Law and Ethics in Business Final Test Solutions
Course Introduction
This course explores the intersection of legal and ethical principles in the business environment, providing students with a foundational understanding of the regulatory frameworks and moral considerations that influence organizational decision-making. Topics include contracts, torts, intellectual property, employment law, corporate governance, and consumer protection, as well as ethical theories and their application to contemporary business dilemmas. Through case studies and real-world examples, students develop critical thinking skills necessary to analyze, resolve, and communicate solutions to complex legal and ethical issues confronting businesses in a global context.
Recommended Textbook Business Law and the Legal Environment Standard Edition 8th Edition by Jeffrey F. Beatty
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Page 2
Chapter 1: Introduction to Law
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Q1) Wilfred was driving too fast for the icy road conditions and hit Sally's car.Sally can sue Wilfred in criminal court.
A)True
B)False
Answer: False
Q2) In order to determine if the case she was hearing broke the law,Judge Jane referred to prior rulings on the same subject.In other words,the judge is relying on precedent to make her decision.
A)True
B)False
Answer: True
Q3) A rule that establishes maximum length of work shifts for air traffic controllers demonstrates an agency imposing a regulation.
A)True
B)False
Answer: True
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Chapter 2: Ethics and Corporate Social Responsibility
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Q1) Researchers who study happiness find that good health,companionship,and enjoyable leisure activities all contribute more to happiness than money does.
A)True
B)False
Answer: True
Q2) The goal of utilitarian ethics is to
A)establish rules for why certain behaviors are ethical.
B)do the right thing,no matter the result.
C)produce the greatest good for the greatest number of people.
D)establish universal ethical rules that apply to all people.
Answer: C
Q3) Wever,Inc.is considering relocating a facility to Mexico.The interests of the various stakeholders affected by this decision may conflict.
A)True
B)False
Answer: True
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Chapter 3: International Law
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Q1) A binding process of resolving legal disputes by submitting them to a neutral third party is called
A)mediation.
B)arbitration.
C)investigation.
D)enforcement.
Answer: B
Q2) NAFTA is a trade agreement between the United States,Canada,and Mexico.
A)True
B)False
Answer: True
Q3) Which of the following administers the day-to-day operations of the United Nations?
A)The General Assembly
B)The Security Council
C)The President
D)The Secretariat
Answer: D
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Page 5
Chapter 4: Common Law, Statutory Law, and Administrative Law
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Q1) While at the park,Tasha saw a small child fall into the lake.Tasha did not know the child.Under the common law of most states,Tasha has a legal duty to take reasonable steps to assist the child if Tasha is able to help and such help will not jeopardize Tasha's well-being.
A)True
B)False
Q2) The majority of work done by legislative bodies is performed in committees.
A)True
B)False
Q3) Which statement is correct concerning judicial review of an administrative agency's action?
A)Courts usually accept the facts of the case as determined by the agency and often defer to the agency's interpretation of the law.
B)Courts conduct a de novo review of the case.
C)Courts ignore the facts of the case.
D)Courts substitute their opinion for that of the agency.
Q4) The largest source of new law comes from court decisions.
A)True
B)False
Page 6
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Chapter 5: Constitutional Law
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Q1) Identify the basic job of a President of the United States,the source of executive power,and three key powers associated with the position of President.
Q2) Hal was arrested for burning the U.S.flag in a protest of governmental policy.His action is protected under the First Amendment's guarantee of free speech because the flag burning is considered symbolic speech.
A)True
B)False
Q3) The primary source of federal power to regulate business is the A)Supremacy Clause.
B)Commerce Clause.
C)Contract Clause.
D)Privilege and Immunities Clause.
Q4) The doctrine of preemption is based on the Constitution's A)Commerce Clause.
B)Due Process Clause.
C)Equal Protection Clause.
D)Supremacy Clause.
Q5) Discuss the Miller test to determine if a creative work is obscene.
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Chapter 6: Dispute Resolution
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Q1) Emails and their attachments are not subject to pretrial discovery.
A)True
B)False
Q2) A summons is a paper ordering a defendant to appear in court at a certain time.
A)True
B)False
Q3) What is the primary trial court in the federal system?
A)Municipal Court
B)U.S.Supreme Court
C)U.S.Claims Court
D)U.S.District Court
Q4) Briefly describe the process of jury selection.
Q5) In alternative dispute resolution (ADR),most cases are resolved through A)litigation.
B)negotiation.
C)mediation.
D)lawsuits.
Q6) Generally,mandatory arbitration provisions in a contract are valid. A)True
B)False
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Chapter 7: Crime
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Q1) The fraudulent conversion of property which is already in the defendant's possession is
A)money laundering.
B)exclusion.
C)embezzlement.
