Introduction to Business Law Practice Exam
Course Introduction
Introduction to Business Law provides students with a foundational understanding of the legal principles and frameworks that govern the business environment. This course covers essential topics such as contract law, torts, agency, employment law, business formation, and regulatory compliance. Students will examine how the legal system influences business operations and decision-making, with real-world examples and case studies. By the end of the course, students will be equipped to identify legal risks and rights in business scenarios and appreciate the importance of law in ethical and successful business practices.
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) Organic Veggies'4'U Inc. has entered into a one-year, extendable supplier contract with EcoWise Fertilizers Ltd. for the delivery of 1.5-ton pallets of worm castings fertilizer at a price of $2,000 per ton in March and June. What type of role do contract law and its contributions to the establishment of this business relationship have?
A) a facilitating role, providing definition, context, and certainty
B) an ethical role, facilitating better environmental practices
C) a litigation role, defining clear areas of liability for breach
D) a governing role, providing a comprehensive action plan
Answer: A
Q2) Which of the following is a distinguishing characteristic of the influence of law on the business environment?
A) The influence of law does not have to be exacting and literal.
B) The influence of law demands strict, literal enforcement.
C) The influence of law requires litigation of all disputes.
D) The influence of law creates rules of procedure for planning.
Answer: A
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3
Chapter 2: The Canadian Legal System
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Q1) What form of private law is applied in Quebec courts?
A) the Civic Code of Quebec
B) the Civil Code of Quebec
C) the Quebec Civil Law Code
D) the Civil Law Code
Answer: B
Q2) Rules of equity focus on what would be fair given the specific circumstances of the case, as opposed to which of the following?
A) what the strict rules of common law might dictate
B) law that governs relations between states
C) the internal set of laws of a given country
D) law governing agreements between states
Answer: A
Q3) What is the paramount function of Canadian constitutional law?
A) It sets a parliamentary code of ethics.
B) It creates structure for ceremonial policy.
C) It establishes Canada's deference to British Parliament.
D) It establishes Canada's structure of legal authority.
Answer: D
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Page 4
Chapter 3: Managing Legal Risks
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Q1) Which of the following are usually classified as functional areas of a business?
A) production, human resources, finance
B) finance, accounting, training
C) marketing, education systems, finance
D) accounting, marketing, training
Answer: A
Q2) The fact that an organization's human resource department is typically exposed to potentially serious risks supports the need for a legal risk management plan.
A)True
B)False
Answer: True
Q3) Why will a legal risk management plan be an effective tool for a business experiencing a breach of customer security data?
A) A plan to address the risk is already in place.
B) Senior management must manage the risk.
C) Security breaches are considered commonplace, low-level risks.
D) Computer security breaches generally pose less serious risk.
Answer: A
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Chapter 4: Dispute Resolution
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Q1) According to the rules provided for under the Arbitration Act, an arbitrator's binding decision may be referred for appeal before a judge presiding in a superior court.
A)True
B)False
Q2) A store manager of a large grocery chain makes a verbal offer to compensate a customer for a serious hand injury that requires medical attention. Even though the store manager's offer is refused, he is seriously reprimanded by the vice president of the legal risk department. What was the vice president's most significant concern?
A) to pay as small a settlement as possible
B) to clarify the situation before entering negotiations
C) reaching a fair and acceptable outcome
D) negotiating could imperil risk insurance coverage
Q3) The party ordered by the court to pay a specified amount to a winner of a lawsuit is known as a judgment debtor.
A)True
B)False
Q4) Contrast the advantages and disadvantages of alternate dispute resolution.
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Chapter 5: An Introduction to Contracts
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Q1) Contract law ensures that all parties concerned may rely on the terms included in the contract.
A)True
B)False
Q2) Explain the notion of equality of bargaining power and its impact on the operation of contract law.
Q3) What constitutes an economic breach of contract in a contractual business relationship?
