Introduction to Business Law
Exam Answer Key
Course Introduction
Introduction to Business Law provides an overview of the legal principles and frameworks essential for understanding how law impacts business operations. The course covers fundamental topics such as contracts, torts, agency, employment law, intellectual property, and the structure of the court system. Students will explore real-world case studies to grasp how legal concepts are applied in business scenarios, learning to identify potential legal issues and develop strategies for compliance and risk management. The course aims to equip students with the foundational knowledge necessary to make informed business decisions within the bounds of the law.
Recommended Textbook Business Law and the Legal Environment Standard Volume 23rd Edition by David P. Twomey
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Chapter 1: The Nature and Sources of Law
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Q1) Criminal laws carry damage penalties for a wronged individual.
A)True
B)False
Answer: False
Q2) Although laws are enacted at different levels of government to provide the framework for business and personal rights and duties, the framework for this legal system is constitutional law.
A)True
B)False
Answer: True
Q3) A good example of a uniform state law would be:
A)statutory law.
B)case law.
C)constitutional law.
D)the Uniform Commercial Code.
Answer: D
Q4) One of our most important rights is the right of privacy.
A)True
B)False
Answer: True
Page 3
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Chapter 2: The Court System and Dispute Resolution
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Q1) A court is a tribunal established by:
A)the parties to a lawsuit.
B)the government.
C)the parties to a contract.
D)the will of the people.
Answer: B
Q2) Arbitration procedures occur in a court of law.
A)True
B)False
Answer: False
Q3) The United States Supreme Court was created by:
A)Congress.
B)the President.
C)the Uniform State Law Commission.
D)the U.S. Constitution
Answer: D
Q4) A probate court is an example of a general trial court.
A)True
B)False
Answer: False
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Chapter 3: Business Ethics, Social Forces, and the Law
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Q1) In addition to issues of social responsibility, business values and ethics play an important role in the success or failure of a business.
A)True
B)False
Answer: True
Q2) Over half of all Fortune 500 firms train their employees to recognize and deal with particular types of behavior that breach their ethical codes.
A)True
B)False
Answer: True
Q3) 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
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Chapter 4: The Constitution As the Foundation of the Legal Environment
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Q1) The Constitution prohibits the government from treating different people differently.
A)True
B)False
Q2) Which of the following statements regarding the commerce clause is FALSE?
A)If the federal government establishes safety device regulations for interstate carriers, a state cannot require different devices.
B)States may not use their tax power for the purpose of discriminating against interstate commerce.
C)The commerce clause empowers Congress to regulate interstate commerce, but not commerce with foreign nations.
D)A state cannot refuse to allow an interstate waste collector to conduct business within the state on the grounds that the state already has enough waste collectors.
Q3) When the federal government deregulates an industry, the states automatically have the power to regulate the same industry.
A)True
B)False
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Chapter 5: Government Regulation of Competition and Prices
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Q1) Quickness Computer, Inc.is a manufacturer of computers.A Hollywood star indicated on national television that Quickness was his favorite computer.Buoyed by this comment, sales of Quickness computers surged.Since demand outpaced supply, Quickness decided to sell no more computers unless an accompanying software package was purchased.A competitor informed the Office of the Attorney General of this policy, asserting it was illegal.Decide.
Q2) A violator of the Sherman Act may be subject to:
A)fine only.
B)imprisonment only.
C)both fine and imprisonment.
D)neither fine nor imprisonment.
Q3) For violation of the Sherman Act, the maximum fine that may be imposed on a natural person is:
A)$1 million.
B)$500,000.
C)$0.
D)$100 million.
Q4) A "suggested retail price" is not a violation of the antitrust laws.
