Law for Managers Exam Review
Course Introduction
Law for Managers is designed to provide future business leaders with a foundational understanding of the legal principles and frameworks that directly impact managerial decision-making. The course covers key topics such as contract law, employment law, intellectual property, corporate governance, and dispute resolution, with a focus on real-world applications relevant to day-to-day business operations. Students will analyze case studies, examine the implications of regulatory compliance, and learn how to identify and mitigate legal risks in a business context, equipping them with the knowledge to make informed and ethical managerial choices.
Recommended Textbook
Andersons Business Law and the Legal Environment Comprehensive 23rd Edition by Twomey
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51 Chapters
2716 Verified Questions
2716 Flashcards
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Chapter 1: The Nature and Sources of Law
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Sample Questions
Q1) The common law are court-enforced unwritten principles originally based on the usages and customs of the community.
A)True
B)False
Answer: True
Q2) A ______ is a legal principle expressed for the first time in court decision.
A) statutory law
B) stare decisis
C) case law
D) precedent
Answer: D
Q3) A constitution is a body of principles that establishes the structure of a government and the relationship of that government to the people who are governed.
A)True
B)False
Answer: True
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Chapter 2: The Court System and Dispute Resolution
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57 Verified Questions
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Sample Questions
Q1) Documents filed by both parties at the beginning of a lawsuit are called the pleadings.
A)True
B)False
Answer: True
Q2) The types of civil cases that a private citizen can file in federal district courts include:
A) cases in which any state in the United States is one of the parties.
B) cases between citizens of different states that involve damages of $75,000 or more.
C) cases brought by the citizen of one state against the state government of the same state.
D) criminal charges against a state representative.
Answer: B
Q3) The decision of an association tribunal is binding on both the association member and the consumer.
A)True
B)False
Answer: False
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Chapter 3: Business Ethics, Social Forces, and the Law
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52 Verified Questions
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Sample Questions
Q1) In addition to issues of social responsibility, business values and ethics play an important role in the success or failure of a business.
A)True
B)False
Answer: True
Q2) Despite the importance of ethical behavior for business success, few Fortune 500 companies have codes of ethics to resolve ethical dilemmas.
A)True
B)False
Answer: False
Q3) Differences among businesses preclude the development of any universal categories of ethical behavior.
A)True
B)False
Answer: False
Q4) Moral relativists solve ethical dilemmas according to time and place.
A)True
B)False
Answer: True
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Chapter 4: The Constitution As the Foundation of the Legal Environment
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Sample Questions
Q1) A strong President is one of the characteristics of a "living Constitution."
A)True
B)False
Q2) The power of the states to adopt laws to protect the general welfare of the people is called ex post facto.
A)True
B)False
Q3) The commerce clause of the Constitution:
A) prohibits the U.S. government from engaging in interstate commerce.
B) prohibits the U.S. government from regulating interstate commerce.
C) has been expanded by Supreme Court interpretations to give the U.S. government the power to regulate the general welfare of the nation.
D) was declared unconstitutional in 1937.
Q4) In a "bedrock view" the Constitution is merely a statement of goals and objectives, intended to grow and change with time.
A)True
B)False
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Chapter 5: Government Regulation of Competition and Prices
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Sample Questions
Q1) Section __________ of the Sherman Act applies to agreements, conduct, or conspiracies to restrain trade, which can consist of price-fixing, typing, and monopolization.
A) A
B) B
C) 1
D) 2
Q2) Under the Robinson-Patman Act, wholesalers may give new distributors free advertising and other services to help them compete with other distributors who have been doing business for a number of years and have become firmly established.
A)True
B)False
Q3) A manufacturer having a restriction on territories in the form of a sole outlet is a per se violation.
A)True
B)False
Q4) Boycotts are always illegal, even when done with good intentions.
A)True
B)False
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Chapter 6: Administrative Agencies
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58 Flashcards
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Sample Questions
Q1) Meetings are to be open to the public under:
A) the Administrative Protection Act.
B) the Sunshine Act.
C) the Freedom of Information Act.
D) the Administrative Procedure Act.
Q2) The Freedom of Information Act provides access to any information upon request.
A)True
B)False
Q3) Wilma was an employee of the Electric Storage Battery Company. She was fired. She claimed that she was fired because she was a member of a labor union. The employer asserted that she was fired because she was a poor worker. Wilma filed an unfair labor practice complaint with the National Labor Relations Board. Its examiner held a hearing at which evidence was presented showing that Wilma was a poor worker. Other evidence presented showed that the employer was opposed to labor unions. The Board decided to believe Wilma's witnesses and concluded that she had been fired because she belonged to the union. Can the employer appeal this decision?
