Entrepreneurship and the Law Test
Bank
Course Introduction
Entrepreneurship and the Law explores the critical legal issues and frameworks that impact the creation, growth, and management of new business ventures. The course examines topics such as business formation and structuring, intellectual property protection, contracts, financing, regulatory compliance, employment law, and risk management. Through case studies, practical exercises, and real-world examples, students will develop an understanding of how legal considerations influence entrepreneurial decision-making, and acquire tools to identify and navigate the legal challenges faced by startups and small businesses.
Recommended Textbook
Business Law Text Cases An Accelerated Course 14th Edition by Roger LeRoy Miller
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19 Chapters
1368 Verified Questions
1368 Flashcards
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Page 2
Chapter 1: Law and Legal Reasoning
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Sample Questions
Q1) In most states, the courts no longer grant "equitable" remedies.
A)True
B)False
Answer: False
Q2) Kevin is a judge hearing the case of Local Dispatch Co. v. National Transport Corp.
Applying the relevant rule of law to the facts of the case requires Kevin to find previously decided cases that, in relation to the case under consideration, are
A) as different as possible.
B) as similar as possible.
C) at odds.
D) exactly identical.
Answer: B
Q3) Business decision makers are expected to make decisions that are ethically sound.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Business and the Constitution
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Sample Questions
Q1) The checks and balances in the U.S. Constitution prevent any one branch of government from exercising too much power.
A)True
B)False
Answer: True
Q2) The First Amendment protects commercial speech more extensively than noncommercial speech.
A)True
B)False
Answer: False
Q3) The Constitution sets out the authority and the limits of the branches of the government. The term checks and balances means that
A) Congress writes checks and the other branches balance the budget.
B) each branch has some power to limit the actions of the others.
C) the courts balance their authority to the other branches' checklists.
D) the president "checks" the courts, which "balance" the laws.
Answer: B
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Chapter 3: Courts and Alternative Dispute Resolution
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Sample Questions
Q1) The role of the courts is to interpret and apply the laws.
A)True
B)False
Answer: True
Q2) Quest Inc., a U.S. firm, and Real Treks, Ltd., a Canadian firm, enter into a contract that does not have a forum-selection or choice-of-law clause. Litigation between Quest and Real Treks involving this contract may occur in
A) an online forum only.
B) Canada or the United States, but not both.
C) Canada, the United States, or both.
D) an international, United Nations tribunal only.
Answer: C
Q3) The term venue refers to the location of a trial.
A)True
B)False
Answer: True
Q4) Generally, a foreign court's decision can be enforced in the United States.
A)True
B)False
Answer: True
Page 5
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Chapter 4: Tort Law
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Sample Questions
Q1) False imprisonment occurs when a person restrains another intentionally and without justification.
A)True
B)False
Q2) Felix tells Genie, a prospective tenant, that the roof of the Hillside Apartments building does not leak when Felix knows that it does. This may give rise to an action for fraud, because the statement is one of A) puffery.
B) fact.
C) illusion.
D) opinion.
Q3) Robin is a spectator at State Tennis Tournament, an athletic competition. Regarding the risk of injury, Robin assumes the risks
A) attributable to the tournament in any way.
B) different from the risks normally associated with the tournament.
C) greater than the risks normally associated with the tournament.
D) normally associated with the tournament.
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Chapter 5: Criminal Law and Cyber Crime
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Sample Questions
Q1) Reese, driving while intoxicated, causes a car accident that results in the death of Sanyo. Reese is arrested and charged with a felony. A felony is a crime punishable by death or imprisonment for A) any period of time.
B) more than one year.
C) more than six months.
D) more than ten days.
Q2) Ordinarily, "ignorance of the law" or a mistaken idea about what the law requires is a valid defense to criminal liability.
A)True
B)False
Q3) In a criminal case, the state must prove its case by a preponderance of the evidence.
A)True
B)False
Q4) A stolen credit card is more likely to hurt the cardholder than a merchant.
A)True
B)False
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Chapter 6: Business Ethics
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Sample Questions
Q1) According to the view that Applied Engineering Corporation is a "citizen," the firm is expected to
A) participate in bettering communities and society.
B) primarily generate revenue for its owners.
C) have no responsibility other than profit maximization.
D) efficiently allocate scarce resources.
Q2) It may be unethical for a company to refuse to negotiate liability claims for alleged injuries because of a faulty product.
A)True
B)False
Q3) Ryland, an officer for Sports Park, Inc., attempts to apply a duty-based approach to ethical reasoning in conflicts that occur on the job. This approach is based on the idea that a person must
A) achieve the greatest good for the most people.
