Introduction to Law Practice Exam
Course Introduction
Introduction to Law provides students with a foundational understanding of the legal system, exploring its purpose, structure, and role within society. The course covers key legal concepts, sources of law, major branches such as civil and criminal law, and basic legal terminology. Students will examine the functions of courts, the roles of legal professionals, and the process of legal reasoning. Through analysis of cases and statutes, the course aims to cultivate an appreciation of the significance of law in shaping social order and addressing societal issues, while introducing students to legal research and interpretation skills.
Recommended Textbook Essentials of Business Law 4th Edition by
Jeffrey F. Beatty
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Page 2
Chapter 1: Introduction to Law
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Q1) The doctrine of stare decisis applies to:
A)Congress.
B)state legislatures.
C)courts.
D)all of the above.
Answer: C
Q2) Henry slipped on a leaf of lettuce while shopping at Joe's Market.Henry can sue Joe in civil court.
A)True
B)False
Answer: True
Q3) At Nick's request,a court issued an injunction to prevent Heather from publishing a book he claims is defamatory.This is an equitable remedy.
A)True
B)False
Answer: True
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Chapter 2: Business Ethics and Social Responsibility
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Q1) Why do many major corporations actively encourage ethical behavior?
A)Unethical behavior always damages a business.
B)Unethical behavior can quickly destroy a business.
C)Unethical acts are always illegal.
D)All of the above are reasons that corporations actively encourage ethical behavior.
Answer: B
Q2) Unethical behavior can be costly.
A)True
B)False
Answer: True
Q3) Zeno,Inc.is considering relocating its manufacturing facility from Illinois to Mexico City.The stakeholders in this decision might include:
A)Zeno's shareholders.
B)customers.
C)the Illinois community in which Zeno operates.
D)All of the above.
Answer: D
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Chapter 3: Dispute Resolution
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Q1) Tony fell and injured himself in a Mega Toy Store.Mega Toy Store is incorporated in Delaware.Tony is a resident of Nevada but was injured in a Mega Toy Store located in Arizona.Mega Toy does not do business in Nevada.Tony's damages exceed $100,000.If Tony decides to sue Mega Toy Store:
A)he may file the lawsuit in an Arizona state court.
B)he may file the lawsuit in a federal district court in Arizona.
C)he must file the lawsuit in a federal district court because the federal courts would have diversity jurisdiction in this case.
D)Either a or b.
Answer: D
Q2) The United States has taken a position that legal issues are best resolved by lawsuits involving parties with conflicting interests presenting their strongest possible case to a neutral factfinder.Because of this,the legal system in the United States is considered:
A)an adversary system.
B)a inquisitorial system.
C)a state court of original jurisdicion.
D)a mediation system.
Answer: A
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Chapter 4: Common Law, statutory Law, and Administrative Law
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Q1) The Federal Trade Commission promulgated detailed rules governing any site directed to young children.One of the rules is that the site operator must obtain verifiable parental consent before collecting,using,or disclosing any personal information.This legislative rule has the effect of a statute.
A)True
B)False
Q2) Administrative agencies exist at the federal,state,and local levels.
A)True
B)False
Q3) Discuss the role of money in the legislative process and the Congressional and Supreme Court controls on campaign spending since the 1970s.
Q4) If the President vetoes a bill and if both the House and Senate repass the bill by a two-thirds margin,the bill becomes law.
A)True
B)False
Q5) Define the common law.Discuss its conflicting goals and the doctrine created to serve one of these goals.
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Chapter 5: Constitutional Law
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Q1) The Pines,a small motel in central Georgia,may be subject to federal regulation even though it is not close enough to the state borders to have many guests from other states.
A)True
B)False
Q2) The power to create laws regulating international commerce is given to Congress and the states concurrently under the U.S Constitution.
A)True
B)False
Q3) The Framers of our Constitution,a true cross section of the population at the time,created the Constitution by drafting a new document rather than amending the Articles of Confederation,which had been the governing document of the colonists.
A)True
B)False
Q4) Generally,constitutional protections do NOT apply to:
A)acts of the federal government.
B)acts of state government.
C)acts of administrative agencies.
D)acts of privately owned businesses.