Q4) An agency hearing is generally not subject to the rules of evidence.
A)True
B)False
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Chapter 7: Crimes
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Sample Questions
Q1) In a prosecution for unauthorized use of computers, unsecure _______ has proven to be a challenge in prosecution for unauthorized use of computer information.
A) economic espionage
B) diverted delivery
C) computer raiding
D) wi-fi networks
Q2) Crimes are classified as common law or statutory according to their origin.
A)True
B)False
Q3) For nonbusiness crimes, only those who are actually involved in the act itself can be convicted of the crime.
A)True
B)False
Q4) "Mental state" does not require an awareness of guilt.
A)True
B)False
Q5) Because a corporation is not a human being, it cannot be convicted of a crime.
A)True
B)False
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Chapter 8: Torts
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Sample Questions
Q1) U.S. Senator Jones enjoys an absolute privilege when she is speaking on the floor of the Senate.
A)True
B)False
Q2) Assault is the intentional, wrongful touching of another person without that person's consent.
A)True B)False
Q3) For tort liability to be imposed, the perpetrator of the tort must have acted with the intent to do wrong.
A)True
B)False
Q4) Causing someone's character to be questioned is a wrong against the person and is the tort of defamation.
A)True B)False
Q5) Governments are generally immune from tort liability.
A)True B)False
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Chapter 9: Intellectual Property Rights and the Internet
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Sample Questions
Q1) Trademark law categorizes marks along a spectrum of ______, based on a mark's capacity to serve ______.
A) suggestiveness, the characteristics of the service to which they relate.
B) fancifulness, the characteristics of the product to which they relate.
C) descriptiveness, a source-identifying function.
D) distinctiveness, a source-identifying function.
Q2) Descriptive terms such as locations and colors are never subject to trademark protections.
A)True
B)False
Q3) Trademarks and service marks are recorded with the Register of Copyrights.
A)True
B)False
Q4) To analyze a copyright infringement claim in the context of computer programs, courts will primarily examine:
A) the total number of program steps that are substantially similar.
B) the number of significant program steps that are substantially similar.
C) whether the programs appear substantially similar in ordinary language.
D) whether the programs appear substantially similar in machine language.
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Chapter 10: The Legal Environment of International Trade
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Sample Questions
Q1) Licensing involves the transfer of title of goods to a distributor who bears the financial and commercial risks for the subsequent sale of the goods.
A)True
B)False
Q2) The United Nations Conventions on Contracts for the International Sale of Goods (CISG) sets forth uniform rules to govern international sales contracts.
A)True
B)False
Q3) Parties to international ventures often agree to arbitrate their disputes in neutral countries.
A)True
B)False
Q4) Under the act-of-state doctrine, the courts of one country will not sit in judgment of the acts of the government of another country conducted within its own territory.
A)True
B)False
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Chapter 11: Nature and Classes of Contracts: Contracting on
the Internet
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Sample Questions
Q1) Negotiable instruments are:
A) formal contracts.
B) informal contracts.
C) option contracts.
D) first-refusal agreements.
Q2) An option contract gives one of the parties an absolute right to enter into a second contract at a later date.
A)True
B)False
Q3) The greatest risk to purchasing online is providing your credit card information to the seller.
A)True
B)False
Q4) The principle behind the quasi contract is to prevent unjust enrichment.
A)True
B)False
Q5) A contract is essentially an agreement that creates an obligation.
A)True
B)False
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Chapter 12: Formation of Contracts: Offer and Acceptance
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Sample Questions
Q1) An offer is effective only if it is communicated by the offeror in person.
A)True
B)False
Q2) An offer is terminated upon rejection by the offeree unless:
A) the period of time for which the offeror agreed to keep the offer open has not yet expired.
B) the offeror renews the offer.
C) the offeree revokes the rejection.
D) the offeree makes a counteroffer.
Q3) If no termination date is specified for an offer, the offer will remain open:
A) for one year.
B) for six months.
C) for a reasonable period of time.
D) until someone accepts the offer.
Q4) A firm offer is an offer that states that it is to be irrevocable, or irrevocable for a stated period of time.
A)True
B)False
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14
Chapter 13: Capacity and Genuine Assent
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Sample Questions
Q1) All of the following statements refer to an element of fraud except:
A) the defendant desired to obtain a financial benefit.
B) the defendant made a false statement.
C) the defendant knew that the statement was false or was recklessly indifferent regarding its truth.
D) the defendant intended for the other party to rely on the false statement.
Q2) Contractual capacity can exist even though a party does not understand every provision of the contract.
