Fundamentals of Business Law Exam Review
Course Introduction
Fundamentals of Business Law provides students with an essential understanding of the legal principles governing business activities. The course covers topics such as contract law, agency, employment law, sales and consumer protection, intellectual property, and forms of business organization. Students explore how legal considerations influence business decisions and operations, learn how to recognize and assess potential legal risks, and develop the ability to apply key legal concepts in real-world business scenarios. Emphasis is placed on critical thinking and ethical decision-making within the legal framework that underpins modern commerce.
Recommended Textbook Essentials of Business Law 4th Edition by
Jeffrey F. Beatty
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Page 2
Chapter 1: Introduction to Law
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Q1) Henry David Thoreau felt that war was unjust and therefore refused to pay his taxes when the United States declared war on Mexico.If Henry David Thoreau's neighbor agreed that war was unjust but paid his taxes because the law required him to pay the tax,the neighbor would be applying the jurisprudence theory of:
A)Legal Positivism.
B)Natural Law.
C)Legal Realism.
D)Common Law.
Answer: A
Q2) Which of the following would be an example of a civil lawsuit?
A)George is being prosecuted for bank fraud.
B)The government has initiated an action against Jeff for operating a motor vehicle under the influence of alcohol.
C)Gretta hit Rita in a bar during happy hour.Rita is now suing for her injuries.
D)The district attorney is bringing Ali to court for violating the city's keg ordinance.
Answer: C
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Chapter 2: Business Ethics and Social Responsibility
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Q1) Advertising provides a good example of a sector where ethics is critical.
A)True
B)False
Answer: True
Q2) Define and discuss the concept of stakeholder.
Answer: Stakeholders are all the people potentially affected by the decision.that list might include subordinates,bosses,shareholders,suppliers,customers,members of the community in which the business operates,society as a whole,or even more remote stakeholders,such as future generations.the interests of these stakeholders often conflict.for example,current shareholders may benefit from a company's decision to manufacture a product harmful for the environment whereas future generations are left to contend with a potential environmental nightmare.
Q3) Research has shown that the least important motivation for managers in behaving ethically is:
A)they want to feel good about themselves.
B)they want to feel good about the decisions they make.
C)they value their reputation.
D)profitability.
Answer: D
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Page 4
Chapter 3: Dispute Resolution
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Q1) After the plaintiff has presented her case,the defendant may be granted a:
A)directed verdict.
B)summary judgment.
C)judgment n.o.v.
D)judgment on the pleadings.
Answer: A
Q2) Advantages of Alternative Dispute Resolution (ADR)include:
A)ADR is faster than litigation.
B)ADR keeps the parties talking rather than fighting.
C)ADR is less expensive than litigation.
D)All of the above are advantages of ADR.
Answer: D
Q3) The fastest growing method of dispute resolution in the United States is: A)arbitration.
B)negotiation.
C)mediation.
D)litigation.
Answer: C
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Chapter 4: Common Law, statutory Law, and Administrative Law
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Q1) Which law regulates how federal agencies make rules,conduct investigations,hold meetings and hearings,obtain information,and reach decisions?
A)The 1964 Civil Rights Act.
B)The Clean Agency Act.
C)The Administrative Procedure Act.
D)The Freedom of Information Act.
Q2) The Occupational Safety and Health Administration (OSHA)has proposed rules aimed at reducing repetitive-stress injuries.ATC,Inc.disagrees with the proposed rules.ATC,Inc.should challenge the proposed rules in court to prevent them from becoming final rules.
A)True
B)False
Q3) While at the park,Tasha saw a small child fall into the lake.Tasha did not know the child.Under the common law of most states,Tasha has a legal duty to take reasonable steps to assist the child if Tasha is able to provide positive assistance and the assistance will not jeopardize Tasha's well being.
A)True
B)False
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Chapter 5: Constitutional Law
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Q1) The primary source of federal power to regulate business is the:
A)Supremacy Clause.
B)Commerce Clause.
C)Fifth Amendment
D)Privilege and Immunities Clause.
Q2) Judicial review can best be described as the power of federal courts to:
A)review state court decisions.
