Introduction to Law
Textbook Exam Questions
Course Introduction
Introduction to Law provides students with a foundational understanding of the legal system, its structure, and its role in society. The course explores key concepts such as the sources of law, the distinction between civil and criminal law, and the processes by which laws are created, interpreted, and enforced. Students will examine fundamental legal principles, the functions of courts, and the roles of various legal professionals. Through case studies and real-world examples, the course aims to develop critical thinking skills and a basic legal literacy that can be applied to everyday life and further legal studies.
Recommended Textbook
Business Law Text and Cases 13th Edition by ClarksonMiller
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Page 2
Chapter 1: Law and Legal Reasoning
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Sample Questions
Q1) The U.S. Constitution is the basis of all law in the United States.
A)True
B)False
Answer: True
Q2) The U.S. Congress enacts a new federal statute that imposes liability on businesses hiring employees without verifying their citizenship status. This statute applies
A) only to businesses not covered by state law.
B) only to those states that consent to apply it.
C) to all of the states.
D) to none of the states.
Answer: C
Q3) Juan is a judge. How Juan and the judges in other courts interpret a particular statute determines
A) how that statute will be applied.
B) how the law needs to be changed.
C) how the common law should be codified.
D) nothing.
Answer: A
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Chapter 2: Courts and Alternative Dispute Resolution
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Sample Questions
Q1) Laws would be meaningless without the courts to interpret and apply them.
A)True
B)False
Answer: True
Q2) A mini-trial is a private proceeding in which each party's attorney ar?gues the party's case before the other party.
A)True
B)False
Answer: True
Q3) The least expensive method of resolving a dis?pute between Ronald and Sharon may be
A) arbitration because the case will be heard by a mini-jury.
B) litigation because each party will pay its own legal fees.
C) mediation because the dispute will be resolved by a non-expert.
D) negotiation because no third parties are needed.
Answer: D
Q4) Small claims courts are inferior trial courts.
A)True
B)False
Answer: True
Page 4
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Chapter 3: Court Procedures
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Sample Questions
Q1) During the trial phase of Sof' Drink Soda Corporation's suit against TimeOut Convenience Stores, Inc., their attorneys engage in voir dire. This is
A) an assessment of the arguments on the issues.
B) the determination of the issues to be argued.
C) the testimony by a party to the lawsuit or by any witness, recorded by an authorized court official.
D) the selection of jurors.
Answer: D
Q2) An expert witness is a person who is directly involved in the events concerning a lawsuit.
A)True
B)False
Answer: False
Q3) After both sides have rested their cases, only the plaintiff's attorney makes a closing argument.
A)True
B)False
Answer: False
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Chapter 4: Business and the Constitution
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Q1) In an effort to reduce traffic, Bay City enacts an ordinance that allows only a few specific street vendors to op?er?ate in certain areas. A court would likely review this ordinance under the principles of
A) the commerce clause.
B) the equal protection clause.
C) the due process clause.
D) the First Amendment.
Q2) Congress enacts the Supplemental Income Tax Act (SITA) to exempt the citizens of New Jersey from federal taxes until their coastal towns are rebuilt from the ravages of a recent hurricane. SITA will most likely be
A) rendered invalid under the supremacy clause.
B) held to be valid under the equal protection clause.
C) struck down under the taxing and spending clause.
D) upheld under the commerce clause.
Q3) State laws protect individuals' privacy rights, often to a significant degree.
A)True
B)False
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6
Chapter 5: Business Ethics
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Q1) Dyan, the owner of Expert Restoration Services, Inc., adheres to the "principle of rights" theory. Under this theory, a key factor in determining whether a business decision is ethical is how that decision
A) compares to religious principles.
B) affects the rights of others.
C) effects consequences that would follow if everyone in society acted the same way.
D) supports the right to make a profit.
Q2) Desdemona works for eInnovation, Inc. Her job includes putting "spin" on the firm's successes and failures. In this context, ethics has to do with how businesspersons, in making their decisions, apply
A) legal doctrine.
B) moral and ethical principles.
C) corporate guidelines.
D) financial priorities.
Q3) According to utilitarianism, it does not matter how many people suffer a negative effect from an act.
A)True
B)False
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Chapter 6: Torts
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Sample Questions
Q1) Oakes enters Parnell's property to read an electric meter. Parnell asks Oakes to leave. Oakes refuses. Oakes has most likely committed
A) trespass to land.
B) trespass to personal property.
C) slander of title.
D) no tort.
Q2) Rafi, a van driver for Speedy Delivery Company, causes a multi-vehicle accident on a city street. Rafi and Speedy are liable to
A) all those who were injured.
B) only those who were uninsured.
C) only those whose injuries could have been reasonably foreseen.
D) only those whose vehicles were closest to Rafi's van.
Q3) The goal of tort law is to put a defendant in the position that he or she would have been in had the tort occurred to the defendant.
A)True
B)False
Q4) For fraud to occur, seller's talk must be involved.