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Chapter 6: Torts
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Q1) Arturo drove through an intersection without looking and hit Vincent's car that he had driven into the intersection without obeying a stop sign.Arturo sued Vincent.The jury found that Arturo's fault contributed 20 percent to the collision and determined that his total loss was $100,000.Under comparative negligence,the jury should award Arturo:
A)$20,000.
B)$80,000.
C)$100,000.
D)nothing.
Q2) Identify and discuss two specific causes of action a plaintiff can allege that deal specifically with privacy rights.
Q3) A tort is a violation of a duty imposed by the criminal law.
A)True
B)False
Q4) A business will incur strict liability for damages resulting from:
A)using harmful chemicals.
B)operating explosives.
C)bringing dangerous substances onto property.
D)a defective product manufactured or sold by the business.
E)All of the above.
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Chapter 7: Crime
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Q1) Jeff sent letters to 1,000 people offering to send them information that would help them save money on health care $49.99.If they sent her the money,the brief,generally known information he sent them was: "Don't get sick." Jeff is guilty of:
A)mail fraud.
B)arson.
C)embezzlement.
D)nothing.He never forced anyone to send him the money.
Q2) Which of the following statements about the exclusionary rule is correct::
A)Illegally obtained evidence is not permitted to be used at a criminal trial.
B)It is based on the Fourth Amendment.
C)Good faith is an exception to the rule.
D)All of the above.
Q3) A misdemeanor is distinguished from a felony based upon:
A)the rules of evidence.
B)the length and place of possible imprisonment.
C)the burden of proof.
D)the type of intent.
Q4) Compare and contrast money laundering and embezzlement.Give an example of each.
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Chapter 8: International Law
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Q1) As of 2007 figures,the country trading the most goods with the United States was:
A)Canada.
B)China.
C)Japan.
D)Mexico.
Q2) It is a violation of United States law for a domestic company to pay money to a foreign governmental official in order to obtain favorable influence of the foreign government.
A)True
B)False
Q3) The primary goal of the North American Free Trade Agreement (NAFTA)is to:
A)allow Canada, the United States, and Mexico to compete as a common economic entity against other countries in the world.
B)allow for the free and unrestricted movement of people from one country to another to improve the labor market of all three counties.
C)eliminate almost all trade barriers between the three nations.
D)All the above are correct.
Q4) Explain the origin and purpose of the World Trade Organization.
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Chapter 9: Introduction to Contracts
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Q1) When promissory estoppel is used by the courts,it is because there is NOT an enforceable contract present.
A)True
B)False
Q2) Which of the following types of property would be goods under the Uniform Commercial Code?
A)A promissory note.
B)A stock.
C)A patent.
D)A computer.
Q3) Unilateral contracts are usually considered illegal.
A)True
B)False
Q4) Reliance on the promise made by the defendant doesn't need to be evidenced in order for promissory estoppel to apply.
A)True
B)False
Q5) A valid contract can legally be voided by either party.
A)True
B)False
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Chapter 10: Agreement
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Q1) Acme Co.offers to buy 1000 widgets from Widget World Co.The written offer provides for 1000 at $10 per widget,to be delivered May 1.The offer has no other provisions.Widget World sends a written acceptance.However,the acceptance also states that if any claim arises under this contract,Widget World must be notified within 10 days.Acme does not object to this provision.Both parties are merchants.Which of the following best describes this situation?
A)No contract exists.The purported acceptance contains additional terms, so it is a counteroffer, which has not been accepted.
B)No contract exists if the additional terms are construed to be material terms.
C)A contract exists.If the additional terms are construed to be material, they are not part of the contract.If the additional terms are not material, they are part of the contract.
D)A contract exists, but the additional terms are not part of the contract no matter what.
Q2) Discuss the effect of the Uniform Commercial Code on the law of sales contracts in the area of open terms.
Q3) Discuss the circumstances under which an offer would be terminated by law and give examples.
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Page 12
Chapter 11: Consideration
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Q1) In the historic case of Hamer v.Sidway,the nephew:
A)lost, as there was no consideration.
B)lost, as the uncle was dead.
C)won, as there was consideration.
D)won, as there was a completed gift.
