Entrepreneurship Law
Mock Exam
Course Introduction
Entrepreneurship Law explores the legal landscape faced by entrepreneurs in launching and operating new ventures. The course examines foundational topics such as business entity formation, intellectual property protection, contract negotiation, financing and securities regulation, employment law, and the ethical responsibilities inherent in entrepreneurship. Special emphasis is placed on identifying and mitigating legal risks during various stages of a startup's growth, including the drafting of foundational documents, founder agreements, and dealing with venture capitalists and other investors. Students gain practical skills through real-world scenarios and case studies, preparing them to navigate the complex legal challenges entrepreneurs encounter.
Recommended Textbook
Business Law Principles for Todays Commercial Environment 5th Edition by Twomey
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51 Chapters
2716 Verified Questions
2716 Flashcards
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Chapter 1: The Nature and Sources of Law
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Sample Questions
Q1) The common law are court-enforced unwritten principles originally based on the usages and customs of the community.
A)True
B)False
Answer: True
Q2) A right is an obligation of law imposed on a person to perform or refrain from performing a certain act.
A)True
B)False
Answer: False
Q3) The pattern of rules that society establishes to control the conduct of individuals in their relationships is called law.
A)True
B)False
Answer: True
Q4) The Uniform Commercial Code is a good example of uniform state laws.
A)True
B)False
Answer: True
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Chapter 2: The Court System and Dispute Resolution
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Sample Questions
Q1) An appellate court determines whether there has been reversible error.
A)True
B)False
Answer: True
Q2) If questions of fact are involved,a judge will usually decide the case based on the pleadings alone.
A)True
B)False
Answer: False
Q3) A "Rent-a-Judge" serves as a referee.
A)True
B)False
Answer: True
Q4) Which is not considered an alternate means of dispute resolution?
A) civil lawsuit
B) arbitration
C) association tribunals
D) minitrial
Answer: A
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Chapter 3: Business Ethics, Social Forces and the Law
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Sample Questions
Q1) Unwillingness of businesses to voluntarily improve the ethics of their practices has little practical effect on the regulatory environment.
A)True
B)False
Answer: False
Q2) Rights theory includes all of the following except:
A) is also known an entitlement theory.
B) states that everyone has a set of rights.
C) believes that it is the government's responsibility to protect our rights.
D) using others in a way that gives you a one-sided benefit.
Answer: D
Q3) Differences among businesses preclude the development of any universal categories of ethical behavior.
A)True
B)False
Answer: False
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Page 5
Chapter 4: The Constitution as the Foundation of the Legal Environment
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Sample Questions
Q1) Until 1937,the Supreme Court held that the Commerce Clause gave Congress the power to regulate only interstate commerce,such as an interstate telegraph message.
A)True
B)False
Q2) According to the Privileges and Immunities clause,a state cannot bar someone who comes from another state from engaging in local business or from obtaining a hunting or fishing license.
A)True
B)False
Q3) The commerce clause of the Constitution:
A) prohibits the U.S. government from engaging in interstate commerce.
B) prohibits the U.S. government from regulating interstate commerce.
C) has been expanded by Supreme Court interpretations to give the U.S. government the power to regulate the general welfare of the nation.
D) was declared unconstitutional in 1937.
Q4) A strong President is one of the characteristics of a "living Constitution."
A)True
B)False
6
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Chapter 5: Government Regulation of Competition and Prices
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Sample Questions
Q1) Each of the states and the federal government have statutes and regulations that prohibit unfair methods of competition.
A)True
B)False
Q2) Criminal penalties are possible under the Sherman Act.
A)True
B)False
Q3) A person who is harmed by a conspiracy that violates the Sherman Antitrust Act may sue the wrongdoers for treble damages,which is four times the actual damages.
A)True
B)False
Q4) The Clayton Act prohibits price discrimination between different buyers of like commodities when the effect may be to substantially lessen competition.
A)True
B)False
Q5) Boycotts are always illegal,even when done with good intentions.
A)True
B)False
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Chapter 6: Administrative Agencies
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Sample Questions
Q1) The term "exhaustion of administrative remedies" means that:
A) parties to an agency action must be diligent in pursuing their case.
B) parties to an administrative action must take their appeal to a court of law.
C) parties to an administrative action can appeal only after the agency has made a final decision.
D) administrative agencies tend to work very hard.
Q2) Which of the following is true about judicial review of agency action?
A) Judges tend to substitute their own judgment for that of the agency.
B) Courts will reverse agency decisions merely because the court would have made a different decision based on the same facts.
C) Courts will reverse a decision if they disagree with the legal interpretation.
D) There is a right to a trial by jury before an agency.
Q3) The Federal Register lists all administrative regulations,presidential proclamations,and executive orders on a semiannual basis.