A)True
B)False
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Chapter 7: Strict Liability and Strict Liability
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Q1) Fleet Feet Corporation makes athletic shoes. Gloria, a marathoner, files a product liabil?ity suit against Fleet Feet, alleging a design defect. In deciding whether to hold Fleet Feet liable, the court may consider an alternative design's A) popularity among industrial designers and consumers.
B) weight and heft.
C) aesthetics.
D) advantages and disadvantages.
Q2) A manufacturing defect is a departure from a product unit's design specifications that results in products that are physically flawed.
A)True
B)False
Q3) To successfully assert a design defect, a plaintiff has to show that no reasonable alternative design was available.
A)True
B)False
Q4) There is a duty to warn about risks that are obvious or commonly known. A)True
B)False
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Chapter 8: Intellectual Property Rights
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Sample Questions
Q1) A license permits the use of another's intellectual property for certain purposes.
A)True
B)False
Q2) Robyn, an employee at Social Media, Inc., is laid off. Before he leaves, he e-mails Social Media's marketing campaign to Tweets & Trades Corporation, Social Media's competitor, without permission. This is
A) a sneaky but legal method of competing with a business rival.
B) a secretive but lawful way to exact revenge on a supervisor.
C) a simple, legitimate attempt to create a job opportunity.
D) a theft of trade secrets.
Q3) GreatGro, Inc., makes genetically modified seeds with properties that are iden?tical to Hearty Harvest Corporation's patented seeds, without Hearty Harvest's permission. This is most likely
A) copyright infringement.
B) patent infringement.
C) trademark infringement.
D) not infringement.
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Chapter 9: Internet Law, Social Media, and Privacy
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Sample Questions
Q1) Employees who use social media in a way that violates their employer's stated policies cannot be disciplined or fired from their jobs.
A)True
B)False
Q2) No federal court has held that digitally sampling a copyrighted sound recording of any length constitutes copyright infringement.
A)True
B)False
Q3) Sly includes in his song "Sneaky" a few seconds of Wily's copyrighted sound recording "Wits" without permission. Some federal courts have found that such digital sampling is
A) a violation of copyright law.
B) a "fair use" exception to the provisions of the act.
C) not a "fair use" exception to the provisions of the act.
D) all of the choices.
Q4) Federal wiretapping law covers electronic forms of communication.
A)True
B)False
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Chapter 10: Criminal Law and Cyber Crime
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Q1) Reno, driving while intoxicated, causes a car accident that results in the death of Santo. Reno is arrested and charged with a felony. A felony is a crime punishable by death or imprisonment for A) any period of time.
B) more than one year.
C) more than six months.
D) more than ten days.
Q2) Kimberly, the owner of Littleton Cinema, trusts Max to manage the theater's daily cash flow. One night, without Kimberly's knowledge or consent, Max takes and keeps $1,000 from the receipts. This is most likely
A) embezzlement.
B) larceny.
C) robbery.
D) burglary.
Q3) Under the Fourth Amendment, general searches through a person's belongings are permissible.
A)True
B)False
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Chapter 11: Nature and Terminology
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Sample Questions
Q1) Mallory promises to buy illegal digital copies of movies from Napoleon, who promises to deliver on October 31. These promises are most likely
A) enforceable.
B) valid.
C) void.
D) voidable.
Q2) Otto mistakenly pays property taxes that should have been assessed against Pip. Otto can recover the amount from Pip in quantum meruit
A) even if Pip was not aware of the error.
B) only if Pip tried to conceal the error.
C) only if Pip was aware of the error.
D) only if Pip consents.
Q3) A quasi contract is an actual contract.
A)True
B)False
Q4) If a contract term is ambiguous, a court can consider extrinsic evidence.
A)True
B)False
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Page 13
Chapter 12: Agreement in Traditional and E-Contracts
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Q1) Quay Trucking Service tells Rafe that it will pay him $50 if he unloads a certain truck at the Shipping Warehouse. Rafe's acceptance is complete
A) as soon as Rafe says he will unload the truck.
B) once Rafe starts to unload the truck.
C) only after Rafe unloads the truck.
D) when Rafe hears Quay's offer.
Q2) An acceptance can impose new conditions or change the terms of the original offer without rejecting it.
A)True
B)False
Q3) Kay and Leo enter into a contract that falls within the provisions of the UETA. Under the UETA, "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record" is
A) an e-document.
B) an e-signature.
C) an e-transaction.
D) a record.
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14
Chapter 13: Consideration
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Q1) Statutes of limitations in all states require a debtor to pay a debt within a specified period of time.
A)True
B)False
Q2) Industrial Engineering, Inc., promises to give stock options to Jasmine for processes she has already designed for the firm. This promise is enforceable
A) because it is a new contract.
B) because it is an illusory promise.
C) because it is supported by past consideration.
D) under no circumstances.
Q3) If a promise is made, it can be enforced.
A)True
B)False
Q4) In many states, a release contract must be in a signed writing.