B)review state executive action.
C)review state and federal legislative and executive action.
D)none of the above.
Q3) 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.
Q4) Every year the U.S.Supreme Court receives about 8,000 requests to review cases.Of this number,the Court will hear about:
A)30
B)100.
C)1,000.
D)8,000.
Q5) Discuss the Miller test to determine if a creative work is obscene.
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Chapter 6: Torts
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Q1) Punitive damages are intended to punish the defendant for conduct that is extreme and outrageous.
A)True
B)False
Q2) In the Exxon Valdez case,the Supreme Court:
A)refused to place a limit on punitive awards.
B)stated that punitive damages cannot be awarded in oil spill cases.
C)approved the jury's compensatory award, but reduced the punitive award from $5 billion to $507 million.
D)interpreted a state statute limiting punitive awards and found punitive damages should be no more than three times the award for compensatory damages.
Q3) A business will incur strict liability for damages resulting from:
A)using harmful chemicals.
B)operating explosives.
C)bringing dangerous substances onto property.
D)a defective product manufactured or sold by the business.
E)All of the above.
Q4) Identify and discuss two specific causes of action a plaintiff can allege that deal specifically with privacy rights.
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Chapter 7: Crime
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Q1) German philosopher Immanuel Kant believed there was only one valid reason to punish,which was retribution.
A)True
B)False
Q2) Entrapment can be a defense to a criminal act.
A)True
B)False
Q3) Congress revised and reauthorized the Patriot Act,but the revised national security letter provisions were found unconstitutional by a federal court.
A)True
B)False
Q4) Actus reus means the "guilty act" and is one element the prosecution must prove in a criminal case.
A)True
B)False
Q5) Bieber v.People considered the intent requirement in an armed robbery case.
A)True
B)False
Q6) Compare and contrast money laundering and embezzlement.Give an example of each.
Page 9
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Chapter 8: International Law
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Q1) Which of the following is considered a nontariff barrier?
A)a dumping duty.
B)a quota.
C)a countervailing duty.
D)all of the above
Q2) Archer Co.has decided it wants to expand into international business,but it is concerned about expropriation of its property or losses caused by political unrest.Archer is considering purchasing insurance through the Overseas Private Investment Corporation (OPIC).OPIC:
A)provides insurance, but the cost is relatively high.
B)provides insurance, but the list of countries in which it is willing to provide such protection is fairly short.
C)has had remarkable success at no cost to the U.S.government.
D)insures against expropriation, but not against losses stemming from political violence.
Q3) Explain what the General Agreement on Tariffs and Trade (GATT)is and give pro and con arguments concerning this agreement.
Q4) Explain the origin and purpose of the World Trade Organization.
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Chapter 9: Introduction to Contracts
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Q1) The elements of a contract are agreement,consideration,legality,and capacity.
A)True
B)False
Q2) Miles purchased a lawnmower with an attached warning that said,"The manufacturer is not responsible in the case of an injury caused by the lawnmower." If Miles is injured because of a defect in the mower and sues the lawnmower manufacturer,he will most likely:
A)lose, as he agreed to not hold the lawnmower manufacturer liable.
B)lose, as he assumed the risk.
C)win, as this warning would be unenforceable.
D)win, as all lawnmower manufacturers are strictly liable.
Q3) Rameriz and Cox enter a contract obligating Cox to supply Rameriz with 2,000 bushels of corn by the end of September.Weather conditions are poor and Cox is unable to grow that much corn himself,but could obtain enough to make up the required difference at a financial loss.Discuss the general purpose of contracts and the result of seeking enforcement of this contract both in a court exercising judicial restraint and in a court practicing judicial activism.
Q4) One purpose of contract law is to make business matters more predictable. A)True
B)False
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Chapter 10: Agreement
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Q1) Under the UCC,the mirror image rule applies strictly.
A)True
B)False
Q2) Regency Construction placed an order for two hundred 2 x 4s from Lumber Jack.If the place of delivery and time for shipping the goods are not specified,the UCC provides:
A)the place of delivery is Lumber Jack's and the time for delivering the lumber is a reasonable time based on normal trade practice.
