale of 3,000 sweaters.Both parties performed as required under the contract.Bry delivered the sweaters and Gangl accepted and paid for them.Since the contract is fully executed,it makes no difference that it was oral.
A)True
B)False
Q4) Explain the reason behind having a statute of frauds and give arguments for and against having such a statute.
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Chapter 16: Third Parties
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Sample Questions
Q1) A nonparty to a contract may enforce the contract if the person is:
A) a donee beneficiary.
B) an incidental beneficiary.
C) a creditor beneficiary.
D) Both a and c
Q2) Most,but not all,contract rights are assignable.
A)True
B)False
Q3) Wright Company contracted with the city of St.Louis to train and employ disadvantaged youths.If Wright fails to fulfill the contract and is sued by one of the disadvantaged youths,the youth would:
A) win, as he is an intended beneficiary.
B) win, as he is a donor beneficiary.
C) lose, as he is a creditor beneficiary.
D) lose, as he is an incidental beneficiary.
Q4) Which of the following duties can probably be delegated?
A) An agreement to perform an operation.
B) A contract to paint a picture.
C) An agreement by an attorney to draft a contract.
D) An agreement to paint a house.
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Chapter 17: Performance And Discharge
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Q1) Sea Rovers,Inc.contracted to sell 1,000 pounds of shrimp to the Seafood Shack with delivery on June 1.On May 1 Sea Rovers advised the Seafood Shack that it would not be able to deliver the shrimp.The Seafood Shack:
A) can sue Sea Rovers immediately for breach of contract.
B) must wait until June 1 to see if Sea Rovers will perform before suing for breach of contract.
C) cannot sue Sea Rovers because Sea Rovers gave adequate notice. D) must wait until actual damages are determined before it can sue.
Q2) Name and describe the types of conditions,explain how conditions are created,and discuss whether it is important to identify the type of condition in a contract.
Q3) Ramon purchased 5,000 pounds of coffee from Quick Jump Coffee.The coffee was to be delivered on September 1.Since the contract included a date for performance,time is of the essence and the delivery date is strictly enforceable.
A)True
B)False
Q4) Most contracts are discharged by mutual agreement of the parties.
A)True B)False
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Page 19
Chapter 18: Remedies
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Sample Questions
Q1) A contract clause which specifies the amount of damages to be paid in the event of a breach is called:
A) a covenant of damages clause.
B) a reliance interest of damages clause.
C) a liquidated damages clause.
D) an incidental damages clause.
Q2) Nominal damages are awarded in contract cases in which a damage amount was named in the contract.
A)True
B)False
Q3) The concept that an injured party may recover consequential damages only if the breaching party should have foreseen them was established in:
A) Bi-Economy Market, Inc. v. Harleysville Ins. Co. of New York.
B) Putnam Construction & Realty Co. v. Byrd.
C) Hadley v. Baxendale.
D) Toscano v. Greene Music.
Q4) Discuss the purpose of an injunction and how the two types of injunctions covered in the textbook are used.
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Page 20
Chapter 19: Practical Contracts
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Q1) Nate works as a carnival barker.His employment contract specifies that he can be fired if he "loses his voice." This is an example of:
A) vagueness.
B) extortion.
C) ambiguity.
D) duress.
Q2) Typos are almost always detrimental to the validity of a contract because they cause the contract to not reflect the true agreement of the parties.
A)True
B)False
Q3) You should hire a lawyer to review any legal papers you have to sign,including such papers as lease agreements or car purchases.
A)True
B)False
Q4) "Scrivener's error" is another (fancier)name for a typo.
A)True
B)False
Q5) Define and compare the terms "vagueness" and "ambiguity."
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Chapter 20: Introduction To Sales
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Q1) The difference between the UCC requirement of good faith and doctrine of unconscionability is that:
A) good faith prohibits shockingly one-sided terms in a contract.
B) good faith focuses on the parties' behavior as they perform the contract.
C) unconscionability looks at the parties' attempt to carry out the terms of the contract in a reasonable manner.
D) unconscionability focuses on whether a party is honest in fact and exercises reasonable commercial standards of fair dealing.
Q2) UCC Section 2-204 provides three important rules that enable parties to make a contract quickly and informally.These include all but which of the following?
A) The parties may make a contract in any manner sufficient to show that they reached an agreement.
