Legal Aspects of Business
Exam Answer Key
Course Introduction
Legal Aspects of Business provides an in-depth understanding of the legal environment in which businesses operate. The course covers fundamental principles of business law, including contracts, agency, sale of goods, negotiable instruments, company law, consumer protection, and intellectual property rights. Emphasis is placed on the application of law in the context of real-world business operations and decision-making. Students will learn to identify and analyze legal risks and issues commonly faced by businesses, enhancing their ability to navigate legal complexities and make informed, ethical decisions in a corporate setting.
Recommended Textbook Business Law and the Legal Environment Standard Volume 23rd Edition by David P. Twomey
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Chapter 1: The Nature and Sources of Law
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Q1) All cities, counties, and other governmental subdivisions have basic powers to adopt ordinances, such as traffic and zoning laws, within their sphere of operation.
A)True
B)False
Answer: True
Q2) Law is often defined as the body of principles that courts or administrative agencies will enforce.
A)True
B)False
Answer: True
Q3) The law could best be described as:
A)only statutory in nature.
B)only the creation of our courts.
C)a collection or bundle of rights.
D)a bundle of political choices.
Answer: C
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Chapter 2: The Court System and Dispute Resolution
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Q1) The Federal Arbitration Act provides that only arbitration clauses dealing with federal subject matters are valid, irrevocable, and binding.
A)True
B)False
Answer: False
Q2) The person who initiates a civil lawsuit is called the:
A)defendant.
B)prosecutor
C)plaintiff.
D)judge.
Answer: C
Q3) A court that can only hear disputes involving damages of $5,000 or less has a limited jurisdiction.
A)True
B)False
Answer: True
Q4) Mediation tends to keep discussions between parties proceeding.
A)True
B)False
Answer: True
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Chapter 3: Business Ethics, Social Forces, and the Law
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Q1) Mortgages, security interests, and surety relationships are legal mechanisms created primarily to promote stability and flexibility in trade.
A)True
B)False
Answer: False
Q2) Laws that prohibit mislabeling of food, speeding, and sale of alcohol to minors exist primarily:
A)for protection of the person.
B)for protection of public health, safety, and morals.
C)for protection of property.
D)for protection of the state.
Answer: B
Q3) Entitlement theory says that everyone has rights but it is up to the government to protect those rights.
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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Q1) Which of the following is not characteristic of the "living" Constitution?
A)strong government
B)strong President
C)administrative agencies
D)states' powers equal to federal powers
Q2) The Constitution prohibits the government from treating different people differently.
A)True
B)False
Q3) In a living-document view, the U.S.Constitution is a document that:
A)is clear in allocating the rights and responsibilities of people and our government.
B)can be interpreted only according to the bedrock principles of 1776.
C)can be interpreted only in accordance with current values.
D)must be interpreted to accommodate both stability and flexibility.
Q4) Administrative agencies are, in effect, a fourth branch of the government.
A)True
B)False
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Page 6
Chapter 5: Government Regulation of Competition and Prices
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Q1) Price discrimination is not permitted even when it can be justified on the basis of a difference in grade, quality, or quantity.
A)True
B)False
Q2) The Robinson-Patman Act guarantees a seller the right to refuse to deal with anyone for any reason or purpose.
A)True
B)False
Q3) Criminal penalties are possible under the Sherman Act.
A)True
B)False
Q4) Unfair competition is controlled by:
A)statutes.
B)administrative agencies.
C)administrative regulations.
D)all of these.
Q5) Having a large percentage of the market is not necessarily a monopoly.
A)True B)False
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Chapter 6: Administrative Agencies
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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) When it comes to administrative agencies, courts:
A)regard agencies as able to perform their duties effectively.
B)accept rules that have been established by agencies using a rational basis.
C)do not substitute their own judgment in agency decisions.
D)All of these.
Q3) The United States constitution places the most significant limitations on administrative investigation in the area of:
A)search and seizure of the person.
B)aerial inspection.
C)search and seizure of papers and records.
D)guarantee against self-incrimination.
Q4) A consent decree is an informal settlement of an enforcement action brought by an administrative agency.
A)True
B)False
Page 8
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Chapter 7: Crimes
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Q1) The unauthorized use of a computer belonging to someone else is:
A)a crime in all states.
B)a crime in some states.
C)not a crime in any state.
D)a crime under federal law only.
Q2) In some states, the taking of information from a computer without the consent of the owner is called _______.
A)unauthorized use of computers
B)diverted delivery by computer.
C)computer trespass.