B)the place of delivery is Regency Construction and the time for shipping is within 30 days.
C)the place of delivery is Lumber Jack's and the time for delivering the lumber is within 30 days.
D)there is no contract because having more than one open term made the offer too indefinite.
Q3) Elias offered to sell his computer to Kevin.Elias is :
A)the offeree.
B)the offeror.
C)subject to the UCC rules as a computer is a "good" under Article 2.
D)required to leave his offer open for a reasonable time.
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Chapter 11: Consideration
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Q1) If Ellen and Daryl are in disagreement as to the exact amount of money that Ellen owes Daryl,then they may choose to form a new agreement at a set amount.If they both perform the new agreement,their conduct would be an example of:
A)a rescission.
B)a contract modification.
C)an accord and satisfaction.
D)past consideration.
Q2) Frank owes an undisputed amount to Hanson Gutter Cleaners.Which of the following is true?
A)If Hanson agrees to accept less than the full amount as full payment, the agreement is not binding.
B)The undisputed amount is also known as an unliquidated amount.
C)Payment of less than the full amount will form an accord and satisfaction agreement.
D)If Hanson agrees to accept less than the full amount, the agreement is only binding if it is in writing and signed by Frank.
Q3) Discuss the concept of consideration.
Q4) What two exceptions did the UCC create for accord and satisfaction check cases?
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Chapter 12: Legality
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Q1) Which of the following is an example of an exculpatory clause?
A)Seller reserves the right to cancel the contract at any time.
B)Seller is not responsible for property damage regardless of the cause of the injury.
C)Buyer agrees to purchase as many products as it wishes.
D)Buyer agrees in advance to pay a specified amount in case of breach.
Q2) An exculpatory clause is generally unenforceable when:
A)it attempts to release a party from liability for ordinarily negligent behavior.
B)it involves public transportation.
C)it is written clearly and in bold, large print.
D)the affected activity is a recreational activity.
Q3) Discuss the pros and cons of gambling and whether there might be any reason for a court or legislature to treat gambling on credit any differently from gambling itself.
Q4) To be valid,an agreement not to compete must be ancillary to a legitimate bargain.
A)True
B)False
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Chapter 13: Capacity and Consent
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Q1) Discuss the concept of a "material fact" in fraud situations.
Q2) Generally,a seller has no duty to disclose facts.However,there is a duty to disclose information or facts if the disclosure is necessary to:
A)correct a previous assertion.
B)correct a basic mistaken assumption on which the other party is relying.
C)report a latent defect that the buyer would not be expected to discover.
D)All of the above are true.
Q3) A offers to sell her car to B for $500,and B accepts.A's car has a market value of $1,000 but this fact is unknown to A.The contract is unenforceable.
A)True
B)False
Q4) Which of the following is least likely to be regarded as a necessary?
A)Rent.
B)Food.
C)Medical expenses.
D)Educational expenses.
Q5) A minor is someone under the age of 18.
A)True
B)False
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Chapter 14: Written Contracts
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Q1) Either party may demand rescission of a fully executed oral contract that was required to have been in writing under the statute of frauds.
A)True
B)False
Q2) Vicki entered into a written contract to buy a car from Valley Motors.The written contract included a provision that stated,"This writing is the full and final expression of the parties' agreement; anything said before signing or while signing is irrelevant." This is:
A)an integration clause.
B)a statute of frauds clause.
C)parole evidence.
D)an exculpatory clause.
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
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Page 16
Chapter 15: Third Parties
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Q1) The McDougal Foundation contracted with Shiny Cleaning Services to clean their offices every weeknight.In the contract,The McDougal Foundation included a clause prohibiting Shiny from delegating its duties.Courts will ordinarily enforce such a clause.
A)True
B)False
Q2) Generally,duties may not be delegated.
A)True
B)False
Q3) Susan took out a life insurance policy on herself,paying all of the premium payments.She named her daughter,Jessica,as the beneficiary under the policy.Jessica has not given anything in consideration for the policy.Jessica is:
A)a donee beneficiary who has rights to enforce the policy once Susan dies.
B)a creditor beneficiary who has rights to enforce the policy once Susan dies.