A)True
B)False
Q3) An apparently voluntary agreement may in fact not be voluntary if:
A) undue influence is present.
B) physical duress is present.
C) economic duress is present.
D) all of these.
Q4) At common law, a minor cannot be held contractually liable for his or her necessary medical expenses when the parent is unable or unwilling to pay.
A)True
B)False
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Chapter 14: Consideration
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Sample Questions
Q1) The effect of the making of a partial payment to satisfy an admitted debt is an example of the rule that:
A) past benefits cannot be consideration for a later promise.
B) a conditional promise may be consideration.
C) doing what one is already under a legal obligation to do is not consideration.
D) consideration must be adequate to be binding.
Q2) One promise may serve as consideration for many return promises. A)True
B)False
Q3) Dave Tompkins was up late one night watching a television campaign for a charitable organization. The organization was seeking donations in order to construct a new building that would serve as the organization's headquarters. One of Tomkins' favorite performers appeared to promote the campaign, and this prompted Dave to telephone in a pledge. Tomkins pledged $10,000 to the charity and, feeling good about his action, finally went to sleep. The next morning, Tomkins regretted making the pledge because its enforcement would cause great personal financial hardship. Will the charity be able to legally enforce the pledge Tomkins made? If so, why might the charity choose not to enforce a lawful pledge?
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Page 16
Chapter 15: Legality and Public Policy
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Sample Questions
Q1) An agreement not to compete is enforceable:
A) in the sale of a business.
B) between competitors.
C) in contracts for the sale of goods.
D) in contracts for the sale of securities.
Q2) When money is loaned at a greater rate of interest than is allowed by law, __________ is committed.
A) Usury
B) credit misfeasance
C) petty theft
D) credit malfeasance
Q3) Agreements that are contrary to public policy are binding but voidable.
A)True
B)False
Q4) An agreement to restrain trade may be void on the grounds that it is:
A) fraudulent.
B) contrary to public policy.
C) illegal lobbying.
D) unfair to merchants.
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Chapter 16: Writing, Electronic Forms, and Interpretation of Contracts
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Sample Questions
Q1) A father's handshake and oral promise to his daughter and her fiancée made in consideration of their contemplated marriage is binding.
A)True
B)False
Q2) A court can imply details of a performance which are not expressly stated in a contract.
A)True
B)False
Q3) Parol evidence is not admissible to show fraud, duress or mistake.
A)True
B)False
Q4) The writing required by the statute of frauds in the case of a contract for the sale of land must:
A) be addressed to the other party to the contract.
B) be made with the intent to create a writing to satisfy the statute of frauds.
C) be signed at the end of the writing.
D) describe the land to be sold.
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Chapter 17: Third Persons and Contracts
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Sample Questions
Q1) The making of an assignment relieves the assignor of any and all obligations existing under the original contract.
A)True
B)False
Q2) Janet Jones sold the assets and liabilities of her coin-operated laundry to Kevin Katz for $10,000. The assets of the business included all of the washers and dryers. The liabilities included the amounts still owing on seven new dryers, which had been purchased recently from Dryer Company under an installment contract. Katz agreed to make the installment payments on the new dryers as they came due. After Katz failed to make an installment payment when it was due, Dryer Company sued Jones. Jones claimed she no longer was liable. How will the court decide?
Q3) Only parties who actually signed a contract may sue on it.
A)True
B)False
Q4) An obligor required to render a performance under a contract can transfer the duty to perform to another person whenever desired.
A)True
B)False
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Page 19
Chapter 18: Discharge of Contracts
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Sample Questions
Q1) A valid tender of payment consists of an unconditional offer of the exact amount due on the date when due.
A)True
B)False
Q2) A homeowner who refinances her home mortgage may cancel the transaction:
A) if the terms of the contract were less favorable than anticipated.
B) within three business days.
C) only if she was the victim of fraud.
D) upon payment of a $1,000 penalty, as required by a Federal Trade Commission rule.
Q3) Commercial impracticability discharges a party's contractual obligations when the contract becomes more expensive to perform due to drastic and severe economic downturns.
A)True
B)False
Q4) A typical situation where the doctrine of economic frustration applies is when the party suffers a loss when a gain was expected.
A)True
B)False
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Page 20
Chapter 19: Breach of Contract and Remedies
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Sample Questions
Q1) If there is a breach of contract, the law requires that the other party terminate the contract and bring a lawsuit.