A) refusing to provide payment for services received in order to get a reduction in price
B) allowing existing legal obligations to keep the business from considering other opportunities
C) electing to refuse performance of contractual obligations and paying damages for the breach
D) electing to avoid damages by completing the performance of the contractual obligations
Q4) Identify and briefly describe the necessary elements that must be present in order for a court to recognize a contract as a legally binding agreement.
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Chapter 6: Forming Contractual Relationships
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Q1) Vague commitments involving commercial exchange between parties are invitations to treat because of the lack of specification of the terms or scope of the proposed arrangement.
A)True
B)False
Q2) What is the proper method of leading contrary evidence to challenge a legal presumption favouring one party?
A) a rebuttable presumption of the parties' intent to contract
B) the doctrine of rebuttable inference of refusal to contract
C) the doctrine of rebuttable assumption of pre-existing condition
D) a rebuttable promise for which no consideration is given
Q3) Which of the following is strongly linked to the contractual requirement of consideration?
A) the idea that consideration need not be monetary
B) the idea of equality during bargaining
C) the idea that a promise to pay be mutual
D) the idea of freedom of parties to bargain
Q4) An advertisement in a newspaper will never be considered to constitute an offer.
A)True
B)False
Page 8
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Chapter 7: The Terms of a Contract
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Q1) What is meant by the term "rules of construction" in contract law?
A) rules limiting evidence concerning a contract's contents
B) a basis for relieving parties from their contractual obligations
C) guiding principles for interpreting the terms of a contract
D) contractual terms stating that the contract is complete as written
Q2) Some Canadian courts have ruled that a good faith clause is not an automatic term of every contract and can be implied only when it is consistent with the parties' intentions.
A)True
B)False
Q3) The principle of business efficacy makes an obligation explicit.
A)True
B)False
Q4) When the existence of the contract is not in doubt, the court will assign as reasonable a meaning as possible to vague or ambiguous terms.
A)True
B)False
Q5) Identify four grounds used by the courts for introducing implied terms into contracts. Give an example of each.
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Chapter 8: Non Enforcement of Contracts
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Q1) How is a wilful omission with regard to relevant information during pre-contractual negotiations regarded in law?
A) as a false statement of fact that causes someone to enter a contract
B) as permissible because each party must look out for their own interests
C) as an error made by one or both parties that seriously undermines a contract
D) as a breach of the duty to disclose information without being prompted
Q2) What is the goal of the common law remedy of rescission?
A) It seeks to provide redress to the innocent party.
B) It seeks to provide monetary redress for harm incurred.
C) It seeks to return parties to their pre-contractual positions.
D) It seeks to enforce good faith in commercial transactions.
Q3) Which of the following is a valid requirement under the federal Secure Electronic Signature Regulations issued in 2005?
A) to facilitate the association of a person's typewritten name with their unique signature
B) to ensure that typewritten names bind electronic contractual obligations
C) to ensure documents and signatures are evidenced in written form.
D) to ensure alterations to a document after it was signed can be evidenced
Q4) What must be proven in order to have a contract set aside for misrepresentation?
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Chapter 9: Termination and Enforcement of Contracts
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Q1) Within each provincial jurisdiction, a beneficiary under an insurance contract is entitled to sue under that contract even though the contractual arrangement is between parties other than the beneficiary. How is this legally possible?
A) legislation limiting application of exclusion clauses in life insurance contracts
B) common law reclassification of the application of the doctrine of privity
C) legislative amendment to modify application of the doctrine of privity
D) common law limiting application of exclusion clauses in life insurance contracts
Q2) An assignee is entitled to collect the debt owed under a contract despite not being involved in the creation of the contract that produced the debt.
A)True
B)False
Q3) What four things must generally be shown on the balance of probabilities in order for a party to succeed in an action for breach of contract?
Q4) Employees can be held liable for their employers' actions.
A)True
B)False
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Chapter 10: Introduction to Tort Law
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Q1) The risks of liability for torts are substantial for just about any business venture. As a result, good business requires good risk management. What are the implications in the human relations area? Also, how does a good risk management plan affect the cost of insurance? Explain.