B) A writing sufficient under the statute of frauds may be a simple memo, a letter, or informal note, but need not itself be a contract.
C) The UCC will enforce a deal even though it is difficult to say exactly when it was formed.
D) A court may enforce a bargain even though one or more terms were left open.
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Page 22
Chapter 21: Ownership And Risk
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Q1) Mayco has received goods from Wallace pursuant to a sale or return agreement.If Mayco subsequently declares bankruptcy,the goods will be:
A) returned to Wallace because title did not pass to Mayco under this type of sale.
B) belong to Mayco and will not be a part of the bankruptcy.
C) subject to the claims of Mayco's creditors under Section 2-326 of the Uniform Commercial Code.
D) will be kept by the bankruptcy judge and clerk.
Q2) Both the buyer and seller may have an insurable interest in the same goods at the same time.
A)True
B)False
Q3) Buyer is located in Des Moines,Iowa and seller is located in Sacramento,California.The contract specifies F.O.B.Des Moines.This contract is a:
A) destination contract.
B) sale or return.
C) shipment contract.
D) sale on approval.
Q4) Discuss the concept of insurable interests.
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Page 23
Chapter 22: Warranties And Product Liability
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Q1) A sales representative at Oxtren,Inc.orally told the purchasing agent at Wety,Inc.that its industrial saw will cut through metal up to 5 inches thick.Wety purchased the saw.Which statement is correct concerning the claim that the saw can cut through metal up to five inches thick?
A) The claim is an express warranty.
B) The claim is an implied warranty of merchantability.
C) The claim is not a warranty because it is not in writing.
D) The claim is not a warranty because it is sales puffery.
Q2) Bill is injured while standing on the corner of Hollyhock and Vine when Mia's new Hog speeds out of control because of a defective part.In most jurisdictions,Bill:
A) can sue the motorcycle manufacturer even though he does not have privity.
B) cannot sue the motorcycle manufacturer because his injuries are personal injuries as opposed to economic loss.
C) cannot sue the motorcycle manufacturer because the lemon laws require arbitration. D) cannot sue the motorcycle manufacturer because there is no privity of contract.
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Chapter 23: Performance And Remedies
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Q1) A buyer has an absolute right to reject goods as long as the rejection is timely.
A)True
B)False
Q2) The common law requirement that the seller make a tender of delivery that conforms in all respects to the contract requirements was retained by drafters of the UCC,although the Code includes sections that limit the rule's effect.
A)True
B)False
Q3) In the Zion Temple First Pentecostal Church of Cincinnati,Ohio,Inc.v.Brighter Day Bookstore & Gifts case,the court found that,because of an error in the catalog,there was no right to cure a nonconformity with the sleeves of the robes.
A)True
B)False
Q4) "Course of dealing" refers to prior commercial transactions between the same parties.
A)True
B)False
Q5) Discuss the UCC rules on the limitation of damages in a contract.
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Chapter 24: Secured Transactions
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Q1) Florence borrows $1,500 from Fremont,leaving her gold necklace with Fremont as collateral.Two weeks earlier,Florence had borrowed $1,000 from Corner Bank.Florence signed a security agreement and a financing statement giving Corner Bank a security interest in the same gold necklace.The financing statement is filed in the appropriate location.If Florence defaults on both loans,which creditor has the superior rights to the necklace?
A) Fremont, because his loan was the first to attach.
B) Fremont, because possession takes priority over filing.
C) Corner Bank, because Fremont did not perfect his interest.
D) Corner Bank, because Fremont did not have a written security agreement.
Q2) Article 9 applies to any transaction intended to create a security interest in real property.
A)True
B)False
Q3) Ken decided to open a retail boat dealership.He expects that many of his sales will be credit sales.What should Ken do to protect his interests in the collateral in the credit sales that he makes?
Q4) Explain the difference between attachment and perfection.
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Page 26
Chapter 25: Creating A Negotiable Instrument
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Q1) Commercial paper is a contract to pay money.
A)True
B)False
Q2) There are three parties on a promise instrument: the maker,the drawee,and the payee.
A)True
B)False
Q3) Lucky loses in a high-stakes poker game to Fat Chance.To pay his debt,Lucky writes a check to Fat Chance,who negotiates the check to Convenient,who then tries to cash the check at Lucky's bank.Lucky has already stopped payment on the check,so the check is not honored by her bank.Convenient then tries to collect the check by suing Lucky.High-stakes poker games are illegal in this state.Which statement is correct?