A)True
B)False
Q2) Beth Roberts purchased a "new" car from Honest John's Car Lot six months ago. The sales agreement expressly described the vehicle as a new car, and all usual factory papers accompanied the sale. However, Beth discovered that the car actually was acquired by Honest John's from another dealer who had used it as a demonstrator and loaned it to business friends on a regular basis. The car had more than 10,000 miles on it, a fact that had been concealed by turning back the odometer. Beth also discovered that Honest John's apparently had engaged in this practice before. Beth is suing for breach of contract. She is asking for compensatory damages equal to the difference between the new car price she paid and the average price the vehicle would have brought as a used car. In addition, she is asking for damages in the amount of $5,000. Honest John's attorney has told Beth that she will fight both claims and has advised Beth that the court will not award $5,000 as punitive damages for such a suit. What do you think?
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Chapter 20: Personal Property and Bailments
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Sample Questions
Q1) In order for a bailment to be valid, the bailor must be the owner of the subject property.
A)True
B)False
Q2) In a(n) ___________, the bailor has a legal duty to make a reasonable investigation for defects and inform the bailee if any are known or found
A) mutual benefit bailment
B) bailment for the sole benefit of the bailee.
C) constructive bailment
D) gratuitous bailment
Q3) Severalty is a form of property ownership by two or more persons.
A)True
B)False
Q4) Personal property is lost when an owner does not know where it is located but intends to find it.
A)True
B)False
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Chapter 21: Legal Aspects of Supply Chain Management
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Sample Questions
Q1) The major purpose of field warehousing is to:
A) create warehouse receipts that the owner can pledge as security for loans.
B) create additional space in the firm's own warehouse.
C) allow warehousers an opportunity to service common carriers.
D) transfer title to buyers without requiring them to pick up merchandise at the plant's location.
Q2) As a general rule, a hotelkeeper has a lien on the property of boarders or lodgers.
A)True
B)False
Q3) A contract carrier holds itself out as willing to furnish transportation for compensation without discrimination to all members of the public who apply.
A)True
B)False
Q4) A public warehouser has a specific lien against the goods stored for reasonable costs incurred from the storage.
A)True
B)False
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23
Chapter 22: Nature and Form of Sales
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Sample Questions
Q1) Which of the following situations create(s) an exception to the statute of frauds writing requirement?
A) non-resellable goods
B) receipt and acceptance
C) payment
D) specially manufactured goods
Q2) Suppose a merchant is about to transfer his entire inventory as part of an annual clearance action. This transfer is called a bulk transfer.
A)True
B)False
Q3) __________ represents a pattern of performance between the parties to a contract.
A) Course of dealing
B) Usage of trade
C) Course of trade
D) Usage of dealing
Q4) The parol evidence rule does not apply to the sale of goods.
A)True
B)False
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Chapter 23: Title and Risk of Loss
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Sample Questions
Q1) A buyer with a voidable title cannot pass on valid title to a subsequent good faith purchaser.
A)True
B)False
Q2) If a buyer purchases goods on approval, the buyer's creditors cannot reach such goods until there is an approval.
A)True
B)False
Q3) In a sale or return transaction, until the actual return of the goods is made, title and risk of loss remain with the buyer.
A)True
B)False
Q4) In the case of a nonshipment contract, risk of loss passes to the buyer upon actual receipt of goods:
A) only if the seller is a merchant
B) only if the seller is a nonmerchant
C) only if the buyer has already paid for them
D) in all nonshipment contracts
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Chapter 24: Product Liability: Warranties and Torts
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Sample Questions
Q1) Unless otherwise agreed, every merchant seller warrants that goods are sold free of any rightful claim by any third party.
A)True
B)False
Q2) A seller who makes a written express warranty for consumer goods costing more than $50 must conform to FTC regulations.
A)True
B)False
Q3) The federal regulation of express warranties:
A) applies only to limited warranties.
B) applies to a seller who makes a written express warranty for a consumer product costing more than $10.
C) requires all express warranties to be full warranties.
D) requires an implied warranty to be designated as either full or limited.
Q4) All of the following are product liability theories except:
A) express warranty
B) implied warranty
C) strict tort liability
D) assumption of the risk
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Chapter 25: Obligations and Performance
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Sample Questions
Q1) All of the following can be considered an acceptance by the buyer except:
A) An express statement of approval by the buyer.
B) The buyer's examination of the goods.
C) The buyer's retention of goods for an unreasonable period of time.
D) The buyer's modification of the goods.
Q2) The standard for rejection requires that any defect in the good be material.
A)True
B)False
Q3) Upon a seller's tender of nonconforming goods and the buyer's rejection of them, the transaction has ended.
A)True
B)False
Q4) In a cash sale that does not require the physical moving of the goods, the:
A) parties are required to perform concurrently.
B) seller is required to tender the goods before the buyer must pay for them.
C) buyer must pay for the goods in advance.
