Introduction to Business Law Exam Preparation Guide
Course Introduction
Introduction to Business Law offers students a foundational understanding of the legal principles and frameworks that govern the world of business. The course explores essential topics such as contract law, tort law, consumer protection, forms of business ownership, workplace law, and the regulatory environment affecting businesses. Students will learn how to identify legal issues in business scenarios, understand the implications of legal decisions, and apply basic legal concepts to real-world situations. Emphasis is placed on the practical application of law in business contexts to prepare students for responsible and informed decision-making in their future careers.
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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Q1) The United States Constitution divides governmental power to prevent:
A)extreme gaps in income
B)states from becoming too powerful
C)the tyranny the founders experienced under King George III
D)excessive taxation
E)none of the other choices
Answer: C
Q2) Laws that define and establish legal rights and regulate behavior are referred to as:
A)procedural laws
B)moral laws
C)judicial ethics
D)stare decisis
E)none of the other choices are correct
Answer: E
Q3) The separation of powers determined by the U.S.Constitution allocated powers between the federal courts and the state courts.
A)True
B)False
Answer: False
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Page 3
Chapter 2: The Court Systems
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Q1) If a party wishes to appeal from a lower court decision in a state court,which of the following is true about the right of appeal:
A)it is a matter of right to at least one higher court
B)it is a matter of right to two levels of appellate review
C)it is a matter of right to the state supreme court
D)it is a matter of right to take the case to the federal system
E)it is a matter of right to have the cost borne by the state
Answer: A
Q2) Limitations on the kinds of disputes a court may resolve come from:
A)the Bill of Rights
B)a constitution
C)the Supreme Court
D)the presiding judge(s)
E)none of the other choices are correct
Answer: B
Q3) The only federal courts in which a jury is used are the courts of appeals.
A)True
B)False
Answer: False
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Chapter 3: Trials and Resolving Disputes
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Q1) A preliminary injunction is also known as a:
A)dispute injunction
B)voir dire injunction
C)primary injunction
D)final injunction
E)none of the other choices are correct
Answer: E
Q2) If a negotiation is conducted properly:
A)the parties will immediately proceed to trial
B)the parties will terminate their relationship
C)almost nothing said in negotiation will be usable in a later court case
D)the evidence presented at negotiation will be pre-approved for use in any later court case,saving time and money
E)the decision will be automatically applied by a court
Answer: C
Q3) In a civil trial the party that proves its contentions by a preponderance of the evidence will win.
A)True
B)False Answer: True
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Chapter 4: The Constitution: Focus on Application to Business
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Q1) The government seized a large amount of cash (as the "instrumentality" of the crime)being carried out of the country by a couple who failed to report that they were leaving the country with more than $10,000.The Supreme Court held that the seizure of the cash was:
A)an unconstitutional search and seizure
B)a constitutional taking based on the "significant interest" of the government
C)a constitutional search and seizure
D)a constitutional fine,not excessive because of the extent of drug money laundering
E)none of the other choices
Q2) In Southern Pacific Co.v.Arizona,concerned whether Arizona could,for safety considerations,require trains traveling through the state be a shorter length than trains traveling through other states.The Supreme Court held the Arizona law was valid:
A)because it concerned a legitimate state interest to improve transportation safety
B)because Congress had not passed legislation dealing with the length of trains
C)because it did not conflict with federal standards
D)because it only applied to intrastate trains
E)none of the other choices
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Chapter 5: Criminal Law and Business
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Q1) Probable cause is:
A)necessary to obtain a warrant
B)not necessary to obtain a warrant
C)important for the defense
D)cause for exclusion
E)none of the other choices are correct
Q2) If Julia is accused of robbing a bank and she has witnesses testify that she was having her nails done at the time the robbery took place then she is using a(n):
A)Miranda right
B)exclusionary rule
C)alibi
D)defensive defense
E)none of the other choices are correct
Q3) The statute of limitations:
A)varies with time
B)varies by crime
C)varies by county
D)varies by state
E)varies by district
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Page 7
Chapter 6: Elements of Torts
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Q1) Which of the following is unlikely to be classified an intentional tort:
A)running at a stranger while waving an iron pipe at them
B)spreading rumors that someone robbed a bank in the past
C)a man grabs a woman he does not know and kisses her despite her protests
D)secretly making tapes of your roommate's phone calls
E)all of the other choices are likely to be intentional torts
Q2) Slander involves spoken defamatory communication.