A)True
B)False
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Chapter 7: Crimes
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Sample Questions
Q1) Because a corporation is not a human being,it cannot be convicted of a crime.
A)True
B)False
Q2) Specific statutes define the _______,which is the criminal conduct required to be charged with a crime.
A) mental state.
B) scienter.
C) actus reus.
D) mental awareness.
Q3) Executives can be convicted on the basis of "honest services" fraud that something went wrong at their company.
A)True
B)False
Q4) An act that is a felony in one state be a felony in all states.
A)True
B)False
Q5) Bribery requires the use of violence.
A)True
B)False
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Chapter 8: Torts
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Sample Questions
Q1) There are several defenses available when the standard of strict liability is applied.
A)True
B)False
Q2) Negligence is imposed because the activity involved is so dangerous that there must be full accountability,even if the activity is necessary and cannot be prohibited
A)True
B)False
Q3) Interactive web sites are immune from liability for content created by a third-party user,unless the web site actively edits the content.
A)True
B)False
Q4) Product disparagement is a form of defamation.
A)True
B)False
Q5) The same action can have both civil and criminal liability.
A)True
B)False
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Page 10
Chapter 9: Intellectual Property Rights and the Internet
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Sample Questions
Q1) ICANN is a nonprofit corporation responsible for:
A) granting safe harbors for good faith domain name violators.
B) removing cybersquatters from the internet.
C) resolving differences among domain names.
D) coordinating the use of domain names across the Internet.
Q2) Trademark law categorizes marks along a spectrum of ______,based on a mark's capacity to serve ______.
A) suggestiveness, the characteristics of the service to which they relate.
B) fancifulness, the characteristics of the product to which they relate.
C) descriptiveness, a source-identifying function.
D) distinctiveness, a source-identifying function.
Q3) Although processes and machines are eligible for patent protection,manufactures and compositions of matter are not.
A)True
B)False
Q4) An owner of a copyright may license some of his or her rights to another in exchange for royalty payments.
A)True
B)False
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Chapter 10: The Legal Environmental of International Trade
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Sample Questions
Q1) The jurisdictional rule of reason addresses the problems that arise when a foreign country has a significant interest in regulating conduct taking place within the United States.
A)True
B)False
Q2) United States antitrust laws have broad extraterritorial reach.
A)True
B)False
Q3) In order to strengthen the ________,in 1982 Congress passed the ________ to provide clarity on the extraterritorial reach of antitrust actions against foreign companies that have a "direct,substantial,and reasonably foreseeable effect" on U.S.commerce.
A) Rule of Reason Doctrine, Foreign Trade Antitrust Improvements Act
B) Act-of-State Doctrine, Foreign Trade Antitrust Improvements Act
C) Sovereign Compliance Doctrine, Foreign Trade Antitrust Improvements Act
D) Sherman Act, Foreign Trade Antitrust Improvements Act
Q4) Parties to international ventures often agree to arbitrate their disputes in neutral countries.
A)True
B)False
Page 12
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Chapter 11: Nature and Classes of Contracts: Contracting on the Internet
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Sample Questions
Q1) A contract is essentially an agreement that creates an obligation.
A)True
B)False
Q2) An obligation to pay for the reasonable value of services rendered when there is no contract would be called:
A) quasi-contractual.
B) quasi-enforceable.
C) semi-lawful.
D) valid.
Q3) An implied contract is shown by:
A) a writing.
B) the acts and conduct of the parties.
C) statements made in open court.
D) an exchange of oral promises.
Q4) A contract of record is also referred to as a(n):
A) recognizance.
B) reconnaissance.
C) recording contract.
D) implied contract.
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Chapter 12: Formation of Contracts: Offer and Acceptance
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Sample Questions
Q1) In general,an acceptance occurs when:
A) a particular form of words is stated to the offeror.
B) a particular mode of expression is made to the offeror.
C) the offeree reserves the right to reject the offer.
D) a clear expression of the offeree's agreement to be bound by the terms of the offer occurs.
Q2) When an offer has been accepted:
A) a subsequent revocation of the offer may serve to nullify the resulting contract.
B) a contract is formed, assuming that all of the other elements of a contract are present.
C) either party may withdraw from the resulting contract without consent.
D) the acceptance is executory.
Q3) A "best efforts" clause is always deemed too indefinite to be enforceable.
A)True
B)False
Q4) Generally,advertisements,catalog prices,and circulars are offers that can be accepted.
A)True
B)False
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Chapter 13: Capacity and Genuine Assent
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Sample Questions
Q1) Ratification consists of any words or conduct of a former minor manifesting an intent to be bound by the terms of a contract made while a minor.
A)True B)False
Q2) Generally,when a person of legal age makes a contract with a minor,the contract is voidable by either party.