D)economic espionage by computer.
Q3) The Fifth Amendment to the United States Constitution's protection against self-incrimination applies to:
A)individuals only.
B)corporations only.
C)both individuals and corporations.
D)individuals, but only in their official capacity within a business.
Q4) Destroying information stored on a computer may be a crime.
A)True
B)False
Page 9
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Chapter 8: Torts
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Q1) The tort of false imprisonment requires the permanent detention of a person without their consent.
A)True
B)False
Q2) Interactive web sites are immune from liability for content created by a third-party user, unless the web site actively edits the content.
A)True
B)False
Q3) A wrong that arises from a violation of a private duty is called a:
A)criminal action.
B)tort.
C)crime.
D)de mala.
Q4) Professionals have a duty to perform their jobs at the level of:
A)a reasonable person.
B)a reasonable professional in the same business.
C)an extraordinarily careful person.
D)an extraordinary person.
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Page 10
Chapter 9: Intellectual Property Rights and the Internet
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Q1) A copyright prevents the copying of an idea.
A)True
B)False
Q2) If other persons are permitted to use a trademark, it will lose its exclusive character and become generic.
A)True
B)False
Q3) Trade dress can be any word, name, symbol, device, or combination of these used to identify a product.
A)True
B)False
Q4) A copyright bestows upon the creator of an artistic or literary work a federal statutory right to exclusively:
A)use the work.
B)reproduce the work.
C)display the work.
D)All of these
Q5) Stealing trade secrets can result in fines, but not imprisonment.
A)True
B)False
11
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Chapter 10: The Legal Environment of International Trade
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Q1) The SEC has accused the Acme Company of fraud in connection with the sale of its securities to American citizens.Although the firm is American-owned, it is located in Switzerland.All of the accounts and business records of the firm are in several Swiss banks.The SEC has been actively pursuing the case, although it has not been able to provide a great deal of hope for those victimized by the fraud.What factors are probably hindering the SEC, and how might this be handled?
Q2) The Foreign Corrupt Practices Act prohibits improper payments to influence foreign officials.
A)True
B)False
Q3) The use of agency arrangements allows a U.S.firm to avoid taxation on sales made in its agent's country.
A)True B)False
Q4) A common barrier to the free movement of goods across borders is the tariff barrier.
A)True
B)False
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Chapter 11: Nature and Classes of Contracts: Contracting
on the Internet
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Q1) A recognizance is an agreement by which one party admits or recognizes that a specified sum of money is owed to another party.
A)True B)False
Q2) When a contract is fully performed by one party, it is called a unilateral contract.
A)True B)False
Q3) An executed contract is an agreement that has been completely performed. A)True
B)False
Q4) A void contract is one that is otherwise valid but may be rejected or set aside by one of the parties.
A)True B)False
Q5) The elements for a valid contract do NOT include: A)a fair price. B)capacity.
C)consideration. D)assent.
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Chapter 12: Formation of Contracts: Offer and Acceptance
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Q1) A properly mailed acceptance takes effect when mailed, even if it never is received by the offeror.
A)True
B)False
Q2) An offer gives the offeror the power to bind the offeree by contract.
A)True
B)False
Q3) Arthur made a bid at an auction by calling out the amount of $250.The auctioneer acknowledged Arthur's bid.There were no higher bids, and before the fall of the auctioneer's hammer, Arthur announced that he was withdrawing the bid.The auctioneer said that it was too late for Arthur to withdraw his bid, because the bid had already been acknowledged.What is the result?
A)Arthur's bid is an ordinary offer that can be revoked.
B)Arthur's bid is firm and cannot be withdrawn.
C)Since the auctioneer had in fact acknowledged Arthur's bid, the bid became an option exercisable at the election of the seller.
D)Since the auctioneer had in fact acknowledged Arthur's bid, a contract had been formed by way of offer and acceptance; accordingly, Arthur's subsequent attempt to withdraw his bid was ineffective.
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Page 14
Chapter 13: Capacity and Genuine Assent
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Q1) Jose visited a garage sale and found a baseball card collection which he believed was worth over $1,000. He bought the collection for $50.00 from Wanda. Later Jose discovered the collection was essentially worthless and demands his money back from Wanda. Must Wanda refund Jose's money?
A)No, the contract is enforceable because Jose was operating under a unilateral mistake and Wanda did not know the value of the cards.
B)Yes, the contract is enforceable because Jose made a unilateral mistake of fact.
C)Yes, the contract is enforceable because of mutual mistake of fact.