Q2) Sanders Co.and Gaines,Inc.enter into a contract for the manufacture and sale of 200 patio wooden tables.If both parties agree that a modification is necessary:
A)the exception established by Citizens Trust Bank v.White will apply.
B)they may not do so as their original contract is not yet executed.
C)an agreement to rescind the contract will terminate the contractual rights of Sanders Co.and Gaines, Inc.if neither of them had completed their obligations.
D)courts will generally not enforce a cancellation and modification of a contract unless one party received inadequate consideration under the original contract.
Q3) Courts normally require adequate consideration.
A)True
B)False
Q4) What two exceptions did the UCC create for accord and satisfaction check cases?
Q5) Discuss the concept of consideration.
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Chapter 12: Legality
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Q1) Discuss the pros and cons of gambling and whether there might be any reason for a court or legislature to treat gambling on credit any differently from gambling itself.
Q2) E-mation,Inc hires Marvin to steal trade secrets from one of its competitors for $10,000.Marvin demands half of the money up front.E-mation pays Marvin $5000 but Marvin decides not to pursue theft of the trade secrets.E-mation sues Marvin for the return of the $5000.What will the court do with this contract?
A)The court will order Marvin to return the $5000.
B)The court will order Marvin to return the $5000 with interest.
C)The court will order Marvin to obtain the trade secrets.
D)The court will not do anything to help E-mation get its money back.
Q3) Cherise contacted her insurance agent and said she was interested in purchasing several life insurance policies: (a)a policy on her own life for $100,000,naming her son and daughter as beneficiaries; (b)a policy on her neighbor's life for $100,000,since she had observed him engaging in reckless behavior,naming herself as beneficiary; (c)a $5,000 policy on another neighbor to cover a loan Cherise made to him,naming herself as beneficiary; and (d)a $250,000 policy on her business partner,naming herself as beneficiary.Discuss the legality of each of these potential contracts.
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Chapter 13: Capacity and Consent
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Q1) After her 18th birthday Lora may,by words or action,ratify a contract she made during the previous year.
A)True
B)False
Q2) Both fraudulent AND innocent,misrepresentation permit the injured party to rescind a contract.
A)True
B)False
Q3) Angie,a minor,wants to avoid a contract she made with Cumberland Cycles.She may disaffirm the contract by:
A)notifying Cumberland orally that she will not honor the agreement.
B)filing a lawsuit to have a court formally cancel the contract.
C)just refusing to perform her obligations under the contract.
D)All of the answers are correct.
Q4) When courts consider economic duress,they consider all the following factors EXCEPT:
A)relative bargaining power.
B)financial distress.
C)legitimate business actions.
D)relative size of the contract.
15
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Chapter 14: Written Contracts
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Q1) The Uniform Commercial Code provides that,under certain circumstances,a merchant may be liable on a written contract,even though that merchant has NOT signed it.
A)True
B)False
Q2) Under the UCC,which of the following contracts may be enforceable,even without a written memorandum?
A)The seller is specially manufacturing the goods for the buyer.
B)The seller admits in court that there was a contract.
C)The seller has delivered the goods.
D)All of the above.
Q3) Explain the reason behind having a statute of frauds and give arguments for and against having such a statute.
Q4) parole evidence refers to anything (other than the written contract itself)that was said,done,or written before or as the parties signed the contract.
A)True
B)False
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Chapter 15: Third Parties
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Q1) An assignment is valid:
A)from the moment it is made.
B)from the moment the assignor notifies the obligor.
C)from the moment the assignee notifies the obligor.
D)from the moment the obligor is notified from any source.
Q2) Gill and Mike are the original parties to a contract.Mike is obligated to design a brochure for Gill's massage business.They subsequently make an agreement with Eric that Eric should take the place of Mike and assume all of Mike's rights and duties under the contract.The agreement releases Mike from his obligations under the contract.This agreement is:
A)a delegation.
B)an accord and satisfaction.
C)an assignment.
D)a novation.
Q3) In the case Rosenberg v.Son,Inc.,the Court held that:
A)Son, Inc., as the assignee, was liable to the Rosenbergs.
B)Despite the assignment of her rights, Pratt remained liable to the Rosenbergs.