A)True B)False
Q3) Jack sells Jim a used car that Jack falsely described as having been driven only 12,000 miles.Fraud has occurred if:
A) Jim bought the car solely because of its color.
B) Jim knew that the mileage was more than 12,000 miles.
C) Jim relied upon Jack's statement.
D) Jack is a merchant.
Q4) The "necessaries" of minors are precisely defined by law. A)True B)False
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Chapter 14: Consideration
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Sample Questions
Q1) Liz agrees to cook 20 dinners for Brian,and in exchange,Brian will repair all of the plumbing in Liz's house.Liz and Brian's 'deal' has:
A) insufficient consideration, because cooking twenty dinners is not worth as much as repairing all of the plumbing in Liz's house.
B) insufficient consideration, because this kind of bargain is against public policy.
C) insufficient consideration, because there is a clear lack of any bargain.
D) sufficient consideration, because Liz has promised something of value.
Q2) Past benefits already received by a promisor cannot be consideration for a later promise.
A)True
B)False
Q3) In a composition of creditors,the various creditors of a single debtor mutually agree to accept a fractional part of their claims in full satisfaction of the claims.
A)True
B)False
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Chapter 15: Legality and Public Policy
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Sample Questions
Q1) If a contract can be interpreted in two ways,one legal and the other illegal,the court will assume that the legal meaning was intended unless the contrary is clearly indicated.
A)True
B)False
Q2) Which of the following is not illegal?
A) an office football "pool" with a cash entry fee and cash prize
B) a raffle with an entry fee to win a car
C) a "giveaway" to every tenth person who buys meat at a butcher shop
D) a "giveaway" to every tenth person entering a department store
Q3) The validity of a contract is not affected by:
A) the effect of the contract on the community.
B) unconscionability.
C) the absence of good faith.
D) the fact that the contract turned out to be a bad bargain for one of the parties.
Q4) A noncompetition covenant may be held invalid because of vagueness concerning the duration and geographic area of the restriction.
A)True
B)False
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Page 17
Chapter 16: Writing, Electronic Forms, and Interpretation of Contracts
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Sample Questions
Q1) Suzy Anders enters into an oral contract to purchase a tract of land from Bill Hermes.The land is considered worthless,but Anders feels that she has discovered a possible usage that would drastically increase the value of the land.To assure herself of the potential value of the land,Anders orally hires an attorney to investigate the title and records associated with the land in question.Before gaining any information from her attorney,Anders orally contracts with a builder to construct a huge building on the site.Because of the size of the project,a completion time is difficult to predict.Anders now discovers that the land is indeed useless,a fact that she obtains through information from her attorney.?Anders now refuses to honor her contracts with Hermes,her attorney,and the builder.Must Anders honor her contractual agreements?
Q2) An oral contract can be enforced when it relates to:
A) the purchase of a television set for $200.
B) the sale of an interest in land for $400.
C) managing a factory for five years.
D) a promise to answer for the debt of another.
Q3) The past performance of the parties under a continuing contract is irrelevant in determining what the contract means.
A)True
B)False
Page 18
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Chapter 17: Third Persons and Contracts
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Sample Questions
Q1) A third person automatically has the status of an intended third-party beneficiary regardless of the parties' intentions at the time of contracting.
A)True
B)False
Q2) In general,an assignee stands:
A) in a position subordinate to the assignor.
B) exactly in the position of the assignor.
C) in a position superior to the assignor.
D) in a position similar to, but not equal to, the assignor.
Q3) The making of an assignment __________ the assignor of any obligation of the contract.
A) relieves
B) conditionally relieves C) does not relieve
D) discharges
Q4) Under the UCC,an assignment of all the assignor's rights under a contract generally is held to be both an assignment of rights and a delegation of duties.
A)True
B)False
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Chapter 18: Discharge of Contracts
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Sample Questions
Q1) Kentucky Lumber and Millwork Company contracted to supply Rommell Company millwork for use in the construction of a school building.While the work was in progress,the Kentucky Lumber mill was destroyed by fire.For two months thereafter,Kentucky Lumber and Millwork supplied Rommell with millwork purchased from a third party.Kentucky Lumber and Millwork did not wish to continue this plan and declared that the contract was ended.Rommell brought an action against Kentucky Lumber and Millwork to enforce the contract.How will the court decide?
Q2) To avoid litigation over impossibility and impracticability issues,modern contracting parties often contract around the doctrine of impossibility,specifying the failures that will excuse performance in their contracts.The clauses in which they do this are called __________ clauses,and they are generally enforced by courts as written.
A) delta force
B) force majeure
C) magnum force
D) force corporeal
Q3) A condition subsequent can alter but not terminate a contract.
A)True
B)False
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Chapter 19: Breach of Contract and Remedies
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Sample Questions
Q1) If one of the parties retains money or a legal benefit in a breach of contract,that person is obligated to make restitution to the person conferring the benefit.