D)No, the contract is enforceable because of mutual mistake of value.
Q2) A contract made by an incompetent person after a guardian has been appointed is voidable.
A)True
B)False
Q3) Ordinarily, a party to a contract has no duty to volunteer information to the other party.
A)True
B)False
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Chapter 14: Consideration
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Q1) A landowner's promise to pay a contractor a bonus to complete construction of a building according to the terms of a pre-existing contract between the landowner and the contractor is:
A)binding if the promise is in writing.
B)binding, since the promise is made by a non-merchant.
C)binding, since the promise is made to a merchant.
D)ordinarily not binding on the promisor.
Q2) None of the following can be legal consideration except:
A)Refraining from beating one's spouse.
B)Promising to refrain from beating one's spouse.
C)Refraining from smoking cigarettes.
D)Refraining from using cocaine.
Q3) Consideration is what a promisor demands and receives as the price for a promise. A)True
B)False
Q4) Consideration is the bargained-for exchange between the parties to a contract. A)True
B)False
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Page 16
Chapter 15: Legality and Public Policy
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Q1) An agreement is illegal only when either its performance is a crime.
A)True
B)False
Q2) An agreement to slander a third person would not be enforceable because slander is a(n):
A)crime.
B)civil wrong.
C)infringement of privacy.
D)restraint against trade.
Q3) 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.
Q4) A noncompetition covenant may be held invalid because of vagueness concerning the duration and geographic area of the restriction.
A)True
B)False
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Chapter 16: Writing, Electronic Forms, and Interpretation of Contracts
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Q1) The parol evidence rule:
A)applies to complete written contracts.
B)prevents proof of fraud.
C)applies to incomplete contracts.
D)is not designed to preserve the integrity of written contracts.
Q2) 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
Q3) An oral contract can be enforced when it relates to:
A)the purchase of a television set for $200.
B)the sale of an interest in land for $400.
C)managing a factory for five years.
D)a promise to answer for the debt of another.
Q4) A promise to grant a mortgage on real property does not require a writing because it is not a transfer of land.
A)True
B)False
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Chapter 17: Third Persons and Contracts
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Q1) The delegator of construction duties remains liable if:
A)the delegatee performs the work properly, but the obligee did not approve of the delegation.
B)the delegatee performs the work improperly.
C)the obligee objects in writing to the delegatee's performance of the work, even if the delegatee performs the work properly.
D)the value of the contract is $500 or more and the delegatee performs the work properly.
Q2) Alberto enters into a contract with a contractor to build a parking garage in Gotham City.Stop-N-Go will greatly benefit from this contract since Alberto's parking garage is adjacent to Stop-n-Go.In this scenario Stop-n-Go is:
A)an incidental beneficiary.
B)a partial beneficiary.
C)a donee beneficiary.
D)an implied beneficiary:
Q3) The right to file a legal claim may not be assigned.
A)True
B)False
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Chapter 18: Discharge of Contracts
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Q1) All courts hold that when an agreement requires satisfaction of the other party regarding the acceptance of an act, a reasonable person standard is used.
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) A condition subsequent can alter but not terminate a contract.
A)True
B)False
Q4) If a debtor with multiple debts specifies the debt to which a payment is to be applied and the creditor accepts the money, the creditor is bound to apply the money as specified.
A)True
B)False
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Chapter 19: Breach of Contract and Remedies
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Q1) A reservation of rights is an assertion by a party to a contract that even though a tendered performance is accepted, the right to damages for the nonconformity to the contract is reserved.
A)True
B)False
Q2) Ordinarily, contracts for the performance of personal services are specifically ordered.
A)True
B)False
Q3) When the plaintiff seeks the remedy of specific performance, the plaintiff wants the other party to carry out the terms of the contract and not pay damages.
A)True
B)False
Q4) A contractual provision which states that a waiver of rights will not constitute a modification to the contract is:
A)not enforceable as being in bad faith.
B)not enforceable as a violation of law.
C)enforceable by one party only.
D)enforceable.
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Chapter 20: Personal Property and Bailments
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Q1) Warren brought his television in for repairs.After Warren left the store, gunmen came in to rob the proprietor.As they ran out, Warren's television was knocked over and destroyed.Warren demanded that the proprietor of the store compensate him for the fair market value of the television.The bailee:
A)is liable, since the goods were not returned to Warren in proper condition.
B)is liable, since the bailee did not prevent the gunmen from damaging the television.
C)is not liable, since this was a mutual-benefit bailment.