D)trespassory taking.
Q2) Mary was suspicious of her neighbor,whom she thought was involved in selling illegal drugs.One day Mary arrived at her apartment and saw a large paper sack tied up with string in front of her neighbor's door.She took the bundle into her apartment,opened it,and discovered it was full of cocaine.She called the police and the neighbor was arrested.The neighbor's lawyer claimed the evidence had been illegally obtained since no probable cause existed to justify opening up the paper bundle.Is the lawyer's argument correct?
Q3) Taking a personal property without paying for it is a common type of larceny.
A)True
B)False
Q4) A crime is a violation of statutory law.
A)True
B)False
Q5) Explain the difference between civil law and criminal law.
Page 9
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Chapter 8: Intentional Torts and Business Torts
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Q1) Working out some frustrations after a bad game,Jessica angrily hits a baseball and then sees it is flying toward the umpire.She yells,"Watch out!" The umpire ducks and the ball misses him.Since there was no physical contact,no assault or battery occurred.
A)True
B)False
Q2) Don was standing in a cafeteria line holding a plate.Tim was upset with Don.Tim turned Don around and grabbed the plate out of Don's hand.Tim then held the plate up and threatened to break it over Don's head.Tim has committed
A)a battery,but not an assault.
B)an assault,but not a battery.
C)both an assault and a battery.
D)neither an assault nor a battery.
Q3) Ahmi was a witness in a lawsuit.When asked why he fired Rana,Ahmi replied,"Rana was fired for willful misconduct." Indeed,Rana had not engaged in any misconduct.Rana will be able to successfully sue Ahmi for defamation based on what Ahmi said in court.
A)True B)False
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Page 10
Chapter 9: Negligence, Strict Liability, and Product Liability
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Q1) Bob,a weak swimmer,ignored warning signs in a recreational swimming area and went into deep water.He soon grew tired and realized that he could not make it back to shore.Seeing Kelly,he cried out for help.Kelly,however,ignored the pleas.Bob was finally saved by Dorothy but suffered brain damage from being submerged during the ordeal.Bob now sues Kelly for negligence for failing to try to save him.Bob will A)prevail because society places a duty on people to help each other and Kelly breached this duty,resulting in Bob's injury.
B)lose because Kelly had no legal duty to rescue him.
C)lose even though Kelly had a legal duty to save him,since Bob will not be able to prove that Kelly's failure to act was the proximate cause of his injuries.
D)lose because a reasonable person could not have foreseen that someone in a recreation area could not swim well.
Q2) What is a principal factor in the risk-utility test?
A)the value of the product
B)the gravity of the danger
C)the likelihood that danger will occur
D)All of these are correct.
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11
Chapter 10: Privacy and Internet Law
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Q1) Musical Productions has a privacy policy posted on its website,but it does not follow the provisions contained within it.Musical Productions is in violation of
A)the CAN-SPAM Act.
B)the Communications Decency Act.
C)Section 5 of the FTC Act.
D)the Electronic Communications Privacy Act.
Q2) Burns Medicine Shop developed a website where customers could ask the pharmacists questions and could refill prescriptions online.What statute requires Burns to have and disclose a privacy policy to anyone using the website?
A)the FTC Act
B)the Electronic Communications Privacy Act
C)the Fair Information Practices Act
D)No statutes presently require websites to have or disclose a privacy policy.
Q3) At its inception,the Communications Decency Act of 1996 created broad immunity for internet service providers (ISPs)and websites.
A)True
B)False
Q4) What provisions are commercial email subjected to under the CAN-SPAM Act?
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Page 12
Chapter 11: Introduction to Contracts
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Q1) Which of the following represents a unilateral offer?
A)"I will pay you $50 if you mow my lawn."
B)"I will pay you $50 if you promise to trim that tree."
C)"I will pay you $50 for your CD player."
D)"I will pay you $50 for your backpack."
Q2) Madison purchases several 50-pound bags of mulch at the local gardening store.An employee carries the bags of mulch to Madison's truck and loads them into the back for her.Will Article 2 of the UCC govern the contract in this situation?
A)No,this is a mixed contract because Madison is paying for both goods and labor.
B)Yes,because the primary purpose of this contract is the sale of goods.
C)No,this is an express contract because both parties explicitly state their intentions.
D)Yes,because Article 2 of the UCC governs all bilateral contracts.
Q3) List and briefly describe the seven key characteristics that must be present for a contract to be enforceable.
Q4) All oral contracts are quasi-contracts until they are completely executed.
A)True
B)False
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Chapter 12: Agreement: Offers and Acceptances
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Q1) Briefly discuss how an offer can be accepted.Include in your answer the application of the mirror image rule.
Q2) The intent of the offeror to extend an offer to the offeree is generally determined by reference to
A)the beliefs of the offeror.