A) If Convenient can demonstrate that he is a holder in due course, he will prevail.
B) If Convenient can demonstrate that he was a buyer in the ordinary course of business, he will prevail.
C) If Convenient can demonstrate that he gave value without notice, he will prevail.
D) Convenient will not prevail.
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Chapter 26: Liability For Negotiable Instruments
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Q1) Micah signed a check in the lower right-hand corner and Andrew signed on the back.The presumption is that:
A) Micah is the issuer.
B) Micah is the acceptor.
C) Andrew is the drawer.
D) Andrew is the maker and Micah is an indorser.
Q2) Mack writes a check to his maid,Marianne,in payment for services rendered.Marianne indorses the check in blank and gives the check to her masseuse,Janet,in exchange for a neck massage.Without indorsing the check,Janet gives the check to Martin,her newspaper carrier in payment for the next four month's delivery charges.Martin indorses with a special indorsement and negotiates the check to his church,St.Mark.The church indorses the check and deposits it in its bank account.If Mack's bank later dishonors the check,to whom may St.Mark's look for recovery?
A) Martin only.
B) Only Mack.
C) Mack, Marianne, Janet, and Martin.
D) Mack, Marianne, and Martin.
Q3) List the warranties a transferor of a negotiable instrument makes.
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28
Chapter 27: Accountants' Liability
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Q1) Under the amended Securities Exchange Act of 1934,accountants are liable jointly and severally whether or not they knew they were violating the law.
A)True
B)False
Q2) Clint is auditing MegaCorp.In reviewing the sales ledger,Clint saw that MegaCorp had sold 3,000 disk drives to CompSales,Inc.Clint reviewed the original invoice of this sale to ensure that the date,price,quantity,and customer's name all match.He then verified each step along the paper trail until the disk drives left the warehouse.This illustrates: A) tracing.
B) vouching.
C) following.
D) monitoring.
Q3) Under the UCC,contracts between accountants and their clients must be in writing. A)True
B)False
Q4) Discuss the advantages and disadvantages of using IFRS.
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Chapter 28: Agency Law
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Q1) The doctrine of estoppel would most often apply in situations of:
A) implied authority.
B) apparent authority.
C) transaction authority.
D) actual authority.
Q2) Generally,either party to an agency relationship has the power to terminate it at any time.
A)True
B)False
Q3) Linda borrowed $2,500 from Tonya.They agreed that Tonya could take a grouping of Linda's antiques as collateral.If Linda could not pay,then Tonya could sell the antiques to recover her money.When Linda could not pay off the loan,Tonya sold the antiques and paid Linda the proceeds after deducting the balance of the loan.Which of the following statements is correct?
A) This is an irrevocable agency relationship.
B) This is a power coupled with an interest.
C) Linda has neither the power nor the right to terminate the relationship.
D) All the above are correct.
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Chapter 29: Employment Law
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Q1) Under the Americans with Disabilities Act,a person with a disabling illness:
A) is not considered disabled once the illness is being managed with medicines.
B) is not considered disabled unless there is no known cure.
C) is considered disabled, but only at times when hospitalization is required for treatment.
D) is considered disabled, even if the illness is under control.
Q2) Discuss the requirements of the Family and Medical Leave Act.
Q3) Laura intends to file a Title VII lawsuit against her employer.Which of the following is true?
A) Laura is required to first submit her claim to the Equal Employment Opportunity Commission.
B) Laura must first submit her claim to a state civil rights commission before she may proceed with her lawsuit.
C) If the EEOC determines Laura has no case against her employer, she may not file a lawsuit.
D) Laura may initiate a lawsuit or file with the EEOC as she so elects.
Q4) Some courts have held that employee handbooks create binding contract terms.
A)True
B)False
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Chapter 30: Labor Law
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Q1) In 1932,Congress passed what legislation prohibiting federal court injunctions in nonviolent labor disputes,thereby declaring that workers should be permitted to organize unions and use their collective power to achieve legitimate economic ends?
A) The Sherman Act.
B) The Norris-LaGuardia Act.
C) The National Labor Relations Act.
D) The Labor-Management Relations Act.