C)an incidental beneficiary because Jessica did not give any consideration for the policy and therefore cannot enforce the policy even when Susan dies.
D)None of the above.
Q4) Briefly discuss the enforceability of contracts by third parties.
Q5) Discuss the potential liability differences between a delegation and a novation.
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Chapter 16: Performance and Discharge
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Q1) Al contracted to sell his house to Bev.Subsequently,they both changed their minds and agreed to cancel the contract.The contract between Al and Bev is discharged by:
A)full performance.
B)rescission.
C)accord and satisfaction.
D)novation.
Q2) Statutes of limitations:
A)define how much money the injured party can sue for under a breach of contract claim.
B)define whether there has been substantial performance of a contract or a material breach.
C)limit the time in which an injured party may sue.
D)only apply to the sale of goods.There is no statute of limitations on a service contract.
Q3) On March 14,Greg orders $2500 of wine from Cork It,Inc.to be delivered on April 28 for a party scheduled on May 1.On April 15,Cork It notifies Greg that it will not be able to perform the contract as agreed.How will the law characterize Cork It's actions? Does Greg have to wait until April 28 before buying wine from another supplier?
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Page 18
Chapter 17: Remedies
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Q1) Rich and Archie sign an agreement in which Archie agrees to deliver ten cases of champagne in 5 days.The parties negotiated and meant to say in the written agreement,delivery in 50 days.If the two cannot settle this dispute,and Archie still wants to deliver the champagne,then Archie should sue for the remedy of:
A)reformation.
B)rescission.
C)restitution.
D)reliance.
Q2) Nominal damages are awarded to parties who have experienced an injury to their legal rights but have no actual loss.
A)True
B)False
Q3) Expectation interest refers to what the injured party reasonably thought she would get from the contract.
A)True
B)False
Q4) Discuss the purpose of an injunction and how the two types of injunctions covered in the textbook are used.
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Chapter 18: Introduction to Sales
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Q1) Which of the following is true regarding an open price term?
A)It makes the contract unenforceable.
B)The price may be fixed by the seller.
C)The price is the "reasonable" price at the time of delivery.
D)The price is set by the buyer.
Q2) In the case Superior Boiler Works,Inc.v.R.J.Sanders,Inc.the Supreme Court of Rhode Island held that:
A)No contract had been formed as the parties disagreed on time of delivery.
B)Superior did not breach the contract as its performance was reasonable.
C)Superior breached the contract under UCC Section 2-207 (2).
D)Sanders breached the contract under UCC Section 1-204 (2).
Q3) Stanziano Construction needs a backhoe to complete a project.If it pays Hofmann
Rentals for temporary use of the equipment,the transaction will be governed by:
A)Article 2 of UCC.
B)Article 2A of the UCC.
C)Article 3 of the UCC.
D)common law
Q4) Discuss the importance of the UCC to the law of sales.Include who created the UCC,how it becomes law,and the stated purposes of the statute.
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Chapter 19: Ownership and Risk
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Q1) Arco sells to Melvin 1,000 computers that are stored in Arco's warehouse.Arco gives Melvin the ownership documents and Melvin will pick up the computers at the warehouse.Title has passed to Melvin.
A)True
B)False
Q2) In the case Valley Forge Insurance Co.v.Great American Insurance Co.,the court ruled that:
A)title had passed to Kennedy as the car had been delivered to him.
B)both title and risk of loss had passed to Kennedy as the contract was a shipment contract.
C)title had not passed to Kennedy as the full purchase price had not been paid.
D)the risk of loss had been transferred to Kennedy.
Q3) Graham,an adult,purchases a car from a minor,and subsequently sells it to Harlow,another adult.Harlow paid full value for the car and had no reason to know that Graham had purchased the car from a minor.Which of the following best describes this situation?
A)Graham had good title and Harlow gets good title.
B)Graham had good title and Harlow gets a voidable title.
C)Graham had voidable title and Harlow gets good title.
D)Graham had void title and Harlow gets void title.
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Chapter 20: Warranties and Product Liability
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Q1) In a strict product liability case,proof that the defendant acted reasonably is a defense.