A)True
B)False
Q2) Consequential damages may not be recovered,even if they were within the contemplation of the parties at the time of contracting.
A)True
B)False
Q3) A contractual provision which states that a waiver of rights will not constitute a modification to the contract is:
A) not enforceable as being in bad faith.
B) not enforceable as a violation of law.
C) enforceable by one party only.
D) enforceable.
Q4) A waiver of a breach may be either express or implied.
A)True B)False
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Chapter 20: Personal Property and Bailments
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Sample Questions
Q1) A gift causa mortis is considered a conditional gift.
A)True
B)False
Q2) Severalty is a form of property ownership by two or more persons.
A)True
B)False
Q3) In states that follow the community property tradition,property acquired after the marriage belongs solely to the party who acquired it.
A)True
B)False
Q4) Most courts consider an engagement ring to be a conditional gift.
A)True
B)False
Q5) Personal property is tangible and immovable.
A)True
B)False
Q6) Joint tenancy and tenancy in common both feature the right of survivorship.
A)True
B)False
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Chapter 21: Legal Aspects of Supply Chain Management
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Sample Questions
Q1) In most states,statutes limit or provide a method of limiting the common law liability of a hotelkeeper.
A)True
B)False
Q2) The purchase of a warehouse receipt by due negotiation eliminates all prior claims.
A)True
B)False
Q3) The storage of goods in a warehouse and the shipment of goods by a common carrier are examples of special bailments.
A)True
B)False
Q4) A factor is a special type of bailee.
A)True
B)False
Q5) A negotiable warehouse receipt that provides for delivery of the goods to the order of Jill Jones may be negotiated by delivery of the document to the purchaser.
A)True
B)False
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Chapter 22: Nature and Form of Sales
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Sample Questions
Q1) An agreement to modify a contract for the sale of goods that is not supported by consideration: ______.
A) is only binding if supported by consideration.
B) is binding as long as it's voluntary.
C) is only binding if the original contract is invalid.
D) is binding only if enforced by a court.
Q2) A contract involving both services and goods is classified as a contract for the sale of goods if:
A) the services are to be performed upon the goods.
B) the services cannot be performed unless the goods are supplied.
C) no charge is made for the services.
D) the sale of goods is the dominant aspect of the transaction.
Q3) A sales agreement that does not satisfy the statute of frauds is:
A) a quasi contract.
B) criminal.
C) unenforceable.
D) unlawful.
Q4) A gift is a free transfer of the title to property.
A)True
B)False
Page 24
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Chapter 23: Title and Risk of Loss
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Q1) When particular goods have been selected by either the buyer or the seller,or both,as being the goods called for by the sales contract,the goods are said to be A) identified. B) actualized.
C) realized.
D) materialized.
Q2) A document of title is not sufficient for a creditor to take an interest in goods.
A)True
B)False
Q3) Bob Corporation entered into a contract to sell parts to Zeck.The contract provided that the goods would be shipped "FOB Bob's warehouse." Bob shipped parts to Zeck that were stolen from the carrier.When Zeck checked the invoice,Zeck discovered that Bob had sent Model #20B instead of Model #20A,which the contract required.Whose loss? Why?
Q4) Once goods in a contract have been identified the buyer holds an insurable interest in them.
A)True
B)False
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25
Chapter 24: Product Liability: Warranties and Torts
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Sample Questions
Q1) All of the following apply to strict tort liability except:
A) strict tort liability is independent of the UCC.
B) strict tort liability has abolished privity of contract.
C) strict tort liability requires the defect exists at the time of manufacture.
D) strict tort liability requires assumption of the risk.
Q2) The right to sue for damages sustained from a defective product is reserved exclusively to the original purchaser of the product.
A)True
B)False
Q3) A seller cannot be held liable for the breach of an express warranty if the seller honestly believed that the warranted statement was true.
A)True
B)False
Q4) Under the concept of ______,only the original parties to a sales contract could sue each other.
A) exclusivity of contract.
B) privity of contract.
C) privacy of contract.
D) priority of contract.
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Chapter 25: Obligations and Performance
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Q1) The standard for determining commercial impracticability is objective,not subjective.
A)True
B)False
Q2) Unless otherwise specified,the place of delivery is the seller's place of business.
A)True
B)False
Q3) Substantial impairment requires proof that goods are worthless.
A)True
B)False
Q4) A buyer has a right to insist that all the goods be delivered at one time.
A)True
B)False
Q5) Unless otherwise agreed,the proper place for the delivery of goods is:
A) the buyer's place of business.
B) the seller's home.
C) a delivery service selected by the seller.
D) the seller's place of business.
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Chapter 26: Remedies for Breach of Sales Contracts
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Q1) If a seller elects to resell the goods remaining in the seller's possession after the buyer breaks the contract,the seller:
A) must always give notice of the sale to the original buyer.