A)True
B)False
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Chapter 6: Administrative Agencies
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Q1) The Federal Trade Commission suspects Billy Williams of unlawful trade activities and has obtained evidence, claimed to be proof of unlawful activity, by way of aerial photography.The FTC is also currently seeking the submission of various documents, within Williams' place of business, for additional evidence.Williams refuses to submit to the demands to produce the documents and claims that this demand and the aerial photos are direct violations of his constitutional rights.Williams also demands a jury trial to clear him of charges levied.Comment on Williams' claims.
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) In an administrative hearing, an administrative law judge hears the complaint and has the authority to swear witnesses, take testimony, make evidentiary rulings, and make a decision to recommend to the administrative agency heads for action.
A)True
B)False
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Chapter 7: Crimes
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Q1) In some states, the taking of information from a computer without the consent of the owner is called _______.
A)unauthorized use of computers
B)diverted delivery by computer.
C)computer trespass.
D)economic espionage by computer.
Q2) The Foreign Corrupt Practices Act applies to businesses with their principal offices located in the United States.
A)True
B)False
Q3) Destroying information stored on a computer may be a crime.
A)True
B)False
Q4) White-collar crimes generally involve violence.
A)True
B)False
Q5) Some types of instruments of crime are automatically forfeited.
A)True
B)False
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Chapter 8: Torts
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Q1) The same action can have both civil and criminal liability.
A)True
B)False
Q2) For tort liability to be imposed, the perpetrator of the tort must have acted with the intent to do wrong.
A)True
B)False
Q3) Torts arise from a violation of a ____ duty.
A)public
B)private
C)contractual
D)criminal
Q4) Sal sent Max an e-mail message telling Max that his wife had been killed in a car accident, and Sal knew this was untrue.Max may be able to sue Sal for:
A)Intentional infliction of emotional distress
B)Libel
C)Violations of the First Amendment
D)Battery
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Page 10
Chapter 9: Intellectual Property Rights and the Internet
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Q1) The type of patent that may be granted to developers of new and non-obvious ornamental features of manufactured articles is called a(n):
A)design patent.
B)functional or utility patent.
C)improvement patent.
D)plant patent.
Q2) To prevail in an action for trade dress infringement, a plaintiff must prove that its trade dress is distinctive and nonfunctional and the defendant's trade dress is confusingly similar to the plaintiff's.
A)True
B)False
Q3) Under the Semiconductor Chip Protection Act reverse engineering exemption, competitors may study mask works but may not use the results of that study to design their own semiconductor chip.
A)True
B)False
Q4) A copyright prevents the copying of an idea.
A)True
B)False
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Chapter 10: The Legal Environment of International Trade
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Q1) The Alexo Corporation has been charged in a United States court with violation of American antitrust laws in its foreign dealings.The firm has raised the defense that its actions were compelled by the government of its host country.Alexo based its defense on the__________ doctrine.
A)act-of-state
B)sovereign compliance
C)sovereign immunity
D)Treaty of Rome
Q2) The "effects doctrine" requires U.S.courts to assume jurisdiction over cases when domestic commercial activities have a direct and foreseeable effect on international commerce
A)True
B)False
Q3) The purpose of most-favored-nation treatment is to prohibit one country's discrimination between its own products and foreign products or services.
A)True
B)False
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Page 12
Chapter 11: Nature and Classes of Contracts: Contracting
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Q1) A legally binding agreement that can be rejected at the option of one of the parties is called a(n):
A)void agreement.
B)revoked contract.
C)voidable contract.
D)optional agreement.
Q2) In some cases, third persons, such as third party beneficiaries or assignees, have rights on a contract.
A)True
B)False
Q3) The principle behind the quasi contract is to prevent unjust enrichment. A)True
B)False
Q4) A contract is essentially an agreement that creates an obligation.
A)True
B)False
Q5) Only the parties who signed the original contract can have rights with respect to that contract.
A)True
B)False
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Chapter 12: Formation of Contracts: Offer and Acceptance
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Q1) Generally, advertisements, catalog prices, and circulars are offers that can be accepted.