B)the subjective intention of the offeror.
C)the assumptions of the offeror.
D)the words and conduct of the offeror.
Q3) Which of the following offers are considered to be irrevocable for a given period?
A)Firm offers.
B)Option contracts.
C)A writing signed by a merchant offering to hold open an offer for the sale of goods for a stated period.
D)All of these are correct.
Q4) Discuss the effect of the Uniform Commercial Code on the law of sales contracts in the area of open terms.
Q5) What elements are necessary for an offer to be valid? Give two examples of nonoffers.
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Chapter 13: Consideration
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Q1) Courts distinguish between mere gifts between parties and legally binding commitments by the element of consideration.
A)True
B)False
Q2) Juan agrees to paint Michelle's house for $1,000.Halfway through the job,Juan tells Michelle that he will need an extra $250 to finish the job.Which of the following is a correct evaluation of the situation?
A)Michelle will have to pay because she and Juan did not have a bargained-for exchange.
B)Michelle will have to pay the extra $250 because Juan has promised not to finish the job unless she does.
C)Michelle will not have to pay the extra $250 because Juan made an illusory promise about only charging $1,000.
D)Michelle will not have to pay the extra $250 because Juan has a preexisting duty to paint the house for $1,000.
Q3) Agreeing not to open a competing business could be consideration.
A)True
B)False
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Chapter 14: Legality
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Q1) A court is unlikely to enforce the non-compete agreement Kelly and Amber signed because of which of the following clauses?
A)Kelly agrees not to work for a competitor for two years.
B)Kelly agrees not to work for a competitor within a 10-mile radius of Amber's business.
C)Kelly agrees to go into a completely different line of work than Amber.
D)All of these are correct.
Q2) Morality plays no part of gambling contract legality.
A)True
B)False
Q3) An exculpatory clause is generally unenforceable when
A)it attempts to release a party from liability for ordinarily negligent behavior.
B)it involves public transportation.
C)it is written clearly and in bold,large print.
D)the affected activity is a recreational activity.
Q4) A gambling contract is illegal unless it is a type of wagering specifically authorized by state statute.
A)True
B)False
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Page 16
Chapter 15: Voidable Contracts: Capacity and Consent
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Q1) Mrs.Elsley was an elderly woman who relied on Nancy to visit her every day and prepare her meals.Nancy convinced Mrs.Elsley that she should give Nancy her house so they could live together and Nancy could better care for her,although Nancy really just wanted the house and had no intention of moving in to take care of Mrs.Elsley.Although Mrs.Elsley agreed,she may rescind the contract because of undue influence.
A)True
B)False
Q2) Deborah purchased a boat from Sun 'N Surf Marine.She later learned that the salesman had made misrepresentations to induce her to make the purchase.Under UCC Section 2-721,Deborah can rescind the contract
A)only if the misrepresentation was fraudulent.
B)and sue for damages if the misrepresentation was fraudulent.
C)but cannot sue for damages even if the misrepresentation was fraudulent.
D)but must forego all other remedies.
Q3) Reed,a 15-year-old,has run out of money while on a trip away from home.Martha gives him food,a place to sleep,and his bus fare home,in exchange for Reed's promise to pay $200 after he got home.Is Reed's promise enforceable?
Q4) Discuss the meaning of "material fact" in fraud situations.
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Chapter 16: Written Contracts
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Q1) J.T.Tidwell entered into an oral contract with Robert Anthony for the purchase of 100 head of cattle at a price of $500 each.When the oral contract was made,Tidwell gave Anthony a check for $1,000 as "earnest money or good faith money towards the purchase of the cattle." Anthony sold the cattle to someone else.Tidwell sued,asking the court to either compel Anthony to perform the contract or to pay damages that Tidwell suffered from the alleged breach of contract.What issues do you see and how would you resolve those issues?
Q2) The Uniform Electronic Transmission Act (UETA)
A)declares that a contract or signature may not be denied enforceability just because it is in electronic form.
B)declares that e-signatures are invalid.
C)creates a safe cyberspace environment in which business communications cannot be intercepted or fraudulently altered.
D)has only been adopted in a handful of states.
Q3) Ramona,age 42,orally agreed to work for Brahma,Inc.for the rest of her life for $50,000 per year.This agreement would not be enforceable since it violates the one-year rule of the Statute of Frauds.
A)True
B)False
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Page 18
Chapter 17: Third Parties
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Q1) If Velma,as a birthday present,assigns to Jim her contractual right to collect $50 from Wood Co. ,this would be a gratuitous assignment.
A)True
B)False
Q2) A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.Under this arrangement the rock group is the A)assignor.
B)assignee.
C)delegator.
D)delegatee.