Q2) Provide a brief description of the nature of the expenses a court will consider when awarding special damages for an injury-causing event. Provide examples of the types of expenses that fall under this damage category, and indicate what a court will require from an innocent party in order to determine the amount of the award. Identify the legal principle that is applicable in some provincial jurisdictions and the types of costs that must be repaid to these provincial health insurers.
Q3) Which of the following is most likely attributable to a private prosecution?
A) a rare form of criminal prosecution initiated by a private individual
B) a rare form of civil action in which the defendant is a private individual
C) a typical form of civil action in which the plaintiff is a private individual
D) a typical form of criminal prosecution initiated by the Crown
Q4) The same event cannot give rise to legal consequences in criminal law and in tort law.
A)True B)False
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Chapter 11: The Tort of Negligence
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Q1) 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
Q2) In tort law, a relationship of deficient proximity creates a neighbour.
A)True
B)False
Q3) An elderly woman with osteoporosis suffered numerous broken bones as a result of a minor car accident. A person without osteoporosis would not have suffered any broken bones in the same circumstances. What would you reasonably expect a court to determine with respect to a negligence claim by the elderly claimant?
A) The elderly claimant will receive full compensation on the basis of the thin skull principle.
B) The defendant has a complete defence.
C) The injury will pass the test of remoteness.
D) The elderly claimant will not be awarded any damages.
Q4) Briefly describe how a prima facie duty of care is established.
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Chapter 12: Other Torts
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Q1) Identify and briefly describe the elements that must be proven by a plaintiff seeking a remedy from a court for an actionable tort of passing off.
Q2) Martina is meeting with a group of new trainees. One of management's main training goals is to improve employee awareness of the legal risks that can arise under occupiers' liability. What will Martina most likely stress as a distinguishing feature of this form of liability?
A) that an occupier owes a lower duty to a contractual entrant than an invitee B) that each class of visitor is owed a different standard of care
C) the importance of ensuring entrants have paid for the right to enter D) the severity of the liability when someone is classified as a trespasser
Q3) According to the Supreme Court of Canada, which of the following is synonymous with the reputation of a business and its expectation of patronage in the future?
A) goodwill
B) profitability
C) deceit
D) ethics
Q4) Describe the questions that should be included in an occupier's liability risk management plan.
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Page 14
Chapter 13: The Agency Relationship
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Q1) Identify and briefly describe how an employed clerk typist may be transformed into the business's agent.
Q2) What approach would a court most likely take to determine the type of authority an agent has?
A) an inherently flexible inquiry
B) a fact-specific inquiry
C) a broad informal inquiry
D) a narrow informal inquiry
Q3) Identify how a fiduciary duty arises, who is it owed to, and any requirements with regard to specifically state the duty. Provide a brief explanation of what the fiduciary duty is with regard to conflict of interest and how that obligation may be overcome. Provide an example of a conflict of interest situation.
Q4) A representation of authority given by a person who purports to be an agent is legally known as a disclosed warranty.
A)True
B)False
Q5) Identify the circumstances under which a principal would be permitted, by law, to ratify a contract.
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Chapter 14: Business Forms and Arrangements
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Q1) Which of the following will be most influenced by restrictions contained in the incorporating documents or by a shareholders' agreement?
A) transfer of ownership of shares
B) voluntary surrender of legal status
C) general application laws
D) perpetual existence of the entity
Q2) Which of the following is a characteristic of a franchisor-franchisee relationship?
A) a joint venture
B) a contractual arrangement
C) a limited partnership
D) a limited liability partnership
Q3) Investors in a corporation are paid a return on their capital investment if there is profit and if the directors declare a dividend.
A)True
B)False
Q4) Briefly discuss the requirements for the creation of a limited liability business entity, including an explanation of the important effects meeting the requirements will have.
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Chapter 15: The Corporate Form: Organizational Matters
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Q1) Suppose Marcella is incorporating a new business entity and must consider the matters relating to shares. Which of the following is a valid question that Marcella must answer?