A)True
B)False
Q2) A customer went into a store and saw a beautiful leather jacket bearing a price tag of $29.The customer handed the cashier a $50 bill and said, "I accept.We have a deal." The cashier then noticed the price tag and told the customer an error had been made and that the price was $229.In this case:
A)the customer validly accepted the store's offer.
B)the price tag was a firm offer.
C)no contract was formed because the customer's offer was refused.
D)the customer is the offeree.
Q3) Frank is drunk and while laughing hysterically says to Hal "I'll sell you my truck for a buck". Frank has made a valid offer.
A)True
B)False
Q4) A requirements contract is too vague to be a legally-enforceable agreement.
A)True
B)False
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Chapter 13: Capacity and Genuine Assent
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Q1) A factual incapacity may exist when, because of a mental condition caused by medication, drugs, alcohol, illness, or age, a person does not understand that a contract is being made or understand its general nature.
A)True
B)False
Q2) Roberta, an educated person, purchased real estate from Maurice.Roberta did not read entirely the contract that she signed.As a result, she did not notice the provision in the contract about the interest imposed on the unpaid portion of the purchase price.She refused to pay the interest specified in the contract.Maurice sued her.Could he recover?
Q3) An apparently voluntary agreement may in fact not be voluntary if:
A)undue influence is present.
B)physical duress is present.
C)economic duress is present.
D)all of these.
Q4) At common law, a minor cannot be held contractually liable for his or her necessary medical expenses when the parent is unable or unwilling to pay.
A)True
B)False
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Page 15
Chapter 14: Consideration
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Q1) A promise that in fact does not impose any obligation on the promisor is known as an elusive promise.
A)True
B)False
Q2) None of the following can be legal consideration except:
A)Refraining from beating one's spouse.
B)Promising to refrain from beating one's spouse.
C)Refraining from smoking cigarettes.
D)Refraining from using cocaine.
Q3) Promissory estoppel does NOT require
A)a signed writing explaining the promise.
B)a clear and definite promise
C)that justice be better served by enforcement of a promise
D)that a promisee has justifiably relied on the promise
Q4) Consideration is:
A)the concern shown by the other contracting party.
B)what is demanded by the promisor as the price for the promise.
C)a stated number of dollars.
D)the concern of both contracting parties for the protection of the environment.
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Chapter 15: Legality and Public Policy
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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) In an employment contract, agreements not to compete are:
A)illegal
B)uniformly held to be in the public interest and therefore legal
C)valid only if the restriction protects the employee
D)valid, if the restriction is reasonable and necessary for the protection of the former employer
Q3) In certain situations, the law may hold a contract provision unenforceable because it is too harsh or oppressive to one of the parties.
A)True
B)False
Q4) An agreement that unreasonably restrains trade is illegal and void on the ground that it is contrary to public policy.
A)True
B)False
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Chapter 16: Writing, Electronic Forms, and Interpretation of Contracts
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Q1) The parol evidence rule does not apply in which of the following scenarios?
A)contradict a complete written contract.
B)prove the modification or termination of a contract.
C)replace the statute of frauds.
D)create a contract.
Q2) 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?
Q3) A court can imply details of a performance which are not expressly stated in a contract.
A)True
B)False
Page 18
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Chapter 17: Third Persons and Contracts
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Q1) If a municipality contracts with a contractor to pave a street, the homeowners on that street are third-party beneficiaries of the contract.
A)True
B)False
Q2) An assignee of a contract can bring suit on the contract only in the name of the assignor.
A)True B)False
Q3) The party making an assignment is called the:
A)assignee.
B)assignor.
C)obligor.
D)successor.
Q4) An incidental beneficiary of a contract:
A)can sue to enforce the contract.
B)cannot sue to enforce the contract.
C)is a beneficiary specifically named in the contract.
D)is an assignee of the direct beneficiary.
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Chapter 18: Discharge of Contracts
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Q1) Payment by check is a conditional payment.