A)True
B)False
Q2) A common problem in cases of express warranty is being able to separate statements that create express warranties from statements that do not.Discuss what type of statements create an express warranty and four indications that a statement is likely to create an express warranty.
Q3) An express warranty may be created by a sample.
A)True
B)False
Q4) Kyle is the owner of a motorcycle company.His tire supplier having gone out of business,he asked several tire manufacturers for samples.He selected one manufacturer,based on the quality of the rubber,the tread depth and the price,and ordered 1000 tires.When he received his order,he found that the quality did not match that of the sample.In particular,the tread depth was much lesser than that of the sample.What recourse does Kyle have?
Q5) Explain what the warranty of title and the warranty against claims of infringement are.
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Chapter 21: Performance and Remedies
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Q1) Can the buyer revoke his acceptance? If so,under what circumstances?
Q2) Wimble ordered $800 worth of pro-quality luminescent orange tennis balls from Sports Unlimited.On June 1,Sports Unlimited shipped standard white tennis balls that were rejected by Wimble.Wimble bought the same number of pro-quality luminescent orange balls from another supplier the same day for $550.In a suit against Sports Unlimited,Wimble may recover $800.
A)True B)False
Q3) Under the doctrine of commercial impracticability,which situation would not excuse the seller's performance?
A)The seller forgot to include the cost of freight in a C&F contract.
B)The seller's source of supply is no longer available because of a governmental embargo prohibiting an export from another country.
C)The seller cannot deliver because severe flooding wiped out three-fourths of the state's produce.
D)The seller's workforce is out on an unexpected strike.
Q4) Tender means to make conforming goods available to the buyer.
A)True B)False
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Chapter 22: Creating a Negotiable Instrument
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Q1) Kent Weston wrote a check for $500 payable to the order of Chester Jones.Chester indorsed the back of the check as follows: "Chester Jones." The check is now:
A)order paper.
B)bearer paper.
C)a cashier's check.
D)special paper.
Q2) A & D,Inc.wrote a negotiable note payable to Vicy,Inc.A & D left the amount of the note blank because it was uncertain as to amount of the applicable tax.Vicy completed the note for $3,000 more than A & D actually owed for the products it purchased.The note was negotiated to a holder in due course.A & D will not have to honor the note as this constituted fraud in the execution.
A)True
B)False
Q3) Discuss the effect on an instrument of: (a)contradictory amounts between the numerals and amount written in words on a check; (b)the interest rate left blank on a promissory note; and (c)contradictory terms that are typed onto a promissory note and terms that are preprinted on the note form.
Q4) Define commercial paper and explain what it is used for.
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Chapter 23: Liability for Negotiable Instruments
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Q1) Paula is a sales agent for The Rock Insurance Company.Paula accepts a check from a customer made payable to her in payment for the premium on an insurance policy.Prior to depositing the check in The Rock's bank account,Paula indorses the check as follows: "The Rock Insurance Company,by Paula Beck,agent." Assuming that Paula has authority to indorse company checks,if the check is dishonored,then between Paula,The Rock,and the bank:
A)Paula only will be liable.
B)Paula and The Rock will be liable.
C)The Rock only will be liable.
D)The bank will be stuck with the dishonored check.
Q2) 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.
Q3) The accidental destruction of a negotiable instrument will result in its cancellation.
A)True
B)False
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Page 25
Chapter 24: Liability for Negotiable Instruments: Banks and Their Customers
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Q1) If a bank does not return canceled checks to its customers,the bank must keep legible copies on hand for:
A)30 days.
B)six months.
C)one year.
D)seven years.
Q2) An oral stop payment order is valid:
A)for 7 days.
B)for 14 days.
C)for 30 days.
D)until canceled in writing.
Q3) The Electronic Fund Transfer Act was passed to protect: A)consumers.
B)financial institutions.
C)businesses.
D)all of the above.
Q4) Discuss warranty liability of a bank that transfers or presents an electronic or substitute check.
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Q5) Discuss the type of negotiable instrument created by the Check 21 Act and the reason for the statute.