A)True
B)False
Q5) Essentially, adequacy of consideration concerns the fairness of the bargain. A)True
B)False
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Chapter 14: Capacity and Legality
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Q1) Rosalind, a seventeen-year-old, signs a contract to sell her car to Street Fleet Used Cars. The next day, Rosalind tells Street Fleet that she's decided not to sell the car. Rosalind is liable to Street Fleet for
A) the cost of a car of comparable value.
B) the value of her performance under the contract.
C) the amount of its profit on the deal.
D) nothing.
Q2) Lydia, a minor, charges the cost of a smartphone at a Mobile Devices & Minutes store. Two nights later, Lydia loses the phone at Natural Foods restaurant. She disaf?firms the phone's purchase. Lydia owes Mobile Devices the reasonable value of the phone
A) if it is deemed a necessary.
B) if it is deemed a luxury.
C) if it is deemed unique.
D) under no circumstances.
Q3) For business purposes, an adult may petition a court to treat minors as adults.
A)True B)False
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Page 16
Chapter 15: Mistakes, Fraud, and Voluntary Consent
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Q1) In a bike shop, Barrie, who is not knowledgeable about bikes, overhears Cullen say, "This bike could win any race!" Barrie buys the bike, but does not win any races with it. Cullen's statement is
A) a mistake.
B) fraudulent.
C) an opinion.
D) an attempt at undue influence.
Q2) Drake enters into a contract with Eve, who claims to have access to a stock-trading algorithm that will multiply an investment many times over. When the results do not match this promise, Drake learns that Eve does not have access to any unique software and files a suit against her, alleging fraud. Proof of an injury is required to
A) recover damages.
B) rescind the contract.
C) undo Eve's influence.
D) punish the defendant.
Q3) Duress is a defense to the enforcement of a contract, but not a ground for rescission of a contract.
A)True
B)False
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Page 17
Chapter 16: The Writing Requirement and Electronic Records
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Q1) The Statute of Frauds operates as a defense to the enforcement of an oral contract for the sale of land.
A)True
B)False
Q2) Physicians Clinic orders by phone seven boxes of single-use latex gloves from Quality Medical Supplies, Inc. After three boxes are delivered and accepted, Physicians Clinic repudiates the contract. Quality Medical can enforce the contract to
A) any extent because the order was placed orally.
B) no extent because the order was placed orally.
C) the extent of the three accepted boxes.
D) the extent of the four undelivered boxes.
Q3) Lucas orally agrees to sell his Mountain Spring Beverage Company to Natural Soft Drinks, Inc. Lucas notes the terms on a sheet of Mountain Spring stationery and signs it. This agreement is most likely enforceable against A) no one.
B) Lucas and Natural Soft Drinks.
C) Lucas.
D) Natural Soft Drinks.
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Chapter 17: Third Party Rights
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Q1) A contract between Laser Maintenance, Inc., and Medical Vision Operation Corporation contains a clause stating that any assignment is "void." This ordinarily prohibits
A) any assignment.
B) no assignment.
C) only an assignment of contract rights to personal services.
D) only an assignment that would change the obligor's risk.
Q2) The rights of a third party bene?ficiary under a contract vest if the third party brings a lawsuit on the promise.
A)True
B)False
Q3) As long as a contract is personal in nature, all rights under the contract can be assigned.
A)True
B)False
Q4) An assignee's rights are subject to the defenses that the obligor has against the assignor.
A)True B)False
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Chapter 18: Performance and Discharge in Traditional
E-Contracts
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Q1) The law allows an innocent party to be discharged when the other party has materially altered a written contract without consent.
A)True
B)False
Q2) Restoration, Inc., contracts to repair a crack in a supporting beam for Stagecraft Theater for $10,000. If Restoration does not per?form, Stagecraft must pay
A) $10,000.
B) $5,000.
C) $1,000.
D) $0.
Q3) After a contract is made, a supervening event may make performance impossible in an objective sense.
A)True
B)False
Q4) A contractual obligation may not be discharged through novation.
A)True
B)False
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Chapter 19: Breach of Contract and Remedies
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Q1) Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is damages.
A)True
B)False
Q2) A contract for a sale of land from Bayside Properties, Inc., to City Development Corporation contains an erroneous legal description. The most appropriate remedy for these parties is
A) quasi-contractual recovery.
B) reformation.
C) rescission.
D) specific performance.
Q3) Courts order reformation most often when fraud or mutual mistake is present.
A)True
B)False
Q4) In a contract for a sale of goods, the usual measure of compensatory dam?ages is the difference between the contract price and the market price.
A)True
B)False
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21
Chapter 20: Formation of Sales and Lease Contracts
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Q1) Ferris is refinishing his kitchen floor and needs a floor sander to complete the job. Ferris's neighbor Gerda suggests that he call Home Repair Rentals, Inc. Home Repair leases Ferris a floor sander. In this transaction, the lessor is A) Ferris.
B) Gerda.
C) Home Repair.
D) none of the parties.