A)True
B)False
Q2) In a mutual rescission, both parties, acting in good faith, renew their commitment to perform all obligations set forth in their original agreement.
A)True
B)False
Q3) Which of the following events excuses a promisor from performing his or her contractual obligations?
A)a riot
B)a shortage of materials necessary for production of goods and/or provision of services called for under the contract
C)an unanticipated increase in the cost of performance
D)destruction of the subject matter through no fault of either party
Q4) An offer to perform is known as a(n) __________.
A)rendering
B)offering
C)tinder
D)tender
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Chapter 19: Breach of Contract and Remedies
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Q1) When a party waives compliance with one provision of a contract, the other party may thereafter ignore other provisions of that contract.
A)True
B)False
Q2) A provision stipulating the amount of money damages to be paid in the event of default or breach of contract is known as a __________ damages clause.
A)nominal
B)contract
C)liquidated
D)breach
Q3) The remedy of specific performance will most likely be granted in the case of a(n): A)employment contract.
B)contract to buy shares of publicly-traded stock.
C)contract for the sale of a business.
D)contract for the sale of Florida oranges.
Q4) A waiver is based on the subjective opinion of the innocent party.
A)True
B)False
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Chapter 20: Personal Property and Bailments
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Q1) Unclaimed property is often transferred to the government under the concept of escheat.
A)True
B)False
Q2) Title to personal property can be acquired by gift or purchase or stolen property.
A)True
B)False
Q3) To establish a gift, the party claiming to be the donee must prove:
A)delivery only.
B)intent only.
C)intent and a promise to deliver.
D)intent and delivery.
Q4) A bailee's __________ gives the bailee the right to maintain possession of the bailed property until reasonable storage and/or repair charges are paid.
A)reversionary interest
B)lien
C)remainder interest
D)mortgage
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Chapter 21: Legal Aspects of Supply Chain Management
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Q1) The relationship of guest and hotelkeeper ends when the guest:
A)pays his or her bill.
B)advises the hotelkeeper of his or her departure.
C)leaves or ceases to be a transient.
D)has stayed for 30 days and becomes a boarder.
Q2) A building is essential to warehousing.
A)True
B)False
Q3) A common carrier transporting goods under a COD shipment may:
A)make delivery without first obtaining payment.
B)not make delivery without first receiving payment.
C)accept a check as payment and have no liability.
D)not avoid liability without a signed release.
Q4) A purchaser of a nonnegotiable warehouse receipt:
A)receives no implied warranties.
B)may acquire rights superior to those of the transferor.
C)acquires only the title and the rights the transferor had authority to transfer.
D)may be considered to have the rights of a holder in due course.
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Page 23
Chapter 22: Nature and Form of Sales
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Q1) Which term is not required in a writing in order to satisfy the statute of frauds?
A)language indicating that a sale or contract to sell has been made
B)the price of the goods
C)the quantity of goods involved in the transaction
D)the signature of the defendant
Q2) All of the following satisfy the Statute of Frauds' except: ______.
A)merchant's confirmation memo
B)signed, faxed letters
C)authenticated emails
D)a record that omits quantity
Q3) A contract of indefinite duration may be terminated by notice from either party to the other party.
A)True
B)False
Q4) The provisions of Article 6 concerning bulk transfers are designed to protect creditors.
A)True
B)False
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Chapter 23: Title and Risk of Loss
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Q1) __________ reserve auctions are those in which the goods must be sold regardless of whether the auctioneer is satisfied with the levels of the bids.
A)With
B)Without
C)Unqualified
D)Unrestricted
Q2) Supply chain management refers to the management issues of risk and title as goods flow through commerce.
A)True
B)False
Q3) In a consignment, the dealer-consignee is often referred to as a(n): A)remainder.
B)factor.
C)quotient.
D)exponent.