D)is not liable, since the damage was caused by the criminal act of a third party.
Q2) A bailee's interest in the bailed property can be characterized as:
A)ownership.
B)a fractional proprietary interest.
C)possession.
D)constructive ownership.
Q3) Transfer or possession and use of bailed property without compensation is called a constructive bailment.
A)True
B)False
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Page 22
Chapter 21: Legal Aspects of Supply Chain Management
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Q1) The legal definition of a guest of a hotel requires that the person:
A)live at least five miles from the hotel.
B)is a guest of a registered occupant of the hotel.
C)is a transient.
D)stay at the hotel for at least 24 hours.
Q2) To be engaged in warehousing, an enterprise must have appropriate storage buildings.
A)True
B)False
Q3) A hotelkeeper has a bailee's liability regarding property expressly entrusted to a hotelkeeper's care.
A)True
B)False
Q4) A purchaser of a nonnegotiable warehouse receipt:
A)receives no implied warranties.
B)may acquire rights superior to those of the transferor.
C)acquires only the title and the rights the transferor had authority to transfer.
D)may be considered to have the rights of a holder in due course.
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Chapter 22: Nature and Form of Sales
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Q1) The CISG governs all contracts between parties in the countries that have ratified it.
A)True
B)False
Q2) A bill of sale can be used as proof of an otherwise oral agreement.
A)True
B)False
Q3) To satisfy the statute of frauds, the writing must be signed and must include the price of the goods.
A)True
B)False
Q4) A contract that has elements of both goods and services is always classified as a contract for the sale of goods.
A)True
B)False
Q5) A bailment is a special form of a sale of goods in which possession is transferred to a bailee.
A)True B)False
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Chapter 23: Title and Risk of Loss
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Q1) Bob Corporation entered into a contract to sell parts to Zeck.The contract provided that the goods would be shipped "FOB Bob's warehouse." Bob shipped parts to Zeck that were stolen from the carrier.When Zeck checked the invoice, Zeck discovered that Bob had sent Model #20B instead of Model #20A, which the contract required.Whose loss? Why?
Q2) In an FOB Place of Destination shipment Title passes to the buyer:
A)when the goods are tendered at the seller's loading dock.
B)when goods are tendered to the buyer at the destination. C)when goods are tendered to the carrier.
D)when the goods are identified by the seller.
Q3) In a consignment, the dealer-consignee is often referred to as a(n):
A)remainder.
B)factor.
C)quotient.
D)exponent.
Q4) Someone who finds and resells stolen property passes on a good title to a good faith purchaser.
A)True
B)False
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Chapter 24: Product Liability: Warranties and Torts
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Q1) An express warranty is a statement of fact about the product that becomes part of the basis of the bargain.
A)True B)False
Q2) If a merchant sells a lawn mower that will not cut any type of grass, there is a breach of the warranty of merchantability.
A)True B)False
Q3) Product liability based on privity of contract is accepted by the Uniform Commercial Code.
A)True B)False
Q4) The warranties of both merchantability and fitness for a particular purpose exist under the Convention on Contracts for the International Sale of Goods (CISG).
A)True B)False
Q5) An implied warranty arises automatically from the fact a sale has been made. A)True B)False
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Chapter 25: Obligations and Performance
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Q1) When a buyer demonstrates in some way that the goods conform to the contract, the buyer has made a(n):
A)acceptance of the goods.
B)assignment of the goods.
C)substitution of the goods.
D)avoidance of the contract.
Q2) To be adequate, after a proper demand an assurance of performance must:
A)include consideration.
B)allow for the additional examination of the goods.
C)be sufficient to assure a reasonable person that the contract will be performed.
D)be written.
Q3) The UCC requires assurances to be in writing and signed by the company President.
A)True
B)False
Q4) The standard for determining commercial impracticability is objective, not subjective.
A)True
B)False
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Chapter 26: Remedies for Breach of Sales Contracts
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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 buyer refuses to accept specially manufactured goods, the seller has the right to keep the goods, and recover the full purchase price as damages.
A)True
B)False
Q3) The right of a buyer to cancel or rescind a sales contract is never impacted by a delay in exercising that right.
A)True
B)False
Q4) Suppose Jim is seriously injured by his new chain saw.If the sales contract excluded any damages from recovery, courts would hold that contract:
A)enforceable depending on FTC guidelines.
B)unconscionable under the CISG.
C)is enforceable under UCC Article 2.
D)unconscionable and unenforceable.