Q2) Intangible property has conceptual existence and thus comes under Article 2. A)True
B)False
Q3) Refer to Fact Pattern 20-B1. Ripe Produce responds that it did not waive payment for spoiled goods in the parties' previous transaction. Ripe Produce is arguing that the court should take into account
A) the course of dealing.
B) the course of performance.
C) the usage of trade.
D) a rule of construction.
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22
Chapter 21: Title, Risk, and Insurable Interest
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Q1) Fungible goods are goods that are different naturally, by agreement, or by trade usage.
A)True
B)False
Q2) Quest Outdoor Store orders RiverRun-brand kayaks from Sports Merchandise, Inc. Sports Merchandise mistakenly ships kayaks of the wrong size, which Quest rejects and returns via Trans-State Shipping Company. During the re?turn, the kayaks are lost. The loss is suffered by
A) Quest .
B) Trans-State.
C) RiverRun.
D) Sports Merchandise.
Q3) Big Beef, Inc. raises calves to sell. Big Beef breeds its cows in April, and the cows calve in February of the following year. In January Andrea contracts with Big Beef to buy fifty calves. Identification takes place in A) January, when the contract is signed.
B) April, when the calves are conceived.
C) February, when the calves are born.
D) a reasonable period of time.
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Page 23
Chapter 22: Performance Breach of Sales Lease Contracts
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Q1) Repair Tools Company contracts to deliver fifty heavy-duty steel floor jacks to Serv-UR-Self Auto Stores on May 1 for which Serv-UR-Self agrees to pay. Repair Tools tells Serv-UR-Self on April 15 that delivery will be delayed until June 1. Serv-UR-Self may do all of the following except
A) force Repair Tools to deliver substitute goods before the time for the contract's performance.
B) await Repair Tools' performance for a commercially reasonable time.
C) sue Repair Tools for breach of contract.
D) suspend its own performance.
Q2) Energy Products Corporation and First Response Preparedness.com enter into a contract for a sale of portable generators. Under a destination contract, the seller must A) allow the buyer to reject the goods for any reason.
B) deliver the goods to a particular destination.
C) inspect the goods before tendering their delivery.
D) place the goods into the hands of a carrier.
Q3) Merchants are held to a higher standard of performance or duty than are nonmerchants.
A)True
B)False
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Page 24
Chapter 23: Warranties
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Q1) A full warranty requires free repair or replacement of any defective part.
A)True
B)False
Q2) Aerospace, Inc., makes and sells flight navigation equipment, through inde?pendent salespersons, to retailers for resale to consumers. The Magnuson-Moss Warranty Act covers
A) implied warranties, oral statements, and written promises.
B) only implied warranties that consumers are aware of.
C) only a salesperson's oral statements.
D) only a seller's written promises.
Q3) Every sale or lease of goods made by a merchant who deals in goods of the kind sold or leased automatically gives rise to an implied warranty that the goods are fit for a particular purpose.
A)True
B)False
Q4) A warranty against infringement is a promise by the seller that the prod?uct is free from any patent, trademark, or copyright claims of a third person.
A)True
B)False
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Chapter 24: International Law in a Global Economy
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Q1) The basis for India to give effect to the laws and court decisions of the United States is primarily
A) courtesy and respect.
B) fear and intimidation.
C) admiration and envy.
D) payments of cash and exchanges of property.
Q2) The United States and other members of a certain organization agree to grant normal trade relations (NTR) status to each other with regard to im?ports and exports. This organi?zation is
A) the Convention on Contracts for the International Sale of Goods.
B) the International Export-Import Bank.
C) the United Nations.
D) the World Trade Organization.
Q3) Mountain Mining Company, a U.S. firm, owns property in Bolivia. The government of Bolivia seizes the property for an illegal purpose without paying just compensation. This is
A) confiscation.
B) defalcation.
C) dumping.
D) expropriation.
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Chapter 25: The Function Creation of Negotiable Instruments
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Q1) To buy a stuffed cow, Ken executes a check "pay to Laura or bearer" and gives it to Laura, who does not own a stuffed cow. This check is A) negotiable.
B) nonnegotiable, because it does not indicate a specific payee.
C) nonnegotiable, because it may be a joke.
D) nonnegotiable, because Laura does not own a stuffed cow.
Q2) On the back of an envelope, Clark writes, "I promise to pay Dobie or bearer $700 on de?mand. [Signed] Clark." What type of instrument is this? Is it nego?tiable? If not, why not?
Q3) To be negotiable, an instrument must be payable on demand.
A)True
B)False
Q4) With respect to negotiability, a mere reference to another writing or record makes a promise conditional.
A)True
B)False
Q5) All checks are time instruments.
A)True
B)False
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Chapter 26: Transferability and Holder in Due Course
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Q1) Plumbing & Pipes Supply Company issues a promissory note as a demand instrument with a due date of October 5. Quantum Loan Company accepts the note. Quantum Loan has notice that the note is overdue if the firm takes the note
A) after October 5.
B) before October 5.
C) on October 5.
D) at any time.
Q2) A purchaser can become an HDC of an instrument even if it is so incomplete that an element of negotiability is lacking.