Q2) At one point in American history,American courts regarded any coordinated effort by workers as a criminal conspiracy,and courts convicted workers merely for the act of joining together,even if no strike took place.
A)True
B)False
Q3) The management and union at TriColor have bargained for two years without reaching an agreement.After notifying the union,TriColor prohibited the workers from entering the factory to work.This is a lockout.
A)True
B)False
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Chapter 31: Starting A Business
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Q1) Franchise fees can be costly,but they are usually payable over a number of years,after profits are generated from the business.
A)True
B)False
Q2) Jill was a limited partner in a retail business that was sued by a customer who fell in the store.The customer claimed the business was negligent in caring for its floors.Which statement best describes Jill's potential liability?
A) Jill has no potential liability to the customer.
B) Jill can be held personally liable to the customer since she is a partner.
C) Jill can only be liable to the amount of her investment.
D) Jill is personally liable, but the woman must first collect from the general partners before collecting from Jill.
Q3) All the business forms listed below have limited liability except the:
A) limited liability company.
B) general partnership.
C) Subchapter "S" corporation.
D) corporation.
Q4) Briefly discuss the limitations on a corporation electing Subchapter "S" status.
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Chapter 32: Partnerships
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Q1) Astrid and Razi formed a partnership in which they agree to share profits 60 percent to Astrid and 40 percent to Razi.Losses will be shared:
A) equally, unless otherwise agreed.
B) 60 percent to Astrid and 40 percent to Razi, unless otherwise agreed.
C) according to their capital contributions to the partnership.
D) in whatever proportion provides the greatest tax advantage for the partners that year.
Q2) Which of the following events occurs first with respect to the ending of a partnership?
A) Termination.
B) Winding up.
C) Dissolution.
D) Distribution of proceeds.
Q3) The common law of agency applies to relations between partners and it also applies to relations between partners and third parties.
A)True
B)False
Q4) Identify and briefly discuss the management rights and duties of a partner.
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Chapter 33: Life And Death Of A Corporation
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Q1) Which of the following statements is correct?
A) Bonds are long-term debt secured by company assets.
B) Debentures are long-term unsecured debt.
C) Notes are short-term debt and may be secured or unsecured.
D) All the above are correct.
Q2) Identify four circumstances that might persuade a court to pierce the corporate veil.
Q3) A corporate charter is filed with:
A) a state's Secretary of State office.
B) a state's Treasury and/or Revenue Division.
C) the United States Department of Commerce.
D) All the above.
Q4) Once a provision is in the corporate charter,it can only be changed by:
A) a vote of the shareholders.
B) filing an amendment with the Secretary of State.
C) Both of the above are necessary to change a corporate charter.
D) Neither a nor b is necessary to change a corporate charter. The board of directors merely needs to file a change of charter form.
Q5) What are some of the advantages for a business to incorporate in Delaware?
Q6) Discuss how a corporation is terminated.
Page 35
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Chapter 34: Corporate Management
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Q1) A finding by a court that a manager's decision had a rational business purpose does not necessarily protect the manager from a finding that he breached a duty of care.
A)True
B)False
Q2) Corporate responses to takeover attempts are largely governed by federal law.
A)True
B)False
Q3) Which of the following must be approved by the shareholders if a company is attempting to avoid a hostile takeover bid?
A) White knights.
B) Staggered board of directors.
C) Supermajority voting.
D) All the above.
Q4) A manager who has engaged in self-dealing has violated the duty of loyalty to the corporation,unless the self-dealing also benefitted the corporation.
A)True
B)False
Q5) What is the definition of the business judgment rule?
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Chapter 35: Shareholders
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Q1) A shareholder proxy is generally revocable at any time.
A)True
B)False
Q2) Loraine is a shareholder of Taley Corp.She would like to inspect and copy the company's minute book,accounting records,and shareholder lists.Under what circumstances is Loraine allowed to inspect or copy corporate records?
Q3) Who has the right to manage the business of a corporation?
A) Shareholders.
B) Officers.
C) Bondholders.
D) The board of directors.
Q4) A corporation must obtain shareholder approval before the company:
A) sells off a major portion of its business to another company.
B) amends its bylaws.
C) amends its charter.
D) All the above are correct.