B) is never required to give notice of the sale to the original buyer.
C) is required to follow strict standards in the resale of the goods.
D) is not required to give notice of the sale to the original buyer when the goods are perishable.
Q2) Suppose Jim is seriously injured by his new chain saw.If the sales contract excluded any damages from recovery,courts would hold that contract:
A) enforceable depending on FTC guidelines.
B) unconscionable under the CISG.
C) is enforceable under UCC Article 2.
D) unconscionable and unenforceable.
Q3) A buyer may reject a tender of delivery:
A) if the goods do not conform to the contract in some way.
B) only if the goods have a substantial defect.
C) unless the seller promises to cure the defective tender.
D) unless the goods have been sold on credit.
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Chapter 27: Kinds of Negotiable Instruments and Negotiability
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Q1) An instrument is order paper when by its terms it is payable to the order of any person described in it,or to a person or order.
A)True
B)False
Q2) Antedating an instrument affects an instrument's negotiability.
A)True
B)False
Q3) To be negotiable,an instrument must include all of the following,except:
A) a writing.
B) signature of the maker or drawer.
C) unconditional promise or order to pay.
D) holder in due course.
Q4) Negotiability is the characteristic that distinguishes commercial paper and instruments from ordinary contracts.
A)True
B)False
Q5) If an order or promise is not for money,the instrument is not negotiable.
A)True
B)False
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Chapter 28: Transfers of Negotiable Instruments and
Warranties of Parties
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Sample Questions
Q1) Order paper is negotiated by the indorsement of the holder only.
A)True
B)False
Q2) A blank indorsement turns a(n)__________instrument into a(n)__________ instrument.
A) negotiable; non-negotiable
B) non-negotiable; negotiable
C) bearer; order
D) order; bearer
Q3) An indorsement "Pay to Donald Hames,Cathy Dukes" is not a valid indorsement because it does not contain the words "order" or "bearer."
A)True
B)False
Q4) Coppersmith executed and delivered negotiable notes to the payee,Charlene.The payee indorsed the notes to Whitehurst but did not deliver them.Instead,she kept the notes in her possession because she wanted to collect the interest during her life and wanted the indorsee to have the notes on her death.After Charlene's death,her executor,Cartwright,found the notes.Both Cartwright and Whitehurst sought to enforce the notes against Coppersmith.Who was entitled to do so?
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Chapter 29: Liability of the Parties Under Negotiable Instruments
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Q1) A negotiable promissory note was issued by Gold.It was properly issued in all ways.Nevertheless,the payee managed to alter the note and raise the amount from $500 to $5,000.A holder in due course presented the note for payment to Gold who discovered the alteration.In this case:
A) Gold is liable for $500 only.
B) Gold is liable for the full $5,000.
C) Gold has no liability on the altered note.
D) Gold is liable for $2,500.
Q2) Value is similar to consideration..
A)True
B)False
Q3) Bad faith may exist because a transferee takes an instrument under suspicious circumstances.
A)True
B)False
Q4) Economic duress,in the form of a reluctance to enter into a financially demanding instrument,is a universal defense.
A)True
B)False
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Chapter 30: Checks and Funds Transfers
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Q1) Morris issued a check to Al in payment of a debt.There were sufficient funds in Morris' account to cover the check when it was presented for payment.However,due to an error,the bank dishonored the check.Which of the following parties is/are potentially liable to the holder?
A) the drawee bank only
B) Morris and the drawee bank
C) Morris only
D) the drawee bank and any collecting bank
Q2) Harvey issued a check to AgribizCo and,after mailing the check,suffered a heart attack and died.In the regular course of business,the bank paid the check when presented by AgribizCo for payment,despite the fact that the bank had received notice fourteen (14)days earlier of Harvey's death.In terms of the bank's payment of the check
A) the bank is not liable because the payment was made within 20 days of the notification of the death.
B) the bank is potentially liable to Harvey's estate.
C) the bank is not liable unless the Harvey's executor posted an indemnity bond.
D) the bank's authority to act for Harvey ended on his death, regardless of whether the bank had been notified of Harvey's death.
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Chapter 31: Nature of the Debtor Creditor Relationship
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Q1) The amount of credit specified in a letter of credit must be taken by the beneficiary in the form of a lump-sum payment.
A)True
B)False
Q2) A surety that has made payment of a claim for which it was liable as a surety is entitled to which of the following from the principal?
A) Indemnity
B) Exoneration
C) Assignment
D) Subrogation
Q3) When a surety pays a debt that it is obligated to pay,it automatically acquires the claim and the rights of the creditor through:
A) assignment.
B) exoneration.
C) subrogation.
D) default.
Q4) A letter of credit cannot extend for a period of more than five (5)years.