D) buyer must actually receive the goods before he or she is required to pay for them.
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Chapter 26: Remedies for Breach of Sales Contracts
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Sample Questions
Q1) If goods are specially manufactured, unique, or rare, a buyer may have the right to specific performance.
A)True
B)False
Q2) If a seller elects to resell the goods remaining in the seller's possession after the buyer breaks the contract, the seller:
A) must always give notice of the sale to the original buyer.
B) is never required to give notice of the sale to the original buyer.
C) is required to follow strict standards in the resale of the goods.
D) is not required to give notice of the sale to the original buyer when the goods are perishable.
Q3) A buyer who cancels a sales contract because the seller fails to deliver the goods is entitled to recover as much of the purchase price as had been paid.
A)True
B)False
Q4) A defrauded buyer may avoid the contract and recover damages.
A)True
B)False
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Chapter 27: Kinds of Negotiable Instruments and Negotiability
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Sample Questions
Q1) Any of the following constitutes a signature as an element of negotiability, except:
A) the use of initials.
B) a mark.
C) a trade name.
D) all of these.
Q2) The drawee on a check can be a bank.
A)True
B)False
Q3) JeanClaude creates and signs a promissory note. He promises to pay Suzy $1,000 worth of French francs plus $500 worth of custom-made shirts on October 15, in exchange for Suzy's help in renovating his kitchen. The note is :
A) nonnegotiable, because of JeanClaude's signature.
B) negotiable, because all the elements of the note are valid.
C) nonnegotiable, because it calls for payment in French francs.
D) nonnegotiable, because it calls for payment in shirts.
Q4) A nonnegotiable instrument's terms are not enforceable.
A)True
B)False
Page 29
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Chapter 28: Transfers of Negotiable Instruments and
Warranties of Parties
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Sample Questions
Q1) The impostor rule is an exception to the rules on liability for forgery that covers certain situations, such as the embezzling payroll clerk.
A)True
B)False
Q2) Indorsements may be classified in terms of whether the indorser has added any words to the indorsement and what those words are.
A)True
B)False
Q3) The transferee has only those rights that were possessed by the transferor of the note when a transfer of an instrument is made by:
A) an assignment.
B) a negotiation.
C) a sale.
D) a will.
Q4) The warranties made by an unqualified indorser guarantee that payment of the instrument will be made.
A)True
B)False
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Chapter 29: Liability of the Parties Under Negotiable Instruments
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Sample Questions
Q1) Drawers are secondary parties on a note.
A)True
B)False
Q2) Generally, defenses that could be raised in a breach of contact claim cannot be raised against a holder in due course.
A)True
B)False
Q3) Universal defenses work against all of the following except:
A) holders.
B) holders through a holder in due course.
C) holders in due course.
D) secondary parties.
Q4) When the primary party refuses to pay an instrument according to its terms, said party is required to give:
A) notice of nonpayment.
B) notice of dishonor.
C) notice of denial.
D) secondary party notice.
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Chapter 30: Checks and Funds Transfers
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Q1) An "encryption" warranty is a warranty made by any party who encodes electronic information on an instrument.
A)True
B)False
Q2) All of the following statements is incorrect concerning stale checks except: ______.
A) A check is stale when dated more than six (6) months before presentation to the bank.
B) Banks are required to pay stale checks unless a stop payment order has been issued.
C) Banks can pay in good faith after three (3) months.
D) Stale checks do not have to be verified with the bank's customer.
Q3) A check is a particular kind of draft.
A)True
B)False
Q4) A bank is not required to pay a check presented more than three months after its date.
A)True
B)False
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Chapter 31: Nature of the Debtor Creditor Relationship
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Q1) When a suretyship or guaranty contract is entered into after and separate from the original transaction, there must be new consideration for the promise of the guarantor.
A)True
B)False
Q2) Which of the following is not a suretyship defense?
A) statute of limitations
B) performance of the obligation by the principal debtor
C) creditor substitution of the original debtor with a new one
D) insolvency of bankruptcy of the principal debtor
Q3) Letter of credit transactions involve ______ contract(s).
A) one (1)
B) two (2)
C) three (3)
D) four (4)
Q4) Letters of credit are a two-party agreement used for financing.
A)True
B)False
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Chapter 32: Consumer Protection
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Q1) The owner of a lost credit card is:
A) liable for all purchases made by its finder if the card was lost through negligence.
B) not liable for any purchases if the card was lost despite the exercise of reasonable care by the cardholder.
C) liable for all purchases if the card originally had been sent to the cardholder without any prior request and never was used by such holder.
D) not liable for more than $50 for the unauthorized use of the card.