Q5) A corporation is required to have at least one class of stock with voting rights. A)True
B)False
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Chapter 36: Securities Regulation
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Q1) The Fallwater Partnership wants to incorporate and is considering using a DPO.Explain what a DPO is and discuss the advantages and disadvantages of this course of action.
Q2) Typically,exemptions under the 1933 Act are based on either the type of security or the type of transaction.
A)True
B)False
Q3) A criminal case under the Securities Act of 1933 is prosecuted by:
A) the SEC.
B) the Justice Department.
C) the Department of the Treasury.
D) the FTC.
Q4) To recover for an alleged violation of SEC Rule 10(b)-5,a plaintiff is required to prove reliance on a misstatement or omission relative to the purchase of the security.
A)True
B)False
Q5) The Securities Act of 1933 established the Securities and Exchange Commission. A)True
B)False
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Chapter 37: Bankruptcy
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Q1) Under the federal Bankruptcy Code,the exemption amount for the debtor's personal residence is:
A) $20,200.
B) $37,100.
C) unlimited.
D) $50,000.
Q2) Which of the following actions would prevent a discharge of debts under Chapter 7?
A) Discharge under Chapters 7 or 11 within the past eight years.
B) Falsified records presented to bankruptcy court by debtor.
C) Failure to disclose assets.
D) All of the above would prevent a discharge of debts.
Q3) Iris received a discharge under a Chapter 7 bankruptcy.She cannot receive another discharge under Chapter 7 for at least:
A) six years after the prior filing.
B) eight years after the prior filing.
C) ten years after the prior discharge.
D) She cannot file another Chapter 7, but could file a Chapter 11 or 13 bankruptcy.
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Chapter 38: Antitrust
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Q1) The most accurate statement about the Robinson-Patman Act is:
A) It has rarely been enforced in recent years.
B) The U.S. government has stepped up its enforcement during the last decade.
C) It has been declared unconstitutional.
D) It was repealed by Congress in 1998.
Q2) The FTC blocked the merger of Staples,Inc.and Office Depot because they controlled a large percentage of the national market for office supplies.
A)True
B)False
Q3) The U.S.Attorney General brought a Sherman Act lawsuit against competitors in the widget market.The Attorney General alleged that these companies agreed to charge $20 for widgets.Which of the following defenses may apply?
A) That the $20 price was fair.
B) That the $20 price was lower than the price before the agreement.
C) That the businesses did not agree to charge $20 for widgets.
D) That the competitors would have gone out of business without the agreement.
Q4) Discuss when monopoly power is not a violation of Section 2 of the Sherman Act.
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Chapter 39: Consumer Law
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Q1) In a closed-end credit transaction:
A) the lender makes a series of loans with a maximum amount set before the first loan is made.
B) if the lender is offering a "teaser rate," this must be clearly disclosed.
C) the Federal Reserve Board should be consulted before a lender is chosen.
D) there is only one loan, and the borrower knows the amount and payment schedule in advance.
Q2) Employers must have written permission from job applicants to request a credit report.
A)True
B)False
Q3) Ron's Furnace Repair advertised it would inspect any homeowner's furnace for free.Janet had Ron's come to inspect her furnace.The servicewoman dismantled the entire furnace then refused to put it back together unless Janet paid her $250.The FTC considers such a practice to be:
A) an unfair practice.
B) a deceptive practice.
C) an act that violates public policy.
D) All the above.
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Page 41
Chapter 40: Environmental Law
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Q1) The disposal of nonhazardous solid waste is:
A) generally regulated by state law, but the federal government sets guidelines that must be followed.
B) the only area of environmental concern that has yet to be regulated by federal action.
C) completely governed by federal administrative law.
D) currently the subject of great debate since the federal government has declared such activity falls under the Endangered Species Act and, therefore, a small annoying fly known to frequent landfills must be protected.
Q2) Congress established a trust fund for the EPA to use in Superfund cleanup.This trust fund was initially financed by a tax on what?
A) The general public through federal income taxes.
B) Waste management and landfill operators.
C) The construction industry.
D) The oil and chemical industries.
Q3) Local regulation is more effective than state or federal regulation in controlling air pollution.
A)True
B)False
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Chapter 41: Cyberlaw
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Q1) The Internet was started in the 1960s as a project to link military contractors and universities.The World Wide Web was created in 1991 as a subnetwork of the Internet.