A)True
B)False
Q3) In McCune v.Myrtle Beach Indoor Shooting Range,where McCune lost an eye playing paintball when he mask came off,the court held that McCune lost her right to sue because she assumed the risks of playing and signed a liability waiver.
A)True
B)False
Q4) Assault is intentional conduct that places a person in fear of immediate harm,but it need not actually involve personal harm.
A)True
B)False
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Chapter 7: Business Torts and Product Liability
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Q1) Under the strict liability doctrine,the focus is on the problems with the product,rather than:
A)problems with the court process
B)integrity of the manufacturer
C)the reasonableness of the conduct of the manufacturer
D)the appropriateness of the conduct of the manufacturer
E)none of the other choices are correct
Q2) Which of the following is a potential statutory limit on potential tort liability: A)worker compensation statutes
B)certain products that must follow federal labeling requirements
C)federal regulations controlling radiation exposure
D)government contractors building according to government specifications
E)all of the other choices are correct
Q3) The Restatement (Third)of Torts on product defect recommends that courts use a cost-benefit test to see if added safety is worthwhile.
A)True
B)False
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Chapter 8: Real and Personal Property
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Q1) Shooting a bullet across someone else's property without stepping onto the property may be the tort of trespass to land.
A)True
B)False
Q2) Refer to Fact Pattern 8-1.When Jill buys her beach-front land she also buys the right to exclusive possession of and enjoyment of those 3 acres.What Jill has purchased is:
A)a fee defeasible
B)a life estate
C)a reverter interest
D)a remainder interest
E)a fee simple estate
Q3) Business trusts provide security from bankruptcy by:
A)legally separating the trust from the business that is the beneficiary of its assets
B)legally combining the trust and the business that is the beneficiary of its assets
C)making it illegal to sue the business
D)making it illegal to sue the trust
E)none of the other choices are correct
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Chapter 9: Intellectual Property
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Questions
Q1) In New York Times v.Tasini the Supreme Court held that electronic publication of copyrighted works infringed on the owner of the copyrights property.
A)True
B)False
Q2) In Feist Publications v.Rural Telephone Service,the Supreme Court noted that copyrighted materials,such as white
A)True
B)False
Q3) "Zipper" is an arbitrary and fanciful mark.
A)True
B)False
Q4) Once the trade dress of a product or service is registered with the Trademark Office,legal protection begins.
A)True
B)False
Q5) Patents may be granted for processes.
A)True
B)False
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Chapter 10: Contracts
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Q1) Termination of the offer can occur through the action of the parties or by the operation of law.The parties can terminate the offer by:
A)revocation
B)rejection
C)fibulation
D)revocation or rejection
E)any of the other choices
Q2) Termination of an offer by operation of law does not occur:
A)if a law is passed making the subject of the offer illegal
B)by death or insanity of the offeror
C)if the subject matter of the offer is destroyed
D)by physical incapacity of the offeree
E)all of the other choices are correct and termination occurs
Q3) If Scott makes a nonbinding promise to Lee and then fails to fulfill it:
A)Lee can expect contract law to provide a remedy
B)Lee can expect contract law to provide a remedy if he lives East of the Mississippi
C)Lee can expect that he will have to go to the Supreme Court for a remedy
D)Lee is now legally allowed to force Scott to fulfill his promise
E)none of the other choices are correct
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Page 12
Chapter 11: Domestic and International Sales
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Q1) A(n)___________________ is one in which a seller agrees to provide all of a certain good that a buyer needs.
