Introduction to Business Law
Exam Answer Key
Course Introduction
Introduction to Business Law provides an overview of the legal principles and frameworks that govern business activities. The course explores foundational topics such as contract law, torts, agency, business organizations, and the regulatory environment. Students will learn how laws influence business decision-making, the rights and responsibilities of businesses and their stakeholders, and how legal issues are addressed in both domestic and international contexts. Emphasis is placed on real-world case studies and practical applications to prepare students for ethical and legal challenges in the business world.
Recommended Textbook
The Legal Environment of Business 11th Edition by Roger E. Meiners
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Chapter 1: Todays Business Environment: Law and Ethics
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Sample Questions
Q1) An administrative agency is created when the:
A)legislative branch delegates some authority to a group or agency
B)legislative branch enacts a law specifying the duties and responsibilities of an agency
C)executive branch delegates some of its authority to a group or agency
D)the President creates an office by Executive Order
E)all of the other choices can be correct
Answer: E
Q2) Ethics generally refers to accepted standards of right and wrong in a society.
A)True
B)False
Answer: False
Q3) Private law,unlike public law,tends to change rapidly as it is based on current social attitudes.
A)True
B)False
Answer: False
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Page 3
Chapter 2: The Court Systems
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Q1) Municipal courts usually:
A)hear claims that involve less money than claims heard in district courts
B)hear claims that involve more money than claims heard in district courts
C)hear the same claims as a district court
D)hear claims rejected by the district courts
E)none of the other choices are correct
Answer: A
Q2) A court can exercise jurisdiction over a corporate defendant if the court is located in the state in which the corporation has "visible advertising."
A)True
B)False
Answer: False
Q3) With respect to a court,jurisdiction means:
A)the rule of justice in practice
B)the right to command parties
C)the authority to command parties
D)the right to write the law
E)none of the other choices are correct
Answer: E
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Page 4
Chapter 3: Trials and Resolving Disputes
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Sample Questions
Q1) At the close of discovery,either party may:
A)move for a summary judgment
B)move for an ultimate judgment
C)halt the court proceedings until further evidence is obtained
D)move for a timed judgment
E)move for a sustained judgment
Answer: A
Q2) Refer to Fact Pattern 3-1.Because Musclematic is a business,if Amanda files suit against them,the case is:
A)likely to be over rather quickly
B)likely to require use of many documents and exhibits
C)likely to result in a small jury award
D)likely to be appealed before the trial is over
E)none of the other choices
Answer: B
Q3) When a case is taken to an appellate court,the attorneys for the parties must present both written briefs and oral arguments.
A)True
B)False
Answer: True
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Chapter 4: The Constitution: Focus on Application to Business
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Q1) A states may regulate public health without permission of Congress.
A)True
B)False
Q2) You are charged with violating federal law because you allowed your factory to emit pollutants into the atmosphere.You may be held liable for $500,000 in civil penalties,which would bankrupt you.You have no right to a jury trial.
A)True
B)False
Q3) Regulatory takings cases indicate that:
A)the destruction of property value must be almost complete for compensation to be due
B)the destruction of property value need not be extensive for compensation to be due
C)the destruction of property value need not be more than 50% for compensation to be due
D)the destruction of property value is irrelevant
E)none of the other choices are correct
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Chapter 5: Criminal Law and Business
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Q1) In U.S.v.Young,where government agents took x-rays of packages shipped by Young via Federal Express,but no warrant had been issued,the appeals court held that Young had no expectation of privacy for the packages.
A)True
B)False
Q2) An actus reus is:
A)a civil violation
B)a nice deed
C)an active deed
D)a civil crime
E)none of the other choices are correct
Q3) All reported possible criminal acts are investigated and,if credible evidence exists,must be prosecuted.
A)True
B)False
Q4) Criminal negligence is carelessness amounting to a disregard of the rights and safety of others.