Q3) Once a duty is delegated,it relieves the delegator of his or her own liability to perform the contract.
A)True
B)False
Q4) Most types of duties may be delegated.
A)True
B)False
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Chapter 18: Contract Termination
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Q1) What is the key to all conditional clauses?
A)If a condition in a contract does not occur,public policy will require only substantial performance by the party for whom the condition failed.
B)If a contract contains a conditional clause,the requirement of good faith will be eliminated.
C)If a condition in a contract does not occur,one party will probably be discharged without having to perform his or her obligations under the contract.
D)If a contract contains a conditional clause,it must be expressly written with specific language.
Q2) The statement,"You will have a job with Snelling & Snelling as long as you complete your degree in business administration this May" does not create a condition because it does not include the phrase "provided that."
A)True
B)False
Q3) The legal right to sue for a breach of contract is subject to a statute of limitations.
A)True
B)False
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20
Chapter 19: Remedies
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Q1) The remedy of reformation
A)applies only when money damages are inadequate.
B)can be used to correct mistakes in the original contract.
C)is available only if fraud is involved.
D)is a commonly used remedy.
Q2) Which of the following statements concerning liquidated damages is NOT TRUE?
A)A liquidated damages clause will be enforced,if,when the contract was made,it was difficult to estimate actual damages.
B)The amount of liquidated damages must be a reasonable estimation of the actual harm resulting from a breach.
C)Nominal damages are not the same thing as liquidated damages.
D)Liquidated damages are enforceable even if the amount is considered to be a penalty on the breaching party.
Q3) Nominal damages are awarded in contract cases in which a damage amount was named in the contract.
A)True
B)False
Q4) Identify and describe the principal contract interests a court may seek to protect.
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Chapter 20: Practical Contracts
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Q1) Which of the following is NOT one of the three ways to amend a written contract?
A)by writing and signing an amendment (or rider)
B)by verbally agreeing to the changes and shaking hands on the deal
C)by crossing out the mistakes and writing in the corrections
D)by writing a totally new contract with the correct provisions
Q2) Rich and Archie sign an agreement in which Archie agrees to deliver ten cases of champagne in 5 days.The parties negotiated and meant to say in the written agreement,delivery in 50 days.If the evidence is clear that the two parties intended to agree to 50 days,the courts will probably
A)reform the contract.
B)rescind the contract.
C)issue a warranty.
D)issue a covenant.
Q3) Ambiguities in contracts are always interpreted in favor of the party who wrote the contract,since he or she is the one who knows what the provision is supposed to mean.
A)True
B)False
Q4) Outline the parts of a typical contract.
Q5) Define and compare the terms "vagueness" and "ambiguity."
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Chapter 21: Introduction to Sales
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Q1) Megan agrees to sell Nancy her Rolex watch,but she does not specify a price.In such a case,the court would not enforce the agreement because all of the essential terms are not present.
A)True
B)False
Q2) Which of the following contracts requires a writing under the UCC,Article 2?
A)Jeremy,a full-time student,sold his snow blower to a friend for $450.
B)Kayla,a full-time student,purchased a used computer from Office Plus for $300.
C)A toy manufacturer contracted to sell dolls valued at $10,000 to a department store.
D)Tobias Department Store contracted to sell Jenny a $400 doll.
Q3) Lorene,an artist,orally agrees to sell Sabrina a painting for $600.While Lorene is busy talking on the phone,Sabrina writes her a note on the back of an envelope she finds in her purse.The signed note states that she will stop by the studio to pick up the painting within the week.Sabrina changes her mind about the painting,and when Lorene sues to enforce the contract,Sabrina defends on the basis of the Statute of Frauds.Sabrina will succeed with this defense.
A)True
B)False
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Chapter 22: Ownership, Risk and Warranties
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Q1) Mason bought a rotisserie in preparation for a party he was planning.When he put a chicken on the rotisserie,it would not rotate,but stayed in one position where it burned the chicken on one side and left it raw on the other.When he returned the rotisserie to the store,the salesperson disclaimed any responsibility because he had never told Mason the rotisserie would rotate the food as it cooked.Does Mason have any recourse?
A)No,the salesperson did not make any express warranties.
B)Yes,the salesperson made an express warranty just by selling the goods.
C)Yes,although the salesperson did not make any express warranties,the UCC imposes an express warranty on the sale.
D)Yes,although the salesperson did not make any express warranties,the UCC imposes an implied warranty of merchantability under which the rotisserie is guaranteed to be fit for the ordinary purposes for which it is used.
Q2) The statute of limitations for breach of warranty under the UCC is
A)one year.
B)two years.
C)three years.
D)four years.
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Page 24
Chapter 23: Performance and Remedies
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Q1) Which is an example of a repudiation?