A) How many classes of shares will affect the control of the issuance?
B) How many classes of shares should be issued, and what are the rights and privileges for each?
C) Who will have the right to manage or control the issuance?
D) Who will receive the rights and privileges that attach to stakeholders?
Q2) Prior to incorporation, directors are required to hold an organizational meeting to complete the incorporation documents and make bylaws, which are the rules specifying the day-to-day operating procedures of a corporation.
A)True
B)False
Q3) What is the most compelling reason for the creation of a corporate business entity?
A) to extend director's liability in the event of bankruptcy
B) to limit owners' liability in the event of bankruptcy
C) to share joint liability in the event of bankruptcy
D) to proportion liability in the event of bankruptcy
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17
Chapter 16: The Corporate Form: Operational Matters
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Q1) What type of liability is imposed by a court where it is not open to the accused to show he was without fault?
A) primary liability
B) absolute liability
C) vicarious liability
D) strict liability
Q2) A court is satisfied with plaintiff counsel's efforts to establish that, based on the facts of the matter, the defendant corporation is the agent of its shareholders. In presenting this argument, what legal feat was plaintiff's counsel attempting to accomplish on his client's behalf?
A) lifting of the identification principle
B) lifting obligations for a personal guarantee
C) piercing the indemnification veil
D) piercing the corporate veil
Q3) In assessing a claim for oppression, a court must determine (i) whether the evidence supports the reasonable expectation of the stakeholder, and (ii) whether the reasonable expectation of the stakeholders was violated by the oppressive conduct. Identify the factors that must be considered by the court in order to answer both of these questions.
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Page 18
Chapter 17: Personal Property
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Q1) Identify the common types of bailments.
Q2) Identify the risks relating to personal property.
Q3) What should be included in the standard form contract in order for a lessor to maximize its ability to minimize its exposure for damage caused to a leased vehicle in the lessee's possession?
A) a benefit of relationship clause to ensure reciprocal benefit to the lessor
B) the bailee identified as the party to be paid in the event of loss for insurance
C) an ordinary diligence exclusion clause to limit liability for ordinary neglect
D) the bailor named as the party to be paid in the event of loss for insurance
Q4) Which of the following is a distinguishing characteristic of a commercial chattel lease?
A) It is regulated by consumer protection legislation.
B) It is regulated by the general law of contract.
C) Rules are implied through legislation.
D) Rules come mainly from statute law.
Q5) Remedies for failure to perform obligations arising in a bailment relationship originate in two contexts. Discuss.
Q6) Identify the issues typically addressed in a commercial chattel lease.
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Chapter 18: Intellectual Property
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Q1) Which of the following would immediately bar the registration of an industrial design?
A) payment for the application by another
B) novel application of a disclosed design
C) disclosure or use in the previous 15 months
D) established design with novel application
Q2) What is the relationship between the qualitative and quantitative aspects of copying a substantial part of another's work with respect to copyright infringement?
A) determines whether the author has a valid right to object to dealings with or uses of the work
B) determines whether the author has a valid right to be associated with the work
C) determines infringement based on whether the part taken is a key or distinctive part
D) determines infringement based on whether the work is associated with a cause
Q3) List the factors identified by the Supreme Court of Canada that must be considered with respect to a confusion created by similar trademarks.
Q4) Discuss the rights attributable to a registered industrial design.
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Page 20
Chapter 19: Real Property
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Q1) Drew submitted two offers to purchase for two apartment buildings. Of course, he made the offers subject to financing approval. What is the effect of this condition?
A) The lender has to approve the fair and adequate value of the transaction, or there is no deal.
B) The offer will be void if his lender does not grant a mortgage.
C) The lender will approve the price, deposit, and method of payment.
D) The lender will be given control of the money needed to complete the deal.
Q2) It is typical that a commercial lease will address such important matters as the responsibility for repairs and maintenance to the leased space and any common areas, as well as permitted alterations a tenant may make to the space and what happens with the alterations once the lease expires.