A)True
B)False
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Chapter 6: Elements of Torts
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Sample Questions
Q1) If causal connection between a person's act and the resulting harm to another is broken by an intervening act or event,the act or event is called:
A)proximate cause
B)unforeseen cause
C)superseding cause
D)foreseeable cause
E)none of the other choices
Q2) Self-defense is a _______________ based on the need to allow people who are attacked to take steps to protect themselves.
A)proximate cause
B)defense
C)consent
D)privilege
E)none of the other choices
Q3) Defamation is an intentional false communication that injures a person's reputation.
A)True
B)False
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8
Chapter 7: Business Torts and Product Liability
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Q1) MacPherson v.Buick Motor Co.introduced the rule of negligence in tort for consumer products.
A)True
B)False
Q2) To minimize the likelihood of being liable for failure to warn manufacturers must:
A)warn of possible dangers in use of a product
B)warn of possible dangers in the storage of a product
C)warn of possible dangers in the handling of a product
D)all of the other specific choices are correct
E)none of the other specific choices are correct
Q3) The Restatement (Second)of Torts Sect.402A describes:
A)limited liability
B)strict liability in tort
C)contractual liability
D)express warranty of safety
E)all of the other choices
Q4) Intentional misrepresentation is also known as fraud.
A)True
B)False
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Chapter 8: Real and Personal Property
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Sample Questions
Q1) During the term of the lease the ____________ has the right of possession of the property.
A)landlord
B)leasehold
C)designated proxy
D)court
E)none of the other choices are correct
Q2) Subsurface mineral rights:
A)must transfer in fee simple with deeds to land
B)must transfer in fee simple with title to land
C)may be legally separated from surface ownership
D)are owned by the government
E)are owned by the people in common
Q3) A covenant is a contract that accompanies an estate;it is not an interest in an estate.
A)True
B)False
Q4) Most property in the United States is sold as fee defeasible property.
A)True
B)False
Page 10
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Chapter 9: Intellectual Property
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Sample Questions
Q1) In case of infringement of a trademark,suit may be brought under the Lanham Act.
A)True
B)False
Q2) "Chicken of the Sea" is an example of a suggestive trademark.
A)True
B)False
Q3) Infringement means a seller causes confusion about the origins of a product by improper use of a trademark.
A)True
B)False
Q4) Under the ____________"whoever,with intent to convert a trade secret that is related to or included in a product that is produced for or placed in interstate or foreign commerce to the economic benefit of anyone other than the owner thereof,and intending or knowing that the offense will injure any owner of that trade secret" is subject to prosecution.
A)Trade Secret Protection Act
B)Economic Protection Act
C)International Patent Protection Act
D)Federal Espionage Act
E)none of the other choices are correct
Page 11
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Chapter 10: Contracts
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Q1) M agrees to buy Z's house.At the last minute,Z refuses to finish the deal.If the court orders specific performance,M gets the house at the contract price.
A)True
B)False
Q2) Termination of an offer can only occur through the operation of law.
A)True
B)False
Q3) Usually,the acceptance of an offer is legally effective when the acceptance is sent.
A)True
B)False
Q4) Invitations to negotiate or to make an offer are known as:
A)manifestations of intent
B)offers of intent
C)early negotiations
D)preliminary negotiations
E)beginning negotiations
Q5) Nominal damages are usually a trivial sum of money. A)True
B)False
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Chapter 11: Domestic and International Sales
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Q1) A(n)_______________ is created by a seller's promise or guarantee as to the quality,safety,performance,or durability of goods being sold.
A)final warranty
B)warranty to title
C)implied warranty of merchantability
D)fitness for a particular purpose
E)none of the other choices are correct
Q2) If a contract for the sale of goods does not specify where goods are to be delivered,the UCC presumes that in most cases:
A)delivery is at the seller's place of business
B)delivery to the buyer's place of business
C)delivery is to the closest railroad or trucking station
D)delivery is to a common carrier
E)delivery is to the buyer's agent
Q3) The UCC's general damage measures are designed to put the seller in as good a position as if the buyer had performed contractual obligations.
A)True
B)False
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Chapter 12: Negotiable Instruments, credit, and Bankruptcy
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Q1) To make a security interest subject to better enforcement,the creditor should make sure the interest is attached and perfected.