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28
Chapter 27: Kinds of Negotiable Instruments and Negotiability
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Q1) When ambiguous language in an instrument exists:
A)the instrument becomes non-negotiable.
B)handwriting supersedes typewritten words.
C)typewritten words supercede handwritten words.
D)judgment interest accumulates at the rate of 5% per annum.
Q2) Article 3 of the UCC establishes a four year statute of limitations for most actions involving negotiable instruments.
A)True
B)False
Q3) Revised UCC Article 3 refers to drawers, indorsers, and accommodation parties as "secondary obligors."
A)True
B)False
Q4) Antedating an instrument affects an instrument's negotiability.
A)True
B)False
Q5) The drawer is the person on whom the order to pay a draft is made.
A)True
B)False
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Chapter 28: Transfers of Negotiable Instruments and
Warranties of Parties
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Q1) The warranty liability of a qualified indorser is the same as that of an unqualified indorser.
A)True
B)False
Q2) If a lost instrument is order paper, the finder __________.
A)becomes the assignee of the instrument.
B)becomes the owner of the instrument.
C)becomes the holder of the instrument.
D)does not become the holder of the instrument.
Q3) If an instrument is payable to alternative payees, it may be indorsed and delivered by either of them.
A)True
B)False
Q4) A qualified indorsement is given by using the phrase __________.
A)"as is"
B)"without recourse"
C)"with all faults"
D)"buyer beware"
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Chapter 29: Liability of the Parties Under Negotiable Instruments
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Q1) The law gives certain holders of a negotiable instrument a preferred standing by protecting them from all defenses when they sue to collect payment.
A)True
B)False
Q2) 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.
Q3) Illegality, such as a note for gambling, is a universal defense.
A)True
B)False
Q4) A universal defense is so basic that the social interest in preserving them outweighs the social interest of giving negotiable instruments the freely transferable qualities of money.
A)True
B)False
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Chapter 30: Checks and Funds Transfers
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Q1) Consumers have the responsibility to examine periodic statements provided by their financial institutions.If a loss would not have occurred but for the failure of a consumer to report within __________ of the transmittal of the statement any unauthorized transfer, the loss is borne by the consumer.
A)fourteen (14) days
B)thirty (30) days
C)sixty (60) days
D)six (6) months
Q2) A tender occurs when the holder of a check or other consumer transaction authorization demands payment.
A)True
B)False
Q3) A check is a particular kind of draft.
A)True
B)False
Q4) A forged endorsement must be reported within one year of the time that the bank statement is received.
A)True
B)False
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Chapter 31: Nature of the Debtor-Creditor Relationship
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Q1) The issuer of a letter of credit has a duty to verify that the underlying transaction has been performed.
A)True
B)False
Q2) Under the ______, the respective parties are protected by a careful description of the documents that will trigger payment.
A)letter of credit rule.
B)standby letter rule.
C)independence rule.
D)strict compliance rule.
Q3) The issuer of a letter of credit can revoke or modify the letter at any time without the consent of the beneficiary, even if that right is not expressly reserved in the letter.
A)True B)False
Q4) A surety is discharged if the creditor substitutes a different debtor. A)True B)False
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33
Chapter 32: Consumer Protection
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Q1) One of the protections for consumers against subprime loans includes credit counseling before consumers may sign for certain types of subprime loans.
A)True
B)False
Q2) Antitrust statutes that prohibit anticompetitive behavior give consumers the right to collect treble punitive damages for a violation.
A)True
B)False
Q3) Peter applied for a loan at three banks.Peter's application was denied at the first two banks but finally was approved by the third institution.Peter believes that the first two banks denied his application because of his minority status.No explanation ever was provided by the banks denying Peter's request for funds.After obtaining the loan, Peter soon found himself unable to make the prescribed payments.Peter went into default, causing the bank to turn his case over to a collection agency.The collection agency called him "night and day" and were very abusive in their collection practices.Peter became quite distraught and unable to function at his job.As a result, Peter was soon fired.Peter asks for your advice regarding his legal rights.What is your response?
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Page 34
Chapter 33: Secured Transactions in Personal Property
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Q1) A financing statement must provide all of the following except: _______.
A)the name of the debtor.
B)the name of the secured party or their representative.
C)the covered collateral.
D)the value of the collateral.
Q2) Creditors receive an automatic 30-day temporary perfection in negotiable instruments taken as collateral.
A)True
B)False
Q3) Javier buys a 3D TV and a DVR from West Coast Sales.West Coast agrees to lend him 90 percent of the purchase price.Their agreement is known as a(n): ______.