A)True
B)False
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Chapter 32: Consumer Protection
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Q1) Peter applied for a loan at three banks.Peter's application was denied at the first two banks but finally was approved by the third institution.Peter believes that the first two banks denied his application because of his minority status.No explanation ever was provided by the banks denying Peter's request for funds.After obtaining the loan,Peter soon found himself unable to make the prescribed payments.Peter went into default,causing the bank to turn his case over to a collection agency.The collection agency called him "night and day" and were very abusive in their collection practices.Peter became quite distraught and unable to function at his job.As a result,Peter was soon fired.Peter asks for your advice regarding his legal rights.What is your response?
Q2) Odometer fraud allows the purchaser to recover:
A) the entire purchase price of the automobile plus $1,500.
B) twice the actual loss from the fraud.
C) the total loss the buyer can collect to $1,500.
D) three times the actual loss or $1,500, whichever is higher.
Q3) Consumer protection even protects a consumer from the consumer's own negligence.
A)True
B)False
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Page 34
Chapter 33: Secured Transactions in Personal Property
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Q1) Mark purchased a very expensive automobile on credit.Within a week,Mark discovered that a tune-up was necessary,for he was in the habit of driving at an excessive rate of speed.When the car was repaired,the bill was more than $1,000.Mark does not have the money to pay for the car repairs or the monthly car payments.The credit company as well as the repair shop are concerned over who has priority of repayment.Who has priority and why?
Q2) Under Revised UCC Article 9,a debtor may authorize a financing statement by acquiring the collateral that is subject to the security agreement.
A)True
B)False
Q3) If two creditors have a security interest in the same collateral,their priority is determined according to the "last in-first out" provision.
A)True
B)False
Q4) Claim in a changing or shifting stock of the buyer's goods is known as after-acquired goods.
A)True
B)False
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Chapter 34: Bankruptcy
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Q1) Jurisdiction over bankruptcy proceedings is vested in the federal district courts.
A)True
B)False
Q2) In approximately 50% of all bankruptcies no unsecured creditors receive any payments.
A)True
B)False
Q3) Regardless of whether all debts were disclosed in the petition,all debts are discharged in bankruptcy.
A)True
B)False
Q4) A debtor may recover damages against any creditor who filed an involuntary bankruptcy petition against the debtor in bad faith.
A)True
B)False
Q5) The filing of an involuntary bankruptcy case petition results in an order of relief.
A)True
B)False
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Chapter 35: Insurance
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Q1) It is common for institutions financing automobile dealers' new car inventories to purchase a(n)_______ insurance policies to insure against damage to the automobiles while in inventory.
A) freight
B) dealer automobile
C) inland marine
D) liability
Q2) No-fault automobile liability insurance bars injured parties from suing the party at fault for ordinary claims.
A)True
B)False
Q3) Commercial General Liability (CGL)policies apply to trademark infringement suits.
A)True
B)False
Q4) An insurer who wrongfully refuses to defend the insured is liable for: ______.
A) breach of contract.
B) insurance fraud.
C) the tort of wrongful interference with contractual relations.
D) the tort of malicious prosecution.
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Chapter 36: Agency
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Q1) An agent has implied __________ authority to do any act that usually accompanies the transaction for which the agent is authorized to act.
A) express
B) apparent
C) customary
D) incidental
Q2) A durable power of attorney may be terminated by: ______.
A) revocation by a competent principal.
B) the death of the principal.
C) revocation by a competent principal or by the death of the principal.
D) none of these, since a "durable" power of attorney is designed by law to be irrevocable under all circumstances.
Q3) Notification to a principal may be implied when the principal does not object to a contract and accepts its benefits.
A)True
B)False
Q4) A written authorization of agency is called a power of attorney.
A)True
B)False
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Chapter 37: Third Persons in Agency
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Q1) An implied warranty arises when a person purports to act as an agent for a principal.
A)True
B)False
Q2) If an agent's act causes loss to the third person,that third person may generally hold the agent liable for the loss.
A)True
B)False
Q3) Hiring an individual with a criminal record is conclusive proof that the employer is liable for the tort of negligent hiring.
A)True
B)False
Q4) Apparent authority has the same effect as:
A) undisclosed authority.
B) actual authority.
C) partially disclosed authority.
D) imputation authority
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Chapter 38: Regulation of Employment
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Q1) A defined contribution plan is an employer commitment to make specified future payments to participants upon retirement.
A)True
B)False
Q2) The Federal Wiretapping Act makes it unlawful to intercept oral and written communications,except: ______.
A) for personal phone calls without the employee's consent.
B) when an employer monitors a firm's phones during the course of business.
C) when an employer monitors an employee's private email.
D) for personal calls after it is ascertained the call is purely personal.
Q3) Employers generally have the right to lay off an employee because of _____,sometimes referred to as reductions in force (RIFs).