Chapter 25: Secured Transactions
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Q1) Wedney,Inc.has a purchase money security interest in one of Yoro Chicken's meat processing machines.Wedney filed a financing statement on the day the machine was delivered,perfecting its interest.Great State Bank already had a security interest in the machine.Which party has superior priority rights in the meat processing machine?
A)Wedney.A PMSI in collateral other than inventory takes priority over a conflicting security interest if the PMSI is perfected at the time the debtor receives the collateral or within 20 days after he receives it.
B)Great State Bank, since it had an earlier security interest.
C)The party who is first to repossess the collateral.
D)The creditors have equal priority.
Q2) A security interest may be attached in electronic chattel paper.
A)True
B)False
Q3) Great State Bank and First Federal Bank have a security interest in TriColor's equipment.If neither secured party is perfected,the first to sue or repossess has priority over the collateral.
A)True
B)False
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Chapter 26: Bankruptcy
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Q1) Ramona has received a discharge in bankruptcy,but wants to reaffirm a debt to her sister.To be valid,the reaffirmation:
A)will be scrutinized by the court to make sure her sister has not unfairly pressured Ramona.
B)will be automatically disallowed because allowing Ramona to promise to pay a discharged debt would be contrary to the goals of the bankruptcy proceedings.
C)will be automatically allowed if Ramona voluntarily chooses to make it.
D)must clearly disclose that Ramona has the right to rescind at any time since the debt was already discharged.
Q2) In Chapter 11 both creditors and debtor can propose plans of reorganization.
A)True
B)False
Q3) Individual debtors are allowed to keep some assets in a Chapter 7 bankruptcy. A)True
B)False
Q4) Bankruptcy is regulated by both federal and state law.
A)True
B)False
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Chapter 27: Agency
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Q1) What are the requirements for and the effect of a ratification of an agent's unauthorized act?
Q2) Jim,the manager of an apartment complex,rented an apartment to Cynthia.A few weeks later,Cynthia complained that the hot water did not work.Jim hired Cooper Plumbing to fix the hot water,but the job was not successful.A few days later,Cynthia moved out since she had no hot water.If she then sues the landlord and Jim for breach of contract:
A)Jim is personally liable for this breach of contract.
B)the landlord is liable, but Jim is not.
C)Jim is liable, but the landlord is not.
D)neither Jim nor the landlord is liable to Cynthia.
Q3) An agent may not engage in inappropriate behavior that reflects badly on the principal,even if the agent is off duty.
A)True
B)False
Q4) The doctrine of respondeat superior generally:
A)applies to both employees and independent contractors.
B)applies to employees but not independent contractors.
C)applies to independent contractors but not employees.
D)does not apply to either employees or independent contractors.
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Chapter 28: Employment Law
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Q1) Whistleblowers are employees who disclose illegal behavior on the part of their employers.
A)True
B)False
Q2) As a general rule,employers have a legal obligation to disclose information about former employees to potential future employers.
A)True
B)False
Q3) Sandy worked for a small printing company.She found a new job that would pay much more.In accordance with company policy,she gave her employer a two-week notice that she would be leaving.Her employer was upset she was quitting,so he terminated her employment immediately.Sandy was upset because she thought she had acted properly by giving her employer two weeks' notice.Her new employer will not be able to employ her for two weeks.Sandy believes her employer has breached the employment agreement and she should be paid for the two weeks between jobs.Is she right? Explain.
Q4) Some courts have held that employee handbooks create binding contract terms.
A)True
B)False
Q5) Discuss the requirements of the Family and Medical Leave Act.
Page 30
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Chapter 29: Starting a Business: Llcs and Other Options
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Q1) To form an LLC,a charter and an operating agreement must be filed with the Secretary of State in the jurisdiction where the business will operate.
A)True
B)False
Q2) Which of the following is considered by the IRS to be a sale of assets,subject to a tax on the value of the assets?
A)Change from the corporate form to an LLC.
B)Change from an LLC to a corporation.
C)Change from a partnership to an LLC.
D)All of the above.
E)None of the above.
Q3) The term "S Corporation" comes from:
A)the subchapter S of the Internal Revenue Code.