Q4) Title to goods can be transferred without the actual delivery of the goods involved. A)True
B)False
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Chapter 24: Product Liability: Warranties and Torts
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Q1) Whenever a sale of goods is made, certain warranties are implied unless they are expressly excluded.
A)True
B)False
Q2) Manufacturers who prepare goods to the buyer's specifications are under exceptionally stringent warranty obligations for fitness for a particular use.
A)True
B)False
Q3) The federal regulation of express warranties:
A)applies only to limited warranties.
B)applies to a seller who makes a written express warranty for a consumer product costing more than $10.
C)requires all express warranties to be full warranties.
D)requires an implied warranty to be designated as either full or limited.
Q4) 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.
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Chapter 25: Obligations and Performance
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Q1) The statement, "I doubt that I can perform the contract," is a repudiation of the contract.
A)True
B)False
Q2) Upon a seller's tender of nonconforming goods and the buyer's rejection of them, the transaction has ended.
A)True
B)False
Q3) If adequate assurance of performance is not given within five (5) business days from the time of the demand for assurance, the demanding party may treat the contract as repudiated.
A)True
B)False
Q4) To be adequate, after a proper demand an assurance of performance must:
A)include consideration.
B)allow for the additional examination of the goods.
C)be sufficient to assure a reasonable person that the contract will be performed.
D)be written.
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Chapter 26: Remedies for Breach of Sales Contracts
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Q1) On January 15, 2012, Anders brought an action against Barnes for breach of a contract for the sale of electronic parts.The breach occurred on January 10, 2008, and Anders discovered the breach on January 20, 2008.The state statute of limitations for contract actions is five years.Barnes raised the UCC statute of limitations as a defense to the action.Is this defense valid?
Q2) A liquidation of damages clause in a consumer contract is enforceable if it:
A)is not in excess of twice the provable damages.
B)is agreed to by both parties to the contract.
C)reasonably attempts to estimate the actual harm caused by a breach.
D)is a reasonable amount designed to punish the breaching party.
Q3) Fran had a very rare, and therefore expensive, automobile that she wished to sell.Fran worried that if the first attempt at selling the auto failed, the value of the auto might come into question.To prevent any potential loss of profit if the auto needed to be resold, Fran created a sales contract that provided for an estimation of damages should the contract later be breached by the potential buyer.A potential buyer was found, and the contract was signed.Later, because of a lack of sufficient financing, the buyer breached the sales contract.Fran requested the estimated damages provided for in the contract.The buyer refused, calling the clause unconscionable and excessive.Can Fran recover?
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Page 28
Chapter 27: Kinds of Negotiable Instruments and Negotiability
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Q1) Conville signed a note as an officer of the Hughesville Manufacturing Corporation, but she did not name the corporation in the note or indicate that she was acting as an officer for it.Later, she was sued by the Grange National Bank, the holder of the note.She raised the defense that the corporation was liable on the note.Who was liable?
Q2) 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.
Q3) Revised UCC Article 3 refers to drawers, indorsers, and accommodation parties as "secondary obligors."
A)True
B)False
Q4) The bank is the drawee on a check and has no liability until it has accepted the instrument.
A)True
B)False
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Chapter 28: Transfers of Negotiable Instruments and
Warranties of Parties
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Q1) When a negotiable instrument is negotiated by delivery without indorsement, the warranty liability of the transferor runs:
A)only to the immediate transferee.
B)not to the immediate transferee, but to all subsequent transferees.
C)to both the immediate transferee and all subsequent transferees.
D)neither to the immediate transferee, nor to any subsequent transferees.
Q2) If an instrument bears a restrictive indorsement, any further transfer or negotiation is effectively barred.
A)True
B)False
Q3) If a negotiable order instrument is transferred to another party without an indorsement, the instrument has been:
A)assigned.
B)negotiated.
C)obtained by fraud, and is therefore invalid.
D)obtained by fraud, but may be ratified.