A)requirements contract
B)real contract
C)output contract
D)total sale contract
E)complete supply contract
Q2) Under the UCC,merchantable means that goods must be of a quality comparable to:
A)U.S.government safety or quality standards
B)the median standard of industry
C)the highest recent quality of the trade
D)defect-free goods in the industry
E)none of the other choices
Q3) A warranty of title means:
A)a buyer's goods are fit for a particular purpose
B)a buyer's goods are merchantable
C)a buyer is legally capable of owning the goods for sale
D)any of the other specific choices
E)none of the other choices
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Chapter 12: Negotiable Instruments, credit, and Bankruptcy
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Q1) The one who issues or creates the document that requests payment,probably from a bank,is called:
A)the payee
B)the beneficiary
C)the drawer
D)the drawee
E)none of the other choices
Q2) Under the UCC,_________includes goods held for sale as well as raw materials.
A)collateral
B)intangible property
C)inventory
D)investment
E)sales
Q3) In a suretyship:
A)a bank immediately accepts the credit of its debtor
B)the credit of a third party secures a debt
C)the credit of the debtor is sufficient to secure a debt
D)a bank takes a property interest in the debtor's real estate
E)none of these
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Page 14
Chapter 13: Business Organizations
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Q1) _____________ are those with stock traded on a stock exchange and,therefore,are likely to have many shareholders.
A)Publicly held corporations
B)Privately held corporations
C)Close corporations
D)Real corporations
E)Traded corporations
Q2) A corporation's board of directors hires ___________ to run the business.
A)specialists
B)lay persons
C)managers
D)supervisors
E)directors
Q3) The offering circular that franchisors are required to produce contains information about the background and experience of the executives of the franchise firm.
A)True
B)False
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Chapter 14: Agency and the Employment Relationship
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Q1) In France v.Southern Equipment Co. ,where France,after falling off a roof,sued Southern Equipment Co.who had employed Quality Metal Roof,a company that contracted with France's employer,Royalty Builders,to build them a new metal roof for exposing him to the inherently dangerous job of roofing,the appeals court held that:
A)Southern Equipment was liable because they engaged Royalty Builders to do the work
B)Southern Equipment was not liable because they engaged Royalty Builders to do the work and in doing so passed the liability to Royalty Builders
C)Southern Equipment was liable even though they did not engage Royalty Builders to do the work
D)Southern Equipment was not liable because they did not engage Royalty Builders to do the work and they had no control over Royalty Builders
E)Southern Equipment was not liable because France was a minor and should not have been working in construction
Q2) Destruction of the subject matter of an agency ends an agency relationship.
A)True
B)False
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Chapter 15: The Regulatory Process
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Q1) Which classification of administrative laws results in a rule being a federal law:
A)procedural rules
B)enforcement rules
C)substantive rules
D)observational rules
E)interpretive rules
Q2) The first modern federal regulatory agency was created in 1887 to regulate:
A)taxes
B)food and drugs
C)railroads
D)communications
E)courts
Q3) Interpretative rules guide the staff of an agency as to how substantive rules or statutes should be viewed in practice.
A)True
B)False
Q4) Most "informal" agency procedures are more costly than formal procedure.
A)True
B)False
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Chapter 16: Employment and Labor Regulations
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Q1) OSHA inspectors must follow rigid guidelines that give them little discretion;to do otherwise allows discriminatory treatment that has been held illegal.
A)True
B)False
Q2) Which class of employees is not covered by the NLRA:
A)managers
B)independent contractors
C)government workers
D)managers and independent contractors
E)managers and independent contractors and government workers
Q3) China has recently:
A)created a legal system for employment matters equivalent to that in most western countries
B)failed to recognize any rights for workers
C)been favoring employers over employees in all labor disputes
D)allowed employers to discriminate against employees with Hepatitis B
E)none of the other choices are correct
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Chapter 17: Employment Discrimination
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Q1) If a plaintiff proves a prima facie case of employment discrimination,they have won their suit as there is no defense for prima facie discrimination.
A)True
B)False
Q2) Which of the following is an amendment to the Civil Rights Act of 1964:
A)the Equal Employment Opportunity Act of 1972
B)the Pregnancy Discrimination Act of 1978
C)the Civil Rights Act of 1991
D)all of the other specific choices are amendments
E)none of the other specific choices are amendments
Q3) In a few situations,such as modeling clothing,an employer may discriminate on the basis of race as a bona fide occupational qualification.
