Introduction to Business Law Exam Preparation Guide
Course Introduction
Introduction to Business Law provides students with a foundational understanding of the legal concepts and frameworks that govern the business environment. The course explores essential topics such as the formation and enforcement of contracts, the structure and regulation of different business organizations, tort liability, property law, and the principles of agency. Students will also examine the ethical and social responsibilities of businesses, dispute resolution methods, and relevant statutory and case law affecting commercial transactions. Through practical examples and case studies, the course prepares students to identify legal issues in business scenarios and make informed decisions in a legal context.
Recommended Textbook
Canadian Business and the Law 5th Edition by Dorothy Duplessis
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Page 2
Chapter 1: Knowledge of Law As a Business Asset
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Q1) Which of the following best exemplifies a protective element of Canadian law?
A) It seeks to make those who break the law accountable.
B) It sets rules in order to encourage complexity.
C) It sets rules in order to encourage complacence.
D) It provides rules that prohibit making commitments.
Answer: A
Q2) Windy Energy Inc. recovered most of its property stolen by a former employee. The employee was placed on probation and ordered to pay restitution. What type of law determined the employee's punishment?
A) employment law
B) business law
C) criminal law
D) contract law
Answer: C
Q3) Businesses that have been unable to resolve complex contractual disputes may have to turn to litigation as the last resort to, among other things, establish the liability of one business to another.
A)True
B)False
Answer: True
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Chapter 2: The Canadian Legal System
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Q1) Which of the following best describes the defining characteristics of public law?
A) It regulates relationships between governments and individuals.
B) It provides rules concerning rights and obligations of business.
C) It focuses on fairness according to strict rules of common law.
D) It contains the rules of law in the Civil Code of Quebec.
Answer: A
Q2) Federal and provincial legislatures are constitutionally provided with the authority to appoint judges within specified judicial jurisdictions.
A)True
B)False
Answer: True
Q3) Which of the following outcomes is dictated by the doctrine of paramountcy in circumstances where conflicting federal and provincial laws cannot be reconciled?
A) The federal law prevails, except in Quebec.
B) The superior law prevails.
C) Concurrent provincial law prevails.
D) The provincial law prevails.
Answer: B
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4
Chapter 3: Managing Legal Risks
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Q1) Which of the following risk management objectives would be strongly supported by the use of a limitation of liability clause in a contract?
A) It reduces the liability for the risk and is legally enforceable.
B) It transfers the risk, is legally enforceable, and is acceptable to the other party.
C) It eliminates the risk, limits the liability, and is acceptable the other party.
D) It retains a standard form of contractual of limited liability.
Answer: B
Q2) Insurance policies covering business risks will provide coverage for all losses as part of their standard terms, so there is no need for the legal risk management team to review the policies.
A)True
B)False
Answer: False
Q3) Risk avoidance is always the best policy.
A)True
B)False
Answer: False
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Chapter 4: Dispute Resolution
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Q1) For how long, and under what circumstances, would a losing party's personal income and other assets such as land, houses, and vehicles be at risk?
A) for as long as 20 years in some provinces, to satisfy the payment of a judgment
B) for as long as 20 years in some provinces, beginning on the dissolution of a partnership
C) for up to a 10-year period in cases of commercial bankruptcy
D) for up to a 10-year period in cases of corporate insolvency
Q2) Contrast the advantages and disadvantages of alternate dispute resolution.
Q3) It would be very rare to find a significant commercial contract, whether international or domestic, that would contain an arbitration clause in it.
A)True
B)False
Q4) An unsuccessful litigant may appeal a trial decision as long as notice of that party's intention to appeal is filed within a specified number of days following the delivery of the trial court's decision.
A)True
B)False
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Chapter 5: An Introduction to Contracts
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Q1) With respect to the relationship that exists between contractual parties, what is meant by the phrase "meeting of the minds"?
A) There is an agreement between two or more persons.
B) The legal cornerstone of the commercial operation has been formed.
C) There is an informing idea behind the contractual relationship.
D) There is agreement upon the intrinsic responsibilities owed to each other.