A)Jaime orders goods to be delivered on May 1;the company does not deliver the goods until May 15.
B)Darlene offers to sell her car to Brian for $5,000;Brian tells Darlene he will give her $4,000 for the car.
C)Max places an order for five custom-made shirts;two hours later,he changes his mind and notifies the shirt company that he will not pay for the shirts if they are sent.
D)Venus orders 100 silk dresses,which she plans to resell;when the order arrives,she finds the dresses are made of cotton,so she refuses to pay for them.
Q2) Neon orders one thousand 25-foot nylon ropes from Hang'em High Co.Upon inspection of the delivery,Neon learns that Hang'em sent five hundred 25-foot ropes and five hundred 20-foot ropes.Neon may
A)demand that Hang'em send 500 additional 25-foot ropes and get to keep the 20-foot ropes as well.
B)accept the 500 conforming ropes and reject the 500 nonconforming ropes.
C)seek an installment contract.
D)immediately "cure" by finding a substitute product.
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Chapter 24: Secured Transactions
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Q1) Great State Bank loans money to Seth,securing the loan with property owned by Seth.Great State Bank is advised by its attorney to file a financing statement.Great State Bank doesn't understand why it should spend the extra money for this filing,since Seth has told them that he has no other creditors.Why should Great State Bank file a financing statement?
A)There are criminal penalties for failing to file.
B)The financing statement allows Great State Bank to repossess the collateral on default without a court order.
C)The financing statement will protect Great State's priority rights with other creditors by giving notice to other creditors that it claims a security interest in the collateral.
D)Filing the financing statement is necessary to complete the attachment requirement in order to create a security interest.
Q2) The initial term for which a financing statement will be effective is
A)one year.
B)five years.
C)ten years.
D)two years.
Q3) Explain the difference between attachment and perfection.
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Chapter 25: Creating a Negotiable Instrument
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Q1) Matt wrote a $500 check to Alistar for some yard work that Alistar had done.What will Alistar have to do negotiate this instrument to Totally Tough,Inc.in payment for some yard equipment Alistar had bought?
Q2) A possessor of non-negotiable commercial paper has the same rights as the person who made the original contract.
A)True
B)False
Q3) Because negotiable instruments are more valuable than non-negotiable ones,it is important for buyers and sellers to be able to tell,easily and accurately,if an instrument is indeed negotiable.What six standards must an instrument meet in order for it to be negotiable?
Q4) A & D,Inc.wrote a negotiable note payable to Vicy,Inc.for the purchase of some satellite receivers.A & D left the amount of the note blank because it was uncertain as to amount of the applicable tax.Vicy completed the note for $3,000 more than A & D actually owed for the receivers it purchased.The note was negotiated to a holder in due course.A & D will not have to honor the note as this constituted fraud in the execution.
A)True
B)False
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Page 27
Chapter 26: Liability for Negotiable Instruments
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Q1) When signing a company check,an agent must clearly indicate that he or she is signing on behalf of the company in order to be free of liability.
A)True
B)False
Q2) Lana wrote a check knowing that she did not have sufficient funds in her account.What is this practice called?
A)check kiting
B)bouncing a check
C)check forgery
D)check covering
Q3) James Packard,a lawyer representing Robert Marino,received a check for $16,000 in settlement of Robert's case.Instead of turning over the money to Robert or putting it into a trust fund for him,James forged Robert's indorsement and deposited the money into his own account without notifying Robert.Discuss the claims the parties have.
Q4) Conversion means that someone has stolen an instrument or a bank has paid a check that has a forged indorsement.
A)True
B)False
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Chapter 27: Accountants Liability
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Q1) Fast Auditors prepared audited financial statements for Mega Company's registration statement in compliance with the 1933 Securities Act.John bought stock in Mega Company.It was discovered that the financial statements prepared for the registration statement contained some important omissions.John sued Fast Auditors to recover his investment when Mega Company turned out to be a bad investment.What must John prove to recover from Fast Auditors?
Q2) Adam claimed that N & A,its accounting firm,negligently prepared an audit.To hold the accounting firm liable,which of the following elements must be established?
A)scienter or guilty knowledge
B)a fiduciary relationship
C)failure to exercise due care
D)an executed engagement letter
Q3) If a plaintiff is successful in proving that an auditor has violated Section 10(b)of the 1934 Securities Exchange Act,the auditor has
A)primary liability.
B)secondary liability.
C)contingent liability.
D)rebuttable liability.
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Chapter 28: Agency Law
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Q1) Janelle has an art collection that she wants to sell.She calls Amber and tells her to sell the art collection for her at an upcoming auction.Amber agrees.This is an example of A)apparent authority.
B)respondeat superior.
C)intermediary agency.