A)True
B)False
Q4) Affirmative action is largely based on an executive order of the President.
A)True
B)False
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Chapter 18: Environmental Law
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Q1) Under the Endangered Species Act,the ________________ is authorized to establish critical habitat for endangered species.
A)Secretary of Animal and Plant Affairs
B)Secretary of Defense
C)Secretary of the Bureau of Land Management
D)Secretary of the Interior
E)Secretary of State
Q2) The law of negligence can be used to protect the environment.
A)True
B)False
Q3) In pollution cases involving strict liability for abnormally dangerous activities,courts have NOT found which of the following activities to be abnormally dangerous:
A)crop dusting
B)leakage of chemicals into ground water
C)storing of flammable liquids in quantity in an unpopulated area
D)emitting of noxious gases by factories
E)all of the other specific choices have been found to be abnormally dangerous by the courts
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Chapter 19: Consumer Protection
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Q1) Under the Lanham Act,Ford was able to sue General Motors for false advertising that hurt Ford pickup sales,and collected over $100 million in damages.
A)True
B)False
Q2) The primary concern of the Fair and Accurate Credit Transaction Act is to:
A)help deal with identity theft
B)help deal with low credit scores
C)help minority groups get credit cards
D)help students improve their credit ratings
E)none of the other choices are correct
Q3) According to FDA standards,food that is labeled as "low calorie" must:
A)never have been frozen
B)have 3 or fewer grams of fat per serving
C)not have been processed in more than one way
D)not contain trans fats
E)none of the other choices are correct
Q4) The FDA requires nutrition labels only on canned or bottled foods sold to the public.
A)True
B)False
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Chapter 20: Antitrust Law
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Q1) When firms competing at the same level of business agree to allocate territories in a market,and fix prices at the same time,the following may result:
A)firms may exercise monopoly power in their assigned region
B)competition within regions will be reduced
C)their actions may be found per se illegal
D)the Sherman Act may be violated
E)all of the other choices
Q2) In U.S.v.United States Gypsum,regarding sharing of price information by gypsum makers,the Supreme Court held that:
A)a rule of reason applied to the case,which the arrangement failed
B)the case was subject to a per se rule against price fixing,so it was illegal
C)the gypsum industry is exempt from antitrust laws
D)the gypsum industry is so small information sharing is essential
E)the gypsum industry is so small that it simply could not conspire to restrain information
Q3) Although many industries have lobbied Congress to be made exempt from the antitrust laws,none have been exempted.
A)True
B)False
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Page 22
Chapter 21: Securities Regulation
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Q1) In Slayton v.American Express Company,where investors sued American Express for making misleading statements in a 10-Q report,the appeals court held that:
A)American Express was liable for securities fraud because the report was not sufficiently identified as a forward-looking statement
B)American Express was not liable for securities fraud,despite the fact that the report was not sufficiently identified as a forward-looking statement
C)American Express was not liable for securities fraud because the report was sufficiently identified as a forward-looking statement
D)American Express was liable for all damages due to its overly optimistic statements
E)American Express was liable for securities fraud because it did not have a separate section of the report that identified it as a forward looking statement
Q2) The SEC may require that information be released about the high-risk factors of a proposed security offering.
A)True
B)False
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23
Chapter 22: The International Legal Environment of Business
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Q1) The United Nations Convention Against Corruption was rejected by Congress as inferior to the Foreign Corrupt Practices Act.
A)True
B)False
Q2) To respond to claims of dumping in U.S.markets,or foreign government subsidies for production,the International Trade Commission (ITC)may:
A)increase import tariffs on products that are being "dumped" in Third World markets
B)exempt products from customs duties if the country of origin is attempting to decrease pollution
C)allow "experimental" imports to enter duty-free until a market in the U.S.has been established
D)impose a tariff on goods coming into the U.S.to eliminate the value of the subsidy
E)impose import restrictions at the sole discretion of the ITC chairman
Q3) A "specific tariff" involves a tax based on a percentage of the price of the product.
A)True
B)False
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