B)the section S of the FTC rules.
C)the subchapter S of the Uniform Corporation Act.
D)it simply means "small".
Q4) What are the advantages of electing Subchapter S status? What are the requirements?
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Chapter 30: Corporations
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Q1) Shareholder proposals on the company proxy statement:
A)must be stated in the form of a request or recommendation according to SEC rules.
B)may only be implemented by the company if they receive support from at least a simple majority of the shareholders.
C)are, in about half of the cases, withdrawn before a vote because the company decides to implement the proposal.
D)may address only corporate-governance issues, such as cumulative voting or executive compensation, but may not address the shareholder's political agenda, such as saving the environment.
Q2) Discuss the self dealing concept.Under what circumstances is a self-dealing transaction valid?
Q3) When a manager compete against the corporation without its consent,he is in violation of:
A)the business judgment rule.
B)the self dealing doctrine.
C)his duty of care.
D)the corporate opportunity doctrine.
Q4) What is the business judgment rule and what is its purpose?
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Chapter 31: Securities Regulation
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Q1) The 1933 Act exempts all but which of the following from its registration requirements?
A)Short-term notes.
B)Long-term notes.
C)Government securities.
D)Annuity contracts.
Q2) Under Section 14 of the 1934 Act or SEC rules:
A)a company must solicit proxies from shareholders at least 30 days prior to any shareholder meeting.
B)a company must provide detailed information about officers and directors when soliciting proxies from shareholders.
C)the CEO of a publicly traded company must certify that the information in the annual report is accurate.
D)All of the above.
Q3) The Securities Act of 1933 established the Securities and Exchange Commission.
A)True
B)False
Q4) Define a direct public offering.What are its advantages?
Q5) What are the three primary ways the SEC creates law?
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Chapter 32: Property
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Q1) All Appliances,Inc.installed a built-in dishwasher in Greta's house and Greta intends that it remain with the house.The dishwasher is a fixture.
A)True
B)False
Q2) The landlord must meet all standards set by the local building code.This is
A)the warranty of habitability..
B)the duty to maintain premises.
C)The duty to provide quiet enjoyment.
D)None of the above.
Q3) Charles agrees to store Tuan's car in Charles's garage for the winter months while Tuan visits his grandmother in California.As a bailee,Charles is automatically entitled to use Tuan's car while Tuan is away.
A)True
B)False
Q4) A lease for six months starting on June 1,2010,would be a:
A)tenancy for years.
B)periodic tenancy.
C)tenancy at will.
D)tenancy at sufferance.
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Chapter 33: Cyberlaw
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Q1) Lois receives an e-mail asking her to update her personal information on a Web site that is an illegal imitation of a legitimate site.This practice:
A)is a crime called phishing.
B)is a tort called information theft.
C)is a breach of contract action known as shilling.
D)may be prosecuted under the GLB Privacy Act.
Q2) Explain the difference between an ISP and a Web host,and discuss whether they are treated alike under the Communications Decency Act (CDA).
Q3) Online auctions:
A)are the major source of consumer complaints about online fraud.
B)involve approximately $1 million worth of goods annually.
C)allow people to bid on their own goods.
D)allow owners of goods to cross-bid with a group of other sellers.
Q4) Consumers have been active in requesting government regulation of web data collection to protect their privacy.
A)True
B)False
Q5) Discuss the European Directive on the protection of personal Data.
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Chapter 34: Intellectual Property
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Q1) Which of the following started out as a trademark name?
A)Zipper.
B)Linoleum.
C)Nylon.
D)All the above.
Q2) Brighton Inc.used a famous registered trademark of Hartley Corp.,Inc.in a manner that reduced its value.This is a violation of the:
A)Federal Fair Use Act.
B)Federal Trademark Dilution Act.
C)Federal Trade Protection Act.
D)Fair use doctrine
Q3) A company's trade secret lasts for:
A)20 years after the application is filed.
B)70 years after the death of the creator.
C)10 years, but it can be renewed for an unlimited number of terms as long as it is used.
D)as long as it is kept confidential.
Q4) A patent is available for an idea as well as a tangible application.
A)True
B)False
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