A)True
B)False
Q3) An indorsement should be identical to the name of the indorsee, regardless of how the name appears on the instrument.
A)True
B)False
Q4) A restrictive indorsement does not destroy negotiability.
A)True
B)False
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28
Chapter 27: Liability, Defenses, and Discharge
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Q1) A person who transfers an instrument for consideration makes transfer warranties to all subsequent transferees and holders who take the instrument in good faith.
A)True
B)False
Q2) Employment Personnel Company draws a check payable to Felix. Felix indorses the back and negotiates the check to Guaranty Bank. Primarily liable on the check is
A) Employment Personnel.
B) Felix.
C) Guaranty Bank.
D) none of the choices.
Q3) Presentment war?ranties cannot be disclaimed with respect to checks.
A)True
B)False
Q4) When there is a breach of an underlying contract for which an instrument was issued, the drawer of a check can order his or her bank to stop payment on the check.
A)True
B)False
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Chapter 28: Banking in the Digital Age
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Q1) When a customer makes a deposit, the customer becomes a creditor, and the bank a debtor, for the amount deposited.
A)True
B)False
Q2) A bank may not charge a postdated check against a customer's account unless the customer notifies the bank, in a timely manner, to pay the check before the stated date.
A)True
B)False
Q3) If a person does not consent, a federal agency normally must obtain a warrant to access his or her financial records.
A)True
B)False
Q4) Oscar buys a new HD TV from Priceless Retail Mart, using the means that accounts for more retail payments than any other. This means of payment is
A) a cashier's check.
B) a debit card.
C) a personal check.
D) digital cash.
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Chapter 29: Creditors Rights and Remedies
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Q1) Jordan is a surety for Kelly's loan from Lenders Credit Corporation. When the loan comes due, Kelly tries to pay Lenders Credit, but the creditor rejects the payment. Jordan is
A) released from any obligation on the debt.
B) required to pay the amount of the debt to Lenders Credit.
C) required to pay up to half of the amount of the debt to Lenders Credit.
D) required to pay the amount of the debt to Kelly.
Q2) Stanley's debt to Town Bank is past due. Town Bank obtains a judgment against Stanley to collect the debt, but he refuses to pay. Town Bank asks the court to order Stanley's employer to pay a portion of his paycheck to the bank. This is a request for A) a mechanic's lien.
B) an order of garnishment.
C) an order that would violate most state laws.
D) a writ of attachment.
Q3) Personal property that is most often exempt from satisfaction of judgment debts does not include equipment that the debtor uses in a business or trade.
A)True
B)False
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Chapter 30: Secured Transactions
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Q1) A security interest can cover property in which the debtor has ownership or possessory rights in the present or in the future.
A)True
B)False
Q2) In general, it is sufficient to provide only the debtor's trade name (or fictitious name) in a financing statement for perfection.
A)True
B)False
Q3) Refer to Fact Pattern 30-1B. Suppose that Security Finance perfects its se?curity in?ter?est when Resource Drilling takes possession of the equipment. In that cir?cum?stance, the party with pri?ority to the collateral on Resource Drilling's default would be
A) Resource Drilling.
B) Security Finance and Touchstone Loans proportionately.
C) Security Finance only.
D) Touchstone Loans only.
Q4) Perfection is usually accomplished without filing a financing statement.
A)True
B)False
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Chapter 31: Bankruptcy Law
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Q1) In putting together a repayment plan under Chapter 13, a debtor must apply the means test to identify the amount of disposable income that will be available to repay creditors.
A)True
B)False
Q2) Dorothy files a petition for bankruptcy in bankruptcy for relief through an individual's repayment plan. If she is granted a discharge, debts that will most likely be discharged include
A) claims not provided for by the plan.
B) payments on retirement accounts.
C) claims for domestic support obligations.
D) credit-card debt incurred more than one year before filing.
Q3) Paulina operates a sole proprietorship, a corporation, and a partnership. Paulina wants to ob?tain relief for her individual debts and the debts of her corporation and partnership. For each of these, Paulina may file a petition in bankruptcy for relief through A) a liquidation.
B) a reorganization.
C) a repayment plan.
D) a family-farmer bankruptcy plan.
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Page 33
Chapter 32: Agency Formation and Duties
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Q1) Investment Holdings Corporation hires Jerilyn, a business appraiser, to locate investment possibilities for Investment Holdings. Jerilyn learns of a salsa and hot sauce manufacturing company avail?able for a reasonable price, but neglects to tell Investment Holdings. Most likely, Jerilyn
A) breached the agent's fiduciary duties to the principal.
B) did nothing wrong.
C) failed to take advantage of a business opportunity.
D) assumed that the information was confidential.
Q2) Employers can avoid certain tax liabilities by hiring independent contractors instead of employees.
A)True
B)False
Q3) Lorena is appointed as an agent for Milled Grains, Inc. The agency agree?ment is silent as to the level of sales that Lorena is expected to achieve. She must A) achieve nothing because the agreement says nothing on the issue.