A) economic conditions
B) nonperformance of duties by the employee
C) theft by the employee
D) possession of drugs by the employee
Q4) A person cannot be both an employee and an agent for a party at the same time.
A)True
B)False
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Chapter 39: Equal Employment Opportunity Law
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Q1) Failing to hire an individual who does not have English language skills violates Title VII unless those language skills have a clear connection to the successful performance of the job to which it is applied.
A)True
B)False
Q2) Tom was a tall man who operated a successful restaurant that he owned.He believed that tall people commanded more respect in a restaurant.Accordingly,he never hired a waiter or waitress who was less than six feet tall.Because of this,he had seventeen waiters and no waitresses working at the restaurant.Lucinda,a woman less than six feet tall,applied for a job as a waitress and was not hired.Later,Lucinda learned that a man who was over six feet in height was hired to fill the position.After a few inquiries,she learned of Tom's height requirements and alleged that she was the victim of illegal discrimination.Decide.
Q3) Women who are unable to work as a result of pregnancy must be provided the same benefits as all other workers.
A)True
B)False
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Chapter 40: Types of Business Organizations
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Q1) The death of a majority shareholder terminates a corporate enterprise.
A)True
B)False
Q2) A rule requiring that a franchisor provide a disclosure statement to all prospective franchisees was adopted by the: ______.
A) UCC.
B) Franchise Tax Board.
C) Securities and Exchange Commission.
D) Federal Trade Commission.
Q3) A joint venture manufacturing agreement gives the manufacturer authority to manufacture products under a proprietary trademark.
A)True
B)False
Q4) A corporation has perpetual life,until one of its shareholder dies.
A)True
B)False
Q5) A corporation must have at least two shareholders.
A)True
B)False
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Chapter 41: Partnerships
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Q1) A partnership involves equal contributions of capital,services,or a combination of these.
A)True
B)False
Q2) All the following are characteristics of a general partnership except: ______.
A) separate entity.
B) voluntary and consensual.
C) partner contributions.
D) co-owners for profit.
Q3) The rights of partners are determined by the partnership agreement,which must be written to comply with the statute of frauds
A)True
B)False
Q4) Creditors of a firm have first claim on the assets of the partnership.
A)True
B)False
Q5) A partner is an agent of the partnership and of the other partners.
A)True
B)False
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Chapter 42: LPs, LLCs, and LLPs
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Q1) An LLC is a separate legal entity and may own property in its own name.
A)True
B)False
Q2) An LLC may be formed without filing formal articles of organization with the secretary of state.
A)True
B)False
Q3) The dissolution and winding up of a limited partnership is governed by the same principles applicable to a: __________.
A) "subchapter S" corporation.
B) limited liability company.
C) general partnership.
D) limited liability partnership.
Q4) Each limited partner in a limited partnership has all of the following rights and benefits,except:
A) A share of the profits.
B) The right to sue the general partner to protect the limited partners' interest.
C) The right to manage the limited partnership.
D) The right to vote on dissolution of the limited partnership.
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Chapter 43: Corporate Formation
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Q1) If a wire manufacturing company owned amill to produce the metal used in making the wire,this relationship between the companies would be best be described as: ______.
A) a conglomerate.
B) a holding company.
C) an integrated industry.
D) a merger.
Q2) In states that have adopted the Revised Model Business Corporation Act,the secretary of state may commence proceedings to administratively dissolve a corporation under all but which of the following circumstances?
A) the corporation adopts more than one business purpose.
B) the corporation does not pay franchise taxes within sixty (60)days after they are due.
C) the corporation does not file its annual report within sixty (60)days after it is due.
D) the corporation is without a registered agent or registered office for sixty (60)days or more.
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Chapter 44: Shareholder Rights in Corporations
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Q1) Manis owns 100 shares of stock of the Linquist Corporation.She sells her stock to Sosnik and delivers to him: (1)her stock certificate for 100 shares and (2)a written,signed assignment of the 100 shares to Sosnik.The assignment form printed on the back of the share certificate is left blank and is not signed.Sosnik refuses to take the certificate and the assignment on the ground that Manis must fill in and sign the assignment form on the stock certificate to make the transfer of stock effective.Is he correct?
Q2) Cumulative voting: ______.
A) decreases the voting power of minority shareholders.
B) is the normal method for shareholder voting on corporate matters.
C) generally is required or allowed in the election of corporate directors.
D) is a right given to participating preferred shareholders.
Q3) If Bruce signs an agreement to purchase Joe's shares in ABCo.the stock sales contract is called an indenture.
A)True
B)False
Q4) Outstanding shares of stock have been issued to stockholders.
A)True
B)False
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Page 46
Chapter 45: Securities Regulation
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Q1) The Securities Exchange Act of 1934 is concerned with the secondary distribution of securities in the national securities markets and in the over-the-counter markets.