C)The assignment became a novation because Rosenberg signed it.
D)The Rosenbergs became liable to Son, Inc.
Q4) Briefly discuss the enforceability of contracts by third parties.
Page 17
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Chapter 16: Performance and Discharge
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Q1) Generally,neither a "time is of the essence" clause nor a "force majeure" clause will be recognized by the courts because these types of clauses are seen as a violation of public policy.
A)True
B)False
Q2) A contract between a company in the U.S.and one in China,contained a clause that stated: "If an event happens which is extraordinary and out of the control of the parties such as a strike,act of God,fire,accident,or transportation difficulties,then the affected party shall be relieved of its obligations under the contract." This type of clause is:
A)an objective impossibility clause.
B)a force majeure clause.
C)a concurrent condition clause.
D)a condition precedent clause.
Q3) On March 14,Greg orders $2500 of wine from Cork It,Inc.to be delivered on April 28 for a party scheduled on May 1.On April 15,Cork It notifies Greg that it will not be able to perform the contract as agreed.How will the law characterize Cork It's actions? Does Greg have to wait until April 28 before buying wine from another supplier?
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Page 18
Chapter 17: Remedies
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Q1) Abigail signed a contract to purchase a new car from Wolf's Auto Sales Company.The seller breached its agreement by not delivering the car.Abigail went to another car dealer and purchased the same model of car at the same price.Although she had experienced a legal injury,Abigail has no actual financial or other damages as a result of the breach.If Abigail sues and wins,what type of damages will she be awarded?
Q2) In a promissory estoppel case,a court will generally award:
A)only nominal damages.
B)only consequential damages.
C)both reliance and incidental damages.
D)only reliance damages.
Q3) Costs to rent a vehicle for a short period of time after an auto dealer fails to deliver a purchased vehicle would be:
A)compensatory damages.
B)incidental damages.
C)consequential damages.
D)punitive damages.
Q4) Identify and describe the four principal contract interests a court may seek to protect.
Q5) Discuss the remedy of specific performance.
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Chapter 18: Introduction to Sales
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Q1) ABC Siding,Inc.manufactures aluminum siding.ABC enters into a contract to deliver siding to Slippery Siding,Ltd.,a retailer of aluminum siding.The written agreement insists that all modifications to the agreement be in writing and signed by both parties.This prohibition against oral modifications is:
A)valid regardless of whether the clause is signed separately.
B)invalid unless the clause is signed separately by Slippery Siding, Ltd.
C)invalid unless the clause is signed separately by ABC Siding, Inc.
D)invalid unless new consideration is supplied by the parties when the modification agreement is made.
Q2) Discuss the importance of the UCC to the law of sales.Include who created the UCC,how it becomes law,and the stated purposes of the statute.
Q3) Discuss the UCC good faith requirement.Does it apply differently depending on whether the parties are merchants or not?
Q4) Under the UCC statute of frauds,the writing for a sale of goods must:
A)state quantity.
B)state price.
C)be signed by both parties.
D)be notarized.
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Page 20
Chapter 19: Ownership and Risk
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Q1) A gun manufacturer in Helena,Montana agrees to sell guns and ammunition to the ATF in Washington,D.C.The terms of the contract specify that the goods are to be shipped "FOB,Chicago." When does the buyer acquire title and risk of loss?
A)When the goods reach Chicago.
B)When the goods are delivered to the carrier in Montana.
C)When the goods are tendered in Washington D.C.by the carrier.
D)When the goods reach Washington D.C.
Q2) In the case Lindholm v.Brant,the Supreme Court of Connecticut held that Brant was a buyer in ordinary course,and,as such,was entitled to keep the painting.
A)True
B)False
Q3) Regardless of the language of the contract,title to goods passes to the buyer at the time and place at which the seller physically delivers the goods.
A)True
B)False
Q4) Discuss the concept of insurable interests.
Q5) Discuss the concept of entrustment.
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Page 21
Chapter 20: Warranties and Product Liability
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Q1) In order to establish strict liability,the plaintiff must prove that:
A)The seller sells normally the kind of product that was defective.
B)There was a contracxtual relation between the plaintiff and the manufacturer.