B) attain the level that Lorena achieved with her previous employer.
C) maintain the level Milled Grains attained before Lorena became an agent. D) use reasonable diligence and skill in selling.
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34
Chapter 33: Agency Liability and Termination
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Q1) The equal dignity rule requires that if a contract entered into by an agent is in writing, the principal, must honor it.
A)True
B)False
Q2) Linus hires Mieko to act as his agent to purchase Ngoc's Southeast Asian Buffet. Linus tells Mieko to reveal only that she is buying the restaurant on behalf of a third party, without telling Ngoc's seller who that third party is. Linus is
A) a disclosed principal.
B) not a principal.
C) an undisclosed principal.
D) a partially disclosed principal.
Q3) Miklos employs Nathalie to handle a list of financial transactions on Miklos's behalf. This power will terminate on
A) any transaction causing a loss to Miklos.
B) Miklos's death or incapacity.
C) Miklos's sixty-fifth birthday.
D) Nathalie's handling of one of each stipulated transaction.
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Chapter 34: Employment, Immigration, and Labor Law
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Q1) Febo is an employee of Guitar & Drum Company. Guitar & Drum's employee manual states that workers, such as Febo, will be dismissed only for good cause. With respect to the employment-at-will doctrine, this is
A) an example of the doctrine.
B) an exception based on contract theory.
C) an exception based on public policy.
D) an exception based on tort theory.
Q2) Blayne is an employee of Chemical Refinery, Inc. Blayne is threatened with a discharge when he refuses a transfer to a Chemical Refinery department in which several employees suffered serious injuries from exposure to hazardous chemicals. Blayne may be entitled to protection from discharge under
A) no law.
B) the Family and Medical Leave Act.
C) the Occupational Safety and Health Act.
D) the state workers' compensation act.
Q3) Children under fourteen years of age are not allowed to work.
A)True
B)False
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Chapter 35: Employment Discrimination and Diversity
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Q1) Employers are not required to modify their job-application and selection process so that those with disabilities can compete for jobs with those who do not have disabilities.
A)True
B)False
Q2) Buena files a suit against Credit Services Corporation under the Civil Rights Act of 1964, alleging employment discrimination on the basis of gender on a disparate-impact theory. To succeed, Buena must show that Credit Services hires fewer women than the per?centage of
A) qualified women in the local labor market.
B) qualified women in the United States.
C) women in Credit Services's state.
D) women who apply to Credit Services for work.
Q3) Refer to Fact Pattern 35-1B. Lomax believes that he has been discriminated against on the basis of his age. For the Age Dis?crimination in Employment Act of 1967 to apply
A) Kyla must be forty years of age or younger.
B) Kyla must be forty years of age or older.
C) Lomax must be forty years of age or older.
D) Lomax must have been MVMC's employee for at least forty years.
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Chapter 36: Sole Proprietorships and Franchises
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Q1) The franchise is not strictly speaking a business organizational form.
A)True
B)False
Q2) Level Fencing Company wants to present information in "disclosure docu?ments" via the Internet to prospective franchisees. Among other legal re?quirements with which Level Fencing must comply, prospective franchisees must
A) agree to settle any lawsuits that may arise over the documents.
B) be able to download or save all electronic documents.
C) provide e-mail addresses for Level Fencing to verify users' authenticity.
D) register with the Federal Trade Commission via Level Fencing's Web site.
Q3) Silvano owns Textbooks Plus, a sole proprietorship that sells textbooks and other school supplies. When Silvano dies, Textbooks Plus will automatically A) dissolve.
B) pass to Silvano's heirs.
C) pass to the state.
D) be offered for sale to its creditors and competitors.
Q4) The duration of a franchise is a matter determined by federal or state statutes.
A)True
B)False
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Chapter 37: Partnerships and Limited Liability Partnerships
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Q1) Edgar, Jon, and Phoebe do business as Reliable Movers. Phoebe develops a debilitating illness and can no longer work. Phoebe
A) may dissociate from the partnership.
B) may not dissociate from the partnership without the other partners' consent.
C) must dissociate from the partnership.
D) may terminate the partnership.
Q2) If no fixed duration of the partnership is specified, the partnership is a partnership in perpetuity, which means that the partnership cannot be dissolved.
A)True
B)False
Q3) Refer to Fact Pattern 37-1B. The partners decide to dissolve Equity Lending. Duke collects and distributes the firm's assets. This results in
A) nothing with respect to the firm's existence.
B) the continuation of the firm's business.
C) the termination of the firm's legal existence.
D) the temporary suspension of the firm's business.
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Chapter 38: Other Organizational Forms for Small Businesses
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Q1) Qatar Global Investments is a foreign entity-a firm owned and operated by investors in a foreign country. With respect to a limited liability company in the United States, Qatar Global can
A) act as a creditor, but cannot otherwise invest or participate. B) become a member.
C) not become a member, but can participate in its operations.
D) not become a member or otherwise participate in its operations.
Q2) As the trustee of a business trust, Bertoldi is required to A) distribute the trust's profits.