D)express authority.
Q2) Circus Pizza contracted with Art to run its birthday parties.Art's responsibilities included supervising the children and organizing the games.Circus did not investigate Art's background,which included a history of assaulting children.Art assaulted a 7-year-old girl in the restaurant's kitchen during a birthday party.Circus Pizza
A)cannot be liable for the damages because Art committed an unforeseeable intentional tort.
B)cannot be held liable for the damages because Art's conduct was not in the scope of employment.
C)may be held liable on the basis of negligent hiring.
D)may be held liable only if Circus actually knew of Art's background.
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Chapter 29: Employment and Labor Law
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Q1) Which of the following laws provides support to unemployed workers?
A)FUTA
B)OSHA
C)FLSA
D)NLRA
Q2) In the absence of a specific law to the contrary,employers have the right to fire workers for off-duty conduct.
A)True
B)False
Q3) Employees of Mega Corp.have gone out on strike seeking better pay.Mega Corp.announces that if the union does not end the strike,it will begin hiring replacement workers.Which statement is correct?
A)Hiring replacement workers during a strike is an unfair labor practice.
B)Mega Corp can only hire replacement workers if the collective bargaining agreement expressly gives the company the right to do so.
C)Mega Corp can only hire replacement workers if it gives the union 14 days' notice prior to actually bringing in the replacement employees.
D)Mega Corp can hire replacement workers at any time during a strike.
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Chapter 30: Employment Discrimination
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Q1) What accommodations might an employer be expected to make for a disabled employee? What standard is used to determine whether an employer would be expected to make these accommodations?
Q2) Which of the following is TRUE about affirmative action?
A)Affirmative action is required by Title VII.
B)Affirmative action is prohibited by Title VII.
C)Affirmative action is allowed in government contracts if it can show the programs are needed to overcome specific past discrimination.
D)Affirmative action programs are usually voluntary on the part of employers,since courts have no power to order remedies for past discrimination.
Q3) Under which circumstances would the EEOC consider obesity to be a disability?
A)only if it has an underlying physiological cause
B)only if the individual is morbidly obese
C)if it has an underlying physiological cause and/or if the individual is morbidly obese
D)being overweight is not considered a disability under any circumstances
Q4) What is the process for filing a suit under Title VII of the Civil Rights Act?
Q5) Discuss the two categories of sexual harassment.
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Page 32
Chapter 31: Starting a Business: Llcs and Other Options
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Q1) Franchise fees can be costly,but they are usually payable over a number of years,after profits are generated from the business.
A)True
B)False
Q2) Which is true of an S corporation?
A)There can be no more than 50 shareholders.
B)There can be only one class of stock.
C)A majority of shareholders must agree the company should be an S corporation.
D)All of these are correct.
Q3) Charles and Ellen,an unmarried couple,run an ice cream store.The business is not incorporated,and they have filed no formation papers with the state.Their business is a A)sole proprietorship.
B)partnership.
C)franchise.
D)limited liability company.
Q4) Generally,a joint venture is a partnership created for one limited purpose.
A)True
B)False
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33
Chapter 32: Partnerships
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Q1) Doyle contributed $10,000 when he became a general partner in the existing partnership of R & Z Heating.If Albert wins a judgment for $25,000 against R & Z on a claim that was incurred before Doyle became a partner,Doyle shares joint and several liability with his new partners for the whole obligation.
A)True
B)False
Q2) Gary and Herman are partners in a lawn mower repair business in Ohio.While Gary is on vacation,visiting his sister in Georgia,his sister's neighbor has trouble with her mower and Gary fixes it for her.She insists on paying him.Gary
A)may keep the payment since he did the work while he was on vacation.
B)must turn the money over to the partnership because he earned it doing the kind of work that the partnership does.
C)may not accept the money because it would create a conflict of interest.
D)may not accept the money because it would mean he was taking a business opportunity away from the partnership.
Q3) A partner always has the right,though not the power,to leave a partnership.
A)True
B)False
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Chapter 33: Life and Death of a Corporation
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Q1) A corporation is required to have at least one director,no matter how many shareholders it has.
A)True
B)False
Q2) Mike is planning on incorporating his business in the state of Delaware.Which of the following regarding the name of Mike's business is TRUE?
A)He will be able to use the words "Association" or "Institute" in his company name.
B)He will not be able to use abbreviations (such as Inc.or Corp. )in his company name.
C)His company name will not have to include one of the following words: Corporation,Incorporated,Company or Limited.
D)His company name can be the same as another corporation that already exists in Delaware.
Q3) When a corporation accepts legal responsibility for a contract,it is called novation. A)True
B)False
Q4) What are some of the advantages for a business to incorporate in Delaware?