A)a purchase money security interest.
B)a future transaction.
C)a floating lien.
D)transferred collateral interest.
Q4) A security agreement must be backed by a written record even if the creditor has possession of the collateral.
A)True
B)False
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Chapter 34: Bankruptcy
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Q1) In order to be eligible for Chapter 13 bankruptcy an individual must have secured debts of less than $1,000,000.
A)True
B)False
Q2) An involuntary petition in bankruptcy may not be commenced against: ______.
A)a nonprofit corporation.
B)an individual.
C)a for-profit corporation.
D)a railroad company.
Q3) An automatic stay:
A)arises only upon the filing of a voluntary petition.
B)prevents any further interest from accruing on a debtor's outstanding debts.
C)prevents creditors from taking action outside of the bankruptcy proceeding against a debtor.
D)ends if a debtor attempts to incur additional debt after a petition has been filed.
Q4) Individuals and corporations, but not partnerships, may be reorganized under the Bankruptcy Code.
A)True
B)False
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Chapter 35: Insurance
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Q1) If a provision in an insurance policy is ambiguous:
A)it is interpreted in favor of the insurer because the insured could have rejected the policy.
B)it is interpreted against the insurer.
C)parol evidence is admitted to show what was intended.
D)the policy is declared void and the insurer is required to return all premiums to the insured.
Q2) For property insurance, an insurable interest must exist: _____.
A)at the time the policy is purchased.
B)at the time of the loss.
C)both at the time the policy is purchased and at the time the loss is sustained.
D)for at least thirty (30) days before the loss is sustained.
Q3) What is a correct statement concerning burden of proof?
A)The insured has the burden of proving that the loss was a covered loss.
B)The insurer has the burden of proving that the loss was not covered.
C)Exceptions to coverage are liberally interpreted in favor of the insurer.
D)Exceptions to coverage are disregarded in life insurance matters.
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Page 37
Chapter 36: Agency
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Q1) The scope of an agent's authority is always known by the third party.
A)True
B)False
Q2) The "right to control" test determines whether an individual is an agent, an employee, or an independent contractor.
A)True
B)False
Q3) If the principal terminates the agency: ______.
A)the agent's authority to act for the principal is terminated automatically.
B)the right of the agent to bind the principal to third persons generally ends immediately.
C)the termination is not effective until notice is given to third parties.
D)the termination is not effective until the agent receives the notice.
Q4) For a principal to ratify the actions of an agent, all that is necessary is that the principal express the intention to ratify.
A)True
B)False
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Chapter 37: Third Persons in Agency
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Q1) Even after there is an effective ratification, the original action of an agent is still considered as unauthorized.
A)True B)False
Q2) Parol evidence is allowed to show whether an agent has signed in a representative or an individual capacity.
A)True B)False
Q3) Payment to an authorized agent is:
A)payment to the principal only if the agent remits the payment.
B)payment to the principal if the third person informs the principal.
C)payment to the principal, provided the agent does not misappropriate the payment.
D)payment to the principal.
Q4) Different rules of law govern the vicarious liability of principals and employers.
A)True B)False
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Chapter 38: Regulation of Employment
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Q1) An employee differs from an agent, who can make contracts with third persons on behalf of a principal.
A)True
B)False
Q2) Under which circumstance will an employee not be entitled to Workers' Compensation benefits for an on-the-job injury?
A)an injury that is the result of an employee's own negligence
B)an injury that is the result of an employee's own gross negligence
C)an injury that is caused by a fellow employee
D)an injury that is the result of an employee's intoxication
Q3) Under the common law, an employer is under a duty to furnish an employee with a sufficient number of competent fellow employees for the work involved.
A)True
B)False
Q4) Employers generally have the right to lay off employees because of economic conditions, including a lack of work.
A)True
B)False
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Chapter 39: Equal Employment Opportunity Law
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Q1) The Equal Pay Act:
A)does not allow variances in wages pursuant to a seniority system.
B)generally requires that members of both sexes be paid equally for equal work.
C)prohibits all variations in wage rates paid to men and women.
D)makes payment variances a BFOQ.
Q2) Religious societies may not grant hiring preferences to members of their religion.
A)True
B)False
Q3) An affirmative action policy can do all of the following except:
A)help ensure a diverse work force.
B)be an effective means to avoid litigation costs.
C)provide job preferences for minorities and women.
D)provide equal pay for employees.
Q4) The Age Discrimination in Employment Act forbids discrimination by employers against persons over 30 years of age.
A)True
B)False
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