A)True
B)False
Q3) Which of the following is "tenant" synonymous with in the realm of real property law?
A) an individual who leases space rather than having outright ownership
B) a contract allowing owners to deal with their respective interests
C) an owner of any form of right or title in land
D) a contract limiting ownership by division in time
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Chapter 20: The Employment Relationship
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Q1) What commonality exists in the employment relationships between an employer and an independent contractor and an employer and employee?
A) Both are short-term and temporary in nature.
B) Tax savings and flexibility can be derived from either relationship.
C) Both involve a master.
D) Work and services are exchanged for remuneration.
Q2) The less direction and supervision provided by the employer, the more likely that the relationship is one of employment.
A)True
B)False
Q3) Which of the following is a feature of Canada's Employment Equity Act?
A) targets underrepresentation of particular groups in workplaces of 10 or more employees
B) targets underrepresentation of particular groups in workplaces of 100 or more employees
C) targets reverse discrimination in workplaces of 100 or more employees
D) targets reverse discrimination of particular groups in workplaces of 10 or more employees
Q4) Define harassment and list the various forms that such conduct may take.
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Chapter 21: Terminating the Employment Relationship
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Q1) What are the primary factors that tend to lengthen the period of notice an employee is entitled to on termination?
A) a high degree of specialization, age, and economic climate
B) the character of employment, and the availability of similar employment
C) the inducement to join, length of service, and industry practice
D) the length of service, age, company policy, and industry custom and practice
Q2) During a meeting with in-house counsel, the human resource manager identified something as being easy to articulate but difficult to apply. Which of the following was the manager most likely referring to?
A) neglect of duty
B) willful disobedience
C) grounds for dismissal
D) prejudicial conduct
Q3) According to the Supreme Court of Canada, which of the following is an act of employer bad faith with respect to the termination of an employment relationship?
A) failing to provide disability coverage in a benefit package
B) withholding statutory severance pending the return of company property
C) terminating for communication with potential employers
D) alleging cause for termination where there is none
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Page 23
Chapter 22: Professional Services
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Q1) Which of the following is a legitimate concern for clients or third parties who rely on professionals who provide their services through a limited liability partnership?
A) the adequacy of the profession's indemnification fund to cover losses
B) whether individual partners remain liable for their own negligence
C) whether highly specialized professional protection associations defend claims
D) whether there will be compensation for losses caused by the professional
Q2) Following his accounting firm's audit team being hired by Canuck Inc. to review Northern Ltd.'s books, Tysan contacted several members he knew in the profession, advising them to buy Northern's shares. Trading in Northern's stock notably increased in ensuing weeks, driving the share price up, making it more expensive for Canuck to complete the takeover and prompting the securities commission to investigate. What did the securities commission find with respect to Tysan?
A) The firm will avoid vicarious liability, as Tysan acted independently.
B) The firm employing Tysan, not Tysan, owed a fiduciary duty to Canuck.
C) Tysan breached the fiduciary duty to maintain confidentiality of client information.
D) The claimant's loss was too remote from the professional's actions.
Q3) Identify specific obligations that apply to a professional as fiduciary.
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Chapter 23: Sales and Marketing: the Contract, Product, and Promotion
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Q1) Why would a buyer be relieved of the implied statutory requirement to make its intended purpose of purchasing goods known to the seller of those goods?
A) The goods will be used in their ordinary purpose.
B) The buyer is reliant on the inspection of goods.
C) The goods will be bought by description.
D) The seller's goods are being sold by description
Q2) Due diligence is a defence based on adopting reasonable steps to avoid the violation of a legal duty.
A)True
B)False
Q3) A customer who has made its purpose for a particular product known to the seller will be deemed to have relied on the advice of the seller in selecting a product fit for that purpose.
A)True
B)False
Q4) Unascertained goods must be identified and agreed on at the time a contract is made.
A)True
B)False
25
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Chapter 24: Sales and Marketing: Price, Distribution, and Risk Management
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Q1) Evidence of suppliers conspiring to fix the bidding process in a manner that suits their collective needs or wishes is recognized as a serious criminal offence that attacks the heart of the competitive process.