C)The manufacturer breached his duty of due care,
D)All of the above.
Q2) Myrtle walks into Hank's Hardware Store and says,"I need metal storage shelves that can hold 500 pounds." Hank directs her to a metal storage shelving system.Myrtle buys the shelving recommended by Hank.When Myrtle puts 475 pounds of weight on the bottom shelf,it breaks.Hank's Hardware breached the warranty of merchantability.
A)True
B)False
Q3) In a strict product liability case,proof that the defendant acted reasonably is a defense.
A)True
B)False
Q4) In a tort case,the statute of limitations runs from the time the defect was discovered.
A)True
B)False
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Chapter 21: Performance and Remedies
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Q1) Identify six possible remedies for a seller when the buyer breaches a contract.
Q2) Define these terms: usage of trade; course of dealing; and course of performance.
Q3) Which of the following statements is not true regarding the buyer's right to cover?
A)The buyer must cover.
B)The measure of damages in a cover is the difference between the cover price and the contract price.
C)Cover must be done by reasonably obtaining substitute goods.
D)Consequential damages can be recovered in addition to the cover damages.
Q4) A buyer who accepts nonconforming goods may revoke the acceptance under limited circumstances.
A)True
B)False
Q5) A buyer who accepts goods but notifies the seller the goods are non-conforming:
A)cannot recover any damages.
B)can recover the difference between the goods as promised and as delivered, plus incidental and consequential damages.
C)cannot recover incidental damages.
D)cannot recover consequential damages.
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Chapter 22: Creating a Negotiable Instrument
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Q1) Handy Hardware purchases 1200 metallic hooks from Heavy Metals for $1.25 each.Handy promises to pay the money in three months.Heavy Metals wants the money now,as well as keeping Handy as a customer.Heavy Metals (as drawer)drafts an instrument ordering Handy (as drawee)to pay $1500 to First Bank (the payee).This instrument is:
A)a check.
B)a promissory note.
C)a trade acceptance.
D)a payable on demand note.
Q2) With non-negotiable commercial paper,a transferee's rights are conditional.
A)True
B)False
Q3) Forgery is a valid defense against a holder in due course. A)True
B)False
Q4) Explain the shelter rule.
Q5) On March 1 Donna wrote a check for $296 to Sun Services.When will the check be overdue? What is the effect of the check's being overdue? What is the effect if the check is stamped "Insufficient Funds" by Donna's bank?
Page 24
Q6) Define commercial paper and explain what it is used for.
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Chapter 23: Liability for Negotiable Instruments
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Q1) To pay for a minor repair,May writes a check for $50 to David,who indorses the check in blank and gives it to his sister,Glenda,for her birthday.She indorses the check in blank and gives it to her trash collector to pay her quarterly bill.Which of the following is correct?
A)David made transfer warranties to Glenda and to her trash collector.
B)David did not make transfer warranties to Glenda because Glenda gave no consideration for the transfer of the check to her.
C)Neither David nor Glenda made any transfer warranties because they indorsed the check with blank indorsements, making the check bearer paper.
D)The trash collector must wait until the check is dishonored before making a transfer warranty claim against Glenda.
Q2) When a negotiable instrument is transferred,the transferor warrants that:
A)the instrument has not been altered.
B)all signatures are authentic.
C)as far as she knows the issuer is solvent.
D)all of the above.
Q3) List the warranties a transferor of a negotiable instrument makes.
Q4) Discuss the difference between the impostor rule and the fictitious payee rule.
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Chapter 24: Liability for Negotiable Instruments: Banks and Their Customers
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Q1) Issam and James planned to spend spring break in Mexico.James was to make the final plans.To pay for the trip,Issam gave James a signed check that left the name of the payor and amount blank.Using Issam's check,James made the check out to himself for $500.Issam's bank paid the check not knowing that the completion was improper.The bank:
A)is liable because the instrument was forged.
B)is liable because the instrument was unauthorized.
C)is liable for half of the loss.
D)is not liable.
Q2) Lori writes a check to Arturo on Citizens Second Bank.Arturo deposits the check in his account at Commerce National Bank.In this case:
A)Citizens Second Bank is the depositary bank.