B) avoid unethical behavior regardless of the consequences.
C) conform to society's ethical standards.
D) place his or her employer's interest first.
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Chapter 7: Nature and Terminology
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Sample Questions
Q1) All contracts must be in writing to be enforceable.
A)True
B)False
Q2) In contract law, intent is determined by the subjective theory of contracts.
A)True
B)False
Q3) Clay offers to pay Dian $50 for a golf lesson for Ewan. They agree to meet on Friday to exchange the cash for the lesson. These parties have
A) a bilateral contract.
B) a unilateral contract.
C) a void contract.
D) an executive contract.
Q4) The person who makes a promise is the promisee.
A)True
B)False
Q5) One of the requirements of a valid contract is an adequate price.
A)True
B)False
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Chapter 8: Agreement in Traditional and E-Contracts
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Sample Questions
Q1) Fix-It-Quik, Inc., offers Gina a job as a plumber. No time for acceptance is specified in the offer. The offer will terminate
A) after a reasonable period.
B) after a work week (five business days).
C) after a month (thirty calendar days).
D) never.
Q2) An "offer" to sell an item on an online auction site generally is treated an invitation to negotiate.
A)True
B)False
Q3) In most cases, an offeror can revoke an offer as long as the revocation is communicated before the offeree accepts.
A)True
B)False
Q4) A forum-selection clause specifies that any contract dispute will be settled in a particular jurisdiction.
A)True
B)False
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Chapter 9: Consideration, Capacity, and Legality
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Sample Questions
Q1) To be legally sufficient, consideration must be evidenced by something tangible.
A)True
B)False
Q2) Twyla's dock is damaged in a boating accident caused by Ulrich's negligence. Twyla agrees not to sue him if he will pay for the damage. If Ulrich fails to pay, Twyla can bring an action for breach of contract. This is
A) a covenant not to sue.
B) an illusory promise.
C) an unforeseen difficulty.
D) a release.
Q3) Contractual capacity includes the financial ability to pay for the benefits of a contract.
A)True
B)False
Q4) Contracts in restraint of trade are contrary to the public policy that favors competition in the economy.
A)True
B)False
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Chapter 10: Defenses to Contract Enforceability
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Sample Questions
Q1) Reliance on a misrepresentation is justified if the misrepresentation is an obviously extravagant statement.
A)True
B)False
Q2) Misrepresentation cannot occur by silence.
A)True
B)False
Q3) A written contract for a transfer of land is usually enforceable.
A)True
B)False
Q4) A contract in which a party assumes a secondary obligation normally must be in writing to be enforceable.
A)True
B)False
Q5) An innocent party can rescind a fraudulent contract and be restored to his or her original position.
A)True
B)False
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Chapter 11: Third Party Rights and Discharge
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Sample Questions
Q1) A discharge in bankruptcy will ordinarily allow a creditor to subsequently enforce the debtor's contract.
A)True
B)False
Q2) Marco and Ned enter into a contract for the sale of Marco's apartment for which Ned agrees to pay him $100,000. Marco cannot prohibit Ned from transferring his right to the ownership of the apartment because such a prohibition is
A) against public policy.
B) immoral.
C) unconscionable.
D) a crime.
Q3) The most common way to discharge contractual duties is by breach of contract.
A)True B)False
Q4) A material breach occurs when performance is substantial, but not complete. A)True
B)False
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Chapter 12: Breach of Contract and Remedies
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Sample Questions
Q1) Ridgeview Mining Inc. agrees to deliver a certain quantity of oil to Static Energy Corporation. The agreement states that delivery is to be within "9" days, although the parties intend "90" days. Ridgeview cannot convince Static to amend the contract. Ridgeview should seek A) damages.
B) reformation.
C) rescission.
D) specific performance.
Q2) Lunch Trucks, Inc., contracts to deliver and serve Meals Catering Service's products to its clients for $5,000 per event, payable in advance. Meals Catering pays the money, but Lunch Trucks fails to perform. Can Meals Catering rescind the contract? Can Meals Catering also obtain restitution? What does it mean to "rescind" a contract? How is a contract rescinded? What is restitution? How is restitution accomplished? Explain.
Q3) A party seeking to recover in quasi contract must show that the other party has been unjustly enriched.
A)True
B)False
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Chapter 13: Intellectual Property Rights
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Sample Questions
Q1) A trademark must be registered to support a trademark infringement action.
A)True
B)False
Q2) Chris operates the Devil's Brew chain of coffee stands. "Devil's Brew" is a
A) certification mark.
B) collective mark.
C) service mark.
D) trade name.