Q2) The Telephone Consumer Protection Act prohibits all of the following except:
A) automated marking calls without prior express consent.
B) calls to patients' room in hospitals.
C) calls after 9:00 PM.
D) 911 calls.
Q3) Compensatory damages:
A) compensate consumers for their actual loss.
B) are imposed to punish the defendant for wrongdoing.
C) may be a percentage of the company's net worth.
D) allow consumers to collect treble damages for a violation.
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Chapter 33: Secured Transactions in Personal Property
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Q1) An after-acquired property clause in a consumer security agreement means that a creditor has a lien in the shifting stock of goods of the debtor.
A)True
B)False
Q2) Property that is subject to a security interest is called collateral.
A)True
B)False
Q3) If two creditors have a security interest in the same collateral, their priority is determined according to the "last in-first out" provision.
A)True
B)False
Q4) Field warehousing is an example of perfection by the mere by possession of the collateral.
A)True
B)False
Q5) Under Revised UCC Article 9, a financing statement must be signed by the debtor.
A)True
B)False
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Chapter 34: Bankruptcy
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Q1) None of the following transfers may be set aside as preferences by the bankruptcy trustee except for: ______.
A) transactions for present consideration
B) payments in the debtor's ordinary course of business
C) payments of a debtor's utility bill
D) payments to a debtor's relative
Q2) An extended time payment plan:
A) does not provide for a discharge of the debtor.
B) provides for a discharge of the debtor.
C) does not require creditors holding the same type or class of claim to be treated the same way.
D) will not allow the debtor to pay the debts in installments if the debtor's creditors had not originally agreed to such installments.
Q3) A payment by a debtor in the ordinary course of business, such as the payment of a utility bill, will not be set aside by the bankruptcy trustee.
A)True
B)False
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Chapter 35: Insurance
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Q1) When an insurer wrongfully breaches its duty to defend its insured, the insurer is liable for all consequential damages resulting from the breach, up to the value of the policy.
A)True
B)False
Q2) A professor knew a colleague who was quite ill. The professor applied for life insurance on the colleague's life and named himself as beneficiary. Because of a similarity in the names of the professor and the colleague, an error was made and the policy was issued.?The professor also sold his car to a student. When the student drove away, it was clear that the student was an extremely reckless driver. The professor decided not to cancel his property insurance policy that he had maintained on the vehicle that he sold to the student. Shortly thereafter, the colleague died and the student demolished the car. The professor applied for insurance benefits under both policies and each of the insurers resisted payment. Decide both cases.
Q3) A person who obtains life insurance generally can only name a beneficiary that has an insurable interest in the life of the insured.
A)True
B)False
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Chapter 36: Agency
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Q1) An agent is under a duty to obey: ______.
A) all instruction given by the third party.
B) all lawful instructions given by the principal.
C) all instructions given by the principal.
D) none of these, since "obedience" is not an obligation of the agent.
Q2) A(n) _______ gives an agent an interest in the property with which she is dealing.
A) special agency
B) agency with an interest in the authority
C) general agency
D) agency with an interest in the subject matter
Q3) An agency may arise by appointment, conduct, ratification, or operation of law.
A)True
B)False
Q4) Placing property in the possession of another gives that person apparent authority to sell the property.
A)True
B)False
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Chapter 37: Third Persons in Agency
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Q1) The liability of a buyer for the purchase price of goods is terminated by the fact that the buyer gave the buyer's agent the purchase price to remit to the seller.
A)True
B)False
Q2) If an agent commits a crime, the agent's liability will depend on the nature of the agency relationship.
A)True
B)False
Q3) An owner ordinarily is not liable for harm caused a third person by the negligence of an employee of an independent contractor.
A)True
B)False
Q4) If an agent is sued for breach of implied warranty of authority by a third party, none of the following are defenses except: ______.
A) the agent acted in good faith.
B) the agent misunderstood the scope of authority.
C) the third party knew the agent was acting beyond her authority.
D) the agent had written authorization.
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Chapter 38: Regulation of Employment
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Q1) Employers may verify ______ through the federal government's employment verification program using the ______ system.
A) employers' compliance with ICRA, E-Verify
B) new employee eligibility status, I-9
C) new employee eligibility status, E-Verify
D) new employee eligibility status, ICRA
Q2) The National Labor Relations Act applies to: ______.
A) private-sector employers with gross incomes of $5 million or more.
B) private employers with gross incomes of $500,000 or more.
C) railroad and air carriers with 300 employees or more.
D) public sector government employees.
Q3) An employer is prohibited from requiring any documentation to determine a potential employee's work eligibility other than a driver's license and a social security card.