Q4) A holder is also known as an assignee of the paper
A)True
B)False
Page 30
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Chapter 29: Liability of the Parties Under Negotiable Instruments
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Q1) Fraud in the inducement is a:
A)limited defense not available against a holder in due course.
B)universal defense available against all holders.
C)limited defense available against all holders.
D)universal defense not available against a holder in due course.
Q2) Generally, defenses that could be raised in a breach of contact claim cannot be raised against a holder in due course.
A)True
B)False
Q3) A holder who is neither a holder in due course nor a holder through a holder in due course is subject to every defense, just as though the instrument were not negotiable.
A)True
B)False
Q4) In 1976 the FTC adopted a rule that expands the rights of a holder in due course in a consumer credit transaction.
A)True
B)False
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Chapter 30: Checks and Funds Transfers
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Q1) Funds transfers made by businesses are governed by __________ regulations.
A)UCC
B)Federal Reserve
C)UCC and Federal Reserve
D)neither UCC nor Federal Reserve
Q2) The delivery of a check is an assignment of money on deposit, and the drawee bank is required to pay the holder the amount of the check.
A)True
B)False
Q3) Banks are liable for losses on counterfeit checks in all the following scenarios except:
A)whether or not the bank acted reasonably in its processing systems in clearing the checks.
B)whether or not the bank complied with time requirements for customers regarding the checks.
C)whether or not the bank made an unreasonable mistake in paying the check.
D)whether or not presentment was valid.
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Chapter 31: Nature of the Debtor-Creditor Relationship
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Q1) If an issuer requests its correspondent bank where the beneficiary is located to notify the beneficiary of the issuance of a letter of credit, the correspondent bank is called a(n):
A)advising bank.
B)foreign bank.
C)consulting bank.
D)coissuer.
Q2) Which of the following is correct concerning suretyship and guaranty?
A)A surety is always liable from the moment the principal is in default.
B)A guarantor is always liable from the moment the principal is in default.
C)Both are undertakings by one person, for a consideration, to pay another person a sum of money in the event that the other person sustains a specified loss.
D)Neither can be exonerated from liability.
Q3) Standby letters of credit are used only in international trade situations.
A)True
B)False
Q4) The use of letters of credit arose in international trade.
A)True
B)False
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Page 33
Chapter 32: Consumer Protection
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Q1) Consumer protection even protects a consumer from the consumer's own negligence.
A)True
B)False
Q2) A letter from a collection agency to a consumer that gives the impression a lawsuit is about to be brought against the consumer when in fact it will not be brought is not a violation of the Fair Debt Collection Practices Act.
A)True
B)False
Q3) When improper collection methods are used, it is no defense to the creditor that the improper acts were performed by an agent, an employee, or any other person acting on behalf of the creditor.
A)True B)False
Q4) The types of provisions that make contracts unconscionable include clauses that award excessive damages or the application of credit payments across purchases over time so that the consumer is never able to pay off any goods.
A)True B)False
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Chapter 33: Secured Transactions in Personal Property
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Q1) A security interest is like a lien on personal property that allows the creditor to take possession of the property if the debtor defaults.
A)True
B)False
Q2) If a breach of the peace might occur:
A)self-help repossession is the only option available to obtain the collateral.
B)the creditor must use court action to obtain the collateral.
C)the creditor is barred from repossessing the collateral.
D)the collateral reverts to the debtor.
Q3) The concept of perfection: ______.:
A)creates a security interest.
B)protects against the claims of others to the collateral.
C)secures the rights of the creditor against the debtor.
D)Converts unsecured creditors into secured creditors.
Q4) Property that is subject to a security interest is called collateral.
A)True
B)False
Q5) Under Revised UCC Article 9, a financing statement must be signed by the debtor.
A)True
B)False
Page 35
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Chapter 34: Bankruptcy
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Q1) Under the Bankruptcy Reform Act, the "mansion loophole" increases the homestead exemption for debtors.