A)True
B)False
Q2) Many states provide a homestead exemption to protect a debtor's housing from being attached in debt proceedings.
A)True
B)False
Q3) In some cases,the property of a debtor will not be available to a creditor who wishes to attach and sell it to satisfy an outstanding debt.Exempt property often includes:
A)the family house
B)the family jewelry
C)some tools used in the debtor's trade
D)the family house and some tools used in trade
E)the family house,jewelry,and some tools used in trade
Q4) Promises to pay include drafts and checks.
A)True
B)False
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Chapter 13: Business Organizations
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Questions
Q1) Unless its articles of incorporation provide for a specified period of duration,a corporation has:
A)total existence
B)permanent existence
C)existence of perpetual duration
D)final existence
E)none of the other choices are correct
Q2) Which of the following are usually included in a written partnership agreement:
A)state law that applies to the partnership
B)contributions of the partners
C)limits on transfers of partnership shares
D)how partnership shares will be valued
E)all of the other specific choices are usually included
Q3) Corporations may sue and be sued in the name of the business itself.
A)True
B)False
Q4) Shell corporations are very easy to be set up in many states.
A)True
B)False
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Chapter 14: Agency and the Employment Relationship
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Q1) An agent is expected to perform responsibilities with the degree of care that is called ordinary care under the circumstances.
A)True
B)False
Q2) In Bearden v.Wardley Corp. ,where Bearden sued Wardley because one of its agents,Gritton,bought a house from her and then cheated her on the transaction,the court held that:
A)Gritton was liable for breaching his duty to Bearden,but Wardley had no knowledge of Gritton's actions so was not liable
B)Gritton was liable for theft,but not for breach of his duty as an agent to Bearden,since that relationship expired before Gritton cheated Bearden
C)Wardley was liable to Bearden because Gritton was its agent,but Gritton was not liable to Bearden because he had no legal obligation to her,only to Wardley
D)neither party was liable to Bearden because the contract was legitimate and her claim that she had been cheated by her agent,Gritton,was unfounded
E)none of the other choices
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Chapter 15: The Regulatory Process
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Sample Questions
Q1) In Invention Submission v.Rogan,the Patent and Trademark Office (PTO)used a testimonial from a client of Invention Submission (IS)as an example of someone who felt abused by a patent-marketing scheme.IS had not been convicted of wrongdoing so it sued the PTO for violating the Administrative Procedure Act (APA)by using that example in its advertising campaign about patent-marketing scams.The appeals court held that the PTO violated:
A)the APA by not allowing IS to respond
B)the APA by implying in its ads that IS violated federal regulations,which it had not,so the ads had to be stopped
C)the APA by implying in its ads that IS violated federal regulations,which it had not,so IS could recover damages
D)was not reviewable by the courts as it was not a final administrative action
E)none of the other choices
Q2) Which classification of administrative rules are usually the most important:
A)interpretative
B)agency
C)procedural
D)formal
E)none of the other choices are correct
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Chapter 16: Employment and Labor Regulations
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Sample Questions
Q1) To increase the likelihood that substance tests performed due to "reasonable suspicion"
Of improper usage will be upheld,an employer should:
A)not disclose the company's drug testing policy to employees
B)have a clearly announced policy of such tests
C)file the appropriate paperwork with the federal government before hiring any employees
D)file the appropriate paperwork with the federal government before testing any employees
E)none of the other choices are correct
Q2) Workers' compensation began as a program in several states before it was taken over by the federal government.
A)True
B)False
Q3) The Taft-Hartley Act requires unions to bargain in good faith with employers about wages and working conditions.
A)True
B)False
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Chapter 17: Employment Discrimination
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Q1) If a discrimination suit involves mixed evidence about discrimination and job performance,the Supreme Court has held that the jury must give the benefit of doubt to the plaintiff.
A)True
B)False
Q2) The Supreme Court has held that,when reviewing sexual harassment cases,one should use the perspective of a reasonable person in the same circumstances.