A)True
B)False
Q2) The registration requirement of the Securities Act of 1933 applies to:
A) the issuing of stocks, bonds, and other investment securities.
B) the issuing of certificates of deposit by a national bank.
C) shares issued by nonprofit corporations.
D) issues of $1.5 million or more.
Q3) The JOBS Act requires the SEC to create a "crowdfunding exemption" that would allow companies to raise $1 million in any 12-month period.
A)True
B)False
Q4) Individuals who steal valuable nonpublic information in breach of a fiduciary duty to their employers and trade in securities on that information are guilty of insider trading as misappropriators.
A)True
B)False
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Chapter 46: Accountants' Liability and Malpractice
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Q1) Breach of contract remedies are available to third parties against accountants because they are ordinarily considered third-party beneficiaries of contracts with accountants.
A)True
B)False
Q2) Misrepresentation: ______.
A) is the same as fraud.
B) is a false statement of fact made with the intent to deceive.
C) is a false statement of fact made without any intent to deceive.
D) can be used as a limitation to excuse an accountant from liability.
Q3) An accountant may be liable for malpractice if the accountant fails to detect signs that an employee of the client is embezzling.
A)True
B)False
Q4) According to the intended user rule the accountant must have furnished the information directly to the client,knowing that the client would transmit the information to other third parties.
A)True
B)False
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Chapter 47: Management of Corporations
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Q1) The president of a business corporation does not have implied authority to execute commercial paper in the name of the corporation.
A)True
B)False
Q2) Which of the following is an incorrect statement about directors?
A) Their eligibility requirements may be found in the bylaws.
B) Bylaws may require that directors be shareholders in the corporation.
C) The board of directors has authority to manage the corporation.
D) Courts will interfere with the board's discretion when they disagree with its actions.
Q3) Application of the business judgment rule to a board's decision presumes all of the following except: ______.
A) that the board's decision was profitable to the corporation
B) that the board acted on an informed basis
C) that the board acted in good faith
D) that the board believe it was acting in the best interest of the corporation
Q4) Directors do not have the right to evaluate management's performance.
A)True
B)False
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Chapter 48: Real Property
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Q1) What type of deed merely transfers whatever interest,if any,the grantor may have in the property,without specifying that interest in any way?
A) common law
B) statutory
C) quitclaim
D) warranty
Q2) Machinery and equipment that is movable is ordinarily held not to be fixtures even though it is necessary to unbolt them from the floor or disconnect electrical wires.
A)True
B)False
Q3) Equipment attached to a rented building by a tenant and used in business is: ______.
A) called a trade fixture.
B) called a business fixture.
C) called a commercial fixture.
D) not a fixture.
Q4) Land extends downward to the earth's center and upward indefinitely.
A)True
B)False
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Chapter 49: Environmental Law and Land Use Controls
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Q1) If any uncertainty exists in the interpretation of a restrictive covenant,the covenant will be construed strictly in favor of the free use of the land.
A)True
B)False
Q2) It is probable that a zoning variance would be granted:
A) even though many of the neighboring property owners object.
B) on the grounds of hardship, regardless of who created the hardship.
C) to an outside advertiser to build a billboard.
D) when the desired use of the land is in harmony with the general nature of the surrounding areas.
Q3) States that do not meet federal standards under The Clean Air Act are classified as nonattainment areas.
A)True
B)False
Q4) Nuisances may be classified as either private nuisances or public nuisances.
A)True
B)False
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Chapter 50: Leases
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Q1) A provision in a residential lease stating that the landlord cutting off heat or water will not constitute an eviction is: __________.
A) valid.
B) a stipulation.
C) a covenant.
D) unconscionable.
Q2) A provision in a residential lease excusing a landlord from liability for damage caused by water,snow,or ice is void.
A)True
B)False
Q3) If a lease is assigned,who is liable for the rent?
A) the assignor
B) the assignee
C) either the assignor or the assignee, but not both
D) the landlord can collect from both the assignor and the assignee
Q4) Renewal provisions in a lease are strictly construed against the tenant.
A)True
B)False
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Chapter 51: Decedents' Estates and Trusts
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Q1) A gift of personal property by will is called a(n)_________,and the beneficiary is called a(n)_________.
A) bequest, devisee
B) legacy, legatee
C) devise, devisee
D) legacy, devisee.
Q2) Which of the following is not a duty of a trustee?
A) to use reasonable skill
B) to keep accurate records
C) to invest trust assets
D) to deliver possession of trust assets to the settlor for the trust period
Q3) If a trust is created to take effect within the lifetime of the settlor,it is a testamentary trust.
A)True
B)False
Q4) A beneficiary of personal property by will may be called a devisee.
A)True
B)False
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