A)True
B)False
Q2) None of the following transfers may be set aside as preferences by the bankruptcy trustee except for: ______.
A)transactions for present consideration
B)payments in the debtor's ordinary course of business
C)payments of a debtor's utility bill
D)payments to a debtor's relative
Q3) A discharge does not release a person from a consumer debt to a single creditor totaling more than $5,775 for luxury goods or services if the debt was incurred within how many days of the order for relief?
A)90
B)120
C)180
D)365
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Chapter 35: Insurance
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Q1) Paul purchased a house and also purchased fire insurance coverage on the house.The policy contained an 80 percent coinsurance clause.Paul maintained coverage in the amount of $150,000 and the value of the house was $250,000.A fire caused a loss of $100,000.Paul will collect:
A)the full $100,000, because he had coverage for $150,000.
B)only part of the $100,000 loss, because he failed to maintain coverage at 80 percent of the value of the house.
C)nothing, because he failed to maintain coverage at 80 percent of the value of the house.
D)80 percent of $250,000, or $200,000.
Q2) When the insurer is subornated to the insured's claim, the insurer may enforce that claim against the third person.
A)True
B)False
Q3) The insured must comply with a number of time limitations in making a claim.
A)True
B)False
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Study
Chapter 36: Agency
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Q1) The "right to control" test determines whether an individual is an agent, an employee, or an independent contractor.
A)True B)False
Q2) A principal may ratify an action taken by an agent that the principal would not have been capable of authorizing at the time that the action was taken.
A)True B)False
Q3) Initially, ratification is a question of: ______. A)intention.
B)consideration.
C)form.
D)implication.
Q4) A third person who deals with a person claiming to be an agent has the right to rely on the statements made by the agent concerning the extent of the agent's authority. A)True B)False
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Chapter 37: Third Persons in Agency
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Q1) Modern law holds that an employer is liable for an intentional tort committed by an employee for the purpose of furthering the employer's business.
A)True
B)False
Q2) Parol evidence is allowed to show whether an agent has signed in a representative or an individual capacity.
A)True
B)False
Q3) When a third person makes payment to an authorized agent, such payment is deemed made to the principal at the time the agent remits the payment to the principal.
A)True
B)False
Q4) An agent's liability to a third person is not affected by the degree of the principal's disclosure.
A)True B)False
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Page 39
Chapter 38: Regulation of Employment
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Q1) 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.
Q2) In the absence of an agreement to the contrary, when an employee is discharged, regardless of the reason, the employer must: ______.
A)provide COBRA compensation.
B)make a two-week severance payment.
C)pay wages to the expiration of the last pay period.
D)create a severance package based on market conditions.
Q3) ERISA establishes an insurance plan to protect employees when the employer goes out of business.To provide this protection, the statute created a: ______.
A)Pension surety system.
B)Pension Benefit Guaranty Corporation.
C)Pension Accrual Compensation System.
D)bond system of payment.
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Chapter 39: Equal Employment Opportunity Law
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Q1) Cameo Industries desired a workplace free from all forms of sexual harassment.Accordingly, Cameo developed guidelines for its workers that specifically forbade sexual harassment.The guidelines gave examples of conduct that would not be tolerated, provided penalties, designated a company official as the proper person to whom complaints should be brought, investigated complaints thoroughly, and maintained an educational policy designed to remind employees of the policy?Maureen, a Cameo Industries employee, made a complaint of sexual harassment, charging that her supervisor had demanded sexual favors.An investigation was performed and the charge was substantiated.The supervisor was warned not to continue this conduct, but it happened again.The supervisor was again issued a warning.Finally, Maureen brought a court action against the supervisor and Cameo.Cameo defended on the ground that it had done all in its power to rectify the situation.Decide.
Q2) An employer is liable for the sexual harassment of non-supervisors only when it knew, or should have known, of the misconduct - and failed to take prompt remedial action.
A)True
B)False
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