B)Commerce National Bank is the depositary bank.
C)Citizens Second Bank is an intermediary bank because it handles the check before it is paid.
D)Commerce National Bank is the payor bank if Arturo receives any cash back on the check.
Q3) On May 10,Klaus received his bank statement.Explain why Klaus should examine the bank statement within 30 days.
Page 26
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Chapter 25: Secured Transactions
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Q1) Which of the following is correct concerning termination statements?
A)A secured party must file a termination statement when consumer goods are involved and the debtor has paid for them.
B)The termination statement clears the debtor's public record with regard to old, irrelevant financing statements so that the same collateral can be used again to secure a future loan.
C)The secured party must file a termination statement within 20 days of a consumer debtor's demand, provided the debtor has paid the full debt.
D)All of the above are correct concerning termination statements.
Q2) First Federal had a perfected security interest in Vicor's printing press.Second Credit had a security interest in the same press,but its interest was not perfected.First Federal takes priority over Second Credit.
A)True
B)False
Q3) Goods that have become attached to real estate are called collaterals.
A)True
B)False
Q4) Discuss the concept of software under Article 9.
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Page 27
Chapter 26: Bankruptcy
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Q1) A Chapter 7 debtor's agreement to pay a creditor on a debt after receiving a discharge in bankruptcy is called a:
A)voidable preference.
B)reaffirmation.
C)payment plan.
D)all of the above terms refer to the same concept.
Q2) Bankruptcy is regulated by both federal and state law.
A)True
B)False
Q3) Brad was having financial difficulties and thought bankruptcy might be in his future.He transferred his sports car to his brother with the agreement that if he didn't file for bankruptcy within the next 18 months,his brother would return the car to him.Brad did file for bankruptcy in ten months.The bankruptcy trustee can bring the car back into Brad's estate for the purpose of providing assets for Brad's creditors.
A)True
B)False
Q4) Individual debtors are allowed to keep some assets in a Chapter 7 bankruptcy.
A)True
B)False
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Chapter 27: Agency
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Q1) An agency will be terminated in all but which one of the following situations?
A)The principal and agent agree on an agency relationship to sell a boat, and the boat is sold.
B)A travel agent files for individual bankruptcy under Chapter 13.
C)The agent violates his duty of loyalty.
D)An electrician, an agent of a contractor, has her license revoked.
Q2) Andrew has been hired to do some work for Rossi Enterprises.What factors would a court consider in determining if Andrew is an employee or an independent contractor? Why does the designation matter?
Q3) If the agent and principal are jointly and severally liable,the injured party:
A)may choose to sue only the agent.
B)may choose to sue only the principal.
C)can sue both the agent and the principal.
D)All of the above.
Q4) An agent may not engage in inappropriate behavior that reflects badly on the principal,even if the agent is off duty.
A)True
B)False
Q5) Discuss the principal's remedies when the agent breaches a duty.
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Chapter 28: Employment Law
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Q1) Does the Family and Medical Leave Act apply to professionals like CPAs?
A)Yes, if they work for a company with at least 50 workers.
B)Yes, but only if they are paid on an hourly basis.
C)No.
D)No, unless the employer specifically provides coverage.
Q2) Maude was denied employment with Trucks R Us as a warehouse worker because she didn't meet the weight requirement of 160 pounds.Trucks argued the weight requirement was reasonable because warehouse workers often have to lift things weighing up to 100 pounds.If she sues Trucks,she will probably:
A)lose, as the weight requirement seems like a reasonable occupational requirement.
B)lose, as the 160-pound requirement doesn't discriminate.
C)win, as the weight requirement is discriminatory and doesn't appear necessary for the requirement of lifting 100 pounds.
D)win, as the employer specifically cannot have a weight requirement.
Q3) It is currently legal for a private employer to use lie detector tests as part of its usual hiring process.
A)True
B)False
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Chapter 29: Starting a Business: Llcs and Other Options
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Q1) Which of the following is considered by the IRS to be a sale of assets,subject to a tax on the value of the assets?
A)Change from the corporate form to an LLC.
B)Change from an LLC to a corporation.
C)Change from a partnership to an LLC.
D)All of the above.
E)None of the above.