A)True
B)False
Q2) Even though EcoGreen Ltd. sold the same bulk amount of organic fertilizer to both Sunny Garden Centre Ltd. and Remple Garden Centre, Remple will pay more than Sunny.
Which of the following reasons would explain how EcoGreen has avoided committing an anticompetition offence?
A) The price differential is due to first-time customer pricing.
B) The price differential is due to an involuntary market dominant position.
C) The price differential is due to an adjusted cost of delivery expense.
D) The price differential is due to loss leader pricing.
Q3) In what way are the practices of predatory pricing and exclusive dealing similar to each other?
A) Both are the consequence of distribution policies.
B) Both are subject to criminal sanctions.
C) Both reduce or eliminate competition.
D) Both may be subject to remedial court orders.
Page 26
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Chapter 25: Business and Banking
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Q1) Which of the following creates the legal uncertainty surrounding electronic banking?
A) Potential for forgery and fraud are changed and expanded.
B) Existing legislation is irrelevant in a paperless environment.
C) The bank is responsible for electronic failures.
D) It increases potential for transmission failures and system crashes.
Q2) 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
Q3) Describe the essence of the requirements that must be present for an instrument to become negotiable without the need to investigate its validity through reference to circumstances of the instrument's creation or to other documents.
Q4) A written order to a person directing that a specific amount be paid to another individual is commonly described as a negotiable instrument.
A)True
B)False
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Chapter 26: The Legal Aspects of Credit
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Q1) Which of the following is a valid characterization of the borrower's promise to repay a loan and the lender's collateral or security if the borrower fails to repay?
A) They are the major elements of the credit agreement.
B) Each refers to any interest in property that is of value to a lender.
C) Each reflects the need for extensive security due to uncertain value.
D) They are the lender's value in any property interest.
Q2) In order to be put into a position to collect the repayment of a debt, a creditor has had to exert its contractual right to sue a debtor. What is the nature of this loan?
A) secured credit
B) unsecured credit
C) letter of credit
D) collateral loan
Q3) Because of the uncertain future value of pledged assets, the demand by commercial lenders for as much security as possible often results in the current value of those assets exceeding the extent of the lender's risk.
A)True
B)False
Q4) Explain the environmental due diligence process.
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Chapter 27: Bankruptcy and Insolvency
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Q1) What is the nature of a relationship in which a business sells inventory to a customer to which it is not related or connected in anyway?
A) intercommercial
B) arm's length
C) commercially reasonable
D) consumer transaction
Q2) What is the legal term given to the collective assets of an insolvent debtor?
A) statement of assets
B) statement of assets and liabilities
C) insolvent's estate
D) insolvent's net worth
Q3) Which of the following would most likely be strongly supported by the body of law generically known as insolvency law?
A) a framework for financial bankruptcy
B) a discharge for the unwillingness of creditors to pursue claims
C) an appointed non-professional facilitator
D) an absolute discharge for the refusal by creditors to negotiate
Q4) Describe the purposes of early bankruptcy legislation that are confirmed in the Canadian version of bankruptcy legislation.
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Chapter 28: Insurance
Available Study Resources on Quizplus for this Chatper
70 Verified Questions
70 Flashcards
Source URL: https://quizplus.com/quiz/27019
Sample Questions
Q1) A rider is written evidence of a change in an existing policy of insurance.
A)True
B)False
Q2) One of the cornerstones of an effective risk management program for either an individual or a business is insurance coverage.
A)True
B)False
Q3) Because financing a buyout on the death of one of the shareholders of a company is challenging, that legal risk is typically reduced by shareholder life insurance policies that will provide all or a portion of the financing needed to complete the buyout.
A)True
B)False
Q4) Which of the following is required by provincial law to have insurance for liability arising from its ownership, use, and operation?
A) a laundromat
B) a car wash
C) an automobile owner
D) a product manufacturer
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