Q3) Metro Movers Miami Corporation allows Metro Movers Milwaukee Company to use Metro Movers' trademark as part of its company advertising. This is
A) a license.
B) likely to confuse consumers.
C) trademark infringement.
D) trademark dilution.
Q4) A personal name is not protected under trademark law if it acquires a secondary meaning.
A)True
B)False
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Page 15
Chapter 14: Internet Law, Social Media, and Privacy
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Sample Questions
Q1) Eddie and other users of Facebook and other social networking sites post trademarked images and copyrighted materials on these sites without permission. This is
A) a violation of the intellectual property rights of the owners of the images and materials.
B) within the rights of the users of social networks.
C) a subject for dispute resolution by the providers of the social networks.
D) a "business-extension exception" under the Electronic Communications Privacy Act.
Q2) Social media users can post trademarked images or copyrighted materials without infringing the owners' rights, even if it is done without permission.
A)True
B)False
Q3) Federal law permits the intentional interception of any wire, oral, or electronic communication.
A)True
B)False
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Chapter 15: The Formation of Sales and Lease Contracts
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Sample Questions
Q1) Under the "partial performance" exception to the UCC, an oral contract for goods worth more than $500 is enforceable if the goods are designed to partially perform a specific function.
A)True
B)False
Q2) Marine Expeditions, Inc., pays Nate's Boats $4,000 to use an oceangoing vessel for a month. For the purposes of the UCC, this is
A) a merchant's firm offer.
B) an option contract.
C) a lease.
D) a sale.
Q3) The terms of a fully integrated contract can be contradicted by evidence of any prior agreements.
A)True
B)False
Q4) The UCC imposes some different rules on merchants.
A)True
B)False
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Chapter 16: Performance, Breach, and Warranties of Sales and
Lease Contracts
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Sample Questions
Q1) Tarts & Pies Bakery contracts with Sweet Fruits for strawberries to be delivered by Refrigerated Trucking Company. On the day of delivery, the refrigeration on the trucks is not working. Sweet Fruits
A) may ship the strawberries to the buyer using a different carrier.
B) must cancel the contract.
C) must wait to ship the strawberries until the carrier fixes its trucks.
D) must ship the goods through a different carrier and pay damages.
Q2) Trucks & Trailers, Inc. (T&T), and United Express Service enter into a contract for a lease of vehicles. T&T is a merchant who deals in goods of the kind leased. Under the UCC, an implied warranty of merchantability arises
A) automatically in most contracts for a lease of goods.
B) only if the lessee asks for it.
C) only if the lessor expresses such a warranty.
D) only in conjunction with sales, not lease, contracts.
Q3) A statute of limitation may restrict the time within which an action for breach of warranty may be brought.
A)True
B)False
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Chapter 17: Agency Relationships in Business
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Sample Questions
Q1) An agent's duties to the principal are implied from the agency relationship only if the identity of the principal is disclosed to a third party.
A)True
B)False
Q2) High Plains Distribution Inc. hires Inez to work on its shipping dock, accepting deliveries, dispatching trucks, and dealing with customers and other companies' drivers. With respect to High Plains, Inez is most likely
A) an agent.
B) an independent contractor.
C) a principal.
D) a work for hire.
Q3) Based on Oona's conduct, Porcio reasonably believes that Qasim has the authority to act on Oona's behalf even though Qasim does not have the actual authority to do so. In this circumstance, Qasim has A) apparent authority.
B) express authority.
C) implied authority.
D) no authority.
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19
Chapter 18: Small Businesses and Limited Liability Companies
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Sample Questions
Q1) Custom Auto, LLC, is a limited liability company. Its members include Dennis and Emma. Like other LLCs with more than one member, unless indicated otherwise, the firm will automatically be taxed as A) a person.
B) a corporation.
C) a sole proprietorship.
D) a partnership.
Q2) Data Analytics, LLC, is a limited liability company. Unless the articles of organization specify otherwise, it will most likely be assumed that the firm is A) member-managed.
B) manager-managed.
C) an aggregate of member and non-member managers.
D) run by an outside professional management group.
Q3) When lending capital to a small business, a bank may require a personal guaranty of its repayment from the owner.
A)True
B)False
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Page 20
Chapter 19: Corporations
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Sample Questions
Q1) Not all directors have a right to access a corporation's books and records, facilities, and premises.
A)True
B)False
Q2) A corporation is not liable for the misconduct of its agents, officers, or employees.
A)True
B)False
Q3) Corporate officers can normally be removed by the board of directors without cause.
A)True
B)False
Q4) Express powers of a corporation can be found in state corporation statutes. A)True B)False
Q5) The board of directors makes corporate policy decisions. A)True
B)False
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Page 21