B) assume responsibility for the trust's debts.
C) draft a written trust agreement.
D) none of the choices.
Q3) A limited liability company is a citizen of every state of which their members are citizens.
A)True
B)False
Q4) A member of a limited liability company (LLC) has the power and the right to dissociate from the LLC at any time.
A)True
B)False
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Chapter 39: Corporate Formation and Financing
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Q1) The articles of incorporation serve as a primary source of authority for the corporation's future organization and business functions.
A)True
B)False
Q2) One of the key advantages of the corporate form is the unlimited liability of its owners.
A)True
B)False
Q3) A court will pierce the corporate veil of a corporation that is formed to evade an existing legal obligation.
A)True
B)False
Q4) Preferred stock is an equity security with preferences.
A)True
B)False
Q5) When a corporation earns profits, it must pass them on to shareholders in the form of dividends.
A)True
B)False
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Chapter 40: Corporate Directors, Officers, Shareholders
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Q1) Shareholders have the power to vote to elect or remove members of the board of directors.
A)True
B)False
Q2) Each director present at a meeting of the board of directors has one vote for each outstanding share of corporate stock that he or she holds.
A)True
B)False
Q3) Donatello is a director and officer of Enzio's Pizza Corporation. Donatello selects an ad campaign that consumers find offensive-a market?ing decision that results in a dramatic decrease in profits for the firm and its shareholders. The shareholders accuse Donatello of breaching his fiduci?ary duty to the corporation. What is Donatello's best defense against this ac?cu?sation? Later, a resolution comes before Enzio's board to expand its menu to compete with Fabio's Pasta Palace Restaurants Inc. Donatello is a director and shareholder of Fabio's. What is Donatello's responsibility in this situation?
Q4) Each director can access the corporation's facilities and premises.
A)True
B)False
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Page 42
Chapter 41: Mergers and Takeovers
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Q1) A short-form merger requires the approval of the shareholders of both corporations.
A)True
B)False
Q2) Ramon is a shareholder of Quantum Mechanix Corporation. Ramon could normally ex?er?cise appraisal rights if Quantum participated in A) a consolidation.
B) a dissolution.
C) a liquidation.
D) a winding up.
Q3) A merger between Blended Coffee Corporation and Cowland Creamery Inc. can be expressed as Blended Coffee + Cowland Creamery = A) Cowland Creamery.
B) Delite Dairy Corporation.
C) Delite Dairy Corporation + EZ Stir & Sip Inc.
D) EZ Stir & Sip Inc.
Q4) The state cannot dissolve a corporation under any circumstances.
A)True
B)False
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Chapter 42: Securities Law Corporate Governance
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Q1) Rico does not work for Street Bikes Company, but wrong?fully obtains inside information concerning the firm. Based on the in?forma?tion, Rico buys and sells Street Bikes stock for personal gain. The Securities and Exchange Commission prose?cutes Rico, arguing that he is liable because he stole in?formation right?fully belonging to another. This argument is
A) the blue-sky theory.
B) the misappropriation theory.
C) the free-writing prospectus theory.
D) the tipper/tippee theory.
Q2) Household Products Corporation wants to make an offering of securities to the pub?lic. This offering is not exempt from registration under the Se?curities Act of 1933. Before Household Products sells its securities, it must provide in?vestors with A) a forward-looking financial forecast.
B) an investment contract.
C) a prospectus.
D) samples of its products.
Q3) Most securities can be resold without registration.
A)True
B)False
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Page 44
Chapter 43: Administrative Agencies
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Q1) Personnel Employment, Inc., has been ordered to appear at a hearing be?fore an administrative law judge of the Social Security Administration. A significant difference between a trial and an administrative hearing is that
A) attorneys are not allowed to attend administrative hearings.
B) clients are not allowed to communicate with their attorneys dur?ing adminis?trative hearings.
C) hearsay can be introduced as evidence in an administrative hearing.
D) the burden of proof is on the charged party to prove innocence.
Q2) Grid Tools & Hardware Company is subject to a decision by the Consumer Product Safety Commission. Opposed to the decision, Grid Tools wants a court to review it. First, however, the firm must use all of the potential administrative remedies. This is
A) an actual controversy at issue.
B) standing to sue.
C) the exhaustion doctrine.
D) the ripeness doctrine.
Q3) Like statutory law, administrative law is created by legislatures.
A)True
B)False
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Chapter 44: Consumer Law
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Q1) Major credit reporting agencies must provide consumers with free copies of their own credit reports every six months.
A)True
B)False
Q2) The Consumer Product Safety Commission is the primary agency that issues regulations on food labeling.
A)True
B)False
Q3) Slow-Brew Coffee Company sells coffee and related beverages. The company's ad contends that ambitious businesspersons "Drink Us & Rise Up in the World!' " The Federal Trade Com?mission would consider this ad to be
A) false and misleading.
B) impermissibly vague and general.
C) a deceptive half-truth.
D) none of the choices.
Q4) Puffery constitutes deceptive advertising.