Q2) Most Canadian jurisdictions require contracts regarding interests in land to be in written form.
A)True
B)False
Q3) In order for a court to be convinced that both parties deliberately entered into a contractual relationship, there must be evidence of their intention to create legal relations.
A)True
B)False
Q4) Identify and briefly explain the circumstances where a party might opt to deliberately breach a contract by refusing to honour its promises to the other side. Provide an example and a possible alternative to an outright breach of existing contractual obligations.
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Chapter 6: Forming Contractual Relationships
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Q1) An offeror has specified the method of communication to be used by the offeree when accepting the offer. What principle would a court apply to determine whether acceptance had been perfected?
A) The offer must have been made using the same method of communication.
B) The offer cannot be accepted by another method of communication.
C) Acceptance by a specified method of communication must be reasonable.
D) Acceptance by other means is effective when received by the offeror.
Q2) In the case of R. v. Ron Engineering & Construction Ltd. [1981] 1 S.C.R. 111, the Supreme Court of Canada reformed the legal structure concerning the tendering process in Canada. What did the Supreme Court state would form an element of the reformed legal structure?
A) Every party submitting a tender is accepting the offer of Contract B.
B) The only successful tenderer would enter into a Contract A with the owner.
C) The call for tender offered a preliminary contract called Contract A.
D) The call for tender offered a preliminary contract forming Contract B.
Q3) A standard form contract requires one party, typically a consumer, to enter into it without benefit of negotiation.
A)True
B)False
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Page 8
Chapter 7: The Terms of a Contract
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Q1) Bad faith is conduct that is contrary to community standards of honesty, reasonableness, or fairness.
A)True
B)False
Q2) Identify the terms that are required to be present in a commercial contract in order for it to be considered complete. Identify any additional clauses that could provide additional benefits through their inclusion.
Q3) Courts are not allowed to refer to external sources (e.g., dictionaries) when trying to determine the meaning of ambiguous terms used in contracts.
A)True
B)False
Q4) When the parties include an "entire contract clause" in their contract, they are directing the courts to apply the parol evidence rule.
A)True
B)False
Q5) Identify and briefly describe the situations in which the court will disregard the parole evidence rule and consider evidence outside the contract.
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Chapter 8: Non Enforcement of Contracts
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Q1) What criteria must be satisfied in order for a misrepresentation to be actionable?
A) the misrepresentation must be made to a minor
B) the misrepresentation must be material to the contract
C) the misrepresentation must be made in conjunction with a threat of harm
D) the misrepresentation must be intentional
Q2) In a recent 2009 ruling, the Supreme Court of Canada found it necessary to direct that judges in lower courts were prohibited from redrafting overly broad non-competition clauses to make them legal and enforceable, stating that such clauses are simply and utterly unenforceable. Why did the Supreme Court find it necessary to invoke this prohibition?
A) to restate policy that vague or ambiguous clauses are unenforceable
B) because such clauses improperly bind employees unable to afford litigation costs
C) because such clauses are difficult to prove when the meaning is in fact unclear
D) to restate a central policy objective to facilitate drafting of broad clauses
Q3) If a contract is one that the Statute of Frauds requires must be written in order to be enforceable, what must appear in writing?
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Page 10
Chapter 9: Termination and Enforcement of Contracts
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Q1) Employees can be held liable for their employers' actions.
A)True
B)False
Q2) What will have occurred if a mechanic employed by an auto repair shop does the actual work required under the shop's contractual agreement to repair a customer's automobile?
A) novational performance
B) substitutional performance
C) assigned performance
D) vicarious performance
Q3) What is the main objective of the remedy of restitution?
A) to enforce the actual performance of contractual obligations
B) to restrain a party from acting for a limited period of time
C) to redress circumstances of unjust enrichment
D) to monetarily compensate for a breach of contract
Q4) There are very few ways in which a third party may acquire an enforceable benefit flowing from a contract.
A)True
B)False
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Chapter 10: Introduction to Tort Law
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Q1) How do Crown prosecutors serve as the gatekeepers of the criminal courts?
A) They typically determine which criminal offences to prosecute.
B) They are designated employees of the provincial governments.