A)True
B)False
Q2) Maria,who lives in the United States,gains unauthorized access to a bank's computer system and steals financial information about customers.Of what is Maria guilty,and under what statute(s)could she be prosecuted?
Q3) What statute requires banks and other financial institutions to disclose to consumers any non-public information they wish to reveal to third parties?
A) Banking and Financial Institution Privacy Act.
B) Gramm-Leach-Bliley Privacy Act.
C) Electronic Communications Privacy Act.
D) Communications Privacy and Decency Act.
Q4) The Computer Fraud and Abuse Act prohibits all but which of the following?
A) Computer trespass.
B) Sending spam.
C) Negligent damage to a computer attached to the Internet.
D) Trafficking in computer passwords.
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Page 43
Chapter 42: Intellectual Property
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Q1) Southern Bar-B-Q owns a special,secret recipe for sauce which it guards because it gives the restaurant a competitive advantage.If Mort willfully misappropriates the recipe,a court may hold him liable to Southern for double damages.
A)True
B)False
Q2) If a trademarked name acquires a generic meaning,the owner of the trademark loses protection.
A)True
B)False
Q3) Jack goes to Fast Copy Center and pays to have 40 copies of a textbook made.Jack then sells the photocopied versions of the book to fellow students for $60 a copy (as opposed to the $95 textbook price).The textbook author learns of this and sues Jack and the copy center.Which statement is correct?
A) Jack and the copy center are both liable to the author.
B) Jack is liable to the author but the copy center is not.
C) The copy center is liable to the author but Jack is not.
D) Neither the copy center nor Jack is liable to the author.
Q4) Briefly discuss a patent,copyright,and trademark.
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Page 44
Chapter 43: Real Property And Tenant-landlord Law
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Q1) If you grant a nonpossessory interest to Eagle Logging to enter your land and remove timber from ten acres,you have granted Eagle a profit.
A)True
B)False
Q2) The right of the tenant to the undisturbed possession of the leased property is known as:
A) quiet enjoyment.
B) habitability.
C) lawful possession.
D) peaceful possession.
Q3) Tom rented an apartment from Margaret on a month-to-month basis,with rent due on the first of the month.This type of tenancy is known as a "tenancy at will."
A)True B)False
Q4) The landlord's duty to provide quiet enjoyment of the premises and the landlord's duty to deliver and maintain the premises in a habitable condition are one and the same.
A)True B)False
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Chapter 44: Personal Property And Bailment
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Q1) Jimmy stole Dave's motorcycle and completely revamped the engine and changed the body.These accessions were very expensive,but Jimmy was completely satisfied with the results,intending to sell the motorcycle for a huge profit.If the motorcycle is recovered from Jimmy,Dave must pay Jimmy for the improvements.
A)True
B)False
Q2) Distinguish between a contract and a gift.Give an example of each.
Q3) Most of the goods contained in a freight train (a common carrier)were destroyed when a tornado wrecked the train.The carrier was sued for damages by all the shippers that had merchandise on the train.Is the carrier strictly liable for the damage done to the goods by the tornado?
Q4) Mega Corporation,the bailor,negotiates a bailment agreement with Huge Corporation,the bailee.Huge Corporation insists that an exculpatory clause be included in the terms and conditions of the bailment agreement.Later,Huge Corporation negligently (ordinary negligence,not gross negligence)damages the property which is the subject of the bailment.Most courts will allow Huge Corp.to stand behind its exculpatory clause and deny liability.
A)True
B)False
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Chapter 45: Planning For The Future: Wills,Trusts,And Insurance
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Q1) Singleton,an eighty-year-old widower,remarried.The next day,he made a will leaving everything to his son,Joey.A week after his marriage,Singleton died.How will his estate be handled?
Q2) Reva prepares and signs a document that she intends to be her will.If she has not followed the legal technicalities of her state regarding executing a will,the court may not enforce the will.
A)True
B)False
Q3) Which of the following property is not affected by a will?
A) Life insurance.
B) Joint tenancy property.
C) Retirement benefits.
D) All of the above.
Q4) Insurance policies often contain a covenant of good faith and fair dealing.Even if the clause is not in the policy,often courts will imply it.Explain the covenant of good faith and fair dealing and provide an example illustrating when an insurance company might breach this covenant.
Q5) Identify four ways a trust can be terminated.
Q6) Discuss the differences between a will and a trust.
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