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Chapter 34: Management Duties
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Q1) What is the definition of the business judgment rule?
Q2) Major Corporation wants to acquire control of Forte Company.What are some legal steps Forte can take to resist a hostile takeover?
Q3) Discuss the purposes of the business judgment rule.
Q4) The Williams Act regulates the conduct of the target company in a takeover situation.
A)True
B)False
Q5) Amy is on the board of directors of Computers Plus.Computers Plus is looking for a warehouse to purchase.Amy owns a warehouse.In order for Amy to sell her warehouse to Computers Plus,
A)the transaction must be fair to both Amy and Computers Plus.
B)the disinterested members of the board of directors must approve the transaction.
C)she must resign her position on the board of directors of Computers Plus before any negotiations for the warehouse begin.
D)a court must review the opportunity to determine its favorability.
Q6) List and discuss the three ways to acquire control of a corporation.
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Page 36
Chapter 35: Shareholder Rights
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Q1) Loraine is a shareholder of Taley Corp.She would like to inspect and copy the company's minute book,accounting records,and shareholder lists.Under what circumstances is Loraine allowed to inspect or copy corporate records?
Q2) At least once every three years,companies must take a nonbinding shareholder vote on the compensation of the five highest-paid executives.This is referred to as A)clawback pay action.
B)voting out the directors.
C)activist investing.
D)say-on-pay.
Q3) A "fundamental change" in a corporation would be illustrated by
A)E-prise,Inc.merging with Vitta Corporation.
B)E-prise electing new members to the board.
C)Vitta Corporation adding a new product to its product line.
D)Vitta Corporation setting the date for its annual meeting.
Q4) Matt,a shareholder,can run for director by simply placing his name on the company's proxy statement.
A)True
B)False
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Page 37
Chapter 36: Bankruptcy
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Q1) Individual debtors are allowed to keep some assets in a Chapter 7 bankruptcy.
A)True
B)False
Q2) Which of the following statements concerning a Chapter 11 reorganization plan is true?
A)A reorganization plan will be confirmed by the court only if a majority of each class of creditors votes in favor of the plan.
B)A reorganization plan can be confirmed by the court over objections of some creditors if the court determines that the plan is feasible and fair.
C)Only the bankruptcy court has the authority to confirm or reject the reorganization plan.Creditors do not have a right to vote on the plan.
D)A reorganization plan binds only the debtor and not the creditors.
Q3) Peggy's credit card debts are mounting as her costs of insurance and fuel have dramatically increased and her income,from sporadic freelance jobs,has dropped.Chapter 13 of the Bankruptcy Code will allow her to reorganize her debt while she keeps most of her assets.
A)True
B)False
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Chapter 37: Securities Regulation
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Q1) Which of the following is a characteristic of a restricted security?
A)It is purchased in a private offering.
B)It cannot be sold at any time.
C)It is subject to reporting requirements.
D)After six months,it is classified as a control security.
Q2) The Fallwater Partnership wants to incorporate and is considering using a DPO.Explain what a DPO is and discuss the advantages and disadvantages of this course of action.
Q3) Ed,a vice-president of Palmette Products,Inc. ,buys 1,000 shares of his company's stock on June 15.His son has medical problems in September,and Ed sells the stock at a profit.Under Section 16,Ed
A)must turn over to Palmette any profits he made on the sale.
B)may keep any profits on the sale since he had a good reason to sell and was not selling in order to manipulate the market.
C)may keep the profits from the sale as long as he reported his sale to the SEC within two business days.
D)may keep any profits from the sale if he did not act on secret information when he sold the shares.
Q4) Discuss the process an issuer follows for either an IPO or a secondary offering.
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Chapter 38: Antitrust
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Q1) A vertical merger involves companies at different stages of the production process.
A)True
B)False
Q2) Two universities located within 30 miles of each other agree to allocate their customers so as to help them both.The two schools draw a line down a map,and each university agrees to accept students only on their side of the line.What type of horizontal cooperative strategy does this represent?
A)market division
B)refusal to deal
C)reciprocal dealing
D)joint venture
Q3) If competitors act in concert but without an explicit agreement,they are engaged in A)a tying arrangement.
B)monopolization.
C)reciprocal dealing.
D)conscious parallelism.
Q4) Discuss when monopoly power is not a violation of Section 2 of the Sherman Act.
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Chapter 39: Consumer Protection
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Q1) Mabel is a single 40-year-old who has borrowed money on numerous occasions.Her payment record has been good,except she has been delinquent in paying a few bills.Which of the following is true regarding credit information gathered on Mabel?
A)Since Mabel has been delinquent,she waives her right to see the credit files.
B)If Mabel is rejected for a loan because of the consumer report,the lender must tell her the source of the report.