C) They are designated employees of the federal government.
D) They typically work closely with police enforcement officers.
Q2) Which of the following would immediately justify a court finding an employer vicariously liable?
A) authorized actions within the ordinary course of employment
B) evidence of unauthorized mode of performance
C) evidence establishing a significant connection
D) authorized actions outside the ordinary scope of employment
Q3) Provide a brief discussion of the tort relating to a consumer who purchased and was harmed by the subsequent use of a defective product.
Q4) A judge will likely rely on expert opinions from occupation experts, labour economists, and actuaries when determining the value of an injured plaintiff's diminished earning capacity.
A)True
B)False
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12
Chapter 11: The Tort of Negligence
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Q1) Identify and briefly describe what a defendant must show in order to successfully rely on the defence of volenti non fit injuria. Include a brief explanation of the major significance of this defence to commercial liability insurers.
Q2) Marsha was permanently disabled by a drunk driver in an automobile accident. Her lawyer missed the limitation date for filing her claim, causing further economic and psychological suffering to Marsha. What is the role of the thin skull rule in these circumstances?
A) Damages cannot be reduced because of a pre-existing vulnerability.
B) It holds inherent weakness to be negative to a full damage award.
C) The lawyer can escape full liability due to a pre-existing injury.
D) It holds defendants are not required to foresee the full extent of loss.
Q3) A large group of members who have similar claims against the same defendant are unlikely to be given certification as a class action in Canadian courts.
A)True
B)False
Q4) Negligence is said to be a very common tort action in the commercial world. Provide three examples of a negligence action that could give rise to a claim for injury or loss.
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Chapter 12: Other Torts
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Q1) Identify the torts that endeavour to protect a business's property and its own reputation and the party whose actions typically give rise to this type of action.
Q2) An owner of a building who uses one of the offices for his own business purposes is an occupier.
A)True
B)False
Q3) Which of the following would most likely be used by a court to assess the quantum of an individual's actual monetary damages resulting from defamation?
A) the severity of injury from the falsehood
B) the remoteness of the damages
C) the severity of the defamation
D) the foreseeability of the damages
Q4) Which of the following is synonymous with a misrepresentation causing loss?
A) the fraudulent use of dirty tricks
B) an uncommon remedy in damages
C) the tort of passing off
D) a reckless disregard for the truth
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Chapter 13: The Agency Relationship
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Q1) Which of the following would a risk manager indicate as being a key point with respect to managing agency relationships?
A) Choosing to avoid conflicts of interests is an agent's duty.
B) Choose wisely, instruct carefully, and review regularly.
C) Fiduciary duties must be specified in the agency agreement.
D) Fiduciary duties are automatically owed to the principal.
Q2) In what way are agency relationships distinct from most other legal relationships?
A) all authority must be formalized
B) agent authority must be express
C) mutual consideration is not required
D) agent authority may be express or implied
Q3) Which of the following is a distinguishing characteristic of the law of agency?
A) It is derived largely from special statutes.
B) It is derived largely from tort and contract law.
C) It is derived largely from provincial legislation.
D) It is derived largely from contract law.
Q4) An agent automatically owes a fiduciary duty to his principal.
A)True
B)False
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Chapter 14: Business Forms and Arrangements
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Q1) Emily, Harry, and Ron are partners in a business partnership called Trinkets. Emily contributed $15 000 to the business, Harry $10 000, and Ron $5000. The partners agreed among themselves that they will share partnership profits and losses in proportion to their contributions. In addition, the partnership borrowed $30 000 from the bank. The business didn't work out, and Trinkets is unable to repay the loan. The bank sued Emily personally. She repaid the full $30 000 and then sued Harry and Ron. What amounts may Emily be legally entitled to recover from her partners?
A) $10 000 from Harry and $5000 from Ron
B) $7500 from Harry and $7500 from Ron
C) $15 000 from either Harry or Ron
D) $30 000 from either Harry or Ron
Q2) The duration of existence of a proprietorship is limited by the life of the owner, whereas a partnership is terminated by agreement and a corporation is perpetual unless dissolved.