A)True
B)False
Q3) The Age Discrimination in Employment Act:
A)prohibits discrimination against men over age 40
B)prohibits discrimination against women over age 40
C)applies to employers with 20 or more employees
D)prohibits discrimination against women over age 40 and applies to employers with 20 or more employees
E)prohibits discrimination against men and women over age 40 and applies to employers with 20 or more employees
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Chapter 18: Environmental Law
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Questions
Q1) The practice of buying or restoring other wetlands in exchange for the right to fill some wetlands is known as:
A)wetlands trading
B)wetlands exchanging
C)wetlands mitigation banking
D)wetlands restoration banking
E)none of the other choices
Q2) California's automobile emissions standards require:
A)use of electric cars
B)use of alternative fuels
C)the sale of cleaner burning gasoline
D)all of the other choices
E)that they follow the standards implemented in New York
Q3) The public welfare effects of a pollutant's NAAQS do NOT include which of the following:
A)impact on plants
B)impact on economic activity
C)impact on soil
D)impact on constructed surfaces
E)all of the other specific choices are included
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Chapter 19: Consumer Protection
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Q1) The Consumer Leasing Act applies to consumer leases for all of the following except a lease:
A)of living room furniture for 18 months
B)of a car for two years
C)of a computer for a year
D)of a big-screen television for six months
E)all of the other choices are covered if for personal use
Q2) Comparing regulation of drugs to other countries,the U.S.is:
A)not very strict compared to nations of Europe
B)not very strict compared to most underdeveloped nations
C)one of the strictest nations but has little impact on the world market
D)one of the strictest nations and has great impact on the world market
E)none of the other choices
Q3) The Credit Card Accountability Responsibility and Disclosure Act (Credit CARD Act)imposes restriction on how often interest rates on cards may be changed.
A)True B)False
Q4) The FTC is required by law to sue all advertisers that publish deceptive ads. A)True B)False
Page 21
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Chapter 20: Antitrust Law
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Q1) In U.S.v.Trenton Potteries,a group of sanitary potters successfully argued that reasonable price-fixing agreements were legal.
A)True
B)False
Q2) The Clayton Act was passed to:
A)deal with the problem of state interference in a federal issue
B)add restrictions beyond the Sherman Act
C)show Congressional dislike of free trade
D)deal with price fixing by the Standard Oil Trust
E)try to limit dangerous fluctuations in the stock market
Q3) A firm that violates the antitrust laws could be required to break up and thereby set up another firm to compete with it.
A)True
B)False
Q4) An attempt to monopolize trade,even if unsuccessful,may be a violation of the Sherman Act.
A)True
B)False
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Chapter 21: Securities Regulation
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Q1) The Securities Litigation Reform Act of 1995 repeals the 1934 Securities Act,replacing it with a statute that takes into account the use of computers and electronics in securities markets.
A)True
B)False
Q2) Under the securities law,liability for misstatements:
A)can be imposed on securities offerors,but not corporate officials
B)cannot be imposed for overly optimistic statements made by executives
C)would not be imposed for misstatements in press releases due to First Amendment protection of media
D)none of the other choices
E)can only be imposed by the SEC,not by private party litigation
Q3) The registration requirement of the Securities Act of 1933 applies to:
A)charitable or religious organizations' securities
B)government bonds
C)insurance policies
D)all of the other specific choices
E)none of the other choices
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Chapter 22: The International Legal Environment of Business
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Q1) Which of the following is NOT an industry that is affected by NAFTA:
A)agriculture
B)automobiles
C)pharmaceuticals
D)textiles
E)all of the other specific choices are affected by NAFTA
Q2) A tariff is a duty or tax most commonly imposed by a government on exported goods.
A)True
B)False
Q3) Legal rules governing international business transactions were developed for the first time in the late 1800s.
A)True
B)False
Q4) A(n)______________ may not be withdrawn.
A)nonbinding letter of credit
B)revocable letter of credit
C)conditional letter of credit
D)unconditional letter of credit
E)none of the other specific choices are correct
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