A)True
B)False
Q4) An employment contract always will state a time or duration for the contract's applicability.
A)True
B)False
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Chapter 39: Equal Employment Opportunity Law
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Q1) Women who are unable to work as a result of pregnancy must be provided the same benefits as all other workers.
A)True
B)False
Q2) A men's clothing store policy of hiring males to do measurements for suit alterations is not an example of a BFOQ.
A)True
B)False
Q3) Criteria used to make employment decisions that have a disparate impact on women, such as height requirements, must be job-related.
A)True
B)False
Q4) Title VII requires equal pay for men and women.
A)True
B)False
Q5) Religious societies may not grant hiring preferences to members of their religion.
A)True
B)False
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Chapter 40: Types of Business Organizations
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Q1) Business corporations exist to make a profit.
A)True
B)False
Q2) A joint venture typically relates to the carrying out of a single enterprise or transaction.
A)True
B)False
Q3) A parents' group in a small town formed an association to run a little league baseball team. Tom and Mary were members of the association, which was never incorporated. Tom was elected president of the association and ordered some uniforms for the team. When the uniforms were not paid for, the baseball supply company sued Tom and Mary for the contract price. Regarding the liability of Mary: ______.
A) Mary is liable because she is a member of an unincorporated association.
B) Mary is not liable because members of an unincorporated association have no personal liability.
C) Mary is liable if she authorized or ratified the purchase.
D) Mary is liable but only for 50% of the outstanding debt.
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Chapter 41: Partnerships
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Q1) Creditors of a firm have first claim on the assets of the partnership.
A)True
B)False
Q2) Partnership property may consist of:
A) real property only.
B) personal property only.
C) any and all property acquired by the partnership.
D) all property contributed by the partners or acquired for the firm or with its funds.
Q3) Each partner has to a right to do all of the following without a partnership vote except: ______.
A) take an equal part in transacting the business of the firm.
B) receive compensation for any work done for the partnership.
C) sell the firm's goods in the regular course of business.
D) borrow money for firm purposes.
Q4) The rights of partners are determined by the partnership agreement, which must be written to comply with the statute of frauds
A)True
B)False
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Chapter 42: LPs, LLCs, and LLPs
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Q1) You are asked to provide two friends who are in business together with advice regarding what they need to do to legally in order to form a limited liability company. Although your friends like the general notion of limited liability in the operation of their business, they are totally unfamiliar with the legal processes for forming a LLC, so you need to provide them with the basic requirements for LLC creation. What specific advice would you give them?
Q2) If an owner discloses he is an agent of an LLC, he will not be personally liable for the debts and obligations of the entity.
A)True
B)False
Q3) In a limited partnership, limited partners are not responsible for the debts of the firm if they engage in management activities.
A)True
B)False
Q4) Under the RULPA, limited partners may engage in certain "safe harbor" activities without losing their protection from liability.
A)True
B)False
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Page 44
Chapter 43: Corporate Formation
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Q1) For the purpose of suing a corporation in federal court, the corporation is a citizen in the state where it has its principal place of business.
A)True
B)False
Q2) If the proper procedure for incorporation has been followed, the corporation has a legal right to exist and is called a(n): ______.
A) corporation by estoppel
B) de jure corporation.
C) de facto corporation.
D) ultra vires corporation.
Q3) A corporation that does business in the state in which it was created is called a(n): ______.
A) domestic corporation.
B) foreign corporation.
C) alien corporation.
D) home corporation.
Q4) A merger is subject to antitrust law, while a corporate consolidation is not.
A)True
B)False
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Chapter 44: Shareholder Rights in Corporations
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Q1) As an owner of the corporation, a shareholder always has the right to inspect the books of the corporation for any purpose, regardless of whether the inspection is related to the shareholder's interest as a shareholder.
A)True
B)False
Q2) Common stock cannot has priority over preferred stock with respect to dividends.
A)True
B)False
Q3) If a share certificate is lost, destroyed, or stolen, the ownership of the shareholder is destroyed.
A)True
B)False
Q4) Manis owns 100 shares of stock of the Linquist Corporation. She sells her stock to Sosnik and delivers to him: (1) her stock certificate for 100 shares and (2) a written, signed assignment of the 100 shares to Sosnik. The assignment form printed on the back of the share certificate is left blank and is not signed. Sosnik refuses to take the certificate and the assignment on the ground that Manis must fill in and sign the assignment form on the stock certificate to make the transfer of stock effective. Is he correct?
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Page 46
Chapter 45: Securities Regulation
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Q1) The registration requirement of the Securities Act of 1933 applies to:
A) the issuing of stocks, bonds, and other investment securities.