A)True
B)False
Q3) On dissolution and after all a partnership's debts are satisfied, describe how and in what order legislation requires any excess to be applied.
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Page 16
Chapter 15: The Corporate Form: Organizational Matters
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Q1) What are the terms "bonds" and "debentures" synonymous with in a business law context?
A) corporate IOU
B) corporate securities
C) unsecured debt
D) flexible capital
Q2) In August, Martina decided to seek preferable tax status for her business income. She negotiated the novation of all contractual obligations acquired since November with each of her sole proprietorship's customers. Novation will allow those obligations to rest with her new corporate entity. What did Martina require in order to realize the tax benefit retroactively?
A) a novation ruling from the Canada Revenue Agency allowing the transfer of contracts
B) a shelf company with an incorporation date predating the earliest of her contracts
C) a numbered company active in business on the date of the earliest of her contracts
D) a novation ruling from the Canada Revenue Agency allowing the transfer of earnings
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17
Chapter 16: The Corporate Form: Operational Matters
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Q1) Briefly discuss statutory derivative actions, including what they permit and what is required for their commencement.
Q2) Why was the standard of care of a corporation's directors and officers codified?
A) The law required an objective standard to ensure that fiduciaries strive for perfection.
B) The unduly low common law standard of care compromised the duty of competence.
C) Fiduciaries had to exhibit a greater degree of skill than could reasonably be expected.
D) Fiduciaries were held to an unreasonably exacting duty of competence.
Q3) Which of the following would allow a party to avoid strict liability for a statutory offence?
A) showing reasonable care and due diligence
B) showing a lack of moral blameworthiness
C) showing the potential for rehabilitation
D) publishing the offence in the media
Q4) Identify the source of and briefly discuss the present standard of care with respect to the duty of competence owed to a corporation.
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Chapter 17: Personal Property
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Q1) Geoffrey made arrangements for storing his houseboat for the winter at BoatsRStored4U Inc. What is the most immediate legal question that Geoffrey should be clear on before he allows the storage company to take physical possession of his boat?
A) When should he provide proof of ownership and valuation?
B) What will happen if BoatsRStored4U goes out of business?
C) Who will bear the risk of loss or damage and have the obligation to purchase insurance?
D) How will BoatsRStored4U bill him for its services?
Q2) Which of the following is reflected by the requirement that a business offering bailment for value appropriately stores perishable items placed in its possession?
A) special terms that limit liability set out in the parties' contract
B) a standard of care based on who benefits from the bailment
C) special regulations that set out the standard of care
D) a standard of care based on the nature of the property
Q3) A key aspect of a bailment contract is often the limitation of the liability that the common law rules of bailment create.
A)True
B)False
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Chapter 18: Intellectual Property
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Q1) The trademark office has included EcoGrow Corp.'s trademark in its journal publication. Which of the following is true?
A) EcoGrow Corp. will now have exclusive right to use the trademark.
B) The trademark application can still be opposed by a member of the public who claims prior use.
C) EcoGrow Corp. will now have priority to use the trademark over prior users of the trademark.
D) All of the procedures necessary to complete the registration process have been satisfied.
Q2) Ziggy's ChairsByDesign Inc. protects its rights to the appearance of its articles against copying by registering its industrial designs and marking its products appropriately.
A)True
B)False
Q3) The intellectual property accruing to an organization through the creative works of its in-house employees can be bought or acquired by others through licensing agreements.
A)True
B)False
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Page 20
Chapter 19: Real Property
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Q1) Often, matters relating to either the supply of water or soil contamination are addressed in an accepted offer for the purchase and sale of real property. Which of the following is most likely to be a valid statement with respect to future legal relevance in instances where such matters are addressed in this manner?
A) They are most often influenced by the misuse of erroneous information.
B) They are both forms of contractual warranties that survive closing.
C) They are both typically excluded by entire agreement clauses.
D) They are most often affected by the misuse of negligent information.
Q2) The mortgagor is the party who lends the money, and the mortgagee is the party who borrows the money and signs the mortgage promising to repay the loan.