Q2) Which of the following statements about limited partnership is correct?
A)Limited partnership is a very popular form of business organization.
B)Limited partners have the right to manage the business.
C)General partners are personally liable.
D)All of the above.
Q3) Which of the following would not be personally liable for the debts of the business?
A)A sole proprietor.
B)A partner in a general partnership.
C)A general partner in a limited liability limited partnership.
D)A general partner in a limited partnership.
Q4) What is a limited liability company? Explain the advantages and disadvantages of this type of business ownership.
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Chapter 30: Corporations
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Q1) Terminating a corporation is a three-step process: dissolution,winding up,and termination.
A)True
B)False
Q2) Discuss how a corporation is terminated.
Q3) When a manager compete against the corporation without its consent,he is in violation of:
A)the business judgment rule.
B)the self dealing doctrine.
C)his duty of care.
D)the corporate opportunity doctrine.
Q4) The Lippman v.Shaffer case was about:
A)piercing the corporate veil to hold shareholders personnaly liable.
B)the application of the business judgment rule.
C)the unlawful transfer of a close corporation stock.
D)all of the above.
Q5) Owners of preferred stock typically have a preference in liquidation.
A)True B)False
Q6) What is the business judgment rule and what is its purpose?
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Chapter 31: Securities Regulation
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Questions
Q1) Valdon brought a lawsuit under Section 11 of the 1933 Act against Kennedy Corp.He will have to prove that:
A)he relied on the registration statement.
B)Kennedy was negligent in preparing the registration statement.
C)there was a material misstatement or omission in the registration statement and he lost money.
D)All of the above.
Q2) If the final registration statement contains a material misstatement or omission,the purchaser of the security can recover damages from:
A)the issuer of the security, but not the company's directors or chief officers.
B)the company's directors, but not the chief officers.
C)the experts who signed the registration statement, but not any other parties.
D)everyone who signed the registration statement.
Q3) Define a direct public offering.What are its advantages?
Q4) Offerings under Regulation A of the Securities Act of 1933,although called private offerings,are really small public offerings.
A)True
B)False
Q5) What are the three primary ways the SEC creates law?
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Chapter 32: Property
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Q1) The rightful possession of goods by one who is not the owner is the definition of:
A)a gift
B)a bailment.
C)a license.
D)a profit.
Q2) Charles agrees to store Tuan's car in Charles's garage for the winter months while Tuan visits his grandmother in California.As a bailee,Charles is automatically entitled to use Tuan's car while Tuan is away.
A)True
B)False
Q3) The bank who lends money in exchange for a mortgage on the borrower's house is considered to be the:
A)mortgagee.
B)mortgagor.
C)profitor.
D)profitee.
Q4) Discuss the tenant's and the landlord's basic duties under a landlord-tenant relationship.
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Chapter 33: Cyberlaw
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Q1) The federal government has preempted the field of online privacy,so states may not pass their own online privacy statutes.
A)True
B)False
Q2) You make an online purchase of a toy for an infant.The next time you log on,your screen has a banner ad for a brand of diapers.This banner ad is most likely the result of:
A)a cookie.
B)spam
C)a virus.
D)any of the above would be possible.
Q3) Unsolicited commercial e-mail (UCE)or unsolicited bulk e-mail (UBE)messages:
A)are officially known as "cookies."
B)constitute about 80 percent of all e-mail.
C)are estimated to be fraudulent either in content or packaging in approximately one-fourth of all cases.
D)are illegal per se.
Q4) Discuss the European Directive on the protection of personal Data.
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Chapter 34: Intellectual Property
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Q1) If a trademarked name acquires a generic meaning,the owner of the trademark loses protection.
A)True
B)False
Q2) Describe what copyright infringement means.
Q3) The Good Housekeeping Seal of Approval is an example of a:
A)trademark.
B)service mark.
C)collective mark.
D)certification mark.
Q4) Provisional patents are good for one year.
A)True
B)False
Q5) Erin and her band played a very familiar song.However,they made up different words for the song that were intended to be funny.Erin's version of the popular song with different words is known as:
A)a copyright infringement.
B)application of the fair use doctrine.
C)a copyright dilution.
D)a parody.
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