B) the issuing of certificates of deposit by a national bank.
C) shares issued by nonprofit corporations.
D) issues of $1.5 million or more.
Q2) Regulation D is commonly referred to as the "private placement exemption" and allows no more than 35 nonaccredited investors per offering.
A)True
B)False
Q3) All private offerings of securities valued less than $100,000 are exempt from the SEC registration requirements.
A)True
B)False
Q4) Federal regulation of the sale of securities is based on the:
A) Securities Act of 1933 and the Securities Exchange Act of 1934.
B) Securities Act of 1933 and the Federal Trade Act of 1936.
C) Federal Trade Act of 1936 and the Blue Sky Act of 1933.
D) Fair Stock Act of 1932 and the Investment Securities Act of 1934.
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Chapter 46: Accountants Liability and Malpractice
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Q1) When the privity rule is applied, a bank lending money to the client of an accountant cannot sue the accountant for malpractice.
A)True B)False
Q2) In contrast to contributory negligence principles, comparative negligence principles are never applied to malpractice situations.
A)True B)False
Q3) An accountant guilty of malpractice can be sued: ______.
A) for breach of contract only.
B) for negligence only.
C) for breach of contract or for tort liability.
D) in federal court only if the suit is brought by a third person.
Q4) The privity rule prevents the filing of an accounting malpractice lawsuit by a third party against an accountant.
A)True B)False
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Chapter 47: Management of Corporations
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Q1) Application of the business judgment rule to a board's decision presumes all of the following except: ______.
A) that the board's decision was profitable to the corporation
B) that the board acted on an informed basis
C) that the board acted in good faith
D) that the board believe it was acting in the best interest of the corporation
Q2) Absent a showing of fraud, generally courts will not 'second guess' directors' right to manage the company.
A)True
B)False
Q3) Officers have a fiduciary obligation not to make any secret financial gain at the expense of the corporation.
A)True
B)False
Q4) Directors do not have the right to evaluate management's performance.
A)True
B)False
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Chapter 48: Real Property
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Q1) A covenant ________ promises that the grantor of an interest in land will execute any additional documents required to perfect the title of the grantee.
A) of seisin.
B) of further assurances.
C) against encumbrances.
D) of quiet enjoyment.
Q2) A trade fixture is a fixture that is traded in by the owner when purchasing new fixtures.
A)True
B)False
Q3) A deed is not necessary to transfer title to land when the land is a gift.
A)True
B)False
Q4) Equipment attached to a rented building by a tenant and used in business is: ______.
A) called a trade fixture.
B) called a business fixture.
C) called a commercial fixture.
D) not a fixture.
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Chapter 49: Environmental Law and Land Use Controls
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Q1) The fact that harm occurred is sufficient to establish a prima facia case for a nuisance.
A)True
B)False
Q2) A(n) __________ may prevent the landowner from use of the land.
A) eminent domain restriction
B) nonconforming use
C) variance restriction
D) zoning restriction
Q3) The primary federal agency responsible for federal environmental laws is the EPA.
A)True
B)False
Q4) Those affected by a nuisance are entitled to damages for the loss of the use of the land or for harm that is caused by the nuisance.
A)True
B)False
Q5) Solid waste disposal regulations today deal almost entirely with recycling. A)True
B)False
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Chapter 50: Leases
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Q1) When a lease covers rooms or an apartment in a building, a destruction of the leased premises: __________.
A) temporarily suspends the tenant's obligation to pay rent.
B) terminates the lease.
C) requires the landlord to repair or restore the property.
D) has no effect on the obligations of the tenant or the landlord.
Q2) Under the growing minority rule, if a tenant abandons the premise before the expiration of the lease a landlord has no duty to mitigate damages and find another tenant.
A)True
B)False
Q3) If the sewer continually backed up through the toilets in the rented premises, the tenant could claim constructive eviction, but would be able to stay until the landlord fixed it.
A)True
B)False
Q4) The lessor has the right to the exclusive possession of the premises during the term of the lease.
A)True
B)False
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Chapter 51: Decedents Estates and Trusts
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Q1) Testamentary intent means the testator understands that certain persons will become the owners of certain property upon her death.
A)True
B)False
Q2) An individual who desires to make provisions that will be effective only on her death is said to have: _______.
A) probationary intent.
B) a prejudicial interest.
C) testamentary intent.
D) attestation intent.
Q3) One desiring to leave the balance of an estate to a specified person or group after specific bequests are satisfied may do so by making a residuary bequest in a will.
A)True
B)False
Q4) A will is very informal and may be created in any reasonable manner. A)True
B)False
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