A)True
B)False
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Page 46
Chapter 45: Environmental Law and Sustainability
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Q1) Energy Resources, Inc., operates an oil refinery near Forest River, which flows into Grove Lake. Discharging oil from the refinery into the river can result in
A) penalties and damages.
B) penalties only.
C) damages only.
D) no penalties or damages.
Q2) Nashville, Tennessee, passes an ordinance to regulate waste disposal. The disposal of waste may also be regulated by
A) all other levels of government.
B) no other levels of government.
C) the federal government only .
D) the Tennessee state government only.
Q3) Businesses that engage in ultrahazardous activities are not liable for any injuries the activities cause.
A)True
B)False
Q4) Water-quality standards are set by the Environmental Protection Agency.
A)True
B)False
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Chapter 46: Antitrust Law
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Q1) Congress enacts a statute to outlaw a specific type of anticompetitive business agreement. Like other laws that regulate economic competition, this law is referred to as
A) a federal trade commission act.
B) an antitrust law.
C) an interstate commerce act.
D) a suppressive restraint on trade.
Q2) Big American Oil Company joins with a foreign cartel to control the price of oil. If the cartel has a substantial effect on U.S. commerce, a suit for violation of U.S. antitrust laws can be brought against
A) Big American Oil and the foreign cartel.
B) the foreign cartel.
C) Big American Oil.
D) all of the choices.
Q3) The relevant product market includes only products that, although produced by different firms, have identical attributes.
A)True
B)False
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Page 48
Chapter 47: Professional Liability and Accountability
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Q1) Under rules of professional misconduct, an attorney should not engage in conduct involving deceit.
A)True
B)False
Q2) Penalties for aiding or assisting in the preparation of false tax returns are limited to one penalty per taxpayer per tax year.
A)True
B)False
Q3) Root & Branch is a Registered Public Accounting Firm. Root & Branch performs auditing services for Sales & Service Company. Under the Sarbanes-Oxley Act of 2002, at the same time, for the same company, Root & Branch can also provide
A) bookkeeping and other services related to accounting records and financial statements.
B) none of the choices.
C) appraisal and valuation services.
D) financial systems design and implementation.
Q4) Professionals are governed by the contracts they enter into with their clients.
A)True
B)False
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Chapter 48: Personal Property and Bailments
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Q1) Simply finding something and holding onto it gives the finder legal rights in the property.
A)True
B)False
Q2) To be effective, a gift causa mortis must meet only two requirements: intent and acceptance.
A)True B)False
Q3) Einar owns a 1967 Ford Mustang, which Ginny customizes and details to Einar's specifications. The car earns an award at the Regional Motorsports Customizing Convention. The result of Ginny's efforts is
A) accession.
B) confusion.
C) conversion.
D) production.
Q4) In most bailments, the bailee can retain the goods given by the bailor and return equivalent property.
A)True B)False
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Chapter 49: Real Property Landlord-Tenant Law
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Q1) Buck owns five acres of land in California. On the land Buck has a house and a toolshed. There are ten large maple trees around the house. The real property includes A) the land only.
B) the land and the house only.
C) the land, the house, and the toolshed, but not the trees.
D) the land, the house, the toolshed, and the trees.
Q2) The exterior boundaries of land extend down to the depth of the deepest hole and up to the height of the tallest structure and no further.
A)True
B)False
Q3) For a party to take by adverse possession, the party's possession must be peaceable, and not hostile or adverse. A)True B)False
Q4) A quitclaim deed offers the most protection against defects in the title. A)True B)False
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Chapter 50: Insurance
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Q1) An insurance company may require an applicant to give the company permission to access the applicant's private medical records and credit ratings, for the purpose of evaluating the risk.
A)True
B)False
Q2) Lamont applies for a health insurance policy with MedInsure, Inc., an insurance company, through Netta, an agent who works for MedInsure. Lamont pays the initial premium. Netta writes a binder, which
A) acknowledges the application and promises to consider it.
B) attests to the truth of each statement in the application
C) evidences receipt of the payment of the initial premium.
D) indicates that a policy is pending and states its essential terms.
Q3) Grace applies for a homeowners' insurance policy on her house with Heroic Insurance Company through Ian, a broker. In this transaction, Ian is A) an agent for both parties.
B) Grace's agent, and not Heroic's agent.
C) Heroic's agent, and not Grace's agent.
D) not an agent for either party.
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Chapter 51: Wills and Trusts
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Q1) Jade signs an advance health directive that states what medical treatment may be used after a serious accident or illness. She indicates that she wants certain lifesaving procedures to be undertaken unless the treatment will not result in a reasonable quality of life. This is
A) a durable power of attorney.
B) a health-care power of attorney.
C) a living will.
D) a living trust.
Q2) A method of accomplishing a property transfer without a will is through the joint ownership of property.
A)True
B)False
Q3) A resulting trust arises from the conduct of the parties.
A)True
B)False
Q4) A testator may revoke a will by intentionally tearing it.
A)True
B)False
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