A)True
B)False
Q3) Tangible personal property that is attached to land, buildings, or other fixtures is commonly known as real estate.
A)True
B)False
Q4) Briefly discuss tenancy in common.
Q5) Briefly discuss joint tenancy.
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Chapter 20: The Employment Relationship
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Q1) The less direction and supervision provided by the employer, the more likely that the relationship is one of employment.
A)True
B)False
Q2) Pay equity involves provisions designed to ensure that female and male employees receive the same compensation for performing similar or substantially similar work.
A)True
B)False
Q3) Which of the following qualifies as a BFOR?
A) The circumstances involve a person disabled by mental illness.
B) An employee has satisfied the onus placed on him of proving the qualification.
C) Accommodation is demonstrated to be possible for a disabled person.
D) A legitimate business purpose and good faith occasioned its adoption.
Q4) The Supreme Court of Canada has indicated that the nature of the employment relationship is a question of fact and will vary with the situation.
A)True
B)False
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Chapter 21: Terminating the Employment Relationship
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Q1) Due to her firm's downsizing plans, Marina learned she would be expected to complete clerical work, at her current rate of pay, for five lawyers rather than two. After 25 years of service to the firm, Marina is unhappy with management's decision. Which of the following is her lawyer most likely to indicate as being a valid reason for launching a suit for wrongful termination?
A) A reasonable person would believe the contract's essential term was being changed. B) Changing a fundamental term of an employee contract amounts to constructive dismissal.
C) The required bad-faith element of constructive dismissal is readily apparent.
D) The test for determining whether a substantial change is made is an objective one.
Q2) Whistle-blowing by an employee is an offence punishable by the employer because it directly conflicts with the employee's duty of loyalty and good faith to the employer.
A)True
B)False
Q3) Contrast the employment standards legislation provision of reasonable notice for lower-level employees with that of mid-level employees.
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Chapter 22: Professional Services
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Q1) Dr. Walton, a practising psychologist, prepared a report for litigation purposes, as requested by Hayley's lawyer. Hayley has been receiving disability benefits, which the insurer would like to terminate if it can prove she has recovered sufficiently. The insurance company has written to Dr. Walton, requesting a copy of the report prepared for Hayley's lawyer. What will most likely be the appropriate response?
A) The report must be forwarded, or Hayley will lose entitlement to benefits.
B) The duty of professional-client privilege is inapplicable to psychologists.
C) The request is denied, as the report is subject to professional-client privilege.
D) All professionals are bound by a duty of confidentiality.
Q2) The potential for third-party claims for economic loss resulting from negligent misrepresentations was first recognized in Canada in 1964.
A)True
B)False
Q3) Briefly discuss the effects of a limited liability partnership on liability for partners of a firm and the firm itself.
Q4) List the ways in which professionals can manage risk arising from their professional responsibilities.
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Chapter
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Q1) In the case of Chalmers Suspensions International Ltd. v. B&B Automation Equipment Inc., 2008 CanLII 15767 (ON S.C), the court was asked to answer the following:
i) Was there a condition implied in the contract that the robotic machine be suitable for the purpose specified by Chalmers?
ii) If so, was the condition breached?
iii) If the condition was breached, what was Chalmers' remedy? How did the court respond, and why?
Q2) EcoDesign Inc. (Eco) purchased 200 weeping caragana trees for spring planting from Abbot Garden Centre Ltd. Two weeks later, planting was complete and payment forwarded to Abbot. Two months later, Eco was served with a claim issued by Misty Tree Farms Ltd., alleging non-payment for the goods by Abbot Garden Centre and naming Eco as a third party to the claim. How was the Sale of Goods Act violated in this instance?
A) breach of contract
B) breach of innominate term
C) breach of implied term
D) breach of implied warranty
Q3) Briefly discuss the right of repudiation with respect to the sale of goods.
Q4) Briefly discuss the role of a bill of lading.
Page 25
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Chapter 24: Sales and Marketing: Price, Distribution, and Risk Management
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Q1) Why is a business's market dominance typically intolerable to Canadian consumers?