C)Mabel has a right to have the information regarding her delinquency in paying a few loans stricken from her credit record because her record has generally been good.
D)Mabel's only legal remedy,if there is erroneous information in her credit file,is to report the problem to the FTC for enforcement.
Q2) Under the TILA,a qualified mortgage (QM)
A)limits upfront points and fees to 5 percent.
B)limits all of a borrower's debt to 43 percent of his or her income.
C)allows balloon payments only if the borrower agrees up front.
D)must allow for negative amortization.
Q3) What are the three tests or elements used by the FTC to determine whether a particular act is an unfair trade practice?
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Chapter 40: Environmental Law
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Q1) The disposal of nonhazardous solid waste is
A)generally regulated by state law,but the federal government sets guidelines that must be followed.
B)the only area of environmental concern that has yet to be regulated by federal action.
C)completely governed by federal administrative law.
D)currently the subject of great debate since the federal government has declared such activity falls under the Endangered Species Act and,therefore,a small annoying fly known to frequent landfills must be protected.
Q2) What was at issue in the Michigan v.EPA case?
A)a determination as to whether climate change is "real"
B)a provision directing the EPA to regulate power plant emissions if appropriate and necessary
C)the legality of implementing the Paris Accord
D)whether the CWA should cover all navigable waters in the United States
Q3) The EPA will allow individual states' air pollution level to rise as long as it still meets the EPA's existing national standards.
A)True
B)False
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Chapter 41: Intellectual Property
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Q1) Explain what a trademark is,and list the four different types of "marks" that can be protected under trademark law.Explain how each mark is used.
Q2) A trademark lasts for A)20 years after the application is filed.
B)70 years after the death of the creator.
C)10 years,but it can be renewed for an unlimited number of terms as long as it is used. D)as long as it is kept confidential.
Q3) James and his band played a very familiar song.However,they made up different words for the song that were intended to be funny.James's version of the popular song with different words is known as a A)knock off.
B)parody.
C)mockarama. D)link.
Q4) Identify the main provisions of the Digital Millennium Copyright Act.
Q5) Derrick buys a CD but,after listening to it,decides he doesn't like the music.May he legally sell the CD to someone else? If he thinks his cousin would enjoy the music,may he legally copy the CD for her?
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Chapter 42: Real Property and Landlord Tenant Law
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Q1) Which of the following is a possessory interest in land?
A)fee simple absolute
B)easement
C)profit
D)license
Q2) Carlos conveys his property "to Noah for life,then to Maxie." Noah has a life estate,and Maxie has a remainder.
A)True
B)False
Q3) Louie subdivides his oceanfront property with a boat ramp and sells several parcels that do not reach the ocean,promising all purchasers use of the boat ramp.Bernie buys one of the parcels.His right to enter Louie's property to reach the boat ramp is
A)an easement by implication.
B)a profit appurtenant.
C)an easement by reservation.
D)a profit in gross.
Q4) Sandra and Joe own a hobby farm as tenants in common.They also own a vacation home as joint tenants.What is the difference between the tenancy in common and joint tenancy?
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Chapter 43: Personal Property and Bailment
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Q1) Most of the goods contained in a freight train (a common carrier)were destroyed when a tornado wrecked the train.The carrier was sued for damages by all the shippers that had merchandise on the train.Is the carrier strictly liable for the damage done to the goods by the tornado?
Q2) After a meeting with his advisor to register for a class at State University,Ron forgot his calculator in the dean's outer office.Theresa,another student,found the calculator.The calculator is treasure trove and Theresa may keep it.
A)True
B)False
Q3) Stephen wants to give his niece,Dawn,a piece of jewelry as a gift.Stephen gives Tracy,his agent,the bracelet to take to Dawn.The delivery element of making a gift has been completed.
A)True
B)False
Q4) While shopping at the mall,Everett's wallet fell out of his pocket.Jon found the wallet.The wallet is abandoned property and Jon may keep it.
A)True
B)False
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Chapter 44: Planning for the Future: Wills, Trusts and Insurance
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Q1) Property of a person who dies without a will is distributed according to intestacy laws. A)True
B)False
Q2) Darcy buys a life insurance policy on her own life,under which she pays the annual premiums.The insurance is issued for a specific period,but is renewable for similar periods.Darcy is covered only as long as she makes the payments.There is no cash value portion to the policy.Darcy probably owns
A)whole life insurance.
B)key-person life insurance.
C)term life insurance.
D)an annuity.
Q3) Which type of automobile insurance covers the cost of damage caused by fire,theft,or vandalism?
A)liability insurance
B)comprehensive insurance
C)collision insurance
D)uninsured motorist insurance
Q4) Discuss the differences between a will and a trust.
Q5) Identify four ways a trust can be terminated.
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