A) distribution practices discriminate against customers
B) marketing plans identify risks involving a business and its customers
C) corporate compliance programs ensure consumers pay the lowest price
D) unfair and discriminatory higher consumer pricing practices usually result
Q2) Ramsha obtained several quotes from fencing companies in his area of the city but found that there was little variance between them. He contacted fencing companies outside his residential area and was rewarded with a number of competitive quotes. Which of the following would be required if Ramsha were to forward a complaint to the Competition Bureau regarding the fencing quotes received from contractors in his area?
A) proof of lessening of competition by agreement
B) proof of undue lessening of competition
C) continuing proof of an ongoing offence
D) proof that key personnel initiated the offence
Q3) Briefly discuss the regulation of door-to-door selling.
Q4) Briefly discuss abuse of dominant position, and describe the anticompetitive acts involved in this offence.
Q5) Define "refusal to deal" and "exclusive dealing."
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Chapter 25: Business and Banking
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Q1) A written contract that contains an unconditional promise or order to pay a specified sum on demand or on a specific date to a specific individual or bearer is legally known as a bill of exchange.
A)True
B)False
Q2) Since 1991, Canadian banking institutions, among others, have been urged to verify the identity of individual and corporate customers to determine the source of money transfers that exceed a certain amount. What is that amount?
A) $500015 000
B) $10 0005000
C) $15 000
D) $20 000
Q3) Which of the following imposes an obligation upon banks to honour cheques and repay deposits?
A) provincial legislation
B) banking agreement
C) federal Bank Act
D) banking practice and common law
Q4) Describe the various models for electronic cashless transactions.
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Chapter 26: The Legal Aspects of Credit
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Q1) The lenders required EcoEnergy Inc. to pledge the new equipment it had financed as collateral security for the loan. With respect to commercial loans, this is an uncommon practice among lenders.
A)True
B)False
Q2) A receiver may be appointed by an unsecured creditor once the creditor has given reasonable notice for calling a loan.
A)True
B)False
Q3) Which of the following would strongly influence the borrower's ability to challenge an improvident sale?
A) the borrower's right to an ongoing accounting of the state of the loan
B) the Ombudsman for Banking Services and Investments (OBSI)
C) the creditor's insistence on the provision of personal guarantees from a borrower's owners
D) the Model Code for Bank Relations with Small- and Medium-Sized Businesses
Q4) Briefly explain what an acceleration clause is, what it does, and the incentive it provides.
Q5) Explain the environmental due diligence process.
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Chapter 27: Bankruptcy and Insolvency
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Q1) An inspector is a person appointed by the bankruptcy court to act on its behalf and supervise the actions of the trustee.
A)True
B)False
Q2) How long will a bankruptcy remain on the record if it is the individual's first and they have been relieved of the responsibility of repaying their creditors through the bankruptcy process?
A) 3 years
B) 5 years
C) 6 years
D) 14 years
Q3) The debtor's voluntary assignment to the trustee in bankruptcy of legal title to the debtor's property for the benefit of creditors is legally known as a proposal.
A)True
B)False
Q4) Identify the purposes that a proposal is intended to achieve.
Q5) Explain the criteria that must be met before a debtor will be recognized as insolvent under the Bankruptcy and Insolvency Act.
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Chapter 28: Insurance
Available Study Resources on Quizplus for this Chatper
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Source URL: https://quizplus.com/quiz/27019
Sample Questions
Q1) One of the cornerstones of an effective risk management program for either an individual or a business is insurance coverage.
A)True
B)False
Q2) List the possible kinds of liabilities and losses that a business typically seeks to insure against.
Q3) Why is an insured entitled to collect only the amount of the actual loss incurred from its insurance coverage?
A) Contracts of indemnity prevent profiting from an insured-against event.
B) A bank is entitled to an indemnity contribution on a prorated basis.
C) Insurance coverage typically covers a minimum portion of the value of property.
D) A bank may be entitled to an interest in the proceeds for a secured loss.
Q4) What is the name often given to the type of insurance coverage that requires an insurer to compensate for the loss of profits?
A) an all-risk policy
B) comprehensive risk insurance
C) a casualty policy
